The China Moment

The China Moment

November 19, 2020

by Peter Koenig for The Saker Blog

China has achieved the almost impossible – a free trade agreement with 14 countries – the ten ASEAN, plus Japan, South Korea, Australia and New Zealand, altogether 15 countries, including China. The so-called Regional Comprehensive Economic Partnership, or RCEP, was in negotiations during eight years – and achieved to pull together a group of countries for free trade, i.e. some 2.2 billion people, commanding some 30% of the world’s GDP. This is a never before reached agreement in size, value and tenor. The RCEP was signed during the 37th ASEAN Summit on 11 November in Vietnam.

On top of being the largest such trade agreement in human history, it also associates with and binds to the Belt and Road Initiative (BRI), or One Belt, One Road (OBOR), or also called the New Silk Road, which in itself comprises already more than 130 countries and more than 30 international organizations. In addition, China and Russia have a longstanding strategic partnership, containing bilateral agreements that also enter into this new trade fold – plus the countries of the Central Asia Economic Union (CAEU), consisting mostly of former Soviet Republics, are also integrated into this eastern trade block.

The conglomerate of agreements and sub-agreements between Asian-Pacific countries that will cooperate with RCEP, is bound together by for the west a little-understood Asian Pact, called the Shanghai Cooperation Organization (SCO), founded on 15 June 2001 in Shanghai as an intergovernmental organization composed of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. The SCO’s purpose is to ensure security and maintain stability across the vast Eurasian region, join forces to counteract emerging challenges and threats, and enhance trade, as well as cultural and humanitarian cooperation.

Much of the funding for RCEP and BRI projects will be in the form of low-cost loans from China’s Asian Infrastructure and Investment Bank (AIIB) and other Chinese and participating countries’ national funding sources. In the hard times emerging from the covid crisis, many countries may need grant assistance to be able to recover as quickly as possible their huge socioeconomic losses created by the pandemic. In this sense, it is likely that the new Silk Road may enhance a special “Health Road” across the Asian Continent.

See map (Wikipedia).

The real beauty of this RCEP agreement is that it pursues a steady course forward, despite all the adversities imposed by the west, foremost the US of A. In fact, the RCEP may, as “byproduct”, integrate the huge Continent of Eurasia that spans all the way from western Europe to what is called Asia and covering the Middle East as well as North Africa, of some 55 million square kilometers (km2).

The crux of the RCEP agreement’s trade deals is that they will be carried out in local currencies and in yuan – no US dollars. The RCEP is a massive instrument for dedollarizing, primarily the Asia-Pacific Region, and gradually the rest of the world.

Much of the BRI infrastructure investments, or New Silk Road, may be funded by other currencies than the US dollar. China’s new digital Renminbi (RMB) or yuan soon being rolled out internationally as legal tender for international payments and transfers, will drastically reduce the use of the dollar. The new digital RMB will become attractive for many countries which are fed up with being subjected to US sanctions, because using the US-dollar, they automatically become vulnerable to being punished with dollar blockages, confiscations of resources, whenever their international “behavior” doesn’t conform with the mandates of Washington’s.

Even country reserves can be stolen, a crime perpetrated by Washington with impunity and with the help of the UK, in full sight of the world, stealing 1.2 billion dollars’ worth of Venezuelan gold deposited with the Bank of England. Only a cumbersome lengthy legal process in UK courts initiated by Venezuela could eventually free the funds to be returned to the jurisdiction of Caracas. This is a warning for many countries, who want to jump the fiat-dollar-ship and join an honest trading and reserve currency, offered by China’s solid and stable economy-backed RMB / yuan.

The dollar is already today in decline. When some 20-25 years ago about 90% of all worldwide held reserve-assets were denominated in US dollars, this proportion has shrunk by today to below 60% – and keeps declining. The emerging international RMB / yuan, together with a RCEP- and BRI-strengthened Chinese economy, may further contribute to a dedollarization, as well as dehegemonization of the United States in the world. Simultaneously and progressively the international digital RMB / yuan may also be replacing the US-dollar / euro reserves in countries’ coffers around the globe.

The US-dollar may eventually return to be just a local US-currency, as it should be. Under China’s philosophy, the unilateral word will transform into a multi-polar world. The RCEP and New Silk Road combination are rapidly pursuing this noble objective, a goal that will bring much more equilibrium into the world.

For the west adapting to this new reality may not be easy. Cooperation instead of competition has never been a western concept or philosophy. For hundreds if not thousands of years the western dominance has left a sad legacy of exploitation of the poor by the rich colonial masters and of bloody wars.

Cooperation instead of competition and warrying for power, is a concept not easily adhered to by the west. It is clearly visible by US-instigated trade wars, and possibly a currency war between the US and China may already be in the making. The FED has vaguely expressed its plans to also launch a digital, possibly cryptic, blockchain-based currency to counter the new RMB / yuan – not yet even launched internationally. Details of the FED’s plans are at the time of this writing not clear.

Having to adapt to the new RCEP, conforming to an agreement among equals, will not come easy for the west. The west will not let go and may use to the utmost possible, its creation and western biased World Trade Organization (WTO), to sabotage as much as possible the RCEP’s trade deals and BRI-infrastructure, as well as cross-border industrial development advances.

The west, led by the US – and always backed by the Pentagon and NATO, may not shy from threatening countries participating in China’s projects, but to no avail. Under Tao philosophy, China will move forward with her partners, like steadily flowing water, constantly creating, avoiding obstacles, in pursuit of her noble goal – a world in Peace with a bright common future.


Peter Koenig is an economist and geopolitical analyst. He is also a water resources and environmental specialist. He worked for over 30 years with the World Bank and the World Health Organization around the world in the fields of environment and water. He lectures at universities in the US, Europe and South America. He writes regularly for online journals such as Global Research; ICH; New Eastern Outlook (NEO) and more. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe.
Peter is also co-author of Cynthia McKinney’s book “When China Sneezes: From the Coronavirus Lockdown to the Global Politico-Economic Crisis” (Clarity Press – November 1, 2020)

Peter Koenig is a Research Associate of the Centre for Research on Globalization.

RCEP hops on the New Silk Roads

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RCEP hops on the New Silk Roads

November 16, 2020

by Pepe Escobar with permission and first posted on Asia Times

Ho Chi Minh, in his eternal abode, will be savoring it with a heavenly smirk. Vietnam was the – virtual – host as the 10 Asean nations, plus China, Japan, South Korea, Australia and New Zealand, signed the Regional Comprehensive Economic Partnership, or RCEP, on the final day of the 37th Asean Summit.

RCEP, eight years in the making, binds together 30% of the global economy and 2.2 billion people. It’s the first auspicious landmark of the Raging Twenties, which started with an assassination (of Iran’s Gen. Soleimani) followed by a global pandemic and now ominous intimations of a dodgy Great Reset.

RCEP seals East Asia as the undisputed prime hub of geoeconomics. The Asian Century in fact was already in the making way back in the 1990s. Among those Asians as well as Western expats who identified it, in 1997 I published my book 21st: The Asian Century (excerpts here.)

RCEP may force the West to do some homework, and understand that the main story here is not that RCEP “excludes the US” or that it’s “designed by China”. RCEP is an East Asia-wide agreement, initiated by Asean, and debated among equals since 2012, including Japan, which for all practical purposes positions itself as part of the industrialized Global North. It’s the first-ever trade deal that unites Asian powerhouses China, Japan and South Korea.

By now it’s clear, at last in vast swathes of East Asia, that RCEP’s 20 chapters will reduce tariffs across the board; simplify customs, with at least 65% of service sectors fully open, with increased foreign shareholding limits; solidify supply chains by privileging common rules of origin; and codify new e-commerce regulations.

When it comes to the nitty gritty, companies will be saving and be able to export anywhere within the 15-nation spectrum without bothering with extra, separate requirements from each nation. That’s what an integrated market is all about.

When RCEP meets BRI

The same scratched CD will be playing non-stop on how RCEP facilitates China’s “geopolitical ambitions”. That’s not the point. The point is RCEP evolved as a natural companion to China’s role as the main trade partner of virtually every East Asian player.

Which brings us to the key geopolitical and geoeconomic angle: RCEP is a natural companion to the Belt and Road Initiative (BRI), which as a trade/sustainable development strategy spans not only East Asia but delves deeper into Central and West Asia.

The Global Times analysis is correct: the West has not ceased to distort BRI, without acknowledging how “the initiative they have been slandering is actually so popular in the vast majority of countries along the BRI route.”

RCEP will refocus BRI – whose “implementation” stage, according to the official timetable, starts only in 2021. The low-cost financing and special foreign exchange loans offered by the China Development Bank will become much more selective.

There will be a lot of emphasis on the Health Silk Road – especially across Southeast Asia. Strategic projects will be the priority: they revolve around the development of a network of economic corridors, logistic zones, financial centers, 5G networks, key sea ports and, especially short and mid-term, public health-related high-tech.

The discussions that led to the final RCEP draft were focused on a mechanism of integration that can easily bypass the WTO in case Washington persists on sabotaging it, as was the case during the Trump administration.

The next step could be the constitution of an economic bloc even stronger than the EU – not a far-fetched possibility when we have China, Japan, South Korea and the Asean 10 working together. Geopolitically, the top incentive, beyond an array of imperative financial compromises, would be to solidify something like Make Trade, Not War.

RCEP marks the irredeemable failure of the Obama era TPP, which was the “NATO on trade” arm of the “pivot to Asia” dreamed up at the State Department. Trump squashed TPP in 2017. TPP was not about a “counterbalance” to China’s trade primacy in Asia: it was about a free for all encompassing the 600 multinational companies which were involved in its draft. Japan and Malaysia, especially, saw thought it from the start.

RCEP also inevitably marks the irredeemable failure of the decoupling fallacy, as well as all attempts to drive a wedge between China and its East Asian trade partners. All these Asian players will now privilege trade among themselves. Trade with non-Asian nations will be an afterthought. And every Asean economy will give full priority to China.

Still, American multinationals won’t be isolated, as they will be able to profit from RCEP via their subsidiaries within the 15-nation members.

What about Greater Eurasia?

And then there’s the proverbial Indian mess. The official spin from New Delhi is that RCEP would “affect the livelihoods” of vulnerable Indians. That’s code for an extra invasion of cheap and efficient Chinese products.

India was part of the RCEP negotiations from the start. Pulling out – with a “we may join later” conditional – is once again a spectacular case of stabbing themselves in the back. The fact is the Hindutva fanatics behind Modi-ism bet on the wrong horse: the US-fostered Quad partnership cum Indo-Pacific strategy, which spells out as containment of China and thus preclude closer trade ties.

No “Make in India” will compensate for the geoeconomic, and diplomatic, blunder – which crucially implies India distancing itself from the Asean 10. RCEP solidifies China, not India, as the undisputed engine of East Asian growth amid the re-positioning of supply chains post-Covid.

A very interesting geoeconomic follow-up is what will Russia do. For the moment, Moscow’s priority involves a Sisyphean struggle: manage the turbulent relationship with Germany, Russia’s largest import partner.

But then there’s the Russia-China strategic partnership –which should be enhanced economically. Moscow’s concept of Greater Eurasia involves deeper involvement both East and West, including the expansion of the Eurasia Economic Union (EAEU), which, for instance, has free trade deals with Asean nations such as Vietnam.

The Shanghai Cooperation Organization (SCO) is not a geoeconomics mechanism. But it’s intriguing to see what President Xi Jinping said at his keynote speech at the Council of Heads of State of the SCO last week.

This is Xi’s key quote: “We must firmly support relevant countries in smoothly advancing major domestic political agendas in accordance with law; maintaining political security & social stability, and resolutely oppose external forces interfering in internal affairs of member states under any pretext.”

Apparently this has nothing to do with RCEP. But there are quite a few intersections. No interference of “external forces”. Beijing taking into consideration the Covid-19 vaccine needs of SCO members – and this could be extended to RCEP. The SCO – as well as RCEP – as a multilateral platform for member states to mediate disputes.

All of the above points to the inter-sectionality of BRI, EAEU, SCO, RCEP, BRICS+ and AIIB, which translates as closer Asia – and Eurasia – integration, geoeconomically and geopolitically. While the dogs of dystopia bark, the Asian – and Eurasian – caravan – keeps marching on.

Weekly China Newsbrief and Sitrep

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Weekly China Newsbrief and Sitrep

By Godfree Roberts – selected from his extensive weekly newsletter : Here Comes China

The Huawei complete Google alternative is being built out – You will hear about Petal again – Maps, Docs, Search, Browser and probably every app you use.

Huawei solved its map problem with Petal Maps and has just unveiled Huawei Docs, which, supports document viewing and editing of 50 formats including PDF, PPT, and DOC. With real-time syncing enabled by cloud capabilities, Huawei Docs lets users can work on the same document on different devices logged into the same Huawei ID, enhancing the smart office experience. [MORE]

TASS wrote a decent release : Huawei Launches Petal Search, Petal Maps, HUAWEI Docs and More


Digital RMB in use in Shenzenhttps://www.youtube.com/embed/od05YfJyy1E?feature=oembed

Chinese experts see the central bank digital currency (CBDC) as a vital means of facilitating cross-border transactions and expediting the internationalisation of the renminbi. The Chinese central bank announced the commencement of trials of the CBDC in April 2020 across four cities, including Shenzhen, Suzhou, Chengdu and Xiong’an, while in August the Hebei province government issued a notice calling for cross-border e-commerce transactions in Xiong’an to make greater use of the renminbi, as well as exploration of the use of the digital currency for cross-border payments. Pan Helin (盘和林), head of the Digital Economy Research Institute of the Zhongnan University of Economics and Law, said to 21st Century Business Herald that the digital renminbi could be the solution to the current difficulties involved in making cross-border payments.

“At present the main problem with cross-border payments is that the period of time for needed funds to reach accounts is long, the speed is low, fees are high, procedures are numerous and efficiency levels are low,” said Pan. “The biggest advantages of the digital renminbi are convenience, high-efficiency, high timeliness and low cost, and for these reasons it can overcome the existing deficiencies with traditional cross-border payments methods.”

“Survey data indicates that occupation of liquidity is the biggest cost for the SWIFT cross-border payments system. Blockchain technology raises the efficiency of cross-border payments systems, reduces cross-border payments timeframes, and reduces the liquid funds used. The cost for financial institutions to conduct cross-border payments will be reduced.” Liu Bin (刘斌) a financial researcher from the Pudong Reform and Development Research Institute, said that the CBDC could also help to expedite internationalisation of the renminbi, pointing in particular to the following areas of development:

  • Driving the use of the renminbi for trade between China and ASEAN countries and China and Belt and Road countries;
  • At present free trade zones throughout China are exploring cross-border financing, and in future these free trade zones could serve as drivers for international use of the digital renminbi;
  • Overseas consumption by Chinese tourists and travellers could expedite the use and circulation of the digital renminbi abroad, in turn driving the establishment of corresponding systems and coordinating mechanisms abroad. [MORE]

Gross National Happiness

IPSOS: China the happiest nation on earth. Six in ten adults across 27 countries (63%) are happy, according to the latest Ipsos survey on global happiness. Despite the COVID-19 pandemic, the prevalence of happiness at an aggregate level is nearly unchanged from last year. The happiest countries surveyed, i.e., those where more than three out of four adults report being very or rather happy are China, the Netherlands, Saudi Arabia, Canada, France, Australia, Great Britain, and Sweden. Those where fewer than one in two adults say they are happy are Peru, Chile, Spain, Argentina, Hungary, and Mexico. Among 29 potential sources of happiness measured, people across the world are most likely to derive “the greatest happiness” from:

  • My health/physical well-being (cited by 55% globally)
  • My relationship with my partner/spouse (49%)
  • My children (49%)
  • Feeling my life has meaning (48%)
  • My living conditions (45%)

In comparison to the pre-pandemic survey conducted last year, the sources of happiness that have most gained in importance globally pertain to relationships, health, and safety. On the other hand, time and money have ceded some ground as drivers of happiness. Globally, happiness is as common this year as it was last year, dipping by just one percentage point from 64% to 63%. However, it has increased by five points or more in six countries, namely China, Russia, Malaysia, and Argentina, while it has decreased by five points or more in 12 countries, most of all Peru, Chile, Mexico, and India.

The happiness leader in 2020 is China, where 93% say they are happy (up 11 points from last year and moving from third place), followed by the Netherlands (newly added this year) with 87%, and Saudi Arabia with 80% (up two points). Canada and Australia, last year’s leaders in happiness, register a notable drop this year: Canada with 78% (down eight points) drops to fourth place in a tie with France (down two points) and Australia with 77% (down nine points) falls to sixth place.  [MORE]


SOCIETY

Farmer Li Zhifang is being crowned a “Food Hero” by the Food and Agriculture Organization of the United Nations on World Food Day, for his efforts to keep food cheap and accessible to residents of Wuhan during the worst period of the city’s lockdown during the pandemic. Li is marketing manager of the Wuhan Qiangxin Vegetable Production and Marketing Cooperative. He strived to keep food prices affordable and food supplies accessible during an unprecedented lockdown in the city where the virus began and many were forced to stay in their homes for months. Vegetable prices rocketed at the beginning of the pandemic when the situation was still developing.

Li not only persuaded farmers to sell produce at “normal” prices but also helped to increase deliveries from cooperative members to supermarkets, including Hema, also known as Freshippo, a Chinese fresh food supermarket chain owned by Alibaba. During the pandemic Li volunteered to help the local government distribute necessities to districts where there was a shortage of fresh food, including communities adjacent to the Huanan Seafood Market, thought to be the original epicenter of the pandemic, which people were scared to visit. “Someone must be brave when the battle begins,” the “Food Hero” was quoted as saying. People have praised Li for his contribution and commented that his new title on this special day shows that the UN approves of China’s anti-pandemic policies. “As a Wuhan local, I could buy vegetables at reasonable prices during the lockdown, thank you so much!” “Wuhan relied on these ordinary heroes to recover from the pandemic,” one popular comment read.  [CAIXIN].


ASEAN

US-funded agitators in Bangkok block downtown roads–like US-funded agitators in Hong Kong.

Anti-government protesters in Thailand organized by billionaire-led opposition parties and funded by the US government have openly committed themselves to the “Hong Kong model” of US-funded unrest. This includes targeting public infrastructure to create maximum instability for the vast majority of the public and undermining Thailand’s economic recovery in the wake of the global COVID-19 economic crisis. The protesters are committed to the “Hong Kong model” despite it having failed completely in Hong Kong itself with most of the leaders either sidelined, jailed, or having fled abroad. Knowing that this model is ultimately doomed to failure but committing to it and the violence, disruption, and instability it implies anyway – does not even benefit the opposition itself – because it surely did not benefit Hong Kong’s opposition but instead effectively ended it.

Instead – this campaign of violence and disruption will only benefit the protest’s US government sponsors – a US government determined to undermine China and its allies and obstruct Asia’s global rise. Overturning Thailand’s political order is one goal – but simply dividing and destroying Thailand to deny China a prosperous ally is another.  As it stands now – Thailand is benefiting from China’s regional and global rise – but should protesters have their way – the economy they claim to be upset about will be further destroyed as they seek to cut ties with China – Thailand’s largest trade partner, foreign investor, source of tourism, and a key partner in several important infrastructure projects including a high-speed rail network that will connect Thailand to China via Laos. The US and Europe have no ability now nor will in the foreseeable future to replace the ties Thailand currently enjoys and is benefiting from with China. Tony Cartalucci – ATN. [MORE]


Geopolitics

Guest Editorial by Billy Bob, who is married, 45 years old, with two young kids 8 and 6 and a full time job in the medical field that he does not want to lose:  “For several years now I have been using my facebook profile to raise awareness and engage with folks regarding the political and economic issues facing our planet”.

As the West churns out more anti-China propaganda designed to defame, malign, and facilitate the decoupling of Western industry from China, China continues to lead the world in economic growth and expansion. The problem for the Western ruling class is that China is too lucrative of an industrial base and too appealing as a perspective market for any self respecting capitalist to turn their back on such potential wealth creation. For individual Western capitalists to forgo the opportunity to profit in China, actual laws will need to be passed and it’s not clear the ruling class can get it’s act together in order to legislatively force such a decoupling. It’s not as if there exists a central authority that can simply dictate the behavior of thousands of industries and force them to sacrifice their own individual economic well being on the alter of the greater class interest. Even though Trump has attempted to tweet such demands in the past, absent some major catalyzing event, there is no way individual Western industries are going to relinquish the incredible economic opportunities that China offers. Such are the limitations of Western capitalism.

What the ruling class really needs is “a new pearl harbor”. This time however, instead of Islam, China must be declared the alleged antagonist. Only then can the ruling class force individual intransigent corporations and industries to decouple from China and move to India.

Too be sure, India is central to the West’s grand strategy. Modi and his Western backers have convinced themselves that they can emulate China’s success and that they can offer the world’s capitalists all the economic opportunities that China can but without the threatening demonstration of the superiority of social planning and a Marxist Leninist communist party.

The ruling class will never be able to pull this off. China has already won. The West will flail around in futility and watch as the inevitability of China’s economic steam engine rolls over every malign strategy and subversive plot they conceive. China has set in motion a chain of events that is impossible to curtail. The speed at which China is growing and developing and the wisdom with which it is overcoming every challenge is both astonishing and exhilarating.

If you are curious about the information which informs my statements and perspective, if you haven’t internalized and don’t honestly embrace wholeheartedly the truth about China I shared above, you are cheating yourself and missing out on the knowledge that represents the most important development of our lifetime. In 1936, Mao comprehended a faint shadow of what was to come when he wrote:

“When China finally wins her independence, then legitimate foreign trading interests will enjoy more opportunity than ever before. The power of production and consumption of 450,000,000 people is not a matter that can remain the exclusive interest of the Chinese, but one that must engage the many nations. Our millions of people, once really emancipated, with their great latent productive possibilities freed for creative activity in every field, can help improve the economy as well as raise the cultural level of the whole world.”
***

The Two Undersides to Geo-Politics: At the explicit level, today’s geo-political struggle is about the U.S. maintaining its primacy of power – with financial power being a subset to this political power. Carl Schmitt, whose thoughts had such influence on Leo Strauss and U.S. thinking generally, advocated that those who have power should ‘use it, or lose it’. The prime object of politics therefore being to preserve one’s ‘social existence’. But the prize that America truly seeks is to seize is all global standards in leading-edge technologies, and to deny them to China. Such standards might seem obscure, but they are a crucial element of modern technology. If the cold war was dominated by a race to build the most nuclear weapons, today’s contest between the U.S. and China — as well as vis à vis the EU — will at least partly be played out through a struggle to control the bureaucratic rule-setting that lies behind the most important industries of the age. And those standards are up for grabs. So where are we in this de-coupling struggle? China’s intent now is not simply to refine and improve on existing technology, but to leapfrog existing knowledge into a new tech realm– by discovering and using new materials that overcome present limits to microprocessor evolution. They may just succeed – over next the three years or so – given the huge resources China is diverting to this task (i.e. with microprocessors). This could alter the whole tech calculus – awarding China primacy over most key areas of cutting-edge technology. States will not easily be able ignore this fact – whether or not they profess to ‘like’ China, or not.

Which brings us to the second ‘underside’ to this geopolitical struggle. So far, both the U.S. and China have kept finance largely separate to the main de-coupling. But a substantive change may be underway: The U.S. and several other states are toying with Central Bank digital currencies, and FinTech internet platforms are beginning to displace traditional banking institutions. Pepe Escobar notes: “Donald Trump is mulling restrictions on Ant’s Alipay and other Chinese digital payment platforms like Tencent Holdings…and, as with Huawei, Trump’s team is alleging Ant’s digital payment platforms threaten U.S. national security. More likely is that Trump is concerned Ant threatens the global banking advantage the U.S. has long taken for granted. Team Trump is not alone. U.S. hedge fund manager Kyle Bass of Hayman Capital argues Ant and Tencent are “clear and present dangers to U.S. national security that now threaten us more than any other issue.”

The point is two-fold: China is setting the scene to challenge a fiat dollar, at a sensitive moment of dollar weakness. And secondly, China is placing ‘facts on the ground’ — shaping standards from the bottom up, through widespread overseas adoption of its technology. Just as Alipay has made huge inroads across Asia, China’s ‘Smart Cities’ project diffuses Chinese standards, precisely because they incorporate so many technologies: Facial recognition systems, big data analysis, 5G telecoms and AI cameras. All represent technologies for which standards remain up for grabs. Thus ‘smart cities’, which automate multiple municipal functions, additionally helps China’s standards drive .[MORE]


Selections and editorial comments by Amarynth.  (Go Get that newsletter – it again is packed with detail and each time I read it, it becomes clearer that a country of 1.4 billion people requires a specific kind of cohesion to make it work.  And so far, it is working.  Take a look for fun – How to take a 7,000-tonne building for a walk).

The Reality of Modern India: Recurrence of Corporate-State

The Reality of Modern India: Recurrence of Corporate-State

October 17, 2020

by Straight-Bat for the Saker Blog

For quite some time, I have been alarmed with the general lack of understanding on modern India among the readers and activists (Indians and foreigners alike). As soon as “India” word appears on the paper or computer screen, a section of the readers start imagining the philosophical and religious connotation of the word, they try to realise how great saints spent whole life to get insights of ‘life’, ‘death’, and ‘moksha’! Another section of the readers on hearing the word “India” get an adrenaline rush through their body, their mind gets full of apathy bordering on hatred about ‘uneducated’ people who would continue to get screwed by their master perpetually. A third kind of readers feel India is a land of religious fascists, so no point in thinking about it.

The truth is, like any other civilization, the Indian subcontinent also has both glorious and sordid past. As a truth-seeker in political-social-economic domain, my concern is with the present state of affairs in India. However, in order to understand the present society, one must look back into the recent past – this article takes the interested readers and activists into a journey through the significant historical facts, politics, society and economy from around 1720 CE till March’2020.

A word of caution – readers who wish to read about how present ruling party mixed up the question of governance and economy with Hindu religion/spiritualism to bring back ‘ancient glory’ OR readers who wish to broaden their understanding on how covid-19 wrecked Indian economy since last week of March 2020 till date, won’t find this piece of article at all useful.

 1.  Introduction

In the post-colonial modern era, the South Asian landmass consists of the following countries:

  • India claiming an area of 3287.26 thousand sq. km. with 1352.64 million population in 2016
  • Pakistan claiming an area of 881.91 thousand sq. km. with 212.23 million population in 2016
  • Nepal claiming an area of 147.18 thousand sq. km. with 28.09 million population in 2016
  • Bhutan covering an area of 38.39 thousand sq. km. with 0.75 million population in 2016
  • Bangladesh covering an area of 147.57 thousand sq. km. with 161.37 million population in 2016
  • Sri Lanka covering an area of 65.61 thousand sq. km. with 21.23 million population in 2016

[ Link: https://en.wikipedia.org/wiki/South_Asia ]

Each of the above 7 modern political entities possess quite a few characteristics that would enable them to qualify as a ‘nation-state’, while there exist a number of other peculiarities that would render such definition of ‘nation-state’ as pretentious. So, for our discussion in this write-up, I would like to identify any entity listed above as a ‘country’ – it is simple and expressive of the actual meaning. A ‘country’ has a geographical boundary, a population, and sovereignty of governance within the geographical boundary.

South Asian landmass, as a whole, has a very significant characteristic – ever since the Palaeolithic age dawned over this subcontinent, may be around 10,000 BCE, the only common thread that links geography of all regions and history of all eras of this landmass had been / has been – DIVERSITY. In this respect, South Asia is very similar to the European subcontinent – just like South Asia, with a wide variety of clan, tribe, language, religion, custom etc. Europe could / can never come near to a homogeneous society (other than genocide, which was once tried as a political project). Similarity doesn’t end there – in case of both South Asian and European subcontinents, formation of political entities had/has been a dynamic idea and reality! So many republics, principalities, protectorates, kingdoms and empires dotted the landscape for past 4000 years, that the most uncommon feature of political processes across the South Asian and European subcontinents had been / has been – CENTRALISATION.

Without getting into the details of past history or trying to cover the entire south Asian subcontinent, I’m restricting myself within the region of Indian subcontinent (presently India plus Pakistan plus Bangladesh) from Maratha domination around 1719 CE till liberation from British empire in 1947 CE, and partitioned India from 1947 to 2020 CE. Through a thorough but brief survey of the significant political and economic narratives of recent 300 years of history of the Indian subcontinent, I want to establish the following hypothesis:

a) English East India Company (EIC) created world’s first ‘corporate-state’ in Indian Subcontinent – that fete is being repeated now by Indian oligarchy

b) Behaviour of wealthy elites didn’t change over time – EIC’s primary objective of exploitation and extortion now taken up by Indian oligarchy

The journey will begin with review of Indian society as well as economy during Maratha domination and British era, then discuss the post-independence Social Democracy, and Neoliberal Oligarchy era. I will end with current semi-fascist corporatocracy, but won’t discuss future possibilities.

2.  Maratha-Dominated Indian Subcontinent

2.1  Expansion of Maratha Empire & Fall of Maratha Confederacy

Had Maratha power appreciated the diversity of India and tweaked their expansion policy to acknowledge the significance of alliance, as well as assigned importance to economic affairs as similar to military affairs, the Maratha empire would have seamlessly replaced Mughal empire as the central power based in Delhi – the British imperialist history of Indian subcontinent would be, in that case, aborted by 1790.

2.1.1 Starting from 1674, Maratha king Shivaji and his two sons built a kingdom in west region of India primarily on the basis of their expertise in guerrilla warfare against the Mughal empire. Shivaji’s grandson Shahuji, in 1713 CE appointed Balaji Vishwanath Bhat as Peshwa (the governing authority of Maratha kingdom). He marched to Delhi in 1719 CE and deposed the Mughal emperor. Thus the century of conflict started with sacking of Delhi, capital of Mughal empire by Maratha kingdom in 1719, thereafter Maratha kingdom grew into an empire, then transformed into a confederacy, and, with comprehensive defeat of Maratha Confederacy against the British East India Company in the Third Anglo-Maratha War in 1818 the Maratha power was defeated and century of conflict ended.

During this period, marauding Maratha cavalry became a nightmare in northern, eastern, and southern regions (which were part of Mughal empire until a decade back and subsequently the ex-Mughal governors became independent rulers). Maratha power would extract annual tax chauth (levied at the rate of one-fourth the annual revenues of the region) and sardeshmukhi (additional 10% levy on top of the chauth) from all such regions as extortion tax. In the trend-setting incidence, in 1719, the-then Mughal emperor granted Shahuji the chauth and sardeshmukhi rights over the six Deccan provinces in exchange for his maintaining a contingent of 15,000 troops for the purpose of Mughal emperor.

2.1.2 After death of Balaji Vishwanath, his son, Bajirao was appointed in 1720 CE as Peshwa by Shahuji. An able military leader, Bajirao soon transformed the Maratha kingdom into Maratha empire. By the time Bajirao died in 1740, Maratha empire became strong and Maratha army was unconquerable. The regions under the Maratha empire in 1740 were:

  • Western part of present India except Solapur, Nanderh, Kutch, Junagarh regions
  • entire Central region of present India
  • Northern part of present India – Malwa

The Persian emperor Nadir Shah invaded the crumbling Mughal empire from January to May 1739 and sacked the capital, Delhi after defeating Mughal emperor Muhammad Shah. The loot was so ‘fabulous’ that Nadir Shah didn’t collect tax in Persian empire for next three years following his return. From that event onwards, effectively Mughal empire became a dead corpse which would still be showcased in Delhi, until 1857 when British forces would bury it. Three political powers active in India who were seeking expansion of their existing domain, got alerted – Maratha empire, Nizam of Hyderabad (erstwhile Mughal governor), and British East India Company (that didn’t have any territory by in 1740 apart from trading outposts).

The Mughal empire still had jurisdiction over the following regions in 1740:

  • Northern part of present India except Ladakh, Kashmir, Uttar Pradesh, Rajasthan

The governors/kings of erstwhile Mughal empire became independent rulers:

  • Northern region of present India – Uttar Pradesh (Awadh, Rohilkhand), Rajasthan (Jaipur, Jodhpur)
  • Eastern region of present India – Bengal-Bihar (Nawab of Murshidabad)
  • Southern region of present India – Maharashtra (Nizam’s portion), Telengana-Andhra (Nizam’s portion), Karnataka (Mysore), Tamil Nadu (Nawab of Arcot)

2.1.3 After death of Bajirao, his son Balaji Bajirao was appointed in 1740 CE as Peshwa by Shahuji. He expanded the Maratha empire to greatest height, but during his reign, lack of diplomatic statesmanship and lack of appropriate military strategy caused irreparable damages to the empire. Shahuji died in 1749. By the time Balaji Bajirao died in 1761, the Maratha empire established direct rule and indirect control over:

  • Western region of present India except Kutch, Solapur, Nanderh regions
  • entire Central region of present India
  • Northern region of present India – Malwa, part of Rajputana-Haryana-Punjab
  • Eastern region of present India – Orissa
  • Southern region of present India – part of Tamil Nadu

In 1751–52, the Ahamdiya treaty was signed between the Maratha and Mughal powers. Through this treaty, Mughal rule was restricted only to Delhi (currently greater Delhi). In 1752 when Ahmad Shah Abdali annexed Lahore and Multan, the Mughal Emperor entered into an agreement with Holkar and Scindia for protection against external and internal enemies granting the Marathas chauth tax of Punjab, Sindh, and Ganga-Yamuna Doab plus subadari of Agra and Aimer.

Ahmed Shah Abdali plundered Delhi in 1756, and Maratha army raided Delhi after Afghan withdrawal, defeating the Afghan garrison in the Battle of Delhi. Maratha power conquered North-west India successfully wresting Lahore, Attock, and Peshawar. However, Ahmed Shah Abdali came back soon to reoccupy lost territories. Afghani emperor Ahmed Shah Abdali invaded north-west and north India 8 times. During 1760-61 invasion the Afghani army took on the Maratha army. Afghani army in alliance with the army of Awadh and Rohilkhand routed Maratha army (with contingents from Maratha chieftains like Holkar, Scindia, Bhonsale, Pawar, Gaikwad etc.) which didn’t feel requirement of any alliance. Marathas maintained poor relations with most of the Rajput and Jat kings. Due to the defeat of Maratha military in January 1761 in the Third Battle of Panipat, Maratha power lost the wherewithal to replace Mughals to rule majority of Indian subcontinent from Delhi.

2.1.4 After death of Balaji Bajirao, his son, Madhavrao became Peshwa in 1761 CE. Maratha empire regained some of the lost glory during this period. In order to effectively coordinate the large empire through the satraps, Peshwa Madhavrao allowed autonomy to the most prominent of the satraps, and the Maratha empire became Maratha confederacy. However, after death of Peshwa Madhavrao I in 1772 CE, following chieftains became de facto rulers in far-flung regions of the empire:

  • Peshwa of Pune
  • Holkar of Indore
  • Scindia of Gwalior (Chambal region) and Ujjain (Malwa Region)
  • Bhonsale of Nagpur
  • Gaekwad of Baroda
  • Pawar of Dewas and Dhar

Even in the original Maratha kingdom of Shivaji many jamindars were given semi-autonomous charges of small districts like Aundh, Bhor, Phaltan, Miraj, Sangli etc.

There were two undercurrents simultaneously getting played out in Maratha confederacy:

  • Struggle for prominence and revenue collection among the Maratha chieftains
  • Struggle for capturing power within Peshwa family

There were two outstanding military leader-cum-statesman during the confederacy period:

  • Mahadji Scindhia controlled entire central and north India regions crushing all opposition from principalities and protectorate kingdoms of Jats, Rohilla Afghans, and Rajputs to Maratha rule between 1761 and 1793 CE – the period was termed as ‘Maratha Resurrection’. However, it remained one of the unresolved mystery of Indian history, why, even at the zenith of his power, Mahadji Scindia didn’t attempt to put a Maratha leader as the ‘emperor’ in Delhi.
  • Yashwantrao Holkar during the period 1799 through 1811 CE rebelled against the policies of the-then Peshwa Bajirao II and fought against the rising British power teeth and nail. He tried to unite all Maratha chieftains as well as other significant kingdoms of the-then Indian sub-continent communicating to them “First Country, and then Religion. We will have to rise above caste, religion, and our states in the interest of our country. You too must wage a war against the British, like me.” With most other dominions, principalities and kingdoms ruled by Indians signing treaties with the British, Yashwantrao Holkar had to also sign peace treaty in 1805 CE. His plan for final assault on British-held Indian territories didn’t materialise because of untimely death in 1811 CE.

2.1.5 Apart from seizing territory to expand the Maratha empire/confederacy, Peshwa also created a network of tributary/protectorate states all of which were part of Mughal empire in not-so-distant past. Maratha power imposed annual tax/protection money from these erstwhile provinces of Mughal power, while those erstwhile Mughal provinces/tributaries balked at paying extortions at any opportunity:

  • Nawab of Bengal (Bengal and Bihar; Orissa ceded to Marathas)
  • Nizam of Hyderabad (part of Maharashtra, part of Karnataka, Telengana, part of Andhra)
  • King of Mysore (part of Karnataka, part of Tamil Nadu)
  • Rajput kings of Rajputana (Rajasthan)

2.1.6 British East India Company played the role of ‘king-maker’ when it changed the Nawab (ruler) of Bengal-Bihar by winning the Battle of Plassey in 1757. However the significance of next British win in Battle of Buxar fought in October 1764 between British East India Company and combination of Nawab of Bengal-Bihar, Nawab of Awadh, and Mughal (Delhi) emperor was immeasurable – British East India Company became the de facto ruler of the largest revenue earning province of Mughal empire – Bengal-Bihar. By 1770 British company brought the following regions under direct ‘rule’:

  • Western region of present India – Mumbai (Bombay trading outpost)
  • Eastern region of present India – Kolkata (Calcutta trading outpost), Bengal, Bihar
  • Southern region of present India – Chennai (Madras trading outpost), coastal Andhra (Northern Sircars)

The most ferocious period of the 100-year conflict took place between 1766 through 1818 when eight significant wars were fought among British East India Company, Mysore, and Maratha (Hyderabad Nizam most of the time supported English EIC):

  • First Anglo–Mysore War (1766–69)
  • First Anglo-Maratha War (1777–83)
  • Second Anglo-Mysore War (1780–84)
  • Maratha-Mysore War (1785–87)
  • Third Anglo-Mysore War (1789–92)
  • Fourth Anglo-Mysore War (1798–99)
  • Second Anglo-Maratha War (1803–05)
  • Third Anglo-Maratha War (1817–18)

Third Anglo-Maratha War resulted in the British control of most of the Indian subcontinent either directly or through dependency/protectorate treaty. Through meticulous planning, cunning diplomacy, and psychological manipulation of the Indian states, the British power defeated/subdued all of them, and spread their empire across Indian subcontinent.

2.2  Administration & Revenue system of Maratha Power

The Maratha king (Chhatrapati) had an enlightened Council of Eight ministry through which the Maratha empire was administered: Prime Minister (Pantpradhan / Peshwa), Finance Minister (Amatya / Mazumdar), Secretary (Pant Sachiv), Interior Minister (Mantri), Chief of Military (Senapati), Foreign Minister (Sumant), Chief Justice (Nyayadhyaksh), and Highest Priest (Panditrao). After 1761 during the confederacy times, the administration of became quite complex with central Peshwa following the old ‘council of eight’ concept while the autonomous chieftains introduced some new processes. Maratha empire-turned-confederacy was avowedly military-state. The chauth collected across Indian subcontinent was primarily distributed for military purpose – two-thirds remained with Maratha chieftains for maintaining their military troops, 25% went to the King (Chhatrapati), 6% went to the office of pant sachiv for managing the royal secretariat.

Maratha empire was administratively divided into two regions: directly ruled by the king (regulation areas) and ruled by the semi-autonomous/autonomous chiefs (non-regulation areas). Land revenue from regulation areas were based on assessment, accounting and other factors, but revenue from non-regulation areas were not based on any realistic assessment. More vociferous chieftains would resist demand of king’s tribute and pay less compared to more docile chiefs. The assessment-based revenue was almost fixed during the 18th century, with minimum change in valuation.

The regulation areas had ‘vatandar’ system wherein land rights (including right to sale) would be vested in a brotherhood of patrilineal relatives. Vatandar units of about 20 to 200 villages was under a Zamindar termed as DeshmukhVatandars were co-sharers of the produce of ‘land’ as well as ‘revenue exempt land’. There were two types of tenants: resident cultivators with hereditary rights of occupancy, and temporary cultivators.

During late 1750s and 1760s, Peshwa completed the ‘tankha settlement’ considering old and new arable land, quality of land, and thorough measurement (king’s share became one-sixth of the produce). 1790s onwards when the Peshwa needed more revenue to pay for mobilisation of armies and obligations to the British, revenue collection target was raised.

The administrative systems in the semi-autonomous statelets called ‘saranjam states’ (Holkar, Scindia, Bhonsle, Pawar, Gaikwad etc.) were similar in principle, but each of the statelet would run its administration in its own way. Both – land revenue collection system within territory as well as extortion tax from neighbouring statelets, were managed by a well-structured bureaucracy (more often than not, these appointments were done within extended family).

2.3 Economy & Commerce

Summarising the economy in Indian subcontinent during Mughal era (assuming 1526 CE to 1739 CE), The Cambridge Economic History of Indian mentioned “Centralized administration, a uniform revenue policy, a network of inland trade fostered by Mughal peace and active encouragement to an expanding overseas commerce created conditions in which economic stimuli travelled fast enough from one part of the empire to another. A few propositions stated above wouldn’t fit while describing the Maratha empire-cum-confederacy era between 1719 CE and 1818 CE, two factors especially stood out – firstly, ‘centralised administration’ was replaced by decentralised statecraft within Maratha confederacy and few other powerful statelets, secondly, ‘peace’ was elusive during this tumultuous period. Trading and crafts manufacturing activities in large urban cities like Delhi, Agra, Surat, Lahore, Dhaka etc. took a hit during the period of 1710s through 1720s. During this period, for common people (small landholders, agricultural labourers, craftsmen, soldiers), daily life became more stressful.

2.3.1 An estimate by Angus Maddison (Table B-18 in The World Economy, Paris: OECD, 2001) shows that, in early modern era the GDP of Indian subcontinent as a share of world GDP was highest during Mughal era and lowest during British Raj:

1600 CE1700 CE1870 CE
GDP (million 1990 int. $)% of World GDPGDP (million 1990 int. $)% of World GDPGDP (million 1990 int. $)% of World GDP
Britain6,00701.8010,70902.88100,17909.10
Western Europe65,95520.0283,39522.46370,22333.61
China96,00029.1482,80022.30189,74017.23
India74,25022.5490,75024.44134,88212.25
World329,417371,3691101,369

A safe conclusion from the above estimate can be made that, even if the internal disturbances during Maratha domination were detrimental to the economic growth, the drastic reduction in Indian subcontinent’s share of world GDP in 19th century had minimum linkage with 18th century Maratha era.

2.3.2 While discussing the economy of 18th century Indian subcontinent, it must be mentioned that there is an uncanny similarity with imperial China of that period – close to 80% of total population were rural peasants. While Mughal power was deriving their land revenue primarily from north, east and south regions (as well as tax revenue from trade in west, east, and south regions), Maratha power grew out of west and central India where agrarian settlement reached limits of its development. That resulted in persistent pressure of the Maratha power into stimulation of higher productivity in more fertile areas (under their direct rule) like Doab region in north, and Tanjore region in south.

The Maratha rulers adopted revenue collection based on concessional assessment (istava) and extended facility of loans. Another significant policy was encouraging/rewarding the citizens to build and repair agricultural facilities like dam. Fukuzawa has noted that state promotion of agriculture and revenue management system by the Maratha rulers made considerable impact to medium and large plot-holders (18 acres to 108 acres of land)

He further noted that, over the years 1790 to 1803 the small plot-holders completely disappeared while the large land holders increased in number. The economic condition of vast section of rural peasantry and rural labours worsened considerably due to increased population and increased taxation, apart from prices of food grains.

During the power transfer process from Mughal to Maratha era, the families of privileged and powerful aristocracy (state ministers, deshmukhs, military officers, financiers and traders) who combined multiple functions simultaneously, became controller of rural resources and source of income through hereditary offices, tax collection, tax-exempted land etc. More often than not, these families were from non-cultivating background.

2.3.3 Medium and small sized mints were a feature of market towns. Copper and cowries were imported in large volume to meet the demand of highly ‘monetized’ local markets. People in western region of India were paid daily and monthly wages for handicraft production, agricultural labour, and other services. Records dated 18th century pertaining to monetary and contractual dealings, loans in cash and kind, etc. were found.

Apart from cultivation of staple food, cash crops and manufacturing were part of the economy in western, eastern, and southern regions. The crafts manufacturing in the northern region were negatively impacted due to the continuous warfare in Maratha era. Credit institutions operating in town and countryside were not only a vibrant part of economy, but it also played a not-so-impressive role of creating an indebted nobility class.

2.3.4 Development of market forces had impacted the subsistence character of Indian agriculture. Even though the peasantry met family requirements of food out of his own produce, very poor peasants would depend on moneylenders for seed and food-grains during non-cropping period. By mid-18th century non-food grain production (mulberry, poppy, indigo, sugarcane, tobacco, maize, and mango) increased substantially. However, the rural areas could never become source of ‘demand / consumption of goods’ due to poor purchasing power, and remained only ‘producers’ in spite of housing vast population.

In a somewhat similar trend as that of China, the rural peasants were also involved in manufacturing (like spinning of coarse cloth) for their own consumption as well as partly for disposal in the market. For production of agriculture-based products like raw silk, indigo, sugar, oil, and salt peasants were responsible. This type of rural manufacturing co-existed with urban artisan industries (which was independent from rural influences) that catered to a growing export market.

At the village level, there were marketing complex (mandi), which were permanent wholesale markets attracting traders and commodity sellers from both neighbouring and distant locations. Part of the produces would distributed across the country as well as pushed into overseas commerce. Surat, Masulipatam and Hugli were famous centres of export, and Agra and Burhanpur were significant inland commercial centre. By 1770’s English EIC almost monopolised the overseas trade through privileges from which the native Indians were excluded.

2.3.5 The arrogance of provincial rulers and the avarice of government officials during late Mughals (as against the philosophy of ‘good governance’ espoused by the early Mughal emperors) had curbed the enterprising spirit and prevented the accumulation of capital over generations. That type of administrative shortcomings were in place even during the Maratha domination in the subcontinent which deterred many traders and financiers who commanded immense resources (even if they had considerable influence with the political authorities). In fact, during 1750’s and 1760’s few prominent the-then Bengal traders-financiers conspired with English EIC officials against the Bengal Nawab (erstwhile Mughal provincial governor) to bring English EIC as the ruler of Bengal-Bihar-Orissa by enticing the commanders of Bengal Nawab’s Army. These Indian traders-financiers expected EIC would provide good governance and extend special privilege to them for business – it was a short-lived affair that permanently changed the history.

2.4 Significant observations on Maratha-dominated Subcontinent:

2.4.1 Between 1757 and 1819 the English EIC established control of most of the Indian subcontinent. Due to factors like (a) disunity, distrust, and rivalry among the Maratha chieftains, (b) short-sighted “hindutwa” policy of Maratha Peshwa who didn’t want to ally with Mysore Sultan because of few cases of forced religious conversion programmes in south India carried out by the Sultan, and (c) consistently pro-British stand of Hyderabad ruler Nizam and other small kingdoms, seven most prominent statelets of the-then Indian subcontinent (four Maratha statelets- Maratha Peshwa, Gwalior Scindhia, Nagpur Bhosle, Indore Holkar, Mysore kingdom, Hyderabad Nizam, and Sikh kingdom) never joined forces to fight the British forces. History showed that, had any four of them formed a united front and fought the English EIC forces, British forces would got vanquished. On the contrary, Maratha Peshwa, Gwalior Scindhia, Hyderabad Nizam, and Sikh king allied with English EIC at different point of time for their fight against other Indian statelets!

2.4.2 Compared to the early modern Europe and China, early modern Indian subcontinent had been a laggard in application of science and technology in to agriculture and crafts manufacturing. Apart from spinning, canon, and ship, labour-saving techniques in different sectors of economy remained elusive. However, with arrival of French and British companies, the subcontinent started absorbing new techniques and technologies like raw-silk reeling, indigo and saltpetre manufacturing, cloth printing etc. An intriguing observation by Indian scholars including M K Gandhi was that, specialisation and division of labour based on caste and clan got developed in Indian subcontinent since ancient era which kept the economy of villages self-reliant and all households had near-guaranteed employment that at least ensured subsistence. This old heartless and inefficient but effective system didn’t bring any impetus for major technological changes and labour-saving. The English EIC brought technological and management changes that started to break down the entire rural economy and urban crafts manufacturing as early as 1770s.

2.4.3 During the 15th century late medieval era, southern region, western region, Deccan region, and Rajasthan region witnessed emergence of powerful families (mostly upper caste Hindu Brahman-Kshatriya-Vaishya) who, across generations, accumulated various rights, offices, and capital (land, labour, money) and contributed to state building under different kings/emperors (both Hindu and Muslim). During the same time, northern region, north-western region, and eastern region witnessed emergence of powerful Turkish-Iranian Muslim families who similarly accumulated various offices and capital under mainly Afghan and Mughal Muslim sultans/ emperors. This aristocratic wealthy ‘class’ had been involved in state administration (including land survey, revenue accounting, and record keeping) in dual role – as land-owner and as administrator. They were also main driver for commercial ventures (export and shipping) and banking matters. Maratha domination up to 1818, didn’t change the existing structure, but reinforced it with induction of hundreds of aristocrat families based in west India most of whom were upper caste Hindu.

3.  British Rule in Indian Subcontinent

3.1  Road to Corporate-State Passed Through Bengal

English East India Company (EIC) was established in London in 1600 December through a royal charter from English monarch Elizabeth I for monopoly trading with Asia. Initially, EIC formulated separate joint stocks for each voyage, whereby investors would decide to allocate capital on the basis of individual voyage. The EIC became a permanent joint stock corporation in 1657 CE. A new company was awarded the monopoly of Asia trade, but with the old company decided to merge with the new one in 1709 CE – after that EIC became a pillar of public finance through its loan extended to the British exchequer. EIC became a colossus for Britain accounting for between 13 and 15 per cent of all Britain’s imports between 1699 and 1774. EIC trading outposts in Indian subcontinent were established in Masulipatnam, Surat, Madras, Bombay, and Calcutta by 1710 CE. In 1717 CE the company received privileges (firman) for duty-free trading rights in Mughal empire.

3.1.1 Since beginning of 18th century English EIC had a strong base in Calcutta. Due to proximity to good raw materials, and highly sophisticated division of labour, Bengal offered the world ‘an unbeatable combination of high quality and low prices’ and ‘immense diversity, with over 150 different names for the textiles … covering muslins, calicoes and silk, along with mixed cotton and silk goods’. Bengal’s share of total EIC imports (into Europe) climbed to 66% by 1738–40 from just 12% in 1668–70. Few prominent Bengal-based traders-financiers like Jagat Seth, Amir Chand, and Nabakrishna Deb came close to EIC officials owing to business relationship. These Indian merchants-bankers teamed up with the commanders of Bengal Nawab’s Army and conspired with Robert Clive and few other English EIC officials against the Bengal Nawab to remove him and place the-then Army Chief Mir Jafar as Nawab. The ulterior motive was to remove the anti-British Nawab and make way for the English EIC, which in the long run, would ensure special privilege awarded to those Indian merchants for business and trading.

Coup at Plassey in 1757 was followed by looting of the-then Bengal’s treasury at Murshidabad by English EIC – according to heresay the EIC shifted the treasury’s gold, silver, and jewels to their base at Calcutta by a fleet of over 100 boats. If the reality was even a small fraction, the Battle of Plassey not only paved the way for creation of British Empire in India, but it also resulted in a windfall one-time revenue equivalent to hundreds of millions of pound in those days – apparently, most of it was personally distributed among Robert Clive, few senior EIC officials, and few Bengal conspirator financer-merchants. After winning Battle of Buxar in 1764, English EIC got the Mughal emperor’s authorisation as “diwan” of government tax collection in Bengal province (the-then Bengal-Bihar-Orissa) August 1765 onwards. Robert Clive calculated that, from this acquisition there would be a profit to EIC to the tune of Rs12 million or £1.65 million. In 21st century terms, this amounted to an annual surplus of over £150 million, with a profit margin of 49%. It was a phenomenal ‘acquisition’ that propelled the shareholders and company executives on a completely new path to prosperity English EIC’s share price went for a boom when the news reached London’s financial markets in April 1766. In reality EIC would collect total over £10 million during the next 4 – 5 years, generating a surplus of £4 million, much less than initially expected – however that was still far lucrative ‘business’ at a time when the company’s total exports from Asia before the diwani amounted to around £1 million each year. The company directors instructed its officials in Bengal to split the surplus from tax collection between purchase of Bengal textiles, sending the remainder to Canton to buy tea, for shipment back to Europe and North America.

3.1.2 In January 1769, EIC bought British Parliament’s support for the acquisition of Bengal (presidency) with a commitment of annual payment to Parliament of an amount £400,000. In exchange, the Parliament would not attempt to interfere much in the English EIC’s business or other activities. World’s first corporate-state was born. The company used its dominance to monopolise the internal and foreign trade of Bengal-Bihar-Orissa in the decade that followed – very soon, they pushed out the Indian and other European merchants in the process. The EIC officials were extracting ever greater sums from the Bengal populace to maximise revenue for:

  • More and more dividend for British shareholders
  • Extra pay-out to British Parliament
  • Rampant corruption by EIC Officials who sought to line their pockets, make a fortune, take retirement

EIC officials forced the cloth manufacturers to work for them at an under price, at the same time those officials prohibited all Indian or European merchants from dealing with weavers – according to William Bolts, “the methods of oppressing the poor weavers were … fines, imprisonments, floggings, forcing bonds on them”. Consequently, widespread poverty and indebtedness followed. But profit margins for EIC’s cloth import into Europe from Bengal (and India) touched new high as the cloth cost was pushed down through oppression.

The greed, corruption, negligence, and apathy of EIC officials in the agriculture and textile sectors and lack of monsoon rains resulted in massive Bengal famine of 1770, during which millions of impoverished people in Bengal died from hunger, and disease. It was followed by floods. As Horace Walpole said at the time, “we have murdered, deposed, plundered, usurped – nay, what think you of the famine in Bengal, in which three millions perished, being caused by a monopoly of provisions by servants of the East Indies (EIC – author)”.

Between 1757 and 1780 goods worth estimated £38 million were transferred back to Britain by EIC on an unrequited basis – in 21st century terms, this amounted to over £3.5 billion. Apart from that, during the same period remittances to Britain by company executives averaged £0.5 million every year. Noted Indian scholar R C Dutt wrote, “A change came over India under the rule of the East India Company, who considered India as a vast estate or plantation, the profits of which were to be withdrawn from India and deposited in Europe”.

3.1.3 Due to humongous corruption and inefficiency, EIC faced significant financial strain in the early 1770s – in 1772 the company had to request British Parliament for a bailout of an £1 million to avoid bankruptcy. Parliament’s bailout came along with regulatory actions:

  • As per Regulating Act of 1773 during the premiership of Lord North, even though the ultimate sovereignty over the Indian subcontinent stayed with the British Crown, EIC would act as a sovereign power on behalf of the British Crown. It could do this while concurrently being subject to oversight and regulation by the British government and parliament., Warren Hastings was appointed as the first Governor-General of Bengal Presidency to govern the British dominion in India (supervising both Madras Presidency and Bombay Presidency)
  • The India Act of 1784, or Pitt Act, attempted to redress the shortcomings of the 1773 Act. A dual administration was created whereby the EIC would be controlled jointly by the company shareholders and the British Parliament. Board of Control was created to oversee the company affairs which rendered the Board of Directors (Proprietors) less influential. The India Act of 1784 signified the legal transformation of EIC and asserted Parliamentary oversight over EIC

These regulating measures limited EIC’s autonomy (and operational areas were restrained). Also, extending Parliament’s control over appointment of Governor-General (of EIC) business considerations such as profit and dividend could become secondary while state administration could appear as primary objective. These acts by British Parliament, thus legalised the transformation of the EIC from a corporation into a corporate-state. Establishment of similar corporate-state by Dutch East Indies Company in Java (in Indonesia) followed close on the heels of EIC’s ‘achievement’ in Bengal.

Many historians, economists, businessmen consider East India Company as a transition from medieval forms of business entity like the guild and the regulated company, and the modern joint-stock company. However, they forget that, apart from carrying out trading business, EIC also maintained a standing army, vast territory, bureaucracy, a system of taxation, a judiciary with legal code; EIC combined the rights of private persons (like entering into contract, to sue, be sued) along with features of public sovereignty (like prerogative to wage war, sign treaty, govern over people, print/coin money). Niels Steensgaard pertinently pointed out, “The (early modern chartered – author) companies were created in a unique encounter between political power and market oriented entrepreneurship; they were the result of dynamic improvisations and experiments”Considering Lenin’s view on imperialism as the highest stage of capitalism, it was no wonder that arrival of EIC as world’s first corporate-state on the world-stage was the final outcome of mercantile capitalist policy and monopolism promoted by the colonialist state of Britain.

3.1.4 The reforms of the 1770s, and 1780s had penetrated the Company’s autonomy as a business. ‘Industrial Revolution’ started impacting the industrial landscape of Britain – in 1781, mass production of British ‘muslins’ and ‘calicoes’ commenced. By 1793, a Lancashire mill operator had become about 400 times more productive than the average Indian weaver. Mill-made cottons took increasing slices of the EIC’s market share of textiles in both Britain and its key re-export markets in Africa, and America. 1790 onwards, EIC explored alternate business by promoting exports of raw materials (from Indian subcontinent) on a larger scale including sugar, silk, saltpetre, indigo.

Due to sustained campaign by merchants and bankers in Britain, in 1813 EIC lost monopoly of trade with India. Its commercial monopoly was removed for all except the China trade that was extended for another 20 years. 20% increase in import duties on Indian goods was added in 1813 to ensure that competition from Indian subcontinent couldn’t challenge the British mill owners. As a result, after 1813 textile imports from Bengal presidency and Indian subcontinent fell by three-quarters while exports to India of British textile rose more than fifty-fold. British textiles soon inundated the Indian markets – value of the textile imports grew from £5.2 million 1850 to £18.4 million in 1896. In 1818, EIC’s cloth ‘factory’ at Dhaka (now capital of Bangladesh) was wound up – by 1840, population of Dhaka had fallen from 150,000 to just 20,000. Not only the British rulers refused to give any tariff protection to Indian textile sector (until 1920) preferring imports from Britain, but in a grisly repeat of earlier cruelties, when machine-made yarns were first introduced into Dhaka in 1821, the ‘thumb and index finger of some of the renowned artisans began to be chopped off in order to disable them from twisting finer yarns’. The main aim of the British rulers was to transform Indian subcontinent into a consumer of British goods. Textile, metal, and glass industrial sectors in Indian subcontinent lost their traditional position as employer. In the beginning of 19th century, unable to compete with the British industry-made products, the Indian craft goods lost both their domestic as well as foreign market.

3.1.5 In the 19th century, the most lucrative trading for EIC was opium, which could generate up to 2000% profit from each chest of 63 kg opium sourced from Bengal presidency and Malwa region, and transported to Chinese empire through Canton port. As the textile export (mainly from Bengal) to Europe went down, opium export to China went up steadily – 2000 chests in 1800 CE, 12000 chests in 1824, 40000 chests in 1839, and 58000 chests in 1859 CE. Sticking to the original objective of ‘making profit’, EIC officials had no qualms about the ‘drug smuggling’ business. Tea, hides and skins, oil cake (used as animal feed and fertilizer) etc. became export goods 1860 onwards.

3.1.6 By 1832 CE, within Britain there were hue and cry from two sections of elite society:

(a) Merchants and businessmen wanted the trading charter from EIC to be completely revoked

(b) Few politicians, economists and social activists wanted to close down EIC for its blatant mismanagement of internal affairs in Indian subcontinent.

In 1833 CE, British Parliament put an end to EIC’s trading operations in India; EIC however, remained as territorial administrator in India; land revenue, opium, and textile imports into subcontinent became most important sources of revenue. The Governor-General of Bengal presidency was redesignated as the Governor-General of India.

3.2  Setting Up of ‘British India’ Empire by English EIC

Apart from the conflicts the English EIC had with the different political entities of Indian subcontinent, they also fought 3 wars with French East India Company primarily in Carnatic region (the coastal Tamil Nadu and coastal Andhra) which was itself a dependency of Hyderabad Nizam – popularly known as ‘Carnatic War’. Between 1746 (initiation of the First Carnatic War) and 1818 (conclusion of the Third Anglo-Maratha War) English EIC spread their empire across Indian subcontinent.

3.2.1 First Carnatic War (1746–1748), Second Carnatic War (1749–1754), Third Carnatic War (1756–1763) were essentially a series of diplomatic and military struggle between the French EIC and the English EIC for dominance among the European trading companies within Indian subcontinent. The French company was defeated and was confined primarily to Pondicherry, and the British Company eventually established British empire in India generally called as ‘British Raj’. Even before English EIC bagged their first imperial dominion in 1765 as Bengal-Bihar-Orissa, they had 5 trading outposts across India and in order to fight with the French EIC for supremacy in Indian subcontinent they maintained a standing army of 18,200 spread over Calcutta, Madras, Bombay trading outposts. Between 1763 and 1805, EIC’s army had grown almost nine-fold from 18,000 to 154,500, far beyond what was required for self-defence – the continuous build-up of military strength fuelled a powerful dynamic in favour of further aggression. By 1857, EIC commanded an army of 350,538 out of which only 39,500 troops were British. It was briefly described in Section 2 how English EIC colluded, collaborated and controlled most powerful statelets of the-then Indian subcontinent (Maratha Peshwa and warlords, Mysore Sultan, Hyderabad Nizam, Carnatic Nawab, Awadh Nawab, Sikh emperor).

3.2.2 Richard Wellesley’s tenure as governor-general was the most important in EIC’s history of territorial expansion. He expanded beyond Bengal presidency subjugating Mysore, Marathas, Hyderabad, and Awadh. He was a shrewd practitioner of ‘Subsidiary Alliance System’ – it was an alliance system which left the Indian ‘princely state’ a measure of internal autonomy in matters relating to administration, taxation and finance, but were obliged to maintain minimum defence and no foreign affairs. A resident appointed by EIC coordinated affairs between the Indian statelet and EIC. Through such protectorate alliance, more than 550 statelets (about 200 statelets had sizeable land area and population while more than 200 statelets were as small as couple of villages with an area of less than 10 sq. mile) were absorbed in British empire by mid-19th centuryIn 1947 when British rule in Indian subcontinent ended, princely states covered about 40% of the area of pre-independence Indian subcontinent and constituted about one-fourth of its population.

Five most significant princely states with an individual British resident/envoy permanently stationed, were:

  • Mysore state (29,326 sq. mile)
  • Nizam’s Hyderabad state (82,698 sq. mile)
  • Dogra’s Jammu & Kashmir state (84,516 sq. mile)
  • Gaikwad’s Baroda state (8,164 sq. mile)
  • Scindhia’s Gwalior state (26,367 sq. mile)

Almost all of the remaining princely states – large and small – were incorporated within special entities called ‘agency’ where British political agents/officers coordinated the affairs of those states:

  • Baluchistan Agency (significant states – Makran 21,000 sq. mile)
  • Northwest Frontier States Agency (significant states – Swat 3,190 sq. mile)
  • Punjab States Agency (significant states – Bahawalpur 17,726 sq. mile, Mandi 1,140 sq. mile)
  • Rajputana Agency (significant states – Bharatpur 1,978 sq. mile, Bikaner 23,317 sq. mile, Jaipur 15,579 sq. mile, Marwar/Jodhpur 35,016 sq. mile, Mewar/Udaipur 12,694 sq. mile)
  • Central India Agency (significant states – Bhopal 6,902 sq. mile, Indore 9,518 sq. mile, Rewa 13,000 sq. mile, Dhar 1,784 sq. mile, Panna 2,596 sq. mile)
  • Western India States Agency (significant states – Bhavnagar 2,961 sq. mile, Junagadh 3,284 sq. mile, Kutch 8,250 sq. mile)
  • Deccan States Agency (significant states – Kolhapur 3,217 sq. mile)
  • Madras States Agency (significant states – Travancore 7,625 sq. mile, Cochin 1,480 sq. mile)
  • Eastern States Agency (significant states – Keonjhar 3,096 sq. mile, Kalahandi 3,700 sq. mile, Bastar 13,062 sq. mile, Surguja 6,090  sq. mile, Tripura 4,116  sq. mile)

Three princely states however remained out of such ‘agency’ but were British protectorate:

  • Kalat (73,278 sq. mile in Baluchistan region)
  • Manipur (8,456 sq. mile in Bengal-Assam region)
  • Sikkim (2,818 sq. mile in Bengal-Assam region)

The territorial expansion of English EIC from 1757 to 1857 happened through outright annexation in:

a) Calcutta – 24 Parganas – Bengal (part of present east India & Bangladesh) – Bihar – Orissa combined as Bengal Presidency;

b) Madras – Carnatic region (coastal Andhra & coastal Tamil Nadu) – rest of Andhra – Tanjore region – Mysore regions (part of Karnatake & part of Tamil Nadu) combined as Madras Presidency;

c) Bombay – Surat – Maratha Gaikwad territory (part of Gujarat) – Maratha Peshwa territory (part of Maharashtra and part of Karnataka) – Thar region – Sindh region (present Pakistan) combined as Bombay Presidency;

d) Benaras – Awadh territory (east and central Uttar Pradesh) – Maratha Scindia territory (west Uttar Pradesh) – Dehradun region – Jhansi territory combined as United Provinces (North-Western Provinces plus Awadh);

e) Maratha Bhonsle territory (Madhya Pradesh and part of Maharashtra) – Sambalpur region combined as Central Provinces ;

f) Assam – Kachhar region (part of present India) – Sylhet region (present Bangladesh) – Hills of Khasi-Jaintya-Naga combined as Assam province

g) Delhi – Sikh territory (Punjab in present India and Pakistan, Peshawar region in present Pakistan) – Kangra region – Shimla region combined as Punjab province

Supportive Map

3.2.3 In 1829 the British ruled territories were reorganised through establishing districts which were small enough to be controlled by an administrative Head (acting as revenue collector, police officer, and judge). The high-ranking civil service officers were mostly British until the 1920s when Indian Civil Service examinations began to be simultaneously held in UK and Indian subcontinent. Apart from district/provincial administration, education, healthcare, public works, postal, and railway services employed a large number of British citizens.

3.2.4 Indian social reformers and modernisers like Ram Mohan Roy and Ishwar Chandra Vidyasagar were leading social movements for modernisation of social life in Bengal presidency and Indian subcontinent. They instigated the EIC officials to initiate some far-reaching programmes to introduce modern education system which emphasized English language compared to vernacular languages and European justice system that blended customary Indian law (on the basis of religious community) with European concepts. But these changes didn’t bring major transformation in village society which was based on caste and religious identity, the position of downtrodden and untouchables, neither agricultural system changed.

The British officials demonstrated much less religious or cultural fanaticism in introducing Christianity and European culture into Indian subcontinent compared to what Spanish and Portuguese colonialists did in South America. Macaulay devised the education policy and its objective as: “It is impossible for us, with our limited means to attempt to educate the body of the people. We must at present do our best to form a class who may be interpreters between us and the millions whom we govern; a class of persons, Indian in blood and colour, but English in taste, in opinions, in morals, and in intellect. To that class we may leave it to refine the vernacular dialects of the country, to enrich those dialects with terms of science borrowed from the Western nomenclature, and to render them by degrees fit vehicles for conveying knowledge to the great mass of the population” Thus, the ‘westernisation’ introduced by EIC in Indian subcontinent primarily served their main purposes of

a) creating a class of local professionals who would assist EIC in managing their business (administration of the vast empire itself was part of the business operation) for commercial profit and wealth accumulation in lieu of fat salary that placed them in a separate class

b) switching the loyalty of existing aristocracy (landlords-bankers-merchants-logistics owners etc.) from Mughal governors and Maratha warlords to British Crown by offering them a slice of land revenue as well as business opportunity

A new category of elites were formed who would embrace Western life-style and English medium education. The lifestyle and habits of EIC officials were copied by the new local professional elites (doctors, lawyers, business managers, higher education teachers, and businessmen). This new group of professionals, however, would still bear their caste identity sneakily – most of the new elites would come from Hindu upper castes: Brahman-Vaishya-Kshatriya.

3.2.5 In 1837 postal services was established in the British territory in Indian subcontinent. Network of post offices were established in the principal towns across the provinces. District collectors (of land-tax) coordinated the district post offices. By February 1855 telegraph lines (for paid messages) joined main cities of British India territory – Calcutta, Agra, Bombay, Peshawar, Madras – extending over 3,050 miles and touching 41offices. By 1857, the telegraph network expanded to 4,555 miles of lines and 62 offices.

Contracts were awarded in 1849 to three joint-stock companies to construct a 120-mile railway in Bengal presidency, a 30-mile railway in Bombay presidency, and 39 mile railway in Madras presidency. In 1854, the-then Governor-General Lord Dalhousie prepared a plan to construct a network of railway lines connecting significant regions of India. ‘By the turn of the 20th century, India (Indian subcontinent – author) would have over 28,000 miles of railways connecting most interior regions to the ports of Karachi, Bombay, Madras, Calcutta, Chittagong, and Rangoon, and together they would constitute the fourth-largest railway network in the world.’ (Quoted from Wikipedia).

Such infrastructure programme opened avenue for British bankers and investors to invest surplus money in the construction of railways (with a guaranteed minimum profit of 5% by the government). Railways made trading in commodities much easier by providing faster and safer mode of goods transport between ports and internal markets, and also capital inputs like rail-lines, engines, coaches, wagons etc. would create demand for rolling stock industry. Thus it benefited the British businessmen and capitalists tremendously.

Rural infrastructure was not a priority for British rulers – out of about 565,000 villages less than 10,000 were electrified. While network of railways and highways connected the big and medium sized urban centres, most of the villages remained completely isolated.

3.2.6 In 1857, a partially organised rebellion broke out against the British rule, significant participants of which were native soldiers of EIC Army posted in Bengal Presidency and United Provinces, and the common people in United Provinces and Central Provinces. Third most important participants were few of the erstwhile princely states of northern and central regions like Awadh and Jhansi, that were annexed by EIC (ostensibly because rulers had left no heirs for the throne). Not only most of the princely states under ‘Subsidiary Alliance System’ remained in favour of EIC during the battles, but bulk of the native soldiers of EIC Army posted in Bombay Presidency, Madras Presidency, Punjab province also remained aloof from the rebellion. The overwhelming superiority of military machinery-logistics-communication, loyal native troops, and coordinated military strategy of EIC Army against the spontaneous and localised Indian rebellion proved decisive for defeat of the first nationalist struggle by Indians.

3.2.7 In 1858, British Parliament replaced EIC with direct British rule in India. The British crown forged an alliance with the remaining native princes and stopped taking over new territory. As described in previous section 3.1, the corporate state of EIC became a principle pillar of the British economy. From the beginning of 19th century, EIC became a resource base for Britain providing troops and supplies to the state. Also, EIC acted as the agent of British empire throughout west, south and east Asia.

The Company’s demise in 1874 ended the era of the chartered corporation. EIC already played its role as the leading torch-bearer of British colonialism-capitalism-imperialism.

3.3  Agriculture and Land Revenue in British Era

3.3.1 There were three systems of revenue collection in the Indian subcontinent that was directly under EIC rule:

a) In place of complex systems of Mughal (and Maratha) era ownership with intersecting rights and responsibilities of peasant, zamindar/taluqdar/jagirdar, and officials, the Governor-General Cornwallis introduced the English model of land-lordship termed as ‘Permanent Settlement’ in Bengal presidency in March 1793 that targeted fixed revenue £3 million (at 1789 prices) in perpetuity. The new zamindars (often upper caste Hindu employees of EIC, many of whom didn’t have rural background) were given exclusive rights over their lands – ’20 million small landholders were dispossessed of their rights, and handed over, bound hand and foot to the tender mercies of a set of exacting rack-renters’. Forced labour of the peasants by the zamindars became widespread to meet the Company revenue demands. The zamindars were often unable to meet the increased demands that EIC had placed on them – within 3 decades, almost one-third of Bengal-Bihar-Orissa was put up for sale in search of ‘new’ zamindar.

b) Thomas Munro, who was appointed Governor of Madras presidency in May 1820 introduced ‘Ryotwari Settlement’, which was extended to the Bombay presidency also. Political economist John Stuart Mill who was working for EIC in 1857 wrote in a report, “Under the Ryotwari System every registered holder of land is recognised as its proprietor, and pays direct to Government. He is at liberty to sublet his property, or to transfer it by gift, sale, or mortgage. He cannot be ejected by Government so long as he pays the fixed assessment, and has the option annually of increasing or diminishing his holding, or of entirely abandoning it. In unfavourable seasons remissions of assessment are granted for entire or partial loss of produce. The assessment is fixed in money, and does not vary from year to year“. The levy was not based on actual revenues from the produce of the land, but instead on estimate of the production potential of the soil. Traditionally dominant castes mostly acquired land titles, while lower-caste cultivators became their tenants.

c) The ‘Mahalwari Settlement’ system was introduced by Holt Mackenzie and Robert Martins Bird in the states of Punjab, United Provinces, Central Provinces in 1822, and modified in 1833. The settlement was directly made with the village/estate/Mahal by the instruction of the settlement officers (patwari/qanungo), who would fix the annual rent after consulting the ‘lambardar’ (the chief or head of the household or family, usually the eldest male) and the rent payment would be shared by the cultivating peasants. Here, the settlements had neither been with hereditary ‘revenue farmer’ like the zamindars in Bengal presidency nor with the plot-owners like humble cultivators in Madras presidency.

In all areas other than the Bengal Presidency, land settlement work involved a continually repetitive process of surveying and measuring plots, assessing their quality, and recording landed rights, and constituted a large proportion of the work of Indian Civil Service officers working for the government. According to a survey initiated by British government in 1927-28, the distribution of land revenue settlement method was:

  • Rayatwari settlement system – 51%
  • Mahalwari settlement system – 30%
  • Permanent settlement (zamindari) system – 19%

None of the settlement system ever achieved targeted revenue. Often there were several layers of tenancy between the actual cultivator and the ‘land-lord’. The tenant cultivators as well small plot-owners were grinded into distress and poverty by extremely corrupt local and EIC officials as well as excessive state demands. The landless agricultural labourers grew in size to about 15% of rural population at the end of 18th century. British control of India started with a famine in Bengal in 1770 and ended in a famine in 1943 again in Bengal. Working in the midst of the 1877 famine, Cornelius Walford estimated that in the previous 120 years of British rule there had been 34 famines in Indian subcontinent – there could be no better yardstick to measure the adversity brought by the British rule.

After British Crown took over the administration from EIC in 1858, land tax burden was reduced progressively. By the end of the colonial period, in Indian subcontinent the land tax was only 1 per cent of national income – however, most of the benefits of the lower tax burden were appropriated by the landlords and .

3.3.2 Because of the emergence of ‘clear titles’ for cultivation lands, it was now possible to mortgage land. As moneylenders’ importance grew with time, a considerable amount of land changed hands through foreclosures. While the Economists point out that, moneylenders helped to root out imprudent and inefficient landowners, it was equally true that, almost nothing was done by the colonial government to promote agricultural technology, like use of fertilizers. The government however made some arrangements for irrigation.

Increase in population was not matched by increase in cultivated area. United Province was one of the examples. By 1880 the cultivated area of the United Province was calculated at 34 million acres (including double-cropping in about 2.5 million acres). By 1947 with the land carrying a population of 63 million instead of 45 million, the cultivated area had increased only to under 37 million acres (of which over 9 million acres were double-cropped). Scarcity of food almost became a ‘normal’ in British India.

3.4 Industry, Commerce & Economy in British Era

3.4.1 Edmund Burke coined phrase ‘the great drain of India’ which he calculated in 1783 as annual £1.2 million between 1757 and 1780. In India, the drain depressed consumption and savings, while ‘enabling Britain to live beyond its means, to consume, trade and invest at a greater rate than its own internal economy would allow’.

During the rule of EIC, official transfers of funds to Britain rose gradually until they reached about £3.5 million in 1856. During the period of direct British rule after 1858, official transfers were called the ‘Home Charges’ – by the 1930s home charges were in the range of £40 to £50 million each year.

There were substantial private remittances by British officials working in Indian subcontinent – during inter-war period these amounted to about £10 million each year. Apart from those, there were dividend and interest remittances by shipping and banking companies, traders and other investors – most of these commercial transactions were resultant of privileged position of British business in Indian subcontinent.

British India contributed over one million troops for WW I cost of which were financed from Indian budget.

The comparison of real GDP per capita of Britain and Indian subcontinent would be an eye-opener. While GDP per capita of Britain was a direct beneficiary of the imperial colonies and industrial revolution, Indians languished. As per the Maddison Project Database, version 2018, (by Bolt, Jutta, Robert Inklaar, Herman de Jong and Jan Luiten van Zanden), the estimated GDP figures are:

YearReal GDP per capita (in 2011 US $
BritainIndian subcontinent
170015911200
17411712
17812046
18212182968
18613314925
190155721152
1941101161532

3.4.2 Mughal empire (and Maratha domination) not only had a larger industrial output than any other country which became a European colony, but Indian subcontinent was also an industrial exporter in pre-colonial times. The early modern industrial landscape of Indian subcontinent was completely destroyed in course of British rule.

Noted Historian R.C. Dutt argued, “East India Company and the British Parliament, following the selfish commercial policy of a hundred years ago, discouraged Indian manufacturers in the early years of British rule in order to encourage the rising manufactures of England. Their fixed policy, pursued during the last decades of the eighteenth century and the first decades of the nineteenth, was to make India subservient to the industries of Great Britain, and to make the Indian people grow raw produce only, in order to supply material for the looms and manufactories of Great Britain.”

The main powerhouse of Indian industry was textile. During the period 1896-1913, massive import of cheap textile goods supplied about 60% of cloth consumption in Indian subcontinent, and the proportion was still higher during most of the 19th century. While British goods imported into Indian subcontinent as duty free, excise duty on Indian manufactured products prevented them gaining a market share in Britain. Thus textile sector was pushed to death.

The crafts manufacturing sector had another story to tell. Since the British rule dawned over the subcontinent, consumption of British and European luxury goods became a symbol of social status for the native aristocracy and newly created professionals. Angus Maddison wrote about the demise of crafts industry, “about three-quarters of the domestic demand for luxury handicrafts was destroyed. This was a shattering blow to manufacturers of fine muslins, jewellery, luxury clothing and footwear, decorative swords and weapons.”

3.4.3 Reindustrialisation started with installation of first textile mills in Bombay were in 1851 by Indian capitalists (preceding Japan by 20 years and China by 40 years). In 1896 Indian mills supplied 8% of domestic cloth consumption which gradually increased to 76% in 1945.

First jute mill was built in 1854 in the vicinity of Calcutta by Europeans. Between 1879 and 1913 jute spindles multiplied tenfold. Faster expansion of jute industry was possible because most of jute products was for export. In 1911 first Indian steel mill was built in the-then Bihar (succeeding Japan by 13 years and China by 15 years). Coal mining started in Bengal, output of which reached 15.7 million tons by 1914.

Around 1945-46, large-scale manufacturing industry in Indian subcontinent employed less than 3 million people as compared with 12 million in small-scale industry and handicrafts, while total labour force was around 160 million. British policy permitted the emergence of a small but wealthy class of Indian entrepreneurs based in Calcutta, Bombay and Ahmedabad. At independence, exports were less than 5% of national income, probably worst among all Asian countries.

3.4.4 After EIC’s trade monopoly privileges were withdrawn in 1833, the former British employees of EIC set up ‘managing agencies’ to operate most of the industrial enterprises and international trade in Indian subcontinent. Those agencies were closely linked with British and European finance and shipping lines. The agencies got commissions from the enterprise-owners/investors based on sales and/or profits.

3.5 Demography & Occupation in British Era

In 1881, British government conducted first synchronous decennial census. Due to ongoing WW II accuracy of the 1941 census is debated. The 1931 census is considered last accurate British-administered census in Indian subcontinent (including Burma/Myanmar but excluding Portuguese Goa and French Pondicherry).

3.5.1 The population as per 1931 census reached 352,837,778 from 253,896,330 according to census in 1881. The total literate population of Indian subcontinent in 1931 was 28,131,315 (i.e. 8%) – with 12% literacy, the figure improved a bit by 1947. The urban population in 1931 was around 38,985,427 i.e. 11%.

Number of working people (including working dependent) in Indian subcontinent as per 1931 census was 153,916,050 (male 105,086,333 and female 48,829,717) – that signify less than 44% of total population was employed. While most of the males aged under 10 and over 60 form the bulk of non-working dependants, most of the males belonging to the age group 20 – 60 were working people. As per 1931 census, out of every 10,000 persons of Indian subcontinent (including Myanmar but excluding Portuguese Goa and French Pondicherry):

  • Non-working dependants – 5609
  • Working people (including working dependent) – 4391…. Out of which, significant occupations:
    • Cultivation of general crops – 2766
    • Cultivation of special crops – 47
    • Stock-raising – 100
    • Fishing & Hunting – 24
    • Exploitation of minerals – 10
    • Textile Industry – 117
    • Industries of dress and ‘the toilet’ (toiletries?) – 96
    • Food Industries – 42
    • All other Industries (including construction) – 183
    • Transport – 67
    • Trade in foodstuff materials – 110
    • All other Trades – 116
    • Military force & Police – 24
    • Public Administration – 28
    • Professions & Liberal Arts – 66
    • Domestic service – 311
    • Insufficiently described occupation
    • (Services in unorganised sectors) – 222
    • Unproductive (like jail inmate, beggar etc.) – 46

Hence, 64% of working people were engaged in cultivation, and 12% of working people were engaged in unorganised sectors like domestic services and service to miscellaneous establishments. The 1931 census laid bare the reality of relationship among agriculture-industry-occupation in British India better than any scholarly article and book – Indian subcontinent and Burma in the early 20th century were backward pre-modern economies.

A break-up of ‘Cultivation of general crops’ occupation is a pointer on how the agriculture sector accommodated employment among such huge work force in rural Indian subcontinent:

  • Non-cultivating proprietors taking rent – 3.36%
  • Cultivating owners – 27.85%
  • Tenant cultivators – 35.24%
  • Agricultural (landless) labourers – 32.46%
  • Cultivators of jhum, and shifting areas – 0.85%

The big landlords/zamindars were largely parasitic and would spend their time and money for extravaganza. The smaller landowner’s ambition was to stop working and enhance social status based on return from agricultural labourers toil. At the bottom of social structure in villages, condition of tenant cultivators and landless labourers (mostly lower caste Hindu, except in Bengal where majority were Muslim and Punjab-Sind where majority were Muslim and Sikh) remained wretched. Extreme level of poverty was quite common for those tenant cultivators and agricultural labours i.e. about 68% of all families who were involved in cultivation.

In urban areas, occupation in industry, transport, trade, public administration etc., though limited, helped creating new westernized ‘middle class’ Indians (educated in western education institutions). Here also, the upper caste Hindus seized the opportunity though the Parsis and Sikhs also did well.

3.5.2 The census since 1881 opened another Pandora’s Box. The fault lines between aristocratic upper caste wealthy Hindu families and aristocratic Turkic-Afghani wealthy Muslim families (which existed since 1192 CE when Turkic-Afghani rulers established empire in north-west, north, and east regions of Indian subcontinent by defeating local Hindu rulers of dozens of kingdoms) developed into deep chasm. For large section of aristocratic Hindu elites, their ancestral land was steadily being ‘usurped’ by Muslim foreigners, which was ‘substantiated’ by census data:

  • In 1931, Hindu population was 239,195,000 (proportion of population in 1931 became 68.24% from 74.32% in 1881)
  • In 1931, Muslim population was 77,678,000 (proportion of population in 1931 became 22.16% from 19.74% in 1881)

The reality was/is that, the majority of Muslims in Indian subcontinent were not foreigners, they were/are local converts (with much higher birth rate in the community).

3.6  Political Movement for Independence from British Rule

Three acts passed by British Parliament paved way for Indian natives to take part in the process of governance at province and central level: Indian Councils Act 1909 (known as Morley-Minto Reforms), Government of India Act 1919 (called as Montagu-Chelmsford Reforms), and Government of India Act 1935.

The last one authorised establishment of the ‘Federal Legislature’ at the centre and the ‘Provincial Legislature’ at the provinces. Legislative assemblies in all provinces of British India had seat distribution based on religion-race-caste-occupation of the electorate – a voter could cast a vote only for candidates in his/her own category.

Central parliament combining British India and princely states was blocked by the rulers of the princely states

3.6.1 Starting from 1870s, political movements started taking shape in Indian subcontinent. Contrary to popular belief of M K Gandhi and his team vs. British rule that was promoted by Anglo historians as well as a large section of Indian historians, there were wide range of socio-political movements based on different beliefs and ideologies. Significant ones were:

Indian National Congress – moderate (wing) members were primarily the founders of founder of the party that believed in gradual reformation of British rule in Indian subcontinent without pushing for political independence; most of the leaders were from upper caste Hindu and some members from Muslim and Parsi communities, with background of western education and professionals by occupation; they were non-communal in outlook and believed in European style of secular society

  • Indian National Congress – ultra-nationalist (wing) members were relatively younger generation leaders who believed in continuous agitation for self-rule replacing British rule in Indian subcontinent; most of the leaders were from upper caste Hindu, with background of western education and professionals by occupation; they believed Hindu society should be the future in Indian subcontinent
  • Indian National Congress – democratic unionist (wing) members finally wrested control of the party under leadership of M K Gandhi who believed in opportunity-based mass movements for self-rule replacing British rule in Indian subcontinent; most of the leaders were from upper caste Hindu, and some members from Muslim community, with western education and by occupation professionals, businessmen and landlords; mostly they believed each community in subcontinent should be free to live in their own way within European model of governance; a small but vocal group led by Jawaharlal Nehru and Subhas Chandra Bose was influenced by Socialist thoughts
  • All India Muslim League – unionist (wing) members were relatively conservative elites who believed in collaboration with British rule in Indian subcontinent; they believed Muslim society should coexist along with Hindu society in future subcontinent with Muslim-dominated provinces separated from Hindu-dominated ones
  • All India Muslim League – separatist (wing) members were mostly from aristocratic society and were more vocal about the necessity of separate country for Muslim and Hindu population as they believed Muslim religion is a way of life completely incompatible with Hindu way of life and society; they believed in collaboration with British rule in Indian subcontinent
  • Hindu Mahasabha members were almost Hindu version of Muslim League – separatist (wing) who wished either separate country for Hindu and Muslim population due to completely different philosophy of life and society, or single country with Hindu majority in governance and no special treatment like ‘community-wise reservation’ for Muslims; they also believed in collaboration with British rule in Indian subcontinent
  • Communist Party of India members were mostly from upper caste Hindu, and some members from Muslim community, with background of western education; they believed each community in Indian subcontinent should be free to live in their own way within a communist society in Indian subcontinent; Communists’ emphasis on economic status that completely ignored or bypassed the religious perspective and caste system, made limited appeal in Indian subcontinent
  • Armed revolution was another type of movement to which educated middle class youths were drawn into; primarily a phenomenon in Bengal presidency, Punjab province, and Bombay presidency the revolutionaries depended on terrorist attacks on British officials; couple of large-scale uprising across Indian subcontinent was thwarted by British government
  • Backward caste movement was primarily led by Dr. B R Ambedkar to emphasize social equality of the lower caste Hindu population; they became ally of Indian National Congress – democratic unionist after agreement on reservation for depressed/backward castes in legislature assembly (proposed under Government of India Act 1935); primarily it was restricted in Bombay presidency, Central province, and Madras presidency among the educated lower caste Hindu

3.6.2 The largest among the political streams, Indian National Congress (INC) was not organized as a Hindu party, but due to the large difference in level of western education between Muslims and Hindus, elite Hindus made up the majority of the INC leadership since its inception. INC demands for competitive examinations for entry in the civil service and academic institution riled the Muslim elites/leaders, as they felt that would favour the Hindus since Muslims were lagging behind in western education. Also, Hindu leaders of the INC would not give sincere assurance to Muslim leaders about community-wise representation in future governance system. In the absence of mutual trust between educated elites of two communities, elite Muslim leaders from United Province and Bengal floated All India Muslim League (AIML) to represent interests of the Muslim community.

3.6.3 The political atmosphere between 1935 and 1947 was a triumph of personalities and their political ambitions over ideology – it was the most tragic period in the history of Indian subcontinent. Mohammad Ali Jinnah, one of the most secular AIML politician who always sought communal harmony, became ardent supporter of two-nation theory (separate independent countries for Muslim and Hindu communities) because partition would guarantee fulfilment of his political ambitions. Jawaharlal Nehru, a socialist and an impeccable believer in Hindu-Muslim unity, became supporter of partition because that would create the opportunity for him to preside over the Hindu part without political competition from Jinnah. Subhas Chandra Bose, a socialist who first initiated deliberations on Indian economy considering Soviet model of economic planning, with his ambition to preside over an undivided subcontinent, went out of India, and opened a battle front with the help from Japanese fascists in the north-east of Indian subcontinent to fight the British power during WW II.

While Nehru and Jinnah along with their close circle of elites and aristocrats of Hindu and Muslim communities lorded over the newly independent entities of India and Pakistan, the common people of the subcontinent bore the brunt of the unplanned and illogical partition happily assisted by the British power (who worked overtime to create a permanently feuding subcontinent). M K Gandhi failed to rise to the occasion and was relegated to the side-lines, he would be assassinated in India after independence by a terrorist who was a Hindutwa fundamentalist.

3.7  Significant observations on British Rule

3.7.1 Between 1755 and 1765, the giants of trade and finance of the-then Bengal conspired with the English EIC top officials to remove the-then ruler of Bengal-Bihar-Orissa (the region that earned maximum revenue in Mughal empire). It was modern world’s most spectacular corporate conspiracy. French historian Fernand Braudel concluded that the EIC’s rise to prominence only came about with the “help, collaboration, collusion, coexistence, symbiosis” of the local merchant elite.

Once the EIC corporate juggernaut was set rolling, it first crushed the Indian traders and financers to establish monopoly over export from and import into Indian subcontinent, then it transformed into corporate-state to plunder the subcontinent, finally it destroyed the local crafts and industry by duty-free imports into the subcontinent. The EIC’s demise in 1874 ended the era of the chartered corporation. The leviathan of mercantile capitalism was no longer suited to the new empire of colonies that Britain was establishing across the globe for sourcing of raw material and selling of finished goods produced in its factories as an outcome of industrial capitalism.

3.7.2 It won’t be truthful to put entire blame on the British rulers for the abysmal poverty of the common people. Two categories of elites were equally responsible for such poor state of affairs: (a) the rulers and bureaucrats of princely states ruling over 40% of subcontinent, who were, by and large oblivious to unemployment and poverty, (b) the local politicians and bureaucrats of British ruled 60% of subcontinent, who were more mindful to seek prestige and wealth than to influence the British decision-makers for benefit of common people.

Karl Marx summed up British rule as the tool of Britain’s elites-aristocrats-oligarchs, “the aristocracy wanted to conquer it, the moneyocracy to plunder it and the millocracy to undersell it”. Marx, however, didn’t notice that most of the elites and aristocrats of Indian subcontinent (Hindu-Muslim-Sikh-Jain alike) were complicit in the crime – only few patriotic aristocrats put up resistance to British rule.

3.7.3 The partition of Indian subcontinent was most irrational decision agreed by INC under pressure from AIML under continuous ‘guidance’ from British imperialists, fostering the following irregularities during the partition:

(a) AIML got 425 seats in the election to Provincial Legislative Assemblies in 1946 for which AIML chose its main election plank as separate country for Muslims; apart from the provinces in north-west and east regions which were to be affected by partition, AIML got substantial number of seats from other provinces: Madras presidency (29), Bombay presidency (30), United Province (54), Bihar (34), Central Province (13) – why neither British rulers nor INC-AIML parties arranged for mass migration of Muslim community to Pakistan as wished by those constituencies?

(b) For the princely states, there was no process of considering the choice of common people for inclusion in either of the newly independent political entities – the ruler of the princely state was authorised to sign documents of accession; Hyderabad Nizam ruling over 82,698 sq. mile land with majority of population as Hindu wanted to join Pakistan, but army of independent India forced him to join India, while Jammu & Kashmir king ruling over 84,516 sq. mile territory (though China never accepted boundary drawn by British officers) with predominantly Muslim population signed to join India, but militia of independent Pakistan occupied major portion of the princely state – why neither British rulers nor INC-AIML parties settled such well-known problem areas across the subcontinent and did an orderly transition?

4.  India From 1947 To 2014 – Socio-Political Landscape

Newly independent India faced enormous humanitarian crisis due to chaotic partition of the subcontinent that resulted in inter-religious violence as well as displacement of millions of people. Post-partitioned Indian part of the subcontinent witnessed two variants of political economy followed by the mainstream political parties – social democracy during the period August’1947 to May’1991, and neoliberal oligarchy from June’1991 onwards. A brief recapitulation of the social democratic era is noted below:

4.1  Politics during Social Democracy: 1947 to 1991

Immediately after the independence, between 1947 and 1949 India was bogged down with exchange of population with Pakistan on massive scale, integration of princely states, and war with Pakistan over Jammu & Kashmir. On 26 January 1950 India became a democratic republic with adoption of the Constitution of India (with strong provisions for Fundamental Rights of the citizens) which guaranteed a federal structure of governance in the country.

4.1.1 Most of the pundits on India miss the most important political reorganisation that happened in independent India since 1950. About 10 British era provinces and more than 500 princely statelets had been reorganised into Indian provinces (called as ‘state’) on the basis of language and cultural identity – the process continued till couple of years back resulting in 29 self-ruled states and 9 centre-ruled territories. By this process, the immense diversity of India has been acknowledged by the political leadership of the country.

Supportive Map :

https://en.wikipedia.org/wiki/Political_integration_of_India#/media/File:India_Administrative_Divisions_1951.svg

4.1.2 INC remained the most important mainstream party that professed socialism, but in reality the policies were that of a social democratic party. Soon after the independence, the existing support base in rural and urban areas expanded – however, party didn’t notice or simple didn’t care that, instead of more people from poor and backward families filling up the grass-root leadership, the wealthy and well-established families filled the leadership layers from grass-root up to province. Slowly but steadily INC became a training centre for grooming leaders – whenever any non-Marxist party would offer to disgruntled INC leaders a position in their political hierarchy that is more lucrative than existing position, the leaders from INC would join them. Hailing from mainly aristocrat/ elite families, they had no qualms for changing party as long as that improve their prestige and power.

Socialist Party and its offshoot, Praja Socialist Party were political outfits of non-Marxist socialist leaders of India who wanted to blend M K Gandhi’s thoughts and modern socialist thoughts on industrial civilization with Indian traditions. After two decades of existence the ideological influence waned at the central elections since the beginning of 1970s primarily because INC became rallying point for most of the socialist-minded workers (and a section of communists also). But various splinters groups of Socialist Party remained a force to reckon with in few of the Indian states particularly in state elections.

Communist Party of India was a well-known force in the-then Indian politics with its limited but committed mass base in rural areas and industrial belts – the turmoil in global communist movement resulting from the clash of CPSU and CPC took its toll in India (as it did in every country of Asia-Africa-South America continents). A splinter group of Indian communists came to power in couple of Indian states during this period – in fact the government formed by Communists in Kerala province was world’s first elected communist government.

Bharatiya Jan Sangh (latter became Bharatiya Janata Party) was established as rightist political wing of Hindu revivalist Rashtriya Swayamsevak Sangh (RSS). Hindu Mahasabha leaders became the backbone of Bharatiya Jan Sangh. The socio-cultural propaganda by RSS and Hindu Mahasabha has been to relentlessly spread the message of perceived ‘superiority’ of Hindutwa (similar to any right conservative outfit) through its dozens of social wings. The essence of the campaign not only by RSS during its existence for about 100 years, but also by its progenies like Bharatiya Janata Party (BJP), the political wing, Bharatiya Mazdoor Sangh (BMS), the trade union wing, Akhil Bharatiya Vidyarthi Parishad (ABVP), the student wing, can be summed up as below:

  • Aryan Hindu community has been living in Indian subcontinent perpetually since dawn of humanity,
  • Veda scriptures directly originated from Almighty God,
  • Veda is the storage of all significant knowledge in and about the universe,
  • Sanskrit has been the script of Hindu community since dawn of civilization in Indian subcontinent,
  • Caste system with Brahmans as ‘prime mover’ is way for socio-economic progress of Hindu society
  • Indian subcontinent is de facto Indian nation which is the ‘ancient Hindu nation’.

Swatantra Party was established by the right ideologues of INC and few of the royal family members from erstwhile princely states, who were peeved with Nehru’s leftist ideals and promotion of public sector economy. After a decade or so the party’s influence declined dramatically.

Indian Union Muslim League was established by Muslim elites after partition of India. The party represents religious conservatism in Muslim society of India. However, as a matter of fact, Muslim community in different provinces generally voted en bloc in favour of either INC or some strong regional party.

Apart from above mentioned political parties at the national level, there were a dozen of regional political outfits (based on language and caste based politics) which were more or less social democrats in policies. A significant point that should be mentioned here pertains to the conduct of the political parties vis-à-vis their professed ideology – during this period, all significant leaders and their parties not only would chalk out their policies and programs in line with their avowed ideology, but they would also try to implement those programmes if voted to power. It would be another issue that most of the time, such implementations would go haywire.

4.1.3 INC ruled at the centre for most of this period with Jawaharlal Nehru as Prime Minister from August 1947 to May 1964, Indira Gandhi from January 1966 to March 1977 as well as from January 1980 to October 1984, and Rajiv Gandhi from October 1984 to December 1989. Apart from these 3 leaders, few other leaders associated with INC at different point of time came to power at centre for very short duration, mainly through coalition politics at centre.

In 1975, Indira Gandhi advised the President to declare a country-wide emergency that allowed the central government to assume sweeping powers and suspend civil liberties in states. Due to the unpopularity of emergency, Indira Gandhi lost 1977 general elections where ex-INC senior leaders played crucial role in creating Janata Party piecing together many opposition parties.

Two of the Prime Ministers were assassinated in this period – Indira Gandhi and Rajiv Gandhi. Though Indians hardly engage in conspiracy theories about these assassinations, a thorough analysis of cui bono might point out towards involvement of anti-Soviet Union world order and Deep State in removing both leaders, so that in absence of pro-Soviet leaders from Nehru-Gandhi family, India can be easily drawn into USA-oriented world order.

4.1.4 Nehru’s foreign policy was centred on Non-Aligned Movement (NAM) of which India was a co-founder. But, Nehru secretly worked with CIA for keeping religious disturbances alive in Tibet, and provided logistics and moral support to Dalai Lama who was resisting the attempt of government of China to establish the rule of law in Tibet province of China. Indira Gandhi continued the NAM policy of her father, but practically steered India towards USSR camp (during Bangladesh liberation war Soviet support was instrumental) in order to safeguard country’s interests in international arena, to deter USA Navy approaching India and Bangladesh coast.

India fought 2 wars with Pakistan over Jammu & Kashmir, and a third war with Pakistan to help East Pakistan (Bangladesh) get separated from West Pakistan. A brief border war with China was fought. Sikkim was annexed as a state within Indian republic. India deployed troops for peacekeeping operation in Sri Lanka’s ethnic conflict during Rajiv Gandhi’s leadership – next government withdrew the troops when they became entangled in fighting the Tamil rebels itself.

During Indira Gandhi’s tenure in 1975 Sikkim was integrated with India as a province. Sikkim used to be protectorate of India after 1947. Though there had been criticism internationally as ‘annexation’ by India, the anti-monarchy movement within Sikkim was a key factor behind the willingness of Sikkim’s politicians for getting integrated with India.

4.2  Politics during Neoliberal Oligarchy: 1991 to 2014

Even during the neoliberal era, there was/is still an important differentiation among mainstream non-Marxist parties which related to the party’s close identification with some communities demarcated on the basis of religion/ caste/language/region etc. (as against Marxist parties who try to identify with livelihood/income class) – it was/is also called ‘vote bank’ politics. While mainstream national party like INC profess secular policies, it had no qualms to promote medieval culture of divorce within Muslim communities (where husbands summarily divorce wife without alimony, particularly in low-income households) to keep their Muslim vote bank undisturbed. Overall, INC maintained lip service to the concepts of constitution of India (where 4 different ethno-genetic groups, 15+ major languages and close to 100 minor languages, 5 major religions have been cohabiting for millennium). On the other hand, mainstream national party like BJP professes extreme religious intolerance to polarise majority Hindu voters and create a vote bank. This party was proud to demolish a medieval historical mosque which would have been treated as a serious offence against archaeological heritage in any modern country! BJP’s parent RSS popularised their slogan of Hindu-Hindi-Hindustan which delegitimise equal treatment of other religions other than Hindutwa and other languages except Hindi.

4.2.1 Indian National Congress (INC), the most important mainstream party, transformed itself into a neoliberal democratic party after killing of Rajiv Gandhi. The entire party machinery and leadership positions were grabbed by the so-called ‘realist-cum-pragmatist’ camp through a ‘seize from within’ campaign by the elites-businessmen-landlords-technocrats. Narasimha Rao and Manmohan Singh led the transformation of INC into neoliberal fantasy-land after INC won elections at centre in 1991. The media and academia (which till 1991 used to paint a social democratic façade of INC) went full steam ahead to preach on benefits of the so-called LPG (liberalisation-privatisation-globalisation) regime introduced by Rao-Singh duo. I will come back to the so-called economic benefits in the next section, section 5. The semblance of social democratic ideology got eroded so much within a span of 23 years that, during the general election in 2014 INC couldn’t escape from being branded as party of ‘crony capitalists’.

The neoliberal oligarchy period has been the golden period for RSS and BJP-BMS-ABVP – RSS spread its wings unchallenged during this period. With INC openly promoting economy and governance away from the political philosophy of ‘welfare state’, a right conservative institution like BJP promoted by Hindu upper caste landlords and businessmen had no problem in catching wind in their sails. Standing on the ‘solid’ bedrock of Hindutwa socio-cultural propaganda by RSS across India, BJP planned a political movement based on Hindutwa and implemented the plan – (a) Babri Masjid (in UP province) demolition by RSS-BJP workers was carried out in December 1992, and (b) Godhra (in Gujarat province) train-burning (BJP alleged that Muslim community burnt the train, but officially reason couldn’t be ascertained) in February 2002. Both the ‘main incidents’ were followed by religious riots across India (during which most of the attacks were by Hindu fundamentalists). Such gruesome carnage took place when the neoliberal politicians from both INC and BJP were ruling at centre and/or state. BJP’s message for political manipulation was simple, which at one hand, created a sense of deep insecurity among common Hindu (majority) population, and at the other hand, the same population was offered relief from such ‘insecurity’ if they chose BJP.

Communist Party of India and its splinter groups squandered its limited mass base but wide appeal among the middle class sympathisers, due to both internal and external reasons – (a) dissolution of CPSU and Soviet Union, and adoption of capitalist market economy by CPC were portrayed in Indian media and academia as ‘proof of failure of communism’; Communist parties in India couldn’t effectively counter such nonsense, (b) dozens of splinter groups of Communist parties were mired in politicking which lacked consolidated plan and programme across the country, Communist parties in India couldn’t effectively unite and make a single plan of action during past six decades, (c) attitude of ‘intellectualism’ among the senior leadership simultaneously with ‘careerism’ of the junior apparatchiks deflected the Communists from their main strength – strength of Marxist humanitarianism. The different splinter groups of Indian communists have been drifting aimlessly (generally their aim has been to get voted into power in a province through election).

During this period, the regional parties regrouped with social democracy as their declared ideology – in fact, such parties filled in the vacuum created by withdrawal of INC from its old ideological base. There has been three kinds of such regional parties all of which revolve around cult of personality:

  • Backward caste and/or minority language based political parties in few provinces
  • Breakaway splinter groups of INC in few provinces, where province-level INC leaders were charismatic
  • Erstwhile junior leaders of now-defunct non-Marxist Socialist Party created new entity through mergers/demergers

4.2.2 INC ruled at the centre for most of this period with Narasimha Rao as Prime Minister from June 1991 to May 1996, Manmohan Singh from May 2004 to May 2014. BJP ruled for significant period with Atal Bihari Vajpayee as Prime Minister from March 1998 to May 2004. Apart from these 3 leaders, few other leaders associated with different regional parties came to power at centre for very short duration through coalition politics at centre.

During this period of neoliberal oligarchy, the national bourgeoisie allied with the comprador bourgeoisie and influenced political programmes and economic liberalisation carried out by both INC and BJP. Substantial amount of foreign investment had been registered during this period, and Indian industrialists-traders-bankers happily collaborated with MNCs and vied for such FDI. In fact, an in-depth survey shows that, economic policy-wise there was no distinction between INC and BJP – both work tirelessly so that the top 1% of Indian population can amass wealth and power, and the fruits of economic growth gets shared by the next 9% population (as managers and implementers of all policies). The deep divide between INC’s secular socio-cultural platform and BJP’s Hindutwa socio-cultural base vanished when it came to economic liberalisation and westernisation assisted by capital from Zionist-Capitalist global oligarchy. It was only the style of election campaign that still demarcated them. Thus it is no wonder that, during past 7 years when Narendra Modi became crowd-puller for BJP’s campaign, hundreds of seasoned politicians of INC across India joined BJP for contesting elections at province and at centre.

4.2.3 The objectives of foreign policy was/is a peaceful global and regional environment in which Indian economy can grow as well as food security, water security and energy security are maintained. Along with the changing landscape of economic policies, Indian foreign policy also went for a makeover.

4.2.3.1 Background of Jammu & Kashmir Problem – All along, the main focus of Indian foreign policy has been the northern province/state of Jammu & Kashmir (J&K) which was/is the intersection of border disputes with both Pakistan and China. Fact remains that, it was the imperialist British power which created border problems in 1947 through a messy partition. British lawyer Cyril Radcliffe demarcated the so-called border in 1947 between India and Pakistan from the provinces/regions that were directly administered by the-then British government. British government neither issued notification on integration of the individual 550+ princely states with India or Pakistan (except those regions that would basically create the entity of Pakistan) nor arranged uniform procedures for general people of the princely states to choose between India and Pakistan. Even though in 1947 Dogra king signed accession document on behalf of J&K princely state with India government, Pakistan and China didn’t accept the legality, hence J&K became a permanent source of conflict between India and Pakistan as well as India and China:

  • India government controls more than half of the erstwhile J&K Dogra kingdom – part of Kashmir region, entire Jammu region, larger part of Ladakh region. India demands that Pakistan and China cede their control from all regions that were part of erstwhile Dogra kingdom of J&K
  • Pakistan government controls part of Kashmir region, entire Gilgit region, entire Baltistan region. Pakistan ceded a small part of Baltistan to China in mid-1960s. Pakistan further demands entire Kashmir region from India
  • China controls entire Aksai Chin region. China further demands part of Ladakh region from India

It wouldn’t be out of context to mention that, on behalf of princely state J&K, British government maintained foreign relations with Tibet kingdom (a protectorate of China) and Chinese empire, between 1857 and 1947. During this period, British government proposed boundary line between princely state of J&K and Tibet twice, namely Ardagh–Johnson Line in 1860s and Macartney–MacDonald Line in 1899. Chinese government didn’t sent formal acceptance to British government in either of the cases, but 1912 onwards with removal of Qing dynasty, Chinese government always denied the boundary demarcation proposed by British government. Upon independence in 1947, Indian government fixed official boundary that resembled Ardagh–Johnson Line (hence included Aksai Chin region), which was denied by China earlier.

4.2.3.2 Background of Arunachal Pradesh Problem – Border dispute with China has a second dimension in India’s north-east province/state of Arunachal Pradesh (earlier called as North-East Frontier Agency). British administrator Henry McMahon proposed the McMahon Line as the demarcation line between Tibet kingdom and the-then north-east region of British India at the 1914 Simla Convention signed between British and Tibetan representatives. Chinese government didn’t accept the legal status of McMahon Line because Tibet was a tributary state of China while Arunachal Pradesh was southern territory of Tibet.

India controls the Arunachal Pradesh region as per the McMahon Line border. During 1962 war, though China crossed the McMahon Line border and came southwards, soon Chinese troops were withdrawn to positions north of the disputed McMahon border line.

4.2.3.3 Possible Options of Solution to Border Problems – Till 2014, there could be only two options of solution to border problem vis-à-vis Pakistan and China. Best option entailed that all three countries meet in a conference in presence of UNO, discuss heart-to-heart and make adjustments with each other’s standpoint, and legalise the current line of actual control (LAC) with minor adjustment/accommodation as the de facto and de jure border demarcation. The other alternate option was that India or any country which felt aggrieved, would mobilise massive military forces to capture as much land as it wish and unilaterally try to redefine the border, in case the country wins the war against the adversary – but there would have been a gigantic cost to achieve such ‘success’ and sustain it, because all three countries developed strong conventional military power as well as semi-advanced capabilities of nuclear war.

4.2.3.4 After dissolution of Soviet Union, in order to adjust foreign policy to the unipolar world order dominated by USA, in 1992 the-then Prime Minister Narasimha Rao upgraded India’s diplomatic relations with Israel to ambassador level. Trade and investment were given a higher priority while building relations with USA, EU, ASEAN and China. Though relation with USA government temporarily went south after Vajpayee government conducted a series of underground nuclear tests in 1998, soon Vajpayee visited the USA and proclaimed that India and USA are ‘natural allies’. Manmohan Singh government pushed through the India-USA Civil Nuclear Agreement in 2006. In a major policy shift, India started rapidly moving away from Russian armaments and military technology and bring in USA and Israel as key suppliers for military hardware.

The Quadrilateral Security Dialogue (also known as the Quad) forum was initiated in 2007 by Shinzo Abe of Japan, Dick Cheney of USA, John Howard of Australia and Manmohan Singh of India. Quad maintains summits, and military drills among member countries. India government also signed defence cooperation agreement with USA.

4.3  People and Society: 1947 to 2014

4.3.1 Indian society is highly diverse with hundreds (or thousands) of ethnic, linguistic, and caste groups as well as dozens of religious, and regional groups. On top of that, the differences on the basis of urban-rural and gender play crucial role. However, amid such differences and complexities of Indian society, there exist few socio-cultural themes that unify the social order even if that fail to bring social harmony. Across different ethnicities-religions-languages in India, a ‘male-dominated family’ is common basic building block of the society. In rural areas and semi-urban areas resources like land, building, or business are generally controlled by male members (even if legislation allows all Indian women to inherit real estate property). Traditionally women have control over precious stone and jewellery. However, as modern education has been making inroads into the society, male-dominated society is fading away slowly.

The other socio-cultural theme that ‘unite’ Indian society was/is ‘hierarchy of Caste’ – the people were/are grouped by birth, named and brought-up within caste based ‘entitlements’, forced into endogamous (in-marrying) groups, and employed within caste based ‘occupations’. As per old Hindu caste system, there were/are thousands of castes and sub-castes in India, where hierarchy-wise Brahmans are top ranking, Kshatriya-Vaishya-Kayastha groups are second tier, Shudra groups are third tier, while tribes (forest dwellers) are social outcasts. Indian Constitution identified 1,108 scheduled castes (SC, the Shudra) and 744 scheduled tribes (ST, the Forest dweller), and provided special reservation for higher education and government services which brought new hope for those marginal people (however, those benefits were/are more often than not cornered by a tiny section of SC and ST communities; in many crucial areas like medicine and scientific research such reservations had/has detrimental effects as well). With modern (western) education and government policies, in urban areas, the caste system is less divisive than 50 years ago. Rural India still has not only hierarchical caste system among Hindu population, but Muslim and Christian societies are also infected by the disease of caste system.

4.3.2 The key statistics related to total population, rural-urban divide, backward castes (scheduled castes and scheduled tribes), literacy, linguistic groups, religious groups as per census are given below (figures in million):

Data Element1971 census1991 census2011 census
Total Population (million)548.159838.5841210.854
Rural (as percentage of total)80.09%74.27%68.86%
Urban (as percentage of total)19.91%25.73%31.14%
Literate population (million)161.415359.324763.638
Average Life Expectancy at Birth (Years)45.658.767.0
Scheduled Castes population (million)[as percentage of total population]79.092[14.43%]138.223[16.50%]201.378[16.63%]
Scheduled Tribes population (million)[as percentage of total population]36.408[6.64%]67.758[8.08%]104.545[8.63%]
Literate – informal and below primary9.63%10.80%15.03%
Literate – primary and middle schooling15.84%21.27%26.26%
Literate – matriculate3.23%5.65%8.75%
Literate – intermediate and diplomaLess than 0.1%2.40%6.53%
Literate – technical diplomaLess than 0.1%0.26%0.60%
Literate – graduate and above0.60%2.46%5.64%
Illiterate70.55%57.15%36.93%
Population by religion – Hindu82.72%82.00%79.80%
Population by religion – Muslim11.20%12.11%14.23%
Population by religion – Christian2.59%2.34%2.30%
Population by religion – Sikh1.89%1.94%1.72%
Population by religion – Others1.60%1.61%1.73%
Population by language – Hindi36.99%39.29%43.63%
Population by language – Bengali8.17%8.30%8.03%
Population by language – Marathi7.62%7.45%6.86%
Population by language – Telugu8.16%7.87%6.70%
Population by language – Tamil6.88%6.32%5.70%
Population by language – Others32.18%30.77%29.08%

The significant inferences that can be drawn from the above statistics are:

  • Population of India (361.088 million in 1951) grew unrestrained over the decades to reach 1210.854 million in 2011. In 2011, Total Households 249.454 million and Average Population per Household was 4.85. Yearly growth rate of population peaked during 1973 to 1983 period when it hovered around 2.31% to 2.36%. Since then the rate has been slowly declining to 1.04% in 2018 (when population reached 1350 million). However, unevenness exist – on the basis of language, ‘Hindi’-speaking population in north, central, and east India show rise in share of total population, on the basis of religion, ‘Muslim’ community across India show rise in share of total population, on the basis of caste, SC and ST communities demonstrate marginal rise in share of total population.

Vast population was/is one of the key factors behind a multitude of socio-economic problems that has been afflicting the country since independence (because India has limited arable land and face scarcity of resources). However, massive population is not the only problem in India – institutionalised exploitation is even bigger problem.

  • Urbanisation has been increasing, but not as rapidly as government expected after policy changes in 1991. Also, in most of the tier-2 and tier-3 urban areas, management of basic civil amenities remain poor.
  • Life expectancy at birth has steadily increased over the decades, but standard of healthcare facilities vary widely across regions – while south and west regions are better than average north and east regions have below average healthcare facilities.
  • Indian government registered appalling performance in promoting literacy. Not only 37% of the population remained illiterate in 2011, but also less than 22% of the population were ‘employable’ who have academic qualification of matriculate and above. That signifies a whopping 41% of the population were ‘converted’ into literates by the over-zealous government officials of Education ministry (through luring the children into primary schools by arranging mid-day meals, who would drop out as soon as they become teenager to search any unskilled employment opportunity as a ‘child labour’).

Unless the children complete at least 10 years of formal education and clear matriculate, meaningful employment was/is not possible in a 21st century economy – overall productivity of labour as a crucial component of national economy remains a pipe dream.

5.  India From 1947 To 2014 – Economic Landscape

At the time of independence, Indian economy was mainly dependent on agricultural. Prime Minister Nehru’s development model envisaged a dominant role of the state, Industrial Policy Resolution of 1948 proposed a mixed economy of private-owned and state-owned enterprises. Narasimha Rao initiated the process of economic liberalisation and reform in 1991 which opened the Indian economy to global capitalist world order.

5.1  Economic Planning during Social Democracy: 1947 to 1991

Prime Minister Nehru and Professor Mahalanobis were the chief architects of planned economy in post-independence India. INC set the objective of Indian development strategy as to establish a society with self-reliance and socio-economic justice for all citizens as given in the constitution. Government set up the Planning Commission in 1950 to coordinate the entire economic planning, resource allocation, implementation and appraisal of five-year plans (basically modelled after Soviet planning system). The industrial policy reserved 17 industrial sub-sectors like Atomic Energy, Defence, Iron and Steel, Heavy Machinery, Coal, Petroleum, Electricity, Railways, Airlines, and Telecommunication etc. for the state-owned enterprises.

India’s first five-year plan (1951 – 1956) was focused on development of primary sector of the economy – agriculture and allied areas, power. The total planned budget of Rupees 23.78 billion was allocated as: irrigation and power generation (27.2%), agriculture and community development (17.4%), transport (24%), industry (8.4%), social services (16.6%), rehabilitation of landless farmers (4.1%), and for other sectors and services (2.5%). The target growth rate was 2.1% annual GDP growth; achieved growth rate was 3.6%.

India’s second five-year plan (1956 – 1961) was focused on development of industrial sector of the economy – primarily through state-owned industries especially in heavy industries and capital goods. The total budget was Rupees 48 billion was allocated to two broad sectors: industry and agriculture. Applying statistical models of Professor P C Mahalanobis the plan attempted to allocate investment between productive sectors in order to maximise long-run economic growth. The target growth rate was 4.5% and 4.27% was achieved.

The third five-year plan (1961 – 1966) put focus back on agriculture. But the conflicts with China in 1962 and with Pakistan in 1965 shifted the focus towards defence industry and military. On top of that there was severe drought in 1965. State electricity boards, State road transportation corporations, and State education boards were formed in provinces. The target growth rate was 5.6%, but overall failure resulted in 2.4% growth rate.

The fourth five-year plan (1969 – 1974) emphasised growth rate of agriculture as enabler of other sectors to grow. Family Planning programmes were amongst major targets of the Plan. Major Indian banks in private sector were nationalised. But a chunk of fourth plan resources were diverted towards war with Pakistan in 1971 along with refugee problem related to Bangladesh. The plan achieved 3.3% growth against target rate of 5.6%.

The fifth five-year plan (1974 – 1979) proposed to remove poverty (Garibi Hatao) and attain self-reliance particularly in agricultural production and defence. The plan promoted high rate of GDP growth, growth in the domestic rate of savings, and more equitable distribution of income. The central government entered into electricity generation and transmission. When Emergency was declared, Prime Ministers 20 Point Programme became the focal point. Even though in 1978 a new government rejected the plan, it was successful in achieving 4.8% growth rate against 4.4% target.

The sixth five-year plan (1980 – 1985) focussed on increase in national income, development of skill to reduce unemployment and poverty, modernization of technology, and providing slack season employment. Price controls were eliminated to a large extent resulting in increased cost of living. This plan onwards, the Military five-year plans became coterminous with national five-year plans by Planning Commission. Largely successful plan witnessed actual growth rate of 5.7% against 5.2% target.

The seventh five-year plan (1985 – 1990) strived towards social justice through anti-poverty programmes, agricultural development through increasing productivity of small and big farmers, ‘food, work & productivity’, and achieving independent economy through increased energy production. The plan targeted labour force to grow by 39 million people while employment was expected to grow 4% per year. The plan was quite successful with 6% growth rate of the economy against targeted 5%.

Industrial production index registered annual compound growth of 5.7% during 1951 – 1955, 7.2% during 1955 – 1960, 9.0% during 1960 – 1965 riding on quite high growth of basic goods and capital goods. The scale of investment in heavy industries were beyond the capital-raising capacity of the private-owned enterprises. A sort of complementary relationship grew between state-owned and private-owned business that resulted in good industrial growth during the period when overall prices remained stable in the country. Deceleration in industrial growth experienced during the period 1966 to 1980. The annual compound growth rate during 1965 – 1974 period was only 4.1% while 6.1% during 1974 – 1979 period. Finally, 1979-80 even recorded a negative rate of growth of Industrial production (-) 1.6%. Total factor productivity also registered negative growth of (-) 0.2 to (-) 0.3% per year during 1966-67 to 1979-80. The government put the blame on factors like wars in 1965 and 1971, Oil crisis of 1973, etc. However, a crucial factor was also present – low growth in agriculture sector created less demand of industrial goods. Industrial recovery during the period 1981 to 1991 witnessed much improved environment. Rate of industrial growth during 1981 – 1985 period was 6.4% per year and 8.5% during 1985 – 1990 period. The high growth rates were possible because of very robust growth in capital goods as well as consumer goods-durables. This growth was not associated with acceleration in growth of the factor inputs, but on higher factor productivity, which registered 3.4% per year growth during 1981 to 1985. Many commentators opine that liberal fiscal policies, and increased demand from agriculture and infrastructure sectors were key reasons for such recovery.

A close look at the planned economy and the overall parameters of performance reveal three key problems:

(a) Continuously rising population in India that negated the economic gains substantially, had never been tackled with due seriousness and resolve by INC leadership

(b) Even though five-year plans strived to achieve a lot on economic and social front, endemic corruption, faulty implementation, and lack of political resolve didn’t allow the period of planned economy to achieve greater efficiency

(c) Instead of long-term vision of a country free from all types of exploitation and poverty, INC leadership mostly used the planning process for scoring points for mid-term electoral success.

5.2  ‘Open’ Economy during Neoliberal Oligarchy: 1991 to 2014

The main objective of ‘new economic policy’ were liberalisation-privatisation-globalisation, as it used to be fondly called as LPG by the professionals in the 1990’s. The new policy wanted to convert the Indian economy into a full-fledged capitalist market economy by removing all kinds of government regulations and restrictions. It aimed at permitting unfettered international flow of goods and services as well as capital and technology. Another primary objective was to increase participation of private businessmen in all sectors of economy by withdrawing reserved government sector status from all sectors barring atomic energy and railways. Also, another compelling issue was stabilization of macro-economy through reduction of fiscal deficits (that was 5.4% of nominal GDP during 1991-92).

Some of the key economic reforms were:

(i) Removal of industrial licensing and restrictions

(ii) Abolition of restrictive trade practices through replacement of Monopolies and Restrictive Trade Practices act by other benign act

(iii) Freedom for expansion of Industrial production facility

(iv) Import of capital goods without restriction

(v) Increase in the investment limit for small scale industries

(vi) Free determination of interest rate by commercial Banks (within overall framework of central bank)

(vii) Transfer of ownership of state owned enterprises (in India it is called as ‘public sector unit’) to private businessmen at heavily discounted price

(viii) Reduction in import duty and tariffs

(ix) 100% FDI for high priority industries, increase in Equity limit of foreign investment in other sectors

(x) Partial Convertibility of Indian currency.

During this period, the existing process of five-year plan went on unhindered – eighth, ninth, tenth, eleventh, and twelfth five-year plans were drawn up, budgets approved, and implemented. But with capitalist market economy progressing full swing under watchful eyes of successive governments, the five-year plans made little sense for the socio-economic parameters – common Indians soon learnt what is jobless growth, and uneducated literacy.

The new economic policy had a positive impact on foreign investments which rose to more than 5 billion USD in 1995-96 from a paltry 130 million USD in 1991-92. Nominal GDP increased from 14405 billion Indian Rupees in 1992-93 to 54821 billion Indian Rupees in 2012-13.

There was marked increase in inter-regional imbalance and inter-class imbalance in economic growth, upward movement of unemployment, poverty, and wealth gap in rural and urban areas. Crime rates increased across India. No mainstream politician would think about a balanced society any more.

5.3  Discussion on Economic Parameters: 1947 to 2014

5.3.1 Information of key parameters of Indian economic performance have been noted below (Data Source: Economic Survey 2019-20, Ministry of Finance – Government of India; Data-book for Planning Commission – Government of India; Handbook of Statistics on Indian Economy – Reserve Bank of India):

(a) Data on GDP at factor cost at constant 2004-05 prices and share of sectors within GDP reveals that the share of the primary sector in GDP declined from 54% in 1950-51 to 33% in 1990-91 and further to 14.5% in 2010-11, while share of the secondary sector increased from 16% in 1950-51 to 27% in 1990-91 and further to 28% in 2010-11Statistics for GDP at factor cost has been officially withdrawn from 2012 onwards, instead of which Gross Value Added (GVA) at basic price has been brought in, that too with constant 2011-12 prices.

YearGDP at factor cost at constant 2004-05 prices(Billion Indian Rupee)Percentage share of sector in GDP at factor cost at constant 2004-05 price
Agriculture,forestry &fishingMining & quarryingManufacturing,construction,electricity & utility supplyTrade, hotels,transport &communicationFIRE, social & personalservices, other misc. services
1950-512796.1851.881.8416.1911.0118.51
1960-614102.7947.652.1620.0912.6417.55
1970-715897.8741.662.2023.6214.2818.98
1980-817985.0635.692.6225.6516.7720.88
1990-9113478.8929.523.4826.7017.6324.90
2000-0123484.8122.262.9627.2521.6428.84
2010-1149185.3314.592.2527.9227.3230.16

FIRE stands for Finance, Insurance, and Real Estate.

Data on GDP at market price at constant 2004-05 prices, and share of expenditures within GDP shows that economic growth was primarily fuelled by private consumption expenditure share of which came down from 83% in 1950-51 to 67% in 1990-91 and further to 56% in 2017-18 while contribution of gross fixed capital formation went up from a paltry 14% in 1950-51 to 23% in 1990-91 and further to 31% in 2017-18.

(b) Data on Per Capita Net National Income (Per Capita NNI) at market price and Per Capita Private Final Consumption Expenditure (Per Capita PFCE) at market price both at constant 2004-05 prices reveal overall dismal picture of Indian economy if average income and average expenses are estimated for a citizen:

YearPopulation(Million)NNI at market price at constant 2004-05 price (Billion Indian Rupee)Per Capita NNI at market price at constant 2004-05 price (Indian Rupee)Per Capita PFCE at market price at constant 2004-05 prices (Indian Rupee)Average Life Expectancy at Birth (in Years)
1950-51361.12697.247513678232.1
1960-61439.24115.199482814741.3
1970-71548.25964.7011025871445.6
1980-81683.37951.9311711968250.4
1990-91846.413420.31159961182558.7
2000-011028.722917.95224911535162.5
2010-111186.046574.38392702607467.0
2017-181316.073050.965551035566

5.3.2 Information on industrial productions of few significant goods and electricity have been noted below (Data Source: Economic Survey 2019-20, Ministry of Finance – Government of India; Ministry of Textiles – Government of India; Data-book for Planning Commission – Government of India; Handbook of Statistics on Indian Economy – Reserve Bank of India):

(a) Data on basic industrial products and electricity reveals that even with increased production, pace of industrialisation was certainly inadequate for a country like India with vast population. Considering 1350 million population in 2018, per capita consumption of industrial products like finished steel, cement, and cloth was only 76 kg, 220 kg, and 49 sq. metre respectively, in case of finished steel and cement not even half of world average. Consumer price index shows unceasing inflation of food items.

YearIndex of industrial production(Base:2004-05 as 100)Consumer price index for industrial worker – food(Base: 1982as 100)Cotton & Manmade cloth(million sq. metre)Finished Steel (million tonnes)Cement(million tonnes)Coal and lignite(million tonnes)Crude oil(million tonnes)Electricity generated – utility & nonutility(billion KWH)
1950-517.917.01.02.732.30.306.6
1960-6115.621.02.48.055.20.520.1
1970-7128.138.04.614.376.36.861.2
1980-8143.181.089886.818.6119.010.5129.2
1990-9191.6199.02292813.548.8225.533.0289.4
2000-01453.04023332.399.2332.632.4554.5
2010-11888.56173076.3216.7570.437.7965.7
2017-181419.866845103.1297.7722.735.61483.2

(b) Data (computed by S V R Murthy from National Accounts Statistics, 2019, Government of India on the basis of GVA) on organised and unorganised sectors of shows that, Indian unorganised sector still contribute more than 52% of GVA and activities like agriculture and allied, construction, trade-repair-accommodation-food services are highly dependent on unorganised sector:

Economic ActivityPercent Share of GVA in 2011-12 byPercent Share of GVA in 2016-17 by
Organised sectorUnorganised sectorOrganised sectorUnorganised sector
Agriculture, Forestry, and Fishing3.296.82.897.2
Mining and quarrying77.422.677.422.6
Manufacturing74.525.576.423.6
Electricity, gas, water & other utility services95.74.395.05.0
Construction23.676.426.673.4
Trade, repair, accommodation & food services13.486.613.486.6
Transport, storage, communication & services related to broadcasting53.047.053.746.3
Financial services90.79.388.111.9
Real estate, ownership of dwelling & professional service36.963.146.853.2
Public administration and defence100.00.0100.00.0
Other services58.841.252.747.3
Total GVA at basic prices46.153.947.352.7

5.4  Agriculture in Independent India

At the time of Independence, agriculture was the main source of national income and occupation. Even though agriculture sector’s contribution in GDP steadily declined from about 52% in 1950-51 to 14.5% in 2010-11, agriculture sector employed disproportionately high 54.5% of country’s workforce in 2011.

5.4.1 From 1948 to 1965 agrarian reforms were undertaken through which, substantial land titles were transferred to the actual cultivators, major dams and irrigation projects were constructed, and cooperative credit institutions were strengthened. Still, India remained dependent upon imports and food aid to feed the rising population.

During 1966 to 1990 period, New Agricultural Strategy or Green Revolution was formulated by government to apply science and technology for increasing yield. The strategy included (a) increased use of chemical fertilizers and pesticides, (b) increased use of high yielding varieties of grains, (c) crop rotation and multiple cropping programme, (d) increased area under cultivation, and irrigation. Thus application of agriculture technology was the main driver. Along with that, diversification into related areas like vegetables, fruits, fishery, poultry, dairy etc. helped increasing amount of produce (hence, GDP) as well as employment and income.

The third phase of agricultural policy was a fallout of economic reforms initiated in 1991. Opening up of domestic market due to international trade and WTO affected agriculture. To address new scenario formally a new agricultural policy was launched in July 2000. It set an objective of 4% growth in output per year. Sustainable and efficient utilisation of resources was stressed. With inherent constraints, Indian agriculture, indeed, continue to perform much better as a sector of economy compared to industrial sector.

It is worthwhile to note that the modern applications in agriculture gave rise to unsustainable agricultural practices which deteriorated soil nutrients, reduced ground water table, and reduced biodiversity.

5.4.2 Information of key parameters of Indian agriculture sector performance have been noted below (Data source: Agricultural Census Division, Ministry of Agriculture; Agricultural Statistics at a Glance 2018, Registrar General of India; Directorate of Economics and Statistics, Department of Agriculture and Cooperation – Government of India)

(a) There were 48900 million operational holding in 1960-61 with covered area of 131400 million hectares. The number of holdings increased to 115580 million in 2000-01 with covered area of 163357 million hectares which imply that average plot size reduced. Number of marginal (avg. size – 0.39 hectare) and small (avg. size – 1.43 hectare) holdings and area under such holdings have increased while number of semi-medium (avg. size – 2.76 hectare), medium (avg. size – 5.90 hectare), and large (avg. size – 17.33 hectare) holdings and area under such holding have reduced. Thus, number of uneconomical holdings are increasing regularly with increase in marginal and small plot holdings which means that (a) more and more cultivators are joining the ranks of agricultural labourers average income, (b) growth rate in average real income is poor, may be negative.

Plot sizePercent share in1960-611970-711980-811990-912000-01
Marginalnumber of holding40.6950.6056.4059.4063.00
operated area6.609.0012.0015.1018.82
Smallnumber of holding22.2919.1018.1018.8018.80
operated area12.1711.9014.1017.4020.18
Semi-mediumnumber of holding18.8015.2014.0013.1011.70
operated area19.9318.4021.2023.2023.96
Mediumnumber of holding13.4011.309.107.105.40
operated area30.5129.8029.6027.0023.84
Largenumber of holding4.903.902.401.601.02
operated area30.7430.9023.0017.3013.21

(b) As the rural population increased along with rising population of India, the ratio of Cultivators and Agricultural Labourer became skewed in favour of Agricultural Labourer – it signified that number of landless labourers steadily increased with rising population in rural areas along with rising level of povertyTill 2011, only 45% of net area under cultivation has been brought under irrigation.

YearRural population(Million)Net Area Sown (million hectares)Net IrrigatedArea (million hectares)Rural Agriculture workersFood-grains produced(million tonne)
CultivatorsAgricultural LabourersTotal (Million)
1950-51298.6118.7520.8569.927.397.250.8
1960-61360.3133.2024.6699.631.5131.182.0
1970-71439.0140.8631.1078.247.5125.7108.4
1980-81525.6140.2938.7292.555.5148.0129.6
1990-91630.6142.8748.02110.774.6185.3176.4
2000-01742.6141.3455.20127.3106.8234.1196.8
2010-11833.7141.5663.67118.8144.3263.1244.5
2017-18890.6285.0

(c) Rice and Wheat productivity and production increased steadily while per capita availability of coarse cereals and pulses steadily declined over the decades. 429.8 gram (Rice 178.1, Wheat 65.9, Other Cereals 119.4, and Total Pulses 66.4 gram) average availability of total food-grains per capita per day during the decade of 1951-60 increased to only 464.2 gram (Rice 198.1, Wheat 143.3, Other Cereals 83.2, and Total Pulses 39.6 gram) during decade of 1981-90Main reason for such marginal level of food security was lack of robust improvement in productivity of coarse cereal and pulses, and ever-increasing population.

YearRice CultivationWheat CultivationTotal Pulses Cultivation
Area (million Hectare)Yield (Kg/HectareArea (million Hectare)Yield (Kg/HectareArea (million Hectare)Yield (Kg/Hectare
1950-5130.816689.7566319.09441
1960-6134.13101312.9385123.56539
1970-7137.59112318.24130722.54524
1980-8140.15133622.28163022.46473
1990-9142.69174024.17228124.66578
2000-0144.71190125.73270820.35544
2010-1142.86223929.07298826.40691
2016-1743.99249430.79320029.45786

5.5  Occupation, Income & Poverty in Independent India

5.5.1 The key statistics related to population, rural-urban divide, and employment status in 1951, 1971, and 1991 census are given below (Data Source: Census, Government of India). The term ‘main worker’ is defined as those who work for 183 days or more in a year, ‘marginal workers’ are those who work for less than 183 days in a year.

Data Element1971 census1991 census2011 census
Total Population (million)548.159838.5681210.854
Population of 0-19 age (million)277.803391.400492.970
Population of 20-64 age (million)251.916408.540647.209
Population of 65 & above age (million)18.32433.93266.185
Population of unknown age (million)0.1164.6954.489
Total Workers (million)180.583314.131481.888
Main Workers (million)[of which workers of 20-64 age]180.583285.932[238.672]362.565[318.642]
Cultivators78.176110.65695.84
Agricultural labourers47.48974.62886.16
Household industry workers6.3536.86212.33
Other workers48.35593.785168.10
Marginal Workers (million)[of which workers of 20-64 age]No concept28.199[21.572]119.323[93.831]
Cultivators13.98722.85
Agricultural labourers11.39258.16
Household industry workers0.7616.00
Other workers2.05832.27
Non-Workers (million)367.576524.436728.966

A close look at the above mentioned data shows the unemployment and underemployment in India has been rising over the decades (obviously because of the known problem of employment opportunity lagging behind the rise in population):

(a) the proportion of total workers to total population increased from 33% in 1971 to 39.8% in 2011; but the lack of employment among working people of age-group 20–64 years was very high at about 36% in 1991 and 2011 census (official definition-jargon-statistics split off a smaller component as ‘unemployment’, but larger part remained a ‘disguised unemployment’).

(b) the proportion of marginal workers to total workers increased, which mean underemployment increased frighteningly from 9% in 1991 to 25% in 2011 census; within marginal workers, not only agricultural labourers, but workers in industrial and service sectors have also increased substantially.

(c) More than 13% of the (self) cultivators left the occupation between 1991 and 2011, a pointer to the fact that cultivation has become uneconomical for most of the small plot-holders; between 1991 and 2011 number of agricultural labourers increased by 5 times showing that landless labours and small plot holders increased leaps and bounds.

(d) As per report 568 of NSS round 68 carried out by the National Sample Survey Office (NSSO) of Government of India, in 2012 the worker population ratio for age 15 years and above is 54.7% which was uneven for males with 78.1% and females with 30.5%. So, the lack of employment among working people of age-group 15 years and above was astonishingly high at more than 45% in 2012 NSSO survey.

5.5.2 There exist another segregation so far as employment is concerned in India, apart from being organised or unorganised – the formal and informal category of employment. Informal workers don’t have any written contract with their employers, they have neither paid leave nor health benefits, and they don’t have any social security. The key statistics (Data Source: NSS 68th unit level data on employment unemployment, 2011-12 and Periodic Labour Force Survey, 2017-18) reveal that even in organised sector there exist substantial number of informal workers, besides the fact that unorganised sector is almost entirely comprised of informal workers. Even very recently in 2017-18 unorganised sector provided close to 87% of employment in India.

Worker CategoryPercent Share of Employment in 2011-12Percent Share of Employment in 2017-18
Organised sectorUnorganised sectorOrganised sectorUnorganised sector
Informal9.882.65.285.5
Formal7.20.47.91.3
Total17.083.013.286.8

5.5.3 Income distribution:

In India, there was/is no government initiative to document income of individual earning citizens except income tax filing procedure carried out by central government every year. However, out of 481.9 million working citizens in 2011, a paltry 37.9 million (i.e. roughly 7.8% of all working citizens) filed income tax return papers during 2013-14, which later went up to 68.4 million in 2017-18.

Indian Ministry of Statistics and Program Implementation conducts all-India Household Consumer Expenditure Survey through National Sample Survey Office (NSSO). The data gathered during this exercise reveals the average expenditure on goods (food and non-food) and services which gets collated to estimate the household Monthly Per Capita Consumer Expenditure as well as the distribution of households over the MPCE. While expenditure and poverty can be estimated with high accuracy through NSSO reports, income distribution remained a grey area in India.

The Inter University Consortium for Applied Political and Social Sciences Research (ICPSR), based at University of Michigan, provides easy access to India Human Development Survey, which was conducted in 2004-05 and 2011-12 among more than 40 000 households from rural and urban areas. The survey attempted to provide detail information on both household income and consumption. ‘Consumption’ related questionnaire matched NSSO questionnaire (expenditure item categories and referencing periods) while ‘Income’ related queries included all sources of income: labour income (wage, salary, pension), capital income (rent, interest, dividend) as well as business incomes. Government benefits were excluded from the analysis for consistency with tax tabulations. Thomas Picketty and Lucas Chancel in their paper “Indian income inequality, 1922-2015: From British Raj to Billionaire Raj?” estimated a detail pre-tax income distribution combining ICPSR survey data with Indian national accounts data and NSSO survey data. Key data is given below:

Income GroupPre-tax Income Distribution in 2015Approx. Share of National Income in 1990Approx. Average Annual Income Growth
Number of Adult (million)Share of National IncomeAverage Annual Income (Indian Rupee)1970 to 19791980 to 19891990 to 19992000 to 2015
Bottom 50%397.1514.7 %40,67122.3%1.25%1.65%1.15%2.20%
Middle 40%317.7229.2 %101,08444.0%1.55%1.85%0.80%2.40%
Top 10%79.4356.1 %776,56733.5%(-) 0.8%3.80%3.80%7.20%
Incl. top 1%7.9421.3 %2954,38610.7%(-) 4.6%7.20%6.00%7.20%

[ Link: https://wid.world/document/chancelpiketty2017widworld/ ]

The above data can be used logically to categorise Indian population into income groups as given below:

(a) The POOR class in India covers largest part of the working and nonworking adults – 50%.

(b) The LOWER MIDDLE class in India covers 20% of the adult population – rural lower middle may own less than 1.5 hectare cultivation land, urban lower middle may own a dilapidated small flat, but all of them are devoid of access to credit and meaningful deployment of capital to increase their income.

(c) The MIDDLE class in India covers 20% of the adult population who has some amount of money for spending in semi-luxurious items – rural middle class may own more than 3 hectare cultivation land, urban middle class may own a small shop, with access to limited credit from banks.

(d) The UPPER MIDDLE class in India covers 9% of the adult population who has high level of regular income from either job or business and splurge large sums of money on luxury goods – rural affluent class may own more than 10 hectare cultivation land, while urban upper middle class may be senior ranking officers in private and state-owned enterprises, owners of small industry, trading, and service providing companies, with access to very substantial credit from banks.

(e) The OPULENT class in India really owns capital in all forms – 1% of the adult population.

5.5.4 Consumer Expenditure and Poverty:

(a) The key statistics related to percentage of population below poverty line calculated as per Tendulkar method on Mixed Reference Period (Data Source: Handbook of Statistics on Indian Economy – Reserve Bank of India):

Poverty Data1993-942004-052011-12
Rural MPCE at current prices (Indian Rupee)281.40579.21,287.17
Rural Poverty Line (Indian Rupees)446.68816.00
Rural population below poverty line50.1%41.8%25.7%
Urban MPCE at current prices (Indian Rupee)458.041104.602,477.02
Urban Poverty Line (Indian Rupees)578.801000.00
Urban population below poverty line31.8%25.7%13.7%
Total Poverty Ratio45.3%37.2%21.9%

The above data substantiates that the criticism against the basis of “poverty live” calculated by officials of government of India was/is too mild compared to the devilish act of intellectual skulduggery they engage inThe officials since 1950s had/have been artificially constructing “poverty line” which was/is at least 40% – 50% underestimated. If it is accepted by the current neoliberal politicians-bureaucrats-intellectuals-businessmen that an urban family of 4 belonging to the ‘poor’ class has a natural right to eat a breakfast and two square meals every day, then in 2012 the family would have spent at least 5000 Indian Rupees for purchasing food items and for cooking. Assuming a ‘poor’ would have very little money to spend for non-food items apart from electricity/cooking fuel and transport, the total expenditure per month would be 6000 Rupees for the 4-member family. Hence in 2012 the ‘poverty line’ of monthly per capita expenditure should have been 1500 Rupees instead of 1000 Rupees published by government.

(b) NSSO gather data during sampling rounds on two categories: food and non-food expenditures by Indian households. Food is further sub-categorised into cereals, milk and milk products, egg-fish-meat, vegetables, other food items, while non-food is further sub-categorised as betel-tobacco-intoxicants, fuel and light, clothing and bedding, education, medical, conveyance, other consumer services, other non-food items. The key statistics related to social group/caste wise percentage break-up of Average Monthly Per Capita Consumer Expenditure (MPCE) in 2011-12 (Data Source: NSS round 68, report 562, Government of India):

Expenditure Item & MPCE in 2011-12Social Groups
Scheduled Caste (SC)Scheduled Tribe (ST)Other Backward Caste (OBC)Other CommunityAll
Rural
MPCE (Indian Rupee)12521122143917191430
Food: Total55%56%53%51%53%
Non-Food: Total45%44%47%49%47%
Urban
MPCE (Indian Rupee)20282193227532422630
Food: Total47%44%45%40%43%
Non-Food: Total53%56%55%60%57%

The above data indicates the following:

(i) In terms of the regular monthly expenditures, all backward castes (SC, ST, and OBC) were found to be lagging behind the other castes and communities – the gap is more in urban areas compared to rural areas. This is obviously because of lower income in backward caste households. It would be fair to state that more than 90% of the population from three categories of backward castes are in the ‘poor’ and ‘lower middle’ class, while less than 10% of backward caste people are in the ‘middle’ and ‘upper middle’ class.

It is obvious that ‘poor’ and ‘lower middle’ classes who made up 70% of the population, also contain huge army of school drop-out and educated but unemployed people from upper castes.

(ii) Even after two decades (1991 to 2011) of ‘LPG’ economic reforms, household consumption has not increased substantially – average MPCE of Indian Rupees 1430 in rural area and Rupees 2630 in urban area. The fact which non-Marxist politicians, wealthy businessmen, bureaucrats, and professionals continue to hide is that the revenue share of growth during 1991 to 2011 never ‘trickled down’ to the ‘poor’ and ‘lower middle’ classes who jointly made up 70% of the population

(iii) Top 10% of population consisting of ‘upper middle’ and ‘opulent’ classes extracted most of the revenue and asset generated during the period of economic reforms – interestingly more than 90% of top 10% are from the upper caste Hindu community.

5.6  Significant observations on Independent India

5.6.1 INC has been transformed from being a party of elites representing all nook and corner of India (during British period there were indomitable INC leaders even in Pashtun-dominated regions of the present Pakistan-Afghanistan border) into a fiefdom of Nehru-Gandhi family after independence. As long as astute politicians like Jawaharlal Nehru or Indira Gandhi came from the family, there was no major impact of this despicable transition on the party. But after Rajiv Gandhi was assassinated, the weakness of INC as a political outfit became too apparent to be ignored. The wife and son of Rajiv Gandhi kept the control with the family, but lack of political acumen resulted in slow demise of INC, which in turn helped immensely opening up of the political opportunity for RSS-BJP to come to limelight and fill the political vacuum.

5.6.2 INC leaders from Nehru-Gandhi family were mainly populists with leaning towards non-Marxist socialist and social democrat ideas. To broaden mass appeal during general election during prime ministership of Indira Gandhi, during 1970s INC took a decisive turn against the wealthy class of people that resulted in negative rate of growth in income of ‘upper middle’ and ‘opulent’ classes. Notwithstanding such ‘peronist’ policies, after death of Rajiv Gandhi, the party was hijacked by the neoliberal politicians-intellectuals-businessmen who formed coterie around remaining members of Gandhi family, and worked tirelessly to create an oligarchy where national capitalists was supreme in setting policy. Thus INC became unabashedly pro-businessmen and pro-capitalists during the Narasimha Rao and Manmohan Singh premiership.

5.6.3 India till 1991 failed to attain many parameters, but heavily concentrated wealth was surely not one of those parameters. Since INC ruled for most of the time, it was the INC’s monumental failure that even in 2012 exactly 64 years after independence, 37% of population failed to read and write, or 36% of 20–64 years age-group didn’t have employment – no amount of argument can justify this hopeless scenario! Well known economists Amartya Sen and Jean Dreze made so pertinent observations in their book ‘India: Economic Development and Social Opportunity’ as “ While the case for economic reforms may take good note of the diagnosis that India has too much government interference in some fields, it ignores the fact that India also has insufficient and ineffective government activity in many other fields, including basic education, health care, social security, land reforms and the promotion of social change. This inertia too contributes to the persistence of wide spread deprivation, economic stagnation and social inequality.”

5.6.4 Massive military conflict at northern and north-eastern borders was/is the recipe for socio-economic doom for India and Pakistan, hence none of the leaders in Pakistan or India since 1947 had/has been interested in conflicts beyond limited manoeuvre. Even if Bangladesh got partitioned from Pakistan in 1971, for Pakistani leaders, the solace was India didn’t grab its land (practically correct). China with its vast economy can afford massive military mobilisation in a tad more effectively than India. But experience shows that, China wasn’t interested to increase its landmass by getting back few thousand square kilometres into Tibet autonomous region from Indian control – otherwise, Chinese troops wouldn’t withdraw to north of McMahon line in 1962 in north-east.

The above mentioned status and obvious facts were/are known by all senior politicians and bureaucrats in India-Pakistan-China all through these decades. Chinese government can take any decision to legally accept/modify their boundary vis-à-vis other countries – China demonstrated it through signing of a series of border pacts with most of their neighbours. India and Pakistan governments can’t take such decision to make agreement to accept LAC as legal border (and ignore the ‘ideal’ border line soaked in ‘nationalism’ and claimed by government and public from both sides, existence of which has been taught since the school days of every generation) because the political opponents will misuse such wise action by the governing party, through cheap politicking of ‘surrender and sale out to a foreign power’On the contrary, with a tough stand on border dispute, the politicians in India and Pakistan earn extra mileage for campaigning during periodic elections. As a result, the border problems have been lingering on for decades with no end at sight.

6.  India Since 2014: Reappearance of Corporate-State

Since 1950, while formulating policies, the political and bureaucratic institutions of independent India tried to uphold the directive principles of ‘welfare state’ policy enshrined in the Indian constitution. However, while implementing the policies within unavoidable limitations, all mainstream political parties and their leaders surreptitiously represented businessmen-landlords-elites -– end result of such duplicity has been noted previously in section 5.

6.1 The Protagonists

Let’s briefly discuss how the protagonists stack up in the political economy of India during 2010s:

a) The main difference among the dozens of non-Marxist political parties (two of them national, rest regional) which have been controlling the government at centre and the provinces for past 73 years relates to form rather than substance. Fundamentally, almost every senior and junior leader of all non-Marxist political parties across wide spectrum of professed ideologies, treat their association with the party as profession to ‘make money’ if and when the party comes to power at centre or province. Such ‘professional‘ type of politicians join the mainstream national and regional political parties as a professional engagement to create accounted/unaccounted wealth using political and administrative power (a) by entering into business dealings in informal/unorganised sector as well as formal/organised sectors of economy, and (b) by swaying government/bureaucratic decision-making process in favour of their favourite oligarchs/businessmen.

All other activities like spending time and efforts for the sake of the political party (in the role of a party official) and/or for the sake of governance (in the role of managing public administration, when voted to power) become instrument of achieving the primordial target of making wealth. Hence shifting from one political party to another became a sort of professional move for all non-Marxist politicians. While shifting from one party to another, the leader is expected to carry his/her team of unemployed goons who would make required arrangements for winning the election (through booth capturing, false voting, electronic voting machine hacking etc.) – the team of muscleman would be provided protection from police force. These musclemen generate another type of regular revenue for their leaders if and when the party comes to power in any province – (a) ‘protection money’ from unorganised/informal sector of economy involving small manufacturers, small real estate companies, small traders, retail shopkeepers, roadside hawkers, and (b) ‘extortion money’ from organised/formal sector of economy consisting of real estate companies, construction companies, medium sized manufacturers, entertainment sector, etc. Such team, popularly known as ‘social worker’ may comprise of a couple of hundred local rowdies plus couple of petty criminals in case of leaders at provincial Assembly level, while leaders at national Parliament level commands up to thousand rowdies plus up to a dozen of hard-core criminals.

Some of the key information of 543 elected representatives at India’s Loksabha called as Member of Parliament (MP) who are the law-makers of the country:

Data related to MPIn 2009 general electionIn 2014 general electionIn 2019 general election
Elected on INC ticket (no.)2224452
Elected on BJP ticket (no.)112282303
Elected from other Non-Marxist parties (no.)185206182
Elected from Marxist parties (no.)241106
Elected with Declared Criminal cases (no.)162185233
– Out of which…Serious Criminal cases (no.)76112159
MP with education qualification intermediate and below (no.)127130
MP with asset valuation more than 10 million Indian Rupee (no.)315443475
Average asset per MP (million Indian Rupee)53.5147.0209.3

[ Link: https://adrindia.org/content/lok-sabha-elections-2019 ]

‘Serious Criminal cases’ as per Indian penal code include rape, crimes against women, murder, attempt to murder, kidnapping etc. It is obvious from the above data that, not only Indian Parliament have been steadily turning into a den of criminals (in 2019, as many as 43% of MPs have criminal cases against them), but law-makers’ declared assets increased leaps and bounds (between 2009 and 2019, average asset of MPs increased by 4 times). The situation of assembly members in the provinces follow similar logic. In his book “Hind Swaraj or Indian Home Rule” M K Gandhi wrote in 1933 about British Parliament, “That which you consider to be the Mother of Parliaments is like a sterile woman and a prostitute. Both these are harsh terms, but exactly fit the case. That Parliament has not yet, of its own accord, done a single good thing. Hence I have compared it to a sterile woman. The natural condition of that Parliament is such that, without outside pressure, it can do nothing. It is like a prostitute because it is under the control of ministers who change from time to time.” Isn’t it right time to slightly modify M K Gandhi’s legendary statement to describe Indian Parliament as “…a prostitute who is at the centre of brawl among wealthy gangsters…”?

b) There was/is a limited group of educated people across the country who would join some Marxist party (since 1960’s it has become difficult to track the exact number of fragments of the old Communist Party of India, but at least 5 Marxist political parties significantly have small but committed activists and followers) believing they will fight the unjust system to further socialist cause. These ‘amateur’ type of politicians would be dedicated intellectuals throughout their life, instead of being dedicated revolutionaries. Hence, most of the leaders assigned more importance to debating over the theory than to mobilizing millions of hungry unemployed people in their own region. They lack unity and cohesion among themselves, lack robust socio-political action plan, lack resources, and most importantly they lack enthusiasm to change the social-political-economic realities in India. Very few leaders who assigned supreme importance to mass mobilisation, were actually voted into power in some significant provinces like Kerala and West Bengal through existing electoral democratic process.

The conduct of Marxist party functionaries during the period when they run the provincial governments were sometimes became controversial and the governance was not always efficient due to resource crunch. They couldn’t fight concerted campaigns against them conducted by the top 10% who owned all mainstream parties and media. A significant distortion in operational aspects of few Marxist parties can be noted during past two decades – they started believing that election campaign is the supreme task. Another development can be noted – economic reforms did create ‘reformist’ leaders many of whom are imitating professional politicians to leave their Marxist party to join other mainstream political party for, may be, gaining stature.

c) The third, arguably the most significant protagonist is wealthy oligarch families, the 1% OPULENT class, more than 95% of whom belong to the upper caste Hindu namely Brahman-Vaishya-Kshatriya Aryan and Vaishya-Kshatriya Dravidian ethno-genetic people (just like USA, another ‘great’ democracy, where oligarchy mostly comprises of Jewish, Anglo-Saxon ethno-genetic people). Similarly, the 9% UPPER MIDDLE class has more than 90% of the people belonging to upper caste Hindu community. Control of the space of banking-financial service-industry-trading-service business-large cultivation farm-politics-bureaucracy-judiciary-technology-medicine-professional services etc. by these two classes would put the 20th century British colonialists to shame! Regularly and almost religiously, the media and academia who are part of the top 10% have been shedding tears for progress or lack of progress (depending on which mainstream non-Marxist party they prefer) of the Indian society and economy, and pontificate about how the country should be or should not be governed – as a matter of fact, these are essentially an attempt to create a semblance of existence of difference of opinion in a ‘vibrant democracy’ of India while maintaining deafening silence over increasing exploitation of 90% population and atrocities against women, and minority communities (exactly similar to the hue and cry in mainstream media in USA over mistakes of Democrats party and Republican party, but never touching the real issue of endless exploitation by the zionist-capitalist oligarchy that controls both banks, businesses, political parties, media, academia, entertainment, and what not!).

Related data shows how effective the small oligarchic coterie (1%) has been for past 10 years in India to amass wealth while a larger group of elites (9%) applauded about ‘democracy’ and ‘rule of law’ in India:

Data related to Indian Oligarchy201020142019
Total Adult population (million)719.062775.767865.783
Median wealth in US Dollar (current)130010063042
Adults with wealth < median wealth50%50.0%50.0%
Adults with wealth [median – 10,000] US Dollar42.9%44.5%28.2%
Adults with wealth [10,000 – 100,000] US Dollar6.6%5.1%20.0%
Adults with wealth [100,000 – 1000,000] US Dollar0.4%0.3%1.7%
Adults with wealth above 1 million US Dollarnumber of Adult with 1 – 5 million US Dollarnumber of Adult with 5 – 10 million US Dollarnumber of Adult with 10 – 50 million US Dollarnumber of Adult with more than 50 million US Dollar0.02%154,93315,20310,1301,7720.09%666,92654,78132,4414,460
Gini wealth coefficient77.8%81.4%83.2%

[ Link- https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html ]

In the report ‘Time to Care’ published in January’2020, Oxfam India mentions “India’s top 10% of the population holds 74.3% of the total national wealth. The contrast is even sharper for the top 1%. India’s top 1% of population holds 42.5% of national wealth while the bottom 50%, the majority of the population, owns a mere 2.8% of the national wealth. In other words, the top 1% hold more than 4 times the amount of wealth held by the bottom 70% of the population. The bottom 90 percent holds 25.7 percent of national wealth.”

d) Finally, coming to the much maligned and slandered among all protagonists – the poor and lower middle class, the working and unemployed proletariat who are generally termed as ‘lazy-bones’ by intelligent elite managers/professionals in the corporate world. Truth be told. During past 30 years, whether central government or provincial governments which have been run by the mainstream national/regional ‘professional’ political parties (except few cases when Marxist parties formed government in province) campaigned invariably projecting the ‘interest of poor and downtrodden’ as the topmost agenda if they come to power. But barring few rare instances, across India the mainstream political parties ONLY GREASED THE OLIGARCHY – hypocrisy, thy name is politician! In 2015, World Bank estimated that a whopping 50.4% of Indians live below WB poverty line of $3.2 (2011 PPP) per day which was equivalent to 50 Indian Rupees per day. Previously while discussing consumer expenditure and poverty in sub-section 5.5.3, I have mentioned my opinion as “Hence in 2012 the ‘poverty line’ of monthly per capita expenditure should have been 1500 Rupees instead of 1000 Rupees published by government”. I will add that, World Bank officials at least were more ingenuous compared to India government officials.

[ Link: https://databank.worldbank.org/data/download/poverty/33EF03BB-9722-4AE2-ABC7-AA2972D68AFE/Global_POVEQ_IND.pdf ]

The 70% population (poor and lower middle class) at bottom of income and expenditure pyramid earn so insignificantly small amount to live a hand-to-mouth daily life that they can never build bare minimum asset like a 600 square feet house/flat. They just slog on day-after-day to buy daily daal-roti or daal-rice while directly and indirectly supporting the top 10% amass wealth and power. The inflation has been rising so stubbornly that, during 2019 and 2020 it would be a cruel joke to discuss about $3.2 (even in terms of nominal current exchange rate i.e. 224 Indian Rupees) per day expenditure as poverty line. Whether it is a village or town in India, apart from two meals a day what would be left for the poor fellow to meet other daily requirements like breakfast, snacks, medicine, and toiletries? How a poor man would arrange for local conveyance and mobile communication? How monthly requirements like cooking gas, electricity, house rent, clothing, education of kids would be met? In the words of a commentator, “the worker is becoming impoverished absolutely, i.e. he is actually becoming poorer than before; he is compelled to live worse, to eat worse, to suffer hunger more, and to live in basements and attics.” Has the world witnessed similar travesty of natural justice anywhere in the world in 21st century?

6.2 Reincarnation of Corporate-State under Modi’s BJP

Even before the year 2000, most of the successful billionaire capitalists of India belonged to Maharashtra, Gujarat, Delhi, and Tamil Nadu provinces who collectively steered industrial economy of India– during two decades of 1980s and 1990s, based on industrial sector, Gujarat’s economy registered a remarkable growth rate of over 14% against the country’s around 5.5%.

6.2.1 Between 2002 and 2014, Gujarat province became the experimental laboratory of BJP for developing the concept of pseudo-religious authoritarian corporatist system of governance under Narendra Modi which was termed as ‘Gujarat Model’ – mainstream media owned by businessmen did the tomtoming of the model across India. Briefly the three characteristics of that experiment can be described as:

a) Pseudo-religious – section 4.1.2 lists down the essence of RSS-BJP campaign on how and why Hinduism has been the supreme ‘religious philosophy’ and Hindus were/are the ultimate ‘religious community’. However, as it happened with any other pseudo-religious groups, none of the propaganda has anything to do with God and spiritualism which remained the central theme of all religions in humankind. Every propaganda point relates to political objectives of (a) bringing the diverse sects of Hindus under BJP’s political umbrella, (b) implanting a belief among all disparate sects of Hindus that south Asian subcontinent belongs to ONLY them, (c) regimenting the Hindus to follow a hierarchical caste system with Brahmans as de facto leader of Indian society as written in book Manusmriti in Sanskrit, (d) inculcating supremacist ethos among Hindu children and youth about past history and civilization (some truth mixed with mostly fabricated narratives). Thus, the pseudo-religious characteristic turned the entire academic discourses of Indian archaeology-history-anthropology-sociology upside-down, and the academic arena had been converted into a ‘battle’ to uphold ‘India’s/Hindu’s glorious past stretching back to 15000 BCE’.

b) Authoritarian – section 4.2.1 lists down the political messages propagated by RSS-BJP that slowly but surely vitiated the social bonding between communities and the stage was set for further manipulation of the entire political environment. Within few months of Narendra Modi’s swearing in as Chief Minister of Gujarat in 2002, Godhra train-burning incident took place, Modi and BJP used that incident to create terror and carnage of mainly Muslim people. Though Pakistan’s involvement in Islamic terrorism in India was decades old history, there was no robust proof within few days of Godhra train-burning. But Modi’s BJP utilised that event to build a fabricated narrative: (a) demographic growth of Muslim community is far more than Hindu community, unless Hindus ‘resist’ socially and politically, Muslims would once again initiate partition of the country, (b) Hindu community should continue to teach Muslim community unforgettable lessons, and, on behalf of Hindu community BJP will do the needful, (c) BJP is the only political party in India that fights for the larger interest of majority Hindu community, (d) Declaring India as ‘Hindu nation’ discarding the secular constitution, and cornering the minorities are the only solution for ‘bringing back the old glory’ of Hindu civilization, and only BJP can transform India into a Hindu nation. It goes without saying that such propaganda based on false narratives using lies and half-truths helped building an aura of authoritarian Modi that transformed BJP into authoritarian entity.

Voice of opposition parties, trade union leaders, farmers, social activists, and academicians, especially those who represent religious and caste minorities was suppressed by using police and revenue department officials – slapping of criminal cases against dissenting voice was the standard procedure. The mainstream media became an instrument of public campaign in Gujarat province under Modi’s BJP. The sessions of the legislative Assembly were squeezed so that elected representatives from opposition parties don’t get enough time to raise questions/clarifications on various bills and reports.

c) Corporatist – While Oligarchy has been controlling all levers of power at the centre and at the provinces, by and large the corporate honchos preferred to stay at the backstage of governance. Since 2003 the corporate honchos in Gujarat were sucked into part of governance through a fusion of government and corporate interest. The roles and responsibilities that Gujarat government should have played were curtailed and corporates were offered to fill in the vacuum. Among the beneficiary class were/are the Gujarati-Marwari corporate honchos like the Ambanis, Adanis, Ruias, Sanghvis, Mehtas and other big industrialists, and dozens of contractors who got their share of the pudding of various projects of infrastructure development. The new industrial policy of 2003 permitted dilution of laws of labour relations to the extent permissible at the province level. Industries were exempted from getting ‘no objection certificate’ from the pollution control board. Quick possession of farm land by industrialists and businessmen were facilitated. The cronies of Modi’s BJP were rewarded with lower than market price of land in most of the cases. The politicians belonging to BJP and government bureaucracy worked extra time and walked extra mile for the benefit of private capitalists – the whole programme was packaged as ‘Vibrant Gujarat’ and non-stop campaign was undertaken in media for public consumption.

The 2009 industrial policy was designed for transforming Gujarat province as world’s most attractive investment destination – megaprojects with investments more than Indian Rupees 10 billion were mainly targeted. Gujarat government’s industrial nodal agency acquired 21,308 hectares of land between 2001 and 2011 (starting with 4,620 hectares in 2001). Modi had become the favourite chief ministers of Indian capitalists especially Gujarati and Marwari businessmen who would attend the Vibrant Gujarat investors’ meetings and would shower praise on him and fill the coffers of BJP party fund. During these investors’ summits held between 2003 and 2011, Memorandums of Understanding were signed for investment totalling more than 4 trillion Indian Rupees – only 8% of promised investment, amounting to just over 300 billion actually came through. Another analysis showed from 2000 to 2012 Modi’s Gujarat could not attract many foreign investors (4.5% of FDI went to Gujarat, as against 32.8% in Maharashtra, 19% in Delhi, 5.6% in Karnataka, 5.2% in Tamil Nadu). By focusing on capital-intensive megaprojects, ‘Gujarat model’ benefited the big companies balance sheets and industrial growth rate, but job creation remained chimera – after all, the corporatist policies were indeed aimed at (jobless) growth of corporates!

6.2.2 The 16th national general election, held in early 2014, resulted in a huge victory of the BJP, the party gained an absolute majority and formed a government under the premiership of Narendra Modi, till then BJP Chief Minister of Gujarat province. Indian bankers-industrialists-merchants-big landowners who formed 1% opulent class wanted a stable government which would safeguard their long-term interest of endless accumulation of capital. For that, they needed a commercialised political party which has authoritarian background. BJP was best fit – hence, this class spent billions of Indian Rupees in donation to BJP election fund and provided 100% support in all types of media owned by them for 2014 election campaign. As the Modi government settled down at centre, the ‘Gujarat Model’ was quickly being redesigned keeping entire India in view.

67 years after the partitioned independence, in 2014, the hen has come home to roost! To fulfil political ambitions of few south Asian leaders, the Indian subcontinent was bifurcated. But (truncated) India never publicly or constitutionally accepted that fact that Muslim elites separated in 1947 to safeguard and multiply their wealth and power (not to keep the Muslim population in the newly created country hale and hearty), hence Indian constitution declared secular multi-religious multi-ethnic country. As we look into the break-up of capital-holding 1% opulent class) we note that, 95% belong to upper caste Hindu community. People with personal experience of staying and knowing different regions and provinces of India opine that, this opulent class wanted a sort of ‘official declaration’ that would perpetuate their hold on political POWER and WEALTH. Since 1947 INC or any non-Marxist political party at centre or at provinces could never think anything near to this ‘wish’ of the brute majority of Indian opulent class EXCEPT NARENDRA MODI’S BJP IN GUJARAT. Not even BJP government at centre led by Vajpayee could read the pulse of most of the Indian capitalists. The Indian corporates and the opulent class elites got their messiah in Narendra Modi. Thus, Corporate-state returned to India. Henceforth, the government of India would live for the corporates, work for the corporates and, more importantly, die for the corporates.

And what happened to the 9% upper middle class when their role-model, the 1% opulent class has been busy for manipulating the Indian democratic architecture for perpetuation of their not-so-indirect rule? They merrily chugged along with the 1% – with western education, high-paying salary, decent homes, and motor vehicles the prosperous upper middle class seized the opportunity to increasingly dictate the country’s political economy. Large number of this upwardly mobile and consumerist class of people have close ties with their relatives living abroad, mainly in 5-Eyes countries – this resulted in a notion that English language and western capitalism combination is the way for salvation to achieve prosperity. No wonder that the upper middle class also understood the underlying foundation of the western zionist-capitalist economic system that exploited world-wide colonies for sourcing materials and labour at (almost) no cost for five centuries – Indian opulent class and upper middle class applied same logic in India whereby the 90% population would be sucked dry in order to build the wealth of 10%. Only complete seizure of ‘state institutions’ can provide the power required to achieve such ‘economic miracle’. So the upper middle class was on board for the new journey towards ‘prosperity’.

What has been different in the second coming of corporate-state? So far as the ‘substance’ is concerned, there is no difference at all between English EIC corporate-state and BJP Hindu corporate-state. The dynamics of corporate-state clearly works in a fashion so that all government wings – legislature, executive, and judiciary – work in tandem towards maximisation of benefits of corporate interest and limitless accumulation of profit, and in turn the corporates extend illegitimate benefits to the decision-making persons/entities of government wings. Among many differences of ‘form’ most important ones are:

a) In case of the first appearance of corporate-state in 1769, governance of newly acquired Indian ‘state’ got added as an outer layer of function to the existing core function of corporate business; during the second appearance in 2014, governance of existing Indian ‘state’ acted as the body onto which the corporate business was injected as new blood

b) In case of the first appearance of corporate-state in 1769, foreign capitalists (specifically Anglo-Saxon and Jewish ethnic businessmen) were the most significant gainers while Indian capitalists played the role of lackeys; during the second appearance in 2014, Indian capitalists (specifically Gujarati and Marwari ethnic businessmen) are the most significant gainers while foreign capitalists (specifically Anglo-Saxons and Jewish ethnic businessmen in USA-UK) have been playing supportive role till now

6.2.3 Policy Vectors of Current Corporate-State

This sub-section lists few observations about key stated and unstated policies of BJP, as one could notice during past 6 years.

a) Creation of a virtual reality through print media (newspapers), broadcast media (television), digital media (social networking) which would ‘manufacture’ fake news, fake history, fake glory of fake entities, fake socio-economic parameters, in other words, a forged reality gets created on 24×7 basis by a specially created BJP IT Cell (employing thousands of IT professionals) that manufactures the messages to conform to the RSS-BJP’s social-political-economic-cultural propaganda. This virtual reality is transported to the poor, lower middle, and middle class of population i.e. 90% of population through Indian-owned media as well as USA-based Zionist-capitalist media especially social networking behemoths. Majority of Indians have very little education, who easily fell prey to these deceitful propaganda.

b) Creation of a virtual identity through broadcast media (television), digital media (social networking) through which the people who would come forward to raise voice against misrule and corruption, would be identified as anti-national as against the patriots meaning who would remain silent. BJP IT Cell members using thousands of real and fake accounts in social media would abuse and intimidate any dissident until he/she become silent. Thus, even the leaders of the opposition political parties are silenced by the pro-BJP media houses.

c) Exercise direct control over all key government institutions like bureaucracy, judiciary, and defence by installing RSS-BJP sympathiser at all key positions. Thus, for the first time in independent India, the Supreme Court judgements are being questioned among educated people, or Defence Force issues statements that are overtly political. All checks and balances (there were many, including some which were unnecessary) within governance system has been upturned. Many basic tenet of Indian constitution (‘democratic’, ‘secular’, ‘welfare’, ‘socialist’, ‘justice’ etc.) are being challenged and violated by BJP agenda.

d) Redefine citizenship criterion through a series of self-contradictory bills and amendments whereby all Indian citizens would have to prove through official documents that either their parents took birth and lived in India or they migrated to India due to religious persecution. While it is undeniable fact that illegal immigrants exist in India in large numbers, the same should have been dealt through administrative checking and controlling measures. However BJP utilised the problem of illegal immigrants to redefine the citizenship, which would result in a situation where most of the ST and SC population and many Muslim people won’t be able to furnish required official documents (living under abject poverty they spend all efforts and time to earn livelihood). Suffice to say that ST, SC, and Muslim communities fundamentally remain outcast in the RSS ideological frame of Hindutwa supremacy.

e) Modi government has been systematically using the very large Indian diaspora. The high-profile outreach of Modi himself in Anglo-American countries were/are to achieve certain objectives like – (a) proselytising the ‘hindutwa’ ideology in Hindu community who were/are well established in profession and business, (b) making inroads into top level executives of top Information Technology companies to enlist their committed support to BJP IT Cell, (c) entice the Hindu businessmen for FDI in India either by their business entity or by their Anglo-American associates, (d) donations from wealthy Hindus for BJP party fund.

f) Ostensibly to bring in digital economy by promoting use of digital monetary transactions and by suspending counterfeit currency notes, BJP government suddenly delegitimised use of notes 1000 and 500 denominations by 30 December 2016. To double down BJP government implemented Goods and Service Tax (GST) from 1 July 2017 without appropriate preparedness of infrastructure and training. Result of the ‘pincer movement’ on economy was spectacular – slowly but surely the cash-flow dried up in the unorganised sector of economy which used to provide 87% of employment among working population contributing 52% of value addition in the economy. Indian economy moved backstage instead of marching into digital economy.

A section of small-marginal businessmen is inclined to think that through ‘demonetisation’ and ‘GST implementation’ Modi’s government wanted to marginalise the unorganised sector of economy so that the wealthy businessmen can move into the hitherto uncharted territory of such sectors traditionally cornered by unorganised business – they point out to consumer retail stores, trading of agricultural produces, textile and garments etc. as the proof, where unorganised business took a beating even if sectorial turnover was/is huge, and organised big business stepped in with huge investments. Interestingly, big businesses were present in such sectors even earlier, but they were unable to compete with agile small businesses.

g) Gigantic scale of privatisation of state-owned enterprises (SOE) which couldn’t be even imagined during the era of economic reforms 1991 – 2014. While in the earlier days there would be privatisation of the sick and non-profitable SOEs after carrying out due diligence of assets, 2015 onwards the BJP government targeted handover of even the highly profitable SOEs (in sectors like mining, oil and gas, defence machinery, logistics etc.) and Nation-wide service networks of government (like railways, airlines, telecommunication) to private industrialists at a throw-away price. Being a corporate-state the primary objective is to support the crony capitalists in building their business turnover and profits. Slowly the government would retire into a small shell where taxpayers’ money would be used to run the three wings of governance, and government would have no responsibility or commitment towards welfare of common people of India. This conforms to the more subtle agenda of corporate-state – corporates would provide every possible goods and services that are required to live a daily life in India, and people who can’t afford to pay, will perish.

h) In March 2019, large borrowers accounted for 53% of the total loan portfolio in the banking system, they also represented 82% of the share of gross non-performing assets (GNPA) almost 90% of which is in state owned banks. India’s central bank, Reserve Bank of India has been alarmed that if the top three stressed borrowers failed to repay, the impact will be severe for eight banks in the country. State owned banks found their GNPA at 10.7% of total credit as of March 2020.

A close scrutiny shows a very diabolical game is being played by the corporates. While it was/is normal for businesses to make losses and close down (particularly electricity generation and infrastructure construction sectors performed poorly in India), it is abnormal for businesses to declare bankruptcy en masse when a particular political party is governing at centre. Bad loans written-off in state owned banks:

  • During the period 2004 to 2013 (both inclusive) Indian Rupees 1.238 trillion were written-off
  • During the period 2014 to 2019 (both inclusive) Indian Rupees 5.487 trillion were written-off

Bad debt which was still in the books of public sector bank before April 2020 (when additionally covid-19 impacted the economy) would surely be written off within next 2 – 3 years, amount of that future write-off is estimated as more than Indian Rupees 8 trillion. Thus the 1% Indian oligarchs (that includes mainly industrialists and businessmen, ruling party politicians, a section of bureaucrats, a section of professionals in banking and finance) have been siphoning off the public money through systematic collusion after formation of the new corporate-state. No business anywhere on earth can convert loan (a liability amount) directly into cash profit, as it has been happening in corporate-state of India. It reminds us of the loot of the fabulous treasury of Bengal provinces in 1757 by English EIC.

[ Link: https://indianexpress.com/article/india/india-news-india/k-c-chakrabarty-bad-loan-rti-write-offs-a-scam-small-loans-rarely-in-it-says-former-rbi-deputy-governor/ ]

[ Link: https://www.moneylife.in/article/51st-anniversary-of-bank-nationalisation-has-all-stakeholders-edgy-and-unhappy-time-for-government-to-rebuild-confidence/60935.html ]

i) Modi government significantly invested in the Asian NATO programme of the zionist-capitalist Deep State led by successive governments of USA-UK-Australia-NZ-Canada. Defence cooperation continue to expand with signing of Logistics Exchange Memorandum of Agreement (LEMOA), Communications, Compatibility and Security Agreement (COMCASA), and Industrial Security Agreement (ISA). The Anglo-American military industrial complex views India as a promising area for their business growth.

The corporate-state of India under Modi’s BJP would utilize the burgeoning relationship with world order Deep State for – (a) short-term objectives like creating a bargaining power vis-à-vis China for border dispute and vis-à-vis Sri Lanka for autonomy of Tamil population, (b) mid-term objectives like becoming a permanent member of Asian NATO which would propel India to become de facto naval power in the Indian ocean, (c) long-term objectives like becoming a part of extended supply chain for MNCs belonging to primarily, Anglo-American ownership. The long-term objective is the most significant wish of the Indian capitalists for decades – they hardly understand that western societies got saturated in terms of consumerism, it is Asia and Africa where consumption will continue to increase for decades. Indian capitalists could have clocked more robust business benefits by joining the 3+ trillion US Dollar BRI programme of China.

[ Link: http://bharatshakti.in/wp-content/uploads/2017/06/Indo-US-Foundational-Agreements-CNA.pdf ]

[ Link: https://www.orfonline.org/research/strategic-convergence-the-united-states-and-india-as-major-defence-partners-52364/ ]

j) The seven decade old border problems with Pakistan (related to erstwhile Jammu & Kashmir province of India) and with China (related to erstwhile Jammu & Kashmir province, and Arunachal Pradesh province of India) acquired a new dimension when Modi government bifurcated Jammu & Kashmir province into two parts – Jammu & Kashmir, Ladakh, and withdrew special autonomy enjoyed by the erstwhile province. Apparently BJP government wanted to integrate the region with other provinces for free movement of people and capital. There exist another view which suggest that, India wants to strengthen its military posture vis-à-vis Pakistan and China, and the new move on Jammu & Kashmir would facilitate the same.

As I have noted earlier in sub-section 4.2.3, all border problems were creation of British imperialist power, and three Asian countries may either resolve through dialogue or try to resolve by force (which would be too costly for any of these countries). Notwithstanding the USA oligarchy’s pompous statements, there won’t be any tangible support to India if it chooses to fight, USA would be happy to sell the dated military machinery at hefty prices though!

None of the policy trajectories mentioned above address the economic downturn that has been troubling the Corporate-State of India in the wake of demonetisation and GST implementation. It seems nobody in RSS-BJP is bothered about the worst nightmare in India in seven decades with immediate burning concerns like (1) slowing quarterly GDP growth rate 2017 onwards, (2) total debt increase by 38 trillion Indian Rupees in past 6 years while total debt was 53 trillion Indian Rupees as on March’2014, (3) no significant growth in finished goods exports, and (4) highest rate of unemployment in last 45 years among job-seekers of age 15 years and above.

Welcome to BJP’s Hindutwa Corporate-State of India!

7. Conclusion

As I have noted in the ‘introduction’ chapter, South Asian landmass has been very diverse in terms of people and society, as well as much decentralised in terms of political processes. And the discerning readers of ‘The Saker’ website who all are reading this article, must have concluded that even the political entity of ‘partitioned India’ would be very similar to its parent, the Indian subcontinent. Over and above that, widespread and tacit acceptance among the educated Indians about proliferation of (a) corrupt (b) criminal (c) uneducated ‘leaders’ across all non-Marxist political parties, resulted in such an impasse, that it is herculean task for any mainstream political party to steer present India away from being a ‘corporate-state’ into a ‘welfare state’. Only a Marxist political party that TRULY represent the downtrodden 90% of population which has been under repression by the class-caste combined institution for at least one millennium, can lead future India where everyone gets full security of food, education, and employment, and neither ‘developmental’ projects of the oligarchy trample human rights of poor citizens nor the citizens block economically beneficial environment-friendly large projects.

I would like to share couple of distinctly personal thoughts about Indian subcontinent:

  • Apart from the ruling oligarchy and their policy implementation team in all 3 countries – India, Pakistan, Bangladesh – nobody among 90% common people were benefitted in the long run from the partition of Indian subcontinent. Primarily, small group of 1% oligarch families consisting of bankers-merchants-industrialists-big landlords-politicians-bureaucrats that managed the politics plus economy, by and large, reaped all sorts of benefits during past 73 years from old class-caste institutions;
  • 90% common people in all 3 countries are kept busy with all sorts of divisive issues that were/are created by and sustained by the ruling oligarchy. Fissures along the lines of caste-clan-religion-region-language-education etc. were/are continuously created and publicised to maintain the division among common people so that, they never unite across the country on common economic and political agenda. During past 73 years, time and again real possibilities of mass movement got defeated due to the confusion generated among common people (by the ruling elites cutting across political party lines) using such divisive issues;
  • More often than not it has been found that after winning an election the political party that come to power don’t bother about the pre-election promises on different aspects; could there be amendment in constitution in the way of inclusion of article/clause whereby the performance of the political party that comes to power would be judged vis-à-vis their election manifesto?

As on date, India is firmly moving on the path of Indonesia model – as it happened in post-Sukarno Indonesia, the 90% population disowned by the State but owned by the Clergy, don’t have opportunity for getting ‘education’ (different from concept of ‘literacy’), and hence don’t go through the pain of realisation that they are being thoroughly screwed from-cradle-to-grave by vote-seeking politician, profit-seeking businessmen, and attendance-seeking clergy (more often than not, these three wings of oligarchy are rolled into one within an elite family where different family members establish themselves in a particular wing – family uses all those wings to accumulate ‘wealth’ and ‘power’ for generations). Only difference in BJP’s India is ‘clergy’ belongs to RSS and not to Muslim fundamentalists as in Indonesia.

Socio-economic as well as socio-political future is uncertain in India, possibilities galore. Future is wide open for the oppressed masses in India to even create revolutionary history, may be through a path that blends Russian revolution and Chinese revolution or may be through an altogether different path that directly leads towards a community-ownership of all means of production. But that would be only possible if a revolutionary Marxist party crystallises with coming together of Communist splinter groups who still have ideological existence, and all of them relinquish their inhibitions about others, publish a single manifesto based on current realities of India, make a long-term strategy and formulate mid-term plan, educate and unite the oppressed masses without sidestepping the class-caste conundrum. The Marxists have a long way to go. And, for the sake of 90% Indians, they need to embark on the journey afresh.

I would welcome any criticism from readers that is backed by facts and appropriate and correct data analysis. Though I have taken utmost care to present statistics directly from publications by government of India and globally acclaimed institutions, there could still be inadvertent mistakes.

Finally, before ending, I must acknowledge that in many aspects of this lengthy article – the basic hypothesis, and analysis of social-political-economic aspects – my father’s inputs were freely used that he imparted to me during 2006 – 2010 when I used to be informally part of his study-circle.

Reference:

  1. The Cambridge Economic History of India Volume 2
  2. The Corporation that Changed the World by Nick Robins
  3. Class Structure and Economic Growth: India & Pakistan since the Mughals by A. Maddison

Short profile:

By profession I’m an Engineer and Consultant, but my first love was and is History and Political Science. In retired life, I’m pursuing higher study in Economics.

I’m one of the few decade-old members of The Saker blog-site. Hope that this website will continue to focus on truth and justice in public life and will support the struggle of common people across the world.

A nature-lover since childhood, I’m an Indian by nationality with firm belief in humanity.

Weekly China Newsbrief and Sitrep

Source

By Godfree Roberts selected from his extensive weekly newsletter : Here Comes China

October 16, 2020

Weekly China Newsbrief and Sitrep

Editorial : Before we start with Godfree’s news, a short commentary on Pompeo’s attempt to create an type of NATO by way of the QUAD.  Plot Spoiler – did not work.

From Moon of Alabama

The US administration revived the 2007-2008 Quadrilateral Security Dialogue and rebranded it as the U.S.-Australia-India-Japan Consultations Quad. The aim was to turn it into an Asian NATO under U.S. command:

The U.S. State Department’s No. 2 diplomat said Monday that Washington was aiming to “formalize” growing strategic ties with India, Japan and Australia in a forum known as “the Quad” — a move experts say is implicitly designed to counter China in the Indo-Pacific region.“It is a reality that the Indo-Pacific region is actually lacking in strong multilateral structures. They don’t have anything of the fortitude of NATO, or the European Union,” U.S. Deputy Secretary of State Stephen Biegun said in an online seminar on the sidelines of the annual U.S.-India Strategic Partnership Forum.

The end of this meeting was disappointing for Pompeo as he could not even break through to a joint statement.  It is not that Mr Pompeo’s diplomacy failed, it is just that nobody is interested any longer.

MK Bhadrakumar, a very well known and now retired Indian career diplomat describes the Indian stance on the Quad meeting and the aftermath as well as the ASEAN positioning.

“The heart of the matter is that India has no reason to be the US’ pillion rider. Whatever remained of the US’ exceptionalism is also gone as the world witnesses its pitiable struggle with Covid-19, repeated displays of racism, gun violence, political venality, xenophobia. No wonder, the transatlantic alliance is withering and Europeans are dissociating from the US’ effort to “contain” China.

The US created the ASEAN but today no Asian security partner wants to choose between America and China. The ASEAN cannot be repurposed to form a coalition to counter China. Thus, no claimant against China in the South China Sea is prepared to join the US in its naval fracas with China.

China has resources, including money, to offer its partners, whereas, the US budget is in chronic deficit and even routine government operations must now be funded with debt. It needs to find resources needed to keep its human and physical infrastructure at levels competitive with those of China and other great economic powers.

Why on earth should India get entangled in this messy affair whose climax is a foregone conclusion? No, things should never be allowed to reach such a pass that India needs to tackle a China-Pakistan collusion.”


from Here Comes China and we start with protest in Thailand

[Ed.] As the lead-up to these protests are very similar to those others that we’ve seen, we have to come to conclusions that these are not grassroots, but the flames are fanned by outside influence.  I cannot help but consider and speculate that Quad Attempt failure may have kicked off this new attempt at influence. 

US efforts to overthrow the Thai government by funding and backing anti-government groups stems from Thailand’s growing ties with China and Washington’s desire to reverse them. China is currently Thailand’s largest trade partner, largest foreign investor, largest source of tourism, largest arms supplier, and a key partner in several major infrastructure projects including Thailand’s rollout of 5G telecommunication technology and a regional high-speed rail network.

Having clearly failed to attract public support since the 2014 coup ousting Thaksin Shinawatra’s sister from power and since 2019 after vowing to reverse the outcome of general elections the opposition squarely lost – protesters have resorted to increasingly violent and confrontational tactics to attract attention and provoke a government response they and their Western media partners want to portray to the world as “crimes” in order to invite wider Western pressure and possibly even intervention.

There are now fears that – having failed to attract public support – the protests will attempt to trigger violence to have their Western media sponsors spin as government-initiated and used as the Western media has in other nations targeted by similar US-backed “soft power” interventions to pressure the Thai government to step down or at the very least sow chaos and clear the way for sanctions and other punitive measures aimed at targeting Thailand’s economy and international standings. The protest leaders have demonstrated extraordinarily poor judgement and leadership throughout their protest campaign – not unlike other US-funded agitators such as in Hong Kong, China. Since their movement is ultimately directed by foreign interests seeking more to agitate China and those doing business with it than actually deliver “victory” to the protesters themselves – the protesters were always seen as expendable – with chaos always more preferable than  building a genuine, constructive, and sustainable opposition. –Tony Cartalucci – ATN. [MORE]


To counter some of the Xinjiang propaganda:

Xinjiang received 15 mln visitors during the holidayup 11% yoy. Tourism revenue during the holiday reached US$1.24 billion U.S. dollars.[MORE]

José Freitas wrote to say that you may have been unable to open Daniel Dumbrill’s Xinjiang links in last week’s issue, so I added more resources from the Qiao Collective and published everything to the web.


Christine Hong’s ‘A Violent Peace’: Race, U.S. Militarism, and Cultures of Democratization in Cold War Asia and the Pacific, arrives at a time when Washington’s Indo Pacific Strategy is driving U.S. political, economic, and military confrontation in the Asia-Pacific, as the culmination of a long process that began in the immediate aftermath of the Second World War. A Violent Peace examines how the United States sought to encompass the Asia-Pacific “within the securitized contours of U.S. military empire,” and the responses to that policy by “a range of people’s struggles – black freedom, Asian liberation, and Pacific Islander decolonization.”

Hong focuses her political analysis through the the literary and artistic lens of relevant works by black authors Ralph Ellison and James Baldwin, Japanese writer Kenzaburō Ōe, Japanese-American artist Miné Okubo, and Philippine-American novelist Carlos Bulosan.

Following World War II, the United States swiftly expanded its military presence in the region and established and supported reactionary client states. It aimed to roll back socialism and pursue economic, political, and military domination throughout the region. Those goals remain unchanged to this day. As Hong writes: “Understanding the role of U.S. police and war power within the political economy of postwar U.S. ‘democracy’ entails critically revisiting World War II’s structural legacies. How we explain postwar U.S. militarism—its reliance on superior force to achieve political ends in foreign and domestic arenas—depends on our grappling with the transformation of the United States during World War II, a time of Jim Crow, into a boundary-blurring, total-war state, permanently mobilized not only for war abroad but also for war at its very core.”

The United States imposed regional postwar democratization and development based on how it defined those terms. This was a political project that was “realized at the barrel of a gun,” subsuming Asian and Pacific nations into American military and police power projection that encircled China and the Soviet Union.

The U.S. introduced a democratization model that established postwar Japan as an important client state and anchor for the projection of U.S. war power throughout the region. Rehabilitating capitalism and providing opportunities for Western investors were prioritized as goals over meeting the people’s needs, despite the fact that many Japanese urban areas lay in ruins, and the population faced food shortages and mass unemployment.

For U.S. capitalism, a more pressing task than improving peoples’ quality of life was to solidify a system that would serve U.S. power, and the U.S. Army Counter Intelligence Corps “enlisted the Japanese police in routing out labor organizers with alleged Communist Party ties.” This policy planted “the ideological seeds of anticommunist U.S. police actions to come,” including the wars in Korea and Vietnam. “In the dawning Cold War order, wartime allies thereby morphed into peacetime targets whereas former rightist foes in Japan and the region were rehabilitated as linchpins of anticommunism.”

The Marshall Islands served as a sacrificial offering to U.S. nuclear weapons development. The disregard shown by U.S. officials toward islanders is stunning in its inhumanity. Residents of three islands that were downwind from the Castle Bravo hydrogen bomb test on March 1, 1954 were not evacuated until three days later, by which time their “hair began falling out in clumps” and “their skin displayed burn patterns.” In the view of American officials, U.S. administrative control over the islands trumped the territorial rights of the inhabitants, giving the United States “the right to close areas for security reasons,” as it “anticipated closing them for atomic tests.”

Returning the Rongelapese to their contaminated homes was regarded by American researchers as an opportunity that would “afford most valuable ecological radiation data on human beings.” What better test subjects could there be? As Merril Eisenbud, director of the Atomic Energy Commission’s Health and Safety Laboratory, observed in an internal 1956 memorandum, “While it is true that these people do not live…the way Westerners do, civilized people, it is nevertheless true that these people are more like us than mice.” One may question just who is civilized and who is uncivilized in designating Marshallese people as “model organisms for biomedical study.”

As Marshallese politician Tony deBrum noted, “Some of our people were injected with or coerced to drink fluids laced with radiation. Other experimentation involved the purposeful and premature resettlement on islands highly contaminated by weapons tests to study how human beings absorb radiation from their foods and environment.” Hong observes that in this context, “no Marshallese could sustain the illusion that near-likeness meant an assurance of their humanity.”

Although the Marshallese were routinely denied medical care, U.S. researchers diligently conducted examinations and blood tests to gather data. Noting islander resentment, researcher Robert Conrad suggested that “next trip we should consider giving them more treatment or even placebos.” In a scathing public letter to Conrad in 1975, Rongelap magistrate Nelson Anjain wrote: “There is no question about your technical competence, but we often wonder about your humanity.”

U.S. policy in the postwar Philippines followed a familiar pattern, prioritizing opportunities for Western investors to exploit the land, labor, and natural resources. The United States “installed, most flagrantly in the office of the president, Filipino collaborators with the Japanese” and “secured military basing rights, transforming the Philippines into a launching pad for its anticommunist insurgencies in the region.” Inevitably, leftist guerrillas who had fought against Imperial Japanese occupation discovered that with the advent of peace, they were transformed into “targets of brutal U.S.-backed counterinsurgency campaigns.”

Postwar decolonization in the Asia-Pacific generally failed to free the region’s nations from domination, transferring that relationship from Imperial Japan to the United States. “Having returned in the garb of antifascist liberator,” Hong observes, “the United States erected a formidable extraterritorial garrison state, unleashing catastrophic violence throughout the region and placing the Asian communist opponents of Japanese fascism in its war machine’s crosshairs.”

In contrast to the punishment meted out to erstwhile wartime allies, the United States installed in power many of those who had collaborated with Japanese occupiers, valuing their experience in fighting against liberation movements. Hong points out, “In rehabilitating the empire it succeeded, the Pax Americana, as a military-imperial regime in its own right, strategically gave new life to subfascist figures who had served under the Japanese, thus thwarting the process of decolonization.”

U.S. power abroad is interrelated to issues of class and race at home. As was often the case when American soldiers encountered the local citizenry in Vietnam, there was and is a mirrored pattern at home. In both environments, “racial profiling presumes guilt not just by association but by location, sweepingly conflating racialized humanity with areas where ‘mere presence in a certain place’ is tantamount to a crime.” In that context, people are erased as individuals and incorporated into the category of “perceived threat.”

In the postwar era, the persistence of black exclusion from U.S. society contrasted with the image of inclusion provided through the U.S. military’s desegregation. This “liberal cover of integration, coalition, multiculturalism, and democratization” masked what was mainly “un-visible” to the U.S. domestic population – the “U.S. national security apparatus, military-industrial complex, empire of bases, and permanent war economy.” The military offered a politically equivocal personal emancipatory model that was essentially “extractive and destructive.” The “harnessing of race to the war machine required that racial labor risk its own obliteration” in performing its role in a “lethal agenda geared toward the devastation of distant lifeworlds.” The image of the military’s inclusivity “belied the U.S. war machine’s brute geopolitics and antihumanism.”

Black radical appeals to the United Nations General Assembly, such as W.E.B. Du Bois’s 1947 petition and William Patterson’s 1951 indictment We Charge Genocide, outlined a structural relationship between U.S. domestic and foreign policy, “construing racism within the United States to be the domestic expression of a global pattern of U.S. imperialism.” These appeals fell victim to intensifying Cold War pressures and the unequal power relationship between imperialism and Third World nations. Patterson approached several UN delegations, only to be informed that while they were in sympathy with the appeal, “championing such a petition, no matter how valid, would not be diplomatically prudent.” The United Nation’s human rights program was, and remains so today, inextricably bound with U.S. power. “Any account of black radical human rights as an oppositional politics,” Hong explains, “thus must theorize U.S. dominance in the Cold War system, the very institutional basis for human rights that emerged out of World War II’s ashes.”

U.S. domestic repression against oppositional voices during the Vietnam War, including COINTELPRO, the CIA’s Operation CHAOS, and other repressive mechanisms, blurred the distinction between the home front and war front, unleashing a “national security juggernaut” against “Americans perceived to be enemies.” The methods deployed against activists and organizers “uneasily mirrored, though by no means on the same scale, U.S. strategies of pacification and neutralization in Vietnam.”

Racial counterintelligence aimed to neutralize enemies both at home and abroad. “Predictably,” Hong notes, “each author of black radical human rights petitions to the UN – Du Bois, Patterson, Newton, and Seale – as well as key affiliates like Robeson, would be subjected to counterintelligence investigation.” Hundreds of thousands of American citizens were the targets of investigation and surveillance, while COINTELPRO engaged in burglaries, disinformation programs, and efforts to create discord and conflict within oppositional groups. “The vast military-industrial complex and intelligence apparatus that emerged from World War II paved the way” for police militarization and human rights violations throughout the “U.S. military empire, including at its imperial core.”

In the space of a short review, it is only possible to touch on a few of the book’s themes. A Violent Peace covers a much broader spectrum of topics, from which even the most knowledgeable reader will find much to learn. Christine Hong has written a profound and multilayered analysis of the U.S. military’s role in the postwar Asia-Pacific, and its relationship to militarized repression at home. Enriched by a deeply sympathetic understanding of black and Asian oppositional voices, Hong’s book exposes the reality behind comforting myths about the American democratization mission.

With great eloquence, she draws insightful connections between race, class, and power, while vividly demonstrating how the expansion of U.S. power into the Asia-Pacific in the postwar era has led to the world we live in today. Deeply considered and thought-provoking, A Violent Peace is essential to understanding our current predicament. [AMAZON]


Cover Art : A 75-minute bidding battle broke out as collectors competed to acquire Ren Renfa’s

Five Drunken Princes Returning on Horseback,

a late 13th / early 14th scroll from the Yuan dynasty. Over 100 bids pushed the final sale price to US$39,555,000, well beyond the pre-high estimate of US$15,484,000. The sum establishes the scroll as the most valuable work sold at auction in Asia in 2020, and the most valuable Chinese ink painting sold by Sotheby’s Hong Kong.  Ren’s masterpiece was already highly prized duringf the Ming dynasty, in the words of painter Zhang Ning (1426-1496), “Black, Yellow, Red, White, and Mottled Horses. Every horse is worth a thousand taels of gold.”

Selections and editorial comments by Amarynth.  (Go Get that newsletter – it again is packed with detail).

U.S. sanctions bring Moscow, Beijing, and Tehran together: Russian academic

September 18, 2020 – 23:18

By Mohammad Mazhari

TEHRAN – An associate professor in the Department of Comparative Politics at Russia’s RUDN University believes that the United States’ sanctions are one of the factors that bring Iran, Russia, and China together.

Russia, China, and Iran are expanding economic and political ties as a result of U.S. pressure policy, Vladimir Ivanov tells the Tehran Times.
“One of the forces that bring these countries together is U.S. sanctions pressure, which affects Iran, Russia, and China,” the Russian academic says.

Following is the text of the interview:

Q: Some analysts and politicians argue that Russia, China, and Iran are forming an alliance against Washington’s bullying, sanctions pressure, and use of the dollar as a weapon. They cite the Iran-China-Russia joint naval exercise in the Indian Ocean and the Gulf of Oman in December 2019 as the signs of such an alliance. What is your comment?

A: Today, many experts see Russia, Iran, and China’s military exercises as a “Maritime security Belt” in the Northern Indian Ocean and the Arabian sea as the end of American hegemony in the Persian Gulf.
Moscow, Beijing, and Tehran have begun to outline a possible security system in the most important part of the world’s oceans. Contrary the U.S. is trying to promote a naval coalition’s idea to “protect” shipping in the region. So, Washington announced the formation of the International Maritime security coalition (IMSC) under its auspices.  Also, Washington began to realize that Tehran is not isolated and will not be left alone, that the Iranians have serious partners who are ready to support them in the region.
But will this initiative lead to the emergence of a military-political Alliance “Russia-Iran-China” is premature, but we record a noticeable change in the Middle East (West Asia) and Southeast Asia’s power balance.

Q: Economic and scientific ties between Iran and Russia are not commensurate to their political ties. This is despite the fact that the two countries are immediate neighbors with rather large populations and great untapped potential. What are the impediments?

A: Russia, China, and Iran are expanding economic and political ties. One of the forces that bring these countries together is U.S. sanctions pressure, which affects Iran, Russia, and China. These countries already do not use U.S. dollars in mutual trade, but their national currencies. And they create special mechanisms to circumvent U.S. sanctions. In addition, Iran is preparing new agreements on long-term cooperation with China and Russia. The Iran-Russia cooperation agreement expires in March, so the newly updated treaty is likely to develop a long-term comprehensive strategic agreement.
At the same time, Iran continues negotiations with China on a 25-year partnership, which many Iranian officials called a “turning point” in relations between Tehran and Beijing.

Q: What is your analysis of the course of action that the Eurasian Economic Union (EAEU) has taken?  What steps are needed to make the EAEU effective like other economic blocs such as ASEAN?
The recent establishment of a free trade zone between the Eurasian Economic Union (EAEU) and Indonesia is a decisive step towards creating a full-fledged trade zone with the Association of Southeast Asian Nations (ASEAN).
Recently the volume of mutual trade between the EAEU and the ASEAN is not high enough. Integration associations need to expand trade, economic, and investment cooperation, including the development of the initiative of the large Eurasian economic partnership.

In October 2019, the agreement on trade and economic cooperation of the Eurasian Economic Union with China came into force. Although this agreement is “only” a framework agreement, it creates a platform where representatives of the EAEU member states and China can discuss existing barriers to mutual trade and ways to overcome them. The next step could be the creation of a free trade zone between the EAEU and China. But this is not a short-term prospect.

Q:  Is it technically and geographically possible that China also joins the club like the Shanghai Cooperation Organization, which includes countries from  Europe and Asia? 

A: In October 2019, the agreement on trade and economic cooperation of the Eurasian Economic Union with China came into force. Although this agreement is “only” a framework agreement, it creates a platform where representatives of the EAEU member states and China can discuss existing barriers to mutual trade and ways to overcome them. The next step could be the creation of a free trade zone between the EAEU and China. But this is not a short-term prospect.

Q: The U.S. intelligence agencies have claimed that Russia, China, and Iran are seeking to influence the result of the November elections in America. Please give your answer?

A: This is mostly a conspiracy theory that is popular in the U.S. But all these media and political commotions are supported only by public speculation about hacker attacks.

Q: Please give your view of the U.S. failure at the UN Security Council to extend an arms embargo against Iran.

A: Even though Washington has withdrawn from the Iran nuclear deal, it still uses its mechanisms. However, at the UN, no one except the Dominican Republic supported the U.S.-proposed extension of the arms embargo against Iran. In any case, the whole issue of the Iranian arms embargo still looks rather symbolic. Tehran could already acquire some types of weapons — such as air defense systems.

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Why Today’s India is on the Wrong Side of History

Why Today’s India is on the Wrong Side of History

September 13, 2020

by Allen Yu for the Saker Blog

Recently, I wrote a short comment in the piece India’s border policies line with Thalassa noting that “India is on the wrong side of history.” It was too “conclusory” a comment deserves to be better explained. So I’d like to take a brief time why I think India is on the wrong side of history in siding with America against China today.

I’d first like to take a larger view of history.

Historical Context

Human history has for the most part gotten better over the last few tens of thousands of years. Our technology has advanced. Our life expectancies have increased. The last 200 or so years have seen the most explosive advances. The pace of scientific and technological advances has created a world beyond the wildest dreams of our ancestors.

And if we believe that the human spirit of ingenuity will continue, as there is no reason not to, then the best is still yet to come. 90% of all scientists that have ever lived are alive today. If we can have peace and the world allowed to be free from hegemonic oppression, I’d say the future is bright for the human species.

Unfortunately, ominous dark clouds have hung over the world despite all the positive momentum of history. We live in a time of great paradoxes. Though the world is currently in a “time of peace,” with technologies and economies fast advancing, in relative overall prosperity, sponsored Color Revolutions and civil wars have been unleashed upon many nations, devastating regions from Iraq to Afghanistan to Ukraine to Egypt to Syria to Hong Kong. Economic sanctions have ravaged whole generations of peoples in regions from N. Korea to Turkey to Iran to Venezuela.

WWII by most accounts represents a righteous high point in history. It represents the defeat of the axes of fascism and colonialism. Yet, fascism and colonialism never left us. It got transformed and embedded into our new world.

The more things changed, the more we realize that many things haven’t changed. The poor and disposed of the colonial era are for the most part still poor and dispossessed. Russia is still the target of Western aggression after hundreds of years of antagonism. Even China – the presumed challenger to the West – has not escaped the trajectory of this history. Western powers – with their allies – are now actively scheming and working hard to suffocate China economically and technologically in an attempt to shove it back to a place of perpetual subservience to Western interests.

Some may argue say that Russia and China’s problems are that both had overplayed their hands. Russia had overextended itself in Eastern Europe and the Middle East, and crossed the West’s “red line” in Ukraine. China has crossed the “red line” in the S. China Sea, Hong Kong, Xinjiang, etc.

The truth is that it is the West that has crossed the line in Europe, the Middle East and in Ukraine … and in S. China SeaHong Kong, and Xinjiang.

India’s Strategic Blunder

It is at this critical juncture that India has decided to pivot toward the West. India is making a gigantic strategic mistake. Here are some reasons why.

  • It does not make sense to make an enemy of 1.4 billion people. It’s is one thing to fight a border war, but it is quite another to actually join a group of others to contain the development and growth of 1.4 billion people. The wrath and actions coming out of the U.S. against China has been truly surprising and depressing. It is against the basic rights and dignity expressed in the UN charter. Why should India join that chorus? Chinese have no animosity toward the Indian people. However, the Indian populace – fanned by an irresponsible media with much rumors and fake news – has allowed itself to be whipped into a giant anti-China frenzy.
  • America – and the broader West – will not help India to develop. Many Indians fancy that India – after America decouples from China – will take the place of China and that the West is going to help pull India out of poverty the way it has helped to pull China out of poverty. That is just not going to happen. There are a few reasons for this.
    • First, America has squandered much of its capital since becoming the sole superpower with its endless wars since the fall of the Soviet Union. America today thinks the world as set up after WWII is set against it, with much of the world leaching off America’s largess. America will have no more of it. Enough has been enough! Never again will America work for another country!!! America now wants the world to serve it, not the other way around. If Indians think America had pulled China out of poverty (Chinese mince at that notion since they believe it is they themselves who pulled themselves out of poverty), they can rest assured America will not be able to do the same for India.
    • Second, the West has come to see the world not in win-win terms, but in zero sum terms. For a brief while, the West did experiment with some version of win-win globalism. While it infused globalism with its own suffocating ideologies and rules to benefit itself, it did for a while work on a flatter world. In this “flat world,” people the world over get to exchange ideas and goods and services with each other, for each other’s own benefits, all in a win-win fashion. But that period soon ended. It’s not just Trump. It’s the whole establishment and populace. The jealousy by which the West has come to guard their knowhow, markets, and manufacturing resources for Covid-19 vaccines represents just the tip of the ice berg. The West used to think of itself as a shining beacon for the world. It had first rate technology and science that attract the world over to learn and disseminate back to the world. Now, it considers people coming to learn and bring back knowledge as “stealing.” It considers manufacturing abroad as stealing. It considers R&D abroad as “stealing.” Whatever India hopes to get from America and the West, it is not going to be good jobs or know-how. America wants its manufacturing back. It has drawn from China’s rise the (incorrect) lesson that it should never help or allow another power rise. It doesn’t want to depend on China – or anyone else – to make anything but the lowest value items. It becomes suspicious when others make its masks, medical equipment, pharmaceutical products, software, cars, computers, etc. It will think twice, thrice, about ever helping to create a new peer competitor again.
    • America – and the broader West – is in decline. The West is in decline. There is no doubt about it. The writing is on America’s economic wall – or more accurately, in its Fed balance sheet. An economy cannot go on printing money. An economy cannot stay productive with prolonged low interest rates and paper printing, where the most productive and valuable thing it produces are military weapons. Many people talk about America’s “soft power.” I say B.S. If you take away America’s military, do you think America’s “soft power” will stand on its own? No. America’s “software power” will vaporize. American soft power stands on its military power. And America’s military power stands on the might of its economic power. Recently, that economic power is buttressed in part by China (through trade). But now America no longer wants to rely on faraway lands for anything. Once it starts decoupling from China, it will soon realize how weak it economically is. An economic reckoning will come. Such a inflection point would not necessarily bad for the American people. Stripped of its imperial duties and obligations, Americans can focus on the important things that had made America “America” again. But it means the days of the American Empire are ending. The days of America helping to lift another nation from poverty has long gone.
  • America – and the broader West – is not capable of negotiation. The West cannot keep any agreement that goes against their interests. When even the slightest of circumstances change, they find a reason to tear up the agreements, with the Iran nuclear deal but one example. Whatever deal India think it is going to get, it is not going to get what it thinks it will get. The relationship will only work song as so India gives up much more than it receives. This is the Western way. Forget about getting a fair deal. Forget about even getting a good deal. India is thinking about forging a long-term deal … I say be realistic. There is nothing special about India that will make the West change. Beggars can’t demand change. The West is not going to change its fundamental ways for you.
  • India will miss the boat in the rising Asian Century. The engine of the new global growth for the foreseeable future will be China and its surrounding neighbors. No one doubts that. Many ASEAN nations – despite having intractable territorial disputes with China in the S. China Sea – have decided to join China in building a shared future. India too has been invited but it has decided time and time against joining China because of its territorial disputes with China. This is short-sighted. China and India are old sister civilizations that have long interacted with each other. The notion of a straight line fixed territory is a Western concept. When we fixate on boundaries to the exclusion of everything else, we get led down a zero-sum intractable dispute.

China’s “community with shared future for mankind”

China is pushing forward a framework of “community with shared future for mankind” for foreign relations. This is a rejection of both traditional ideological based framework of international relations as well as the cold “realist” approach.

It is a rejection of traditional ideology in the sense it is truly agnostic about what forms of government or other ideologies other nations follow. As Deng Xiao Ping has been quoted to say, “It doesn’t matter whether a cat is black or white, as long as it catches mice.” It doesn’t matter if you have a left leaning or right leaning, or capitalistic or socialist, or “democratic” or “authoritarian” government, what matters is if you deliver good governance for the people.

It is a rejection of traditional realistic approach because it doesn’t really view might as the end and be all. While China acknowledges cold realism, it also aspires for a new world order that promotes global justice – which can be summarized as true sovereignty of each nation to develop as it chooses for its people.

The way to a stable world then – according to China – is to create an environment where we can raise the water for each other, shelving all conflicts as much as possible. Once everyone is better off enough – hopefully much better off than today – many issues – including territorial disputes – will become much easier to resolve.

Why Shelf Territorial Dispute?

So if we go back to the India and China territorial dispute: sure, the two neighbors can always fight to the death over a piece of territory, but that is missing the forest for the trees. What they need – above all else – is to develop each other’s society, to pull its peoples from poverty, to provide a better future for its people. What they need then is to meet each other somewhere in the middle and to enable each other to cooperate with each other. China’s faith – which should be India’s as well – is that the benefits of cooperation will in the future outweigh – far outweigh – any territorial concession each can make. It will outweigh territorial concessions because the sky is the limit to where each nation can develop.

If you think lifting 800 million out of poverty over 4 decades is amazing, think lifting 1 .4 billion between India and China over the next 4 decades! That’s the kind of vision and possibility we are looking at!!!

The way out of today’s intractable territorial dispute is to shelf it and to focus on things both sides can cooperate on, leaving the problem for a much more prosperous generation to settle on. The important thing is to build a bigger pie for our future generations instead of bickering over today’s limited pie.

Unfortunately India has decided to not only reject that vision, but to ally with U.S. to suppress China’s win-win shared common future from arising.

From China’s view, the world has been held hostage by the West for too long. Too many nations either cannot or do not want to stand up for their right to develop. The cost of standing up to the hegemon just seems too high. Many actually want to work with the hegemony, hoping to for fleeting crumbs of good will and vague rewards, even if it means enabling the hegemon to continue its pillaging and oppression over them.

The human psyche is a strange thing. While human beings have been known to rise to the highest of braveries in defense of justice, righteousness, honor, and faith, they can also be exceedingly weak and feeble. There are too many stories of a man or woman being beaten to death by a criminal, with passive crowds and strangers watching and passing by, doing nothing.

“Give a Man a Fish, and You Feed Him for a Day. Teach a Man To Fish, and You Feed Him for a Lifetime.” The world must go beyond taking short-term benefits from the West and learn to fish by themselves. It cannot always beg for a fish scrap here and there. It cannot keep fighting against or sabotaging each other for favors from the rich.

Too many of the areas of the world with territorial conflicts have arisen from their colonial legacy. The China-Indian territorial disputes arose from British colonial legacy (others that come to mind include the Palestinian issue, Cyprus, Kashmir, Pakistan-India animosity, etc.). The world must be able to through this trap to free themselves collectively from their colonial legacy.

The West – despite all its follies – continue to be strong. It has the most wealth, technologies, and strongest military. It can buy allies anywhere around the world. It can bribe and corrupt most governments around the world. But in the long term, it cannot last. The rest of the world must learn to stand up by itself.

Freedom and Development with Strings Attached

As the world currently stand, if nothing major is done, much of the fruits of science and technology will continue to accrue only to a few nations. The U.S. and the “West” has been the undisputed leader across a wide swath of science and technology in the 20th and 21th century. By their actions throughout history and today, we know Western dominance rests exclusively on their scientific and technological prowess. If their ideological prowess, not their technological prowess, is the source of their power, why are they so quick to demand others adopt their ideologies while remaining so protective of their technologies?

I mean … have you wondered why the West would want to shove down the rest of the world’s throat their version of “democracy” and “rule of law” … but get so worked up when others learn from them knowledge about science and technology?

Today, China is the only power capable of challenging all dimensions of the Western grip on of scientific and technological dominance – at least in the foreseeable future. But just as China begins to appear to be a credible competitor or alternative, the West is mounting an all spectrum attack on China to suppress its ability to access technology and markets around the world.

Thus we see that the West’s preaching of “free markets” and “rule-based economy” has always been a mirage. The British demanded “freedom” because they wanted the “freedom” to pillage on their own terms. They know that since they had the best technology and companies, the world is there for their picking if the barriers are broken down. Hence they worked to knock those barriers down!

The U.S. took on their mantle … and demanded “freedom” … too, also for the U.S. to pillage the world on their own terms. But when their dominance is threatened, the veil of “free markets” and “rule-based” trade systems has come down too.

From the Chinese view, the U.S.’s lack of confidence about China’s rise shows how insincere and hypocritical the West has always been about the world. Many Chinese have long seen through the façade of “ideologies,” and “norms” and “rules” masquerading hegemony real politik.

China’s dreams for win-win shared future are not false ideals. After all, it is not completely devoid of precedence. After U.S. helped to rebuild Europe and/or Japan, has the U.S. not received benefits from those regions? Of course! Not only have they contributed to advances in science and technology, they also provided a market for the U.S.

But there is a critical limit about American good will. Europe and Japan were allowed to succeed – but only up to a certain level. The main value of allowing Europe and Japan some prosperity is not in making those regions better off per se. The main value was in using those regions to contain Soviet Union / Russia and China. Europe and Japan understand their roles as subservient powers – and their roles as first lines of containment against Russia and China.

A Disgruntled West

Today, with U.S.’s political system and social fabric deteriorating, the U.S. is going through a fundamental rethink. The U.S. now openly thinks allies like Japan and Europe have been “taking advantage” of the U.S. The U.S. now wants payback. From its allies, it seeks better trade deals and more “protection money.”

And against China, it is on a crusade to stop its development. In China’s view, this is a red line and truly tragic. China believes the fundamental right of every people is the right to develop. It is the right of the U.S. to want to decouple from China. But to try to form an alliance to constrain the growth of 1.4 billion, as it had already with lesser powers such as N. Korea, Cuba, Iran, and Venezuela is to cross China’s fundamental red line.

India is on the wrong side of history because it is siding with a West that is going to such levels to extend its grip on dominating the world. Some time ago, I remember seeing Trump tweet out an edited version of Time’s cover of Trumpism outlasting Trump … lasting “4EVER”! There is an important kernel of truth to that video!

The West has changed. It is now open about wanting to dominate the world through suppression instead of being the light that draws the world.

Painting Itself into a Corner

In wanting to join the Western crusade against China, India too has crossed to the wrong side of history. In the coming multipolar world, India is positioning itself in a place where it will be difficult for it to develop. The capital and knowhow that can flow from a renewed China will no longer flow to India. By rejecting the Belts and Road Initiates and the RCEP, India is decoupling from Asia’s coming century.

Losing all that, but what does India have to gain? India will not be able to tease more territory out of China by playing tough. If India believes it can hang on the disputed territories against China, so too can China hang on to its disputed territories against India. Whatever India thinks it can do against China, China can do the same to India. This should be beyond any doubts!

So no new territories will be gained (or lost) through India’s current posture. What is lost however is the space for cooperation and mutual growth. India’s rejection of strategic cooperation perceived tactical gain is India’s tragic mistake today.

China is strong enough to go along without India if necessary. It is moving full steam ahead with its Belts and Road Initiative, RCEP, CJK, etc. It has formed a formidable relationship with Russia not based on ideology, alliance, political preferences, etc. – but based on building up and emphasizing common interests between two previous competitors. China and Russia will be friends not necessarily because the people “like” each other – although Chinese generally do have overwhelming positive feels toward the Russian people – but because their leaders have worked hard to ensure that they have develop and enhance many overlapping common interests.

A Relationship of Mutual Respect and Shared Common Future

Russia and China represents the sort of respectful, cooperative give and take relationship that China believes will represent the future of man-kind. They will succeed because such thinking not because you either join China or get kicked out on the high way. No, it will succeed because it will create far more than the West’s zero sum approach.

Now, don’t think everything is jolly good between Russia and China. I am sure the leaders have had many “frank” discussions about their differences … often. Historically China and Russia has had many issues. But rather than just hyping up (or burying, which is just as bad) their past, they have chosen to work on cooperating with each – to each other’s mutual benefits.

There is still time for India to join China. For eons China and India have coexisted with each other without a clearly demarcated border. Yes, in our modern world, we all long for clearly defined boundaries. But if that’s not possible, it should not be the end all and be all! Through cooperation, India and China can build a bright, shared future together, notwithstanding the territorial disputes. Now is the time for India’s leaders to decide if petty adventures on the border and allying with a dying hegemon are truly in India’s interest. Will India go down defiant, proud, and loud – but weak, petty, and trapped in the history of time?


Allen Yu is an IP attorney in Silicon Valley, a founding blogger at blog.hiddenharmonies.org, as well as an adjunct fellow at the Chunqiu Institute for Development and Strategic Studies. He holds a J.D. from Harvard Law School and a D. Engr., M.S., and B.S. from UCLA Samueli School of Engineering.

The heart of the matter in the South China Sea

The heart of the matter in the South China Sea

July 30, 2020

by Pepe Escobar for The Saker Blog and originally posted at Asia Times

When the Ronald Reagan and Nimitz carrier strike groups recently engaged in “operations” in the South China Sea, it did not escape to many a cynic that the US Pacific Fleet was doing its best to turn the infantile Thucydides Trap theory into a self-fulfilling prophecy.

The pro forma official spin, via Rear Adm. Jim Kirk, commander of the Nimitz, is that the ops were conducted to “reinforce our commitment to a free and open Indo-Pacific, a rules-based international order, and to our allies and partners”.

Nobody pays attention to these clichés, because the real message was delivered by a CIA operative posing as diplomat, Secretary of State Mike “We Lie, We Cheat, We Steal” Pompeo: “The PRC has no legal grounds to unilaterally impose its will on the region”, in a reference to the Nine-Dash Line. For the State Dept., Beijing deploys nothing but “gangster tactics” in the South China Sea.

Once again, nobody paid attention, because the actual facts on the sea are stark. Anything that moves in the South China Sea – China’s crucial maritime trade artery – is at the mercy of the PLA, which decides if and when to deploy their deadly DF-21D and DF-26 “carrier killer” missiles. There’s absolutely no way the US Pacific Fleet can win a shooting war in the South China Sea.

Electronically jammed

A crucial Chinese report, unavailable and not referred to by Western media, and translated by Hong Kong-based analyst Thomas Wing Polin, is essential to understand the context.

The report refers to US Growler electronic warplanes rendered totally out of control by electronic jamming devices positioned on islands and reefs in the South China Sea.

According to the report, “after the accident, the United States negotiated with China, demanding that China dismantle the electronic equipment immediately, but it was rejected. These electronic devices are an important part of China’s maritime defense and are not offensive weapons. Therefore, the US military’s request for dismantling is unreasonable.”

It gets better: “On the same day, former commander Scott Swift of the US Pacific Fleet finally acknowledged that the US military had lost the best time to control the South China Sea. He believes that China has deployed a large number of Hongqi 9 air defense missiles, H-6K bombers, and electronic jamming systems on islands and reefs. The defense can be said to be solid. If US fighter jets rush into the South China Sea, they are likely to encounter their ‘Waterloo.’”

The bottom line is that the systems – including electronic jamming – deployed by the PLA on islands and reefs in the South China Sea, covering more than half of the total surface, are considered by Beijing to be part of the national defense system.

I have previously detailed what Admiral Philip Davidson, when he was still a nominee to lead the US Pacific Command (PACOM), told the US Senate. Here are his Top Three conclusions:

1) “China is pursuing advanced capabilities (e.g., hypersonic missiles) which the United States has no current defense against. As China pursues these advanced weapons systems, US forces across the Indo-Pacific will be placed increasingly at risk.”

2) “China is undermining the rules-based international order.”

3) “China is now capable of controlling the South China Sea in all scenarios short of war with the United States.”

Implied in all of the above is the “secret” of the Indo-Pacific strategy: at best a containment exercise, as China continues to solidify the Maritime Silk Road linking the South China Sea to the Indian Ocean.

Remember the nusantao

The South China Sea is and will continue to be one of the prime geopolitical flashpoints of the young 21st century, where a great deal of the East-West balance of power will be played.

I have addressed this elsewhere in the past in some detail, but a short historical background is once again absolutely essential to understand the current juncture as the South China Sea increasingly looks and feels like a Chinese lake.

Let’s start in 1890, when Alfred Mahan, then president of the US Naval College, wrote the seminal The Influence of Sea Power Upon History, 1660-1783. Mahan’s central thesis is that the US should go global in search of new markets, and protect these new trade routes through a network of naval bases.

That is the embryo of the US Empire of Bases – which remains in effect.

It was Western – American and European – colonialism that came up with most land borders and maritime borders of states bordering the South China Sea: Philippines, Indonesia, Malaysia, Vietnam.

We are talking about borders between different colonial possessions – and that implied intractable problems from the start, subsequently inherited by post-colonial nations.

Historically, it had always been a completely different story. The best anthropological studies (Bill Solheim’s, for instance) define the semi-nomadic communities who really traveled and traded across the South China Sea from time immemorial as the Nusantao – an Austronesian compound word for “south island” and “people”.

The Nusantao were not a defined ethnic group. They were a maritime internet. Over centuries, they had many key hubs, from the coastline between central Vietnam and Hong Kong all the way to the Mekong Delta. They were not attached to any “state”. The Western notion of “borders” did not even exist. In the mid-1990s, I had the privilege to encounter some of their descendants in Indonesia and Vietnam.

So it was only by the late 19th century that the Westphalian system managed to freeze the South China Sea inside an immovable framework.

Which brings us to the crucial point of why China is so sensitive about its borders; because they are directly linked to the “century of humiliation” – when internal Chinese corruption and weakness allowed Western “barbarians” to take possession of Chinese land.

A Japanese lake

The Nine Dash Line is an immensely complex problem. It was invented by the eminent Chinese geographer Bai Meichu, a fierce nationalist, in 1936, initially as part of a “Chinese National Humiliation Map” in the form of a “U-shaped line” gobbling up the South China Sea all the way down to James Shoal, which is 1,500 km south of China but only over 100 km off Borneo.

The Nine Dash Line, from the beginning, was promoted by the Chinese government – remember, at the time not yet Communist – as the letter of the law in terms of “historic” Chinese claims over islands in the South China Sea.

One year later, Japan invaded China. Japan had occupied Taiwan way back in 1895. Japan occupied the Philippines in 1942. That meant virtually the entire coastline of the South China Sea being controlled by a single empire for the fist time in history. The South China Sea had become a Japanese lake.

Well, that lasted only until 1945. The Japanese did occupy Woody Island in the Paracels and Itu Aba (today Taiping) in the Spratlys. After the end of WWII and the US nuclear-bombing Japan, the Philippines became independent in 1946 and the Spratlys immediately were declared Filipino territory.

In 1947, all the islands in the South China Sea got Chinese names.

And in December 1947 all the islands were placed under the control of Hainan (itself an island in southern China.) New maps duly followed, but now with Chinese names for the islands (or reefs, or shoals). But there was a huge problem: no one explained the meaning of those dashes (which were originally eleven.)

In June 1947 the Republic of China claimed everything within the line – while proclaiming itself open to negotiate definitive maritime borders with other nations later on. But, for the moment, there were no borders.

And that set the scene for the immensely complicated “strategic ambiguity” of the South China Sea that still lingers on – and allows the State Dept. to accuse Beijing of “gangster tactics”. The culmination of a millennia-old transition from the “maritime internet” of semi-nomadic peoples to the Westphalian system spelled nothing but trouble.

Time for COC

So what about the US notion of “freedom of navigation”?

In imperial terms, “freedom of navigation”, from the West Coast of the US to Asia – through the Pacific, the South China Sea, the Malacca Strait and the Indian Ocean – is strictly an issue of military strategy.

The US Navy simply cannot imagine dealing with maritime exclusion zones – or having to demand an “authorization” every time they need to cross them. In this case the Empire of Bases would lose “access” to its own bases.

This is compounded with trademark Pentagon paranoia, gaming a situation where a “hostile power” – namely China – decides to block global trade. The premise in itself is ludicrous, because the South China Sea is the premier, vital maritime artery for China’s globalized economy.

So there’s no rational justification for a Freedom of Navigation (FON) program. For all practical purposes, these aircraft carriers like the Ronald Reagan and the Nimitz showboating on and off in the South China Sea amount to 21st century gunboat diplomacy. And Beijing is not impressed.

As far as the 10-member Association of Southeast Asian Nations (ASEAN) is concerned, what matters now is to come up with a Code of Conduct (COC) to solve all maritime conflicts between Philippines, Vietnam, Malaysia, Brunei and China.

Next year, ASEAN and China celebrate 30 years of strong bilateral relations. There’s a strong possibility they will be upgraded to “comprehensive strategic partner” status.

Because of Covid-19, all players had to postpone negotiations on the second reading of the single draft of COC. Beijing wanted these to be face to face – because the document is ultra-sensitive and for the moment, secret. Yet they finally agreed to negotiate online – via detailed texts.

It will be a hard slog, because as ASEAN made it clear in a virtual summit in late June, everything has to be in accordance with international law, including the UN Convention on the Law of the Seas (UNCLOS).

If they can all agree on a COC by the end of 2020, a final agreement could be approved by ASEAN in mid-2021. Historic does not even begin to describe it – because this negotiation has been going on for no less than two decades.

Not to mention that a COC invalidates any US pretension to secure “freedom of navigation” in an area where navigation is already free.

Yet “freedom” was never the issue. In imperial terminology, “freedom” means that China must obey and keep the South China Sea open to the US Navy. Well, that’s possible, but you gotta behave. That’ll be the day when the US Navy is “denied” the South China Sea. You don’t need to be Mahan to know that’ll mean the imperial end of ruling the seven seas.

Diplomacy is reciprocal

July 25, 2020

Diplomacy is reciprocal

Chris Faure for the Saker Blog

The US suddenly ordered China to end operations from its embassy in Houston, Texas (remember when they did the same to Russia). However, diplomacy is reciprocal and the Chinese so far refrained from a further provocative reaction. They are implementing a fair tit for tat measure, closing the US Consulate in Chengdu, keeping options open for further retaliation. They could have fanned the flames and closed the US Consulate in Hong Kong, or even a bigger one in Beijing, but kept to a fair reciprocal closure – so far.

More about the Consulate spat https://www.moonofalabama.org/

China responded to Mr Pompeo’s highly advertised ‘very important’ speech this week in short, not giving Pompeo that attention that he so craves. The Chinese stance is that Mike Pompeo maliciously attacked the Communist Party of China (CPC) and China’s socialist system, and he made remarks that ignored the facts, were full of ideological bias and turned black into white, which showed his Cold War mentality. From the Chinese Foreign Ministry: “Some US politicians have deliberately stirred up ideological disputes, talked about changing China, denied China-US relations, and provoked China’s relationships with other countries. Their purpose is to suppress China’s development and divert the public’s attention from their own country. These tricks cannot fool the Americans and international community.”

The US have stopped all basic diplomatic standards in a grab for their self-delusional rules-based international order. Just recently, Pompeo announced that they will not respect or accept any of the agreements in the South China Sea. He must be thinking that all of the ASEAN countries like him enough to drop their raft of regional negotiated agreements.

Despite Chinese accusations that the US opens their diplomatic pouches, which is in flagrant violation of all Vienna Conventions on Diplomatic and Consular relations, the most important is the following which shows that China is still keeping to fair diplomatic and pragmatic standard:

“It must be emphasized that China has no intentions to change the US in terms of its social system, and the US cannot change China either.”

https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/t1800221.shtml

Having followed the Russian reactions on these types of actions by the US toward Russia, we have become accustomed to the frustratingly pragmatic and clinically diplomatic methods of dealing with western bullying. The Chinese are different and they enthusiastically take part in the war of words that is reaching cold war status if one adds in the trade war announced by Mr Trump +- two years ago and which he thought would be ‘easy to win’. What we see now as reaction to the US provocation to China in the US social sphere, many ordinary Americans are deeply into the ‘crush China’ rhetoric which attempts to blame China for all of the US ills.

https://sputniknews.com/analysis/202007241079970310-us-heading-towards-quagmire-in-the-south-china-sea-by-inciting-tensions-with-beijing-activist-warns/

While it remains unclear if this can be written off completely to electioneering and election rhetoric, what does clarify is that the harm done is not easily fixed, no matter the reason. It is however quite breathtaking how far Pompeo will push this, hoping for retaliation which he can then use to prove himself and the current US administration right. It is beyond a level of comprehension that Pompeo and Co could really think that they will make war against China.

http://www.chinadaily.com.cn/a/202007/24/WS5f1a5b8da31083481725be24.html

In this time of ‘rhetorical cold war of words’, Godfree Roberts who regularly writes on China for the Unz Review started a new weekly newsletter, Here Comes China, Skulduggery, Good News, Offbeat Opinions, chock-a-block full of what is happening in China.

Godfree has offered the first four newsletters free to Saker readers. From economics, to space, to China-Iran Trade and Military Partnership, to the cleanup and recovering of the Yangtze river, a Hong Kong section, the media war on Xinjiang Uygur Autonomous Region, and an in-depth look at Human rights in China, this newsletter stands unique in its scope and its presentation of Western opinions and Eastern opinions.

Godfree’s new book on China is just about ready for release. The book is called:

Why China leads the world: Democracy at the bottom, Data in the middle, Talent at the top.
A preview: https://www.herecomeschina.com/why-china-leads-the-world-the-book/

I also want to draw the readers’ attention to a two part essay written on Mao, Mao Reconsidered, and published in greanvillepost.com. Part 1Part 2

China Sitrep – 5 selected topics from the Here Comes China newsletter:

Trump Empowers CIA to Launch Cyberattacks

The secret authorization, known as a presidential finding, gives the spy agency more freedom in both the kinds of operations it conducts and who it targets–including Russia, China, Iran and North Korea, which are mentioned directly in the document. The finding allows the CIA to more easily authorize its own covert cyber operations, rather than requiring the agency to get approval from the White House. The “very aggressive” finding “gave the agency very specific authorities to really take the fight offensively to a handful of adversarial countries,” said a former U.S. government official. The Central Intelligence Agency has conducted a series of covert cyber operations against Iran and other targets since winning a secret victory in 2018 when President Trump signed what amounts to a sweeping authorization for such activities. [MORE]

Belt and Road Finds New Life in Pakistan

China and Pakistan have signed deals for two hydro-power generation projects costing $3.9 billion in the disputed Kashmir region, and another to revamp the South Asian nation’s colonial-era railways for $7.2 billion — the most expensive Chinese project yet in Pakistan. The Chinese financing has helped rid Pakistan of an electricity deficit that left exporters unable to meet orders and major cities without electricity for much of the day. [MORE]

T.P. Wilkinson: The Yemen

The West encourages dissolution of state entities that could engage in normal relations with China or any other potential competitors. The Yemen is one of those long-term victims of British imperialism. When Britain nominally withdrew from Egypt, Nasser promoted his new government’s participation in his movement for Arab unity, opposed by British clients in Riyadh (the Saud family’s Wahhabi gangsters). The Saud family would like to have annexed the Yemen but could not without war against Egypt-against which the tiny mob had no chance. So David Stirling led a counter-insurgency funded by the British and Saudis to drive Egypt out of the Yemen and leave the country as a quasi-protectorate of Britain/US. Attempts to change that have been fought for decades but until a decade ago the client regime was well protected. Clearly chaos is profitable for the empire which between Somalia and Yemen prevent any stability in opposition to its interests. Not only do Somalia and Yemen lie close to the Suez route they also form part of the ancient East African trading basin that links Asia with Africa. As part of the overall strategy of Denial, this policy is aided by the designs of the mob in Riyad which lacks the population to occupy territories it would like to annex.

Xinjiang

This section from Here Comes China is an in-depth analysis. I suggest you read it in the newsletter itself. Main points:

Islam is neither the Uyghurs’ native religion nor their only one but, in its Wahhabi form, has caused problems around the world, for which we can thank to two fervent Christians, Jimmy Carter and Zbigniew Brzezinski,[2] who considered a united Eurasia, “The only possible challenge to American hegemony.” In 1979, months before the Soviet entry into Afghanistan, Brzezinski drafted and Carter signed a top-secret Presidential Order authorizing the CIA to train fundamentalist Muslims to wage Jihad against the Soviet Communist infidels and all unbelievers of conservative Sunni Islam and the Mujahideen terror war against Soviet soldiers in Afghanistan became the largest covert action in CIA history.[2] Brzezinski’s ‘Arc of Crisis’ strategy inflamed Muslims in Central Asia to destabilize the USSR during its economic crisis and, when Le Nouvel Observateur later asked if he had any regrets, Brzezinski snapped, “What is most important to the history of the world? Some stirred-up Muslims or the liberation of Central Europe?”

Twenty years later, in 1999, the CIA’s Islam strategist, Graham E. Fuller, announced, “The policy of guiding the evolution of Islam and of helping them against our adversaries worked marvelously well in Afghanistan against the Russians. The same doctrines can still be used to destabilize what remains of Russian power, and especially to counter the Chinese influence in Central Asia.”[3]

Today, NED money supports the World Uyghur Congress (WUC) which calls China’s Xinjiang Province ‘East Turkistan’ and China’s administration of Xinjiang as ‘Chinese occupation of East Turkistan,’ runs articles like, “Op-ed: A Profile of Rebiya Kadeer, Fearless Uyghur Independence Activist,” and admits that Kadeer seeks Uyghur independence from China.

Faced with an armed insurrection, most states impose martial law or a state of emergency, as Britain did in Malaya from 1945 to 1957 and the US did with the Patriot Act, but China decided–despite popular outrage–to write off its losses and play the long game and founded The Shanghai Cooperation Organization (SCO),[1] a political, economic, and security alliance, with Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, who stopped funneling money and providing corridors for Uyghur terrorists to move into and out of China. The SCO has since expanded to include India and Pakistan and Iran has begun the accession process, making it world’s largest security pact in both area and population and the only one whose membership includes four nuclear powers.

Forming the SCO was easier than assuaging public outrage. An unheard-of lawsuit by victims’ relatives accused the government of reverse discrimination so they stepped up security and published their objectives:

  1. restore law and order
  2. prevent terrorists from inflicting more violence
  3. use ‘high-intensity regulation’
  4. contain the spread of terrorism beyond Xinjiang
  5. purge extremists and separatists from society.

Neighborhood community centres–labelled ‘concentration camps’ in the western press–educate rural Uyghurs about the perils of religious extremism and train them for urban jobs.
In 2013 President Xi toured Eurasia and proposed the Belt and Road Initiative for three billion people, designed to create the biggest market in the world with unparalleled development potential, and built a gas pipeline to China from Turkmenistan through Uzbekistan, Tajikistan and Kyrgyzstan which, like China’s other western pipelines, power lines, and rail and road networks, runs through the Xinjiang Uyghur Autonomous Region.

Beijing then moved jobs to Xinjiang and opened vocational schools to train rural youth in literacy and job skills and swore to protect its neighbors from terrorism in exchange for their pledge to reciprocate. To create jobs in the province Xi directed investment from forty-five of China’s top companies and eighty Fortune 500 manufacturers to Urumqi. Corporate investment increased from $10 billion in 2015 to $15 billion in 2017 and infrastructure investments of $70 billion in both 2017 and 2018 lifted the annual goods shipments past 100 million tons with a goal of hourly departures to fifteen European capitals. Half a million Uyghurs have relocated from remote villages to cities and, as a result, 600,000 Uighurs were lifted out of poverty in 2016, 312,000 in 2017 and 400,000 in 2018. The last poor Uyghurs will join the cash economy in mid-2020.

The PBOC, China’s central bank, is partnering with ride-hailing giant Didi Chuxing to test the use of its sovereign digital currency, AKA Central Bank Digital Currency, CBDC. The regulator is working with Didi to apply digital currency electronic payment (DCEP) to the ride-hailing app, which currently serves a total of over 550 million users and is often described as China’s Uber. According to Didi, “the government seeks to support the development of the real economy sectors with innovative financial services.” Didi has more than 30 million daily ride-sharing orders and its bike-sharing daily orders reached 10 million. Meituan and Bilibilibili are also cooperating with banks in the digital yuan project. Meituan’s service platform has over 240 million consumers and five million local merchants, and Bilibilibili is China’s largest video-sharing website.

Sign up for your free one month sub to Godfree’s very extensive newsletter here. At the Saker blog, only a fraction of all the material can be covered.

Foreign Minister Sergey Lavrov’s remarks and answers to questions during the online session “Russia and the post-COVID World”

Source

Foreign Minister Sergey Lavrov’s remarks and answers to questions during the online session “Russia and the post-COVID World”

10 July 2020 15:55

Foreign Minister Sergey Lavrov’s remarks and answers to questions during the online session “Russia and the post-COVID World,” held as part of the Primakov Readings international forum, Moscow, July 10, 2020

First of all, I would like to express my gratitude for inviting me to once again speak at the Primakov Readings. This is a young, but also one of the most respected platforms for discussing international matters. Unfortunately, we cannot meet in person due to the coronavirus pandemic. Nevertheless, thanks to modern technology we could keep it on schedule. I am glad that my colleagues were able to take part in the preceding sessions of these readings. Judging by their feedback, this was a useful experience.

I will not delve into the question of how the coronavirus has affected every aspect of our lives, and what it will bring in the future. We already feel its effect on the economy and in personal contacts, from official visits and talks, to humanitarian, cultural and education exchanges. There seems to be a consensus that it will take quite some time for things to get back to normal. How long it will take and what the new norm will be is anybody’s guess. That said, all tend to agree that things will change.

By the way, I cannot fail to mention that our foreign service has had to face serious challenges. There were confirmed cases both at the Foreign Ministry head offices and our representative offices in the regions, as well as in our affiliated institutions. Thank goodness, we did not face a massive outbreak or severe cases. There were also people in our missions abroad affected by the pandemic. When borders closed, all our foreign missions without exception were mobilised to assist Russian nationals stranded abroad. Along with other agencies represented in the Emergency Response Centre, primarily the Transport Ministry, the Federal Air Agency, the Federal Service for Supervision of Consumer Protection and Welfare and the Communications Ministry, we complied repatriation lists. This was a lot of work, fraught with many mistakes, mostly unintentional rather than deliberate, that had to be rectified. At the same time we had to make arrangements to pay support allowances to those stranded abroad without funds. We have already done a great deal on this front, although there are still people asking to be repatriated, and some have come forward only recently. It seems that looking at the developments in the countries where they are staying and considering the uncertainty as to when all this will come to an end, they finally opted to return home.

Speaking of other ways in which the pandemic influenced our work and the way we perform our professional duties, the virus has aggravated other pre-existing challenges and threats. They have not gone away, including international terrorism. As you know, some speculate that terrorists are thinking about somehow using the strain of this virus, or maybe even creating new strains to achieve their malicious ends. Drug trafficking, cybercrime, environmental issues, climate and, of course, the many conflicts around the world – all these problems are still with us. And all this overlaps with the specific nature of the Trump administration and its deliberate policy of undermining all legal and contractual frameworks without exception on arms control and international cooperation, for example, regarding UNESCO, the WHO, the UN Human Rights Council, etc.

Of course, we keep a close eye on all these developments and analyse them. We still believe that sustainable solutions to various crises, conflicts and problems in the interests of all countries, and taking into consideration each and everyone’s concerns can only result from collective efforts based on the principles enshrined in the UN Charter, by respecting UN Security Council prerogatives, mobilising consensus-based associations, including the G20, as well as BRICS, the SCO and associations on the post-Soviet space. Unfortunately, not everyone has been ready to work together during the pandemic, to engage in collective efforts and approaches. We are witnessing attempts to push through narrow-minded agendas, and use this crisis to continue strangling unwanted regimes. The call from UN Secretary-General Antonio Guterres and the UN High Commissioner for Human Rights Michelle Bachelet to suspend unilateral sanctions, at least during the pandemic, that impede the distribution of medial and other humanitarian goods, and other essential items to the corresponding countries, was completely ignored. The same goes for attempts to assign blame for the infection in the midst of the pandemic, when what we need is to think about how we can help medical workers, doctors and virologists. You know very well what I am referring to.

Like 75 years ago, when Victory over a common enemy was won only by working together and rising above the ideological differences of the time, we now also need to realise that we will resolve these issues only if we cooperate. I’m sure we’ll talk about the future of the WHO later. We are in favour of resolving any issues based on the UN Charter, which is a collective security platform.

Our Western colleagues – I’ve already mentioned this many times – are trying to actively introduce the concept of a “rules-based order” into diplomatic, political and practical usage. This is not international law. This is something else (we can also talk about this in more detail during the discussion). Clearly, this is an attempt to regain the dominance that the historical West has enjoyed for almost 500 years now. This attempt takes the form of convening a “group of interests” and various partnerships, where convenient countries are invited that either share the attempts to adopt unilateral approaches to international affairs, or will yield to pressure and join these initiatives. Not everyone is invited. Those who have their own outlook on things and are ready to defend it are left out. Later, when a concept, say, on chemical weapons, is fabricated, or an attempt is made to create a club of the select few who will decide on who is to blame for violating cybersecurity, they will start selling it as universally applicable norms. We are witnessing this now as it’s happening. These are very serious problems.

I would like to conclude my opening remarks. Our main goal, as before, is to protect our national interests and create the most favourable external conditions for the country’s development. You may have noticed that we come up with ideas that unite. Convening a summit of the UN Security Council permanent members is our top priority. This effort is ongoing. We are now focusing on the substantive part of the event, because, of course, it will play the decisive part.

The current hardships in international relations increase the importance of these discussions and, in general, the contribution of the expert community, and academic and political circles, into the efforts to analyse the situation and make reasonable realistic forecasts. I’d be remiss not to mention the case study concept that Yevgeny Primakov introduced into our foreign policy and political science. We appreciate the fact that the participants and organisers of the Primakov Readings always help us draw from a rich well of ideas, from which we then pick the ones that we submit to the President to determine our policies in specific circumstances.

Question: Five years ago, an IMEMO strategic forecast assumed that a new bipolarity might emerge as one of the four scenarios for the future world order.   At that time, this hypothesis was based on the relative dynamics of the synergetic power of China and the United States.  The COVID-19 pandemic has provided plenty of evidence of this theory. Of course, a different – asymmetrical – bipolarity is emerging, where the strategic parity is between Russia and the US, and the economic parity is between China and the United States, which is distinct from what was the case in the 20th century.

Do you think that the US-PRC conflict has passed the point of no return? It is obvious that any exacerbation of this confrontation is not in Russia’s interests. Will Russia be able to act as a swing power in order to maintain stability of the world system, including based on your unique experience of multilateral diplomacy?

Sergey Lavrov: I remember the forecast you have mentioned. I would like to say that, certainly, a lot has changed over these past five years, primarily in terms of confirming that the confrontation, rivalry, antagonism, and the struggle for leadership between the United States and China have, of course, been mounting. Before I pass directly to an analysis of this bipolar process, I would like to note that the real situation in the world as a whole is much more complicated. After all, the world is growing more polycentric than it was previously. There are numerous players apart from the US and China, without whom it is very difficult to promote one’s interests, if some or other capital suddenly decides to do this single-handedly.  I think we will yet discuss some other possible options in this sense. Let me mention the fact that Dean of the Faculty of World Economy and International Affairs at the National Research University – Higher School of Economics   Sergey Karaganov has commented on this subject in an article for Russia in Global Affairs, a journal published by Fyodor Lukyanov.

It is quite clear that we should take into consideration, in our practical work, the entire diversity and totality of political, economic, military, historical, and ideological factors that are manifesting themselves in the multipolar world, a world that Yevgeny Primakov predicted. We are assessing the US-Chinese controversy against this backdrop and through this prism.  That it is not existing in a vacuum is, as a minimum, confirmed by the fact that each of the sides is seeking to recruit as many supporters of their approaches as possible to the WHO or any other subject that in some way or other is associated with Washington and Beijing as defining contradictions in their approaches.

The Americans are certainly perceiving the growth of the PRC’s total state power as a threat to their claims to retaining the world leadership against all odds. Back in 2017, the US National Security Strategy listed China, along with Russia, among the main threats. It was for the first time that China was put before Russia as a threat to the United States.

Russia and China were directly accused of seeking to challenge the American influence, values and prosperity.  It is quite clear that the US is waging a struggle by absolutely unsavoury methods, as is obvious and clear to everyone. They are putting forward unilateral demands that take into account solely the US interests. If demands are turned down, they say the refusal is unacceptable and introduce sanctions.

If a discussion is suggested, the discussion rapidly degenerates into delivering an ultimatum and ends up in selfsame sanctions – trade wars, tariffs, and lots more.

A highly indicative fact is how the Americans and the Chinese managed to come to terms on phase one of the trade talks in January and what the fate of this agreement is now. The US authorities are accusing Beijing of drawing off jobs and glutting the market, while showing reluctance to buy US products. According to the Americans, China is implementing the Belt and Road project intended to steamroll all world economy mechanisms, production chains, and so on.  China allegedly was concealing information on COVID-19 and is engaging in cyber espionage. Notice how zealously the Americans are forcing their allies and others to give up any collaboration with Huawei and other Chinese digital giants and companies. China’s hi-tech companies are being squeezed out of the world markets.  China is being charged with expansionism in the South China Sea, problems on the actual control line with India, human rights violations, and [misbehaviour with regard to] Tibet, the Xinjiang-Uyghur Autonomous Region, Taiwan, and Hong Kong. All of this is taking place simultaneously. A powerful wave of fault-finding, a perfect storm is being raised. I hope, of course, that common sense will prevail and the situation will not pass the point of no return mentioned by Mr Dynkin.

We hope that there are people in the United States, who are figuring out how to reassure the world of the dollar system’s reliability in the post-election period. The US Secretary of the Treasury is speaking about this all but openly. He is warning that they should be wary of overstepping the red line, after which people will just start fleeing from America, saying that the dollar is no good anymore because it is being brazenly abused.

There is, of course, hope that the Chinese possess a political, diplomatic and foreign policy culture that always seeks to avoid various imbroglios.  But there are also some very alarming signs that, despite these rays of hope, which must be nurtured and cherished, US and Chinese officials start getting personal, occasionally in a very harsh form. This bespeaks a high degree of tension on both sides. And, of course, this is really alarming.

I do hope that our Chinese and US partners have some diplomatic methods, ways of classical diplomacy tucked up their sleeve. People should not insult each other in public or accuse each other of all sins, as the Americans are doing on every street corner. A better option is to sit down [to the negotiating table] and recognise that your opposite number is a great power and that every state, be it a great power or otherwise, has interests that must be respected.  The world certainly should seek to function based on a search for a balance of these interests.

Now let me pass to the second question – that this aggravation is not in Russia’s interests. I think that it is totally at variance with our interests, the interests of the European Union, and those of other countries as well. If you take the EU, China-EU trade is absolutely comparable with trade between China and the US. I think it is also necessary to pay attention to the EU’s increasingly publicised aspirations as regards a strategic autonomy not only in the military-political and security sphere but also in trade and the economy. Incidentally, the EU also wants to start repatriating its industries and localise as many trade and distributive chains as possible on its territory. In this regard, it is entering direct competition with the Americans.

The EU is unlikely to support the United States on every count in its desire to bleed the Chinese economy white by “pumping over” all development-friendly processes to its territory. There will be a lot of wrinkles, tension and clashes of interests.

Today, unlike in 2014, when the EU, under atrocious US pressure, introduced sanctions against Russia, it is showing signs of sound pragmatism towards our country. Specifically, they have publicly announced that they will revise the notorious “five principles” that Federica Mogherini formulated several years ago to guide relations with Russia.  They also say that it is necessary to overhaul their entire approach so that it should be more consistent with EU interests.

Incidentally, EU High Representative for Foreign Affairs and Security Policy Josep Borrell gave a talk recently on EU and China and on EU and Russia. Asked, why not impose sanctions on China for Hong Kong and human rights, he said that sanctions were not a method to be used in relations with China. We inquired whether sanctions were, in his opinion, a method that could be used in relations with Russia?  Our European friends will be thinking about this. It is a tough question.

I think that the European Union and Russia have a stake in cooperating, but not to the detriment of anyone else.  Basically, we do not ally with others to organise some actions against a third party.  We prefer pragmatism and shared benefit. I think Brussels will be doing something to overcome the myopia of the recent period.  The survey of EU policy vis-à-vis Russia will give more heed to an analysis of the real benefits inherent in promoting relations with Russia and the EAEU.

I do not see any benefits that Russia could derive from a trade war between Washington and Beijing. We will not benefit from relations with the EU and India either. Relations with India are traditionally friendly and other than time-serving. I do not envisage any changes in this area. We have proclaimed a “specially privileged strategic partnership” with India. I do not see any reasons why our Indian friends should sacrifice the gains that exist in the context of our partnership and prospects that it opens.

Question: You have mentioned Russian-US relations. Of course, international security and strategic stability depend on them. The situation is rather alarming now because of a deep crisis in the arms control regime. It is possible that the last key treaty in this sphere will expire in six months. There are many reasons for this, both geopolitical and technological. I believe we have to admit that public opinion is not pressuring the political elites to maintain arms control as much as during the Cold War, when large-scale demonstrations were held, as we well remember. The highest priority threats for the public now are the pandemic, climate change and terrorism. The fear of a nuclear war has receded into the background. What can be done to change this, or will it take a new Cuban crisis for the public to become aware of the nuclear conflict threat and to start expressing its opinion?

Jointly with our academic community we are now holding many videoconferences with American experts. You have said that there are rational people in the United States. It can be said that these conferences offer an opportunity to coordinate a number of new proposals, which could be used to formulate our initiatives. Of course, we update the Foreign Ministry and Deputy Foreign Minister Sergey Ryabkov about our activities. But it seems that today we need to think about some radical action, possibly in connection with the proposed summit of the five nuclear states, in order to create conditions that will help prevent the dismantling of the arms control regime and launch the creation of a new system of international security and strategic stability suited to the conditions of the 21st century.

Sergey Lavrov: I fully agree with you. Nuclear risks have increased dramatically, and the situation in the sphere of international security and strategic stability is visibly deteriorating. The reasons for this are obvious to everyone.  The United States wants to regain global domination and attain victory in what it describes as great-power rivalry. It has replaced the term “strategic stability” with “strategic rivalry.” It wants to win, whatever the price, as the saying goes. It is dismantling the arms control architecture so as to have the freedom to choose any instrument, including military force, to put pressure on its geopolitical opponents, and it wants to be able to use these instruments anywhere around the world. This is especially alarming in light of the changes in the doctrines of the US military-political authorities. These changes have allowed the limited use of nuclear weapons. It is notable that, like in the case of other strategic stability topics, the Americans have once again alleged that it is the Russian doctrine that permits the limited use of nuclear weapons and escalation for the sake of de-escalation and victory. They have recently issued comments on our doctrines, claiming that there are some secret parts where all of this is stipulated. This is not true. Meanwhile, we can see that the United States has adopted a number of practical programmes to support their doctrines with military and technical capabilities. This concerns the creation of low-yield nuclear warheads. American experts and officials are openly discussing this.

In this context, we are especially alarmed by the Americans’ failure to reaffirm – for two years now – the fundamental principle that there can be no winners in a nuclear war and that therefore it must never be unleashed. Early in the autumn of 2018, we submitted to the American side our written proposal that has been formulated as the confirmation of what People’s Commissar for Foreign Affairs Maxim Litvinov and US President Franklin Roosevelt had coordinated and the notes they exchanged. We have reminded them about this proposal several times. They have replied that they are analysing it. Of course, we will raise the issue of the inadmissibility of fighting a nuclear war and winning it at the upcoming summit meeting of the five nuclear powers. It is important for our arguments to be no weaker than the arguments in the relevant Soviet-US documents. The slackening of these formulations has shown that the Americans would like to dilute the fact that there is no alternative to this principle and it cannot be repealed.

You have said that civil society is not paying sufficient attention to these threats, and I fully agree with you on this count. It is vital to attract public attention to this problem, to tell the people about the risks in understandable terms, because technicalities are often difficult to understand, and the form in which the analysis of this situation is presented to people is very important. Of course, we should count not only on official establishments but also on civil society and its politically active part – the NGOs and the academic and expert community.

I have said that I agree with you on this count, but I would also like to caution against going too far with raising public awareness of nuclear risks, so as not to play into the hands of those who want to prohibit all nuclear weapons and not to raise other concerns. The Treaty on the Prohibition of Nuclear Weapons openly contradicts the Non-Proliferation Treaty, creating confusion and problems. The necessary balance can be found with the help of top quality professionals, and I believe that we have more of them than any other country.

As for public sentiments, they do not always determine the reality. During the election campaign of US President Donald Trump, public sentiments were largely in tune with his declared plans and his calls for normalising Russian-US relations. Since then, the public has calmed down, and nobody is staging any riots over this matter.

Of course, it is vital to continue to interact directly with the nuclear powers and their authorities. We would like reasonable approaches to take priority.

You have mentioned that political consultations are underway between you, your colleagues and American experts. We appreciate this. Your contribution and assessments, as well as the information we receive following such consultations are taken into account and have a significant influence on the essence of our approaches, including in situations when we submit several alternatives to the leadership; this helps us analyse the possible scenarios and all their pros and cons.

The United States, as well as Britain and France, which are playing along with it, would like to limit the summit’s agenda to arms control, disarmament and non-proliferation. China sees this as an attempt to press through the idea of expanding the number of negotiating parties at the talks on nuclear weapons by one means or another. China has put forth its position on the idea of multilateral talks clearly and more than once. We respect this position. By the way, the Americans are clever at twisting things. They use only the parts of our statements and those of the Chinese that suit their position. The Chinese have said recently that they will join the arms control talks as soon as the Americans reduce their capability to the level of China’s arsenal. A day later, Special Presidential Envoy for Arms Control Marshall Billingslea announced that the United States welcomed China’s readiness to join the multilateral talks and invited Beijing to Vienna. The next round of Russian-US consultations at the level of experts will be held in late July, following on from the late June meeting between Deputy Foreign Minister Sergey Ryabkov and US Special Presidential Envoy for Arms Control Marshall Billingslea, when the Americans made a show with Chinese flags. The Americans have once again stated publicly that they would like to invite the Chinese to Vienna but it would be better if Russia met with China before that so as to tell Beijing what Washington expects from it. I think everyone can see that this is impolite and undiplomatic. When we say that we proceed from the assumption that China is free to take whatever stand it deems necessary, it shows our respect for China’s position. I would like to add that the Americans have not put on paper anything of what they said about the need for transitioning to a multilateral format. Let them at least document what they have in mind. But they seem to be categorically averse to this.

We are ready to take part in multilateral talks, but it should be a voluntary and independent decision of everyone. Only voluntary participation can be effective.

None of the reservations are being taken into account. They say that Russia supports their call for multilateral talks. What do we hear when we add that multilateral talks must also include Britain and France? Special Envoy Billingslea didn’t blink when he said the other day in reply to a question about the possible involvement of Britain and France that they are sovereign states who are free to decide whether to join the talks or not, and that the United States will not make the decision for them. Why has it actually made the decision for China then?

Knowing the US negotiating party, I am not optimistic about the New START, for example, but it’s good that we have started talking. Sergey Ryabkov and Marshall Billingslea have agreed to set up three working groups within the framework of the process they are supervising. They will hold a meeting of the working group on space, nuclear and weapons transparency plus nuclear doctrines in Vienna between July 27 and 30. We’ll see what comes of it. We never refuse to talk, and we will try to make negotiations result-oriented.

Question: Extending the Strategic Arms Reduction Treaty is one of the critical items on the agenda of Russia-US relations, primarily in the sphere of arms control. If Russia fails to reach an agreement with Washington to renew this treaty before February 2021, what will it do next? If there’s a pause in the dialogue with Washington in the sphere of arms control, and if the treaty is not renewed, what will the arms control system become and will the multilateral formats that we are talking about now be possible in the future?

Sergey Lavrov: It appears that the United States has already decided not to renew this treaty. The fact that it insists that there’s no alternative to taking the deal to the trilateral format suggests that everything has been already decided. In addition to this, they want the latest Russian weapons to be part of the deal which, by and large, is nothing short of trying to force an open door. We told the Americans earlier on that when Avangard and Sarmat become fully deployed, they will be subject to the restrictions established by the treaty for as long as it remains valid. The other systems are new. They do not fit into the three categories covered by START-3, but we are ready to start talking about including the weapons that are not classical from the START-3 perspective in the discussion, of course, within the context of a principled discussion of all, without exceptions, variables that affect strategic stability that way or another. This includes missile defence, where we are now able to see that the once existing allegations that it was designed solely to stop the missile threat coming from Iran and North Korea, were lies. No one is even trying to bring this up anymore. Everything is being done solely in terms of containing Russia and China. Other factors include high-precision non-nuclear weapons known as a programme of instant global strike, openly promoted plans by the Americans and the French to launch weapons into space, the developments related to the Comprehensive Test Ban Treaty and a number of other factors too. We are ready to discuss new weapons, but to do so not in order to humour someone or to respond to someone’s initiatives, but to really reduce the threat to global stability and security.

To this end, we need to look at all the things that create these threats, pushing us to create antidotes, as was the case with our hypersonic weapons, which were developed in response to the global deployment of the US missile defence system.

Speaking specifically about the START-3 Treaty, we need an extension as much as the Americans do. They see some kind of a game in our calls to extend it for five more years without any preconditions. Russia, they say, has modernised its entire nuclear arsenal, but we are just beginning the modernisation, so they want to “tie our hands.” This is absolutely not so. We need to extend the START-3 Treaty as much as the Americans. If they refuse to do so, we will not insist. We know and we firmly believe that we will be able to ensure our security in the long run, even in the absence of this treaty. I think it is premature to discuss our actions if this treaty expires without any further action, but we are indeed ready for any turn of events. If the renewal is turned down, our options may be different, but I can assure you that overall we will continue the dialogue with the United States on strategic issues and new weapons control tools based on the facts that underlie strategic stability, as I just mentioned.

With regard to the multilateral talks, we already said back in 2010, when we were signing START-3, that the signing of this treaty puts an end to the possibility for further bilateral reductions and that, talking about future reductions, I emphasise this term, we will need to take into account the arsenals of other nuclear powers and start looking for other forms of discussions, if we’re talking about reductions. If we are talking about control, I think the bilateral Russian-American track has far more to offer. Losing all forms of control and transparency would probably be an unreasonable and irresponsible thing to do in the face of our nations and other nations as well. I believe the fact that there’s a transparency group (this is a broad term that includes measures of trust and verification) among the Russian-American working groups which will be meeting in Vienna soon, is a good sign.

Question: The Eurasian countries regard Russia as a mainstay that can connect the EU and Asian countries. How do you see Russia’s role in this space?

Sergey Lavrov: The situation on the Eurasian continent is fully affected by almost all global factors. This is where a number of the most important world centres are located, including China, Russia, India and the European Union if we are talking about the continent as a whole. For various reasons, each of these actors is motivated to pursue a foreign policy independent from the United States. This includes the EU.

Calls for strategic autonomy extend to the development area as such. We in Eurasia feel the influence of forces that would like to put together interest-based blocs and try to introduce elements of confrontation into various processes. We increasingly see centripetal tendencies. I am referring to ASEAN in the east and the EU in the west of our continent.

Located in the centre is the Shanghai Cooperation Organisation and the Eurasian Economic Union. We would like to promote unifying, not divisive approaches in this space  and intensify trans-regional collaboration based on equality, mutual benefit, and most importantly, we would like to realise the obvious comparative advantages of cooperation on the continent via integration entities created in the West, East, and Centre, with respect for each of these unions and the search for natural forms of collaboration. This is the goal of what we call the Greater Eurasian Partnership that President Vladimir Putin suggested establishing at the Russia-ASEAN summit in Sochi a few years ago. We think this is an absolutely realistic action plan.

Let me note parenthetically that there are opposing approaches. They are mostly promoted by the United States through so-called Indo-Pacific concepts aimed at undermining the central systematic role of ASEAN in the Asia-Pacific region. I am referring to an attempt to put together a group of countries that would openly – this is not even hidden – contain China’s development.

I would favour identifying points of contact among all integration processes. Of course, there is China’s Belt and Road concept. The EAEU has an agreement with China that includes identifying points of contact and the harmonisation of any project that will be implemented as part of Eurasian integration and China’s project. Of course, there is a clash of economic interests in a number of cases, but the sides’ willingness to be guided by international legal principles, respect for each other, and mutual benefit makes it possible to agree on these economic interests based on the search for balance. It is in this way that our relations with our EAEU partners, China within the SCO, and ASEAN, are built. We invite the European Union, as has been repeatedly stated, to consider how it can become part of the development of our common geopolitical and primarily geo-economic space with benefits for itself and for others.

Question: The Middle East and North Africa remain a troubled region. New divides continue to crop up there; the potential for conflict remains and the old conflicts that everyone knows about persist. The humanitarian situation is aggravated due to the West’s unfair sanctions against a certain part of the region. Various asymmetries are growing deeper. What are Russia’s strategic interests in the region today? What do we want to achieve there, given the post-COVID nature of the era we are now entering?

Sergey Lavrov: We have very good relations in this region, possibly the best in the history of relations between this country, in its various capacities, and the region. I mean relations with all sides: the Arab countries, regardless of the conflict potential within the Arab world, and Israel. We will proceed from the need to promote positive contact with all these countries and seek to understand their problems and needs, and take this into account in our relations not only with a specific country but also with the countries that this particular partner has problems with.

In the beginning, I was asked whether Russia was ready to perform as a balancing influence in relations between the United States and China. If they ask us to, if they are interested, we would not decline this. We have established contacts with both sides and our historical development record enables us to see that we have potential.

If there is interest in mediation services that we can offer in this region or elsewhere, we are always ready to try to help, but of course, we will not push ourselves on anyone. Our own interest is primarily in precluding new military crises and in settling old crises so that the Middle East and North Africa become a zone of peace and stability. Unlike certain major countries outside the region, we have no strategic interest in maintaining controlled chaos. We have no such interest whatsoever.

We are not interested in engineering head-on clashes between countries in the region so as to create a pretext and a motive for continuing, and sometimes expanding, our military presence there. We are interested in promoting mutually beneficial trade, economic, investment and other ties with these states. In this respect, we would not like any other country in the region to have the same fate as Libya, which was robbed of its statehood and now no one knows how to “sew it together.” This is why we will be actively involved in efforts to reestablish an international legal approach to avoid any further toothpowder-filled test tubes passed off as VX and lies about weapons of mass destruction in other countries in the region as is now happening in Syria. Some have already started talking about “undiscovered” chemical weapons in Libya. All of these are inventions. How they are concocted is no secret.

We would like to derive economic benefits from our relations with the countries in the region. For this, we primarily have much in common in our approaches to problems in the contemporary world: international law, the UN Charter, and inter-civilisational dialogue, something that is also important, considering the Muslim population in the Russian Federation. Russia’s Muslim republics maintain good ties with the Gulf countries and other countries in the Arab world. We would like to support and develop all this. We will not gain anything from the chaos that continues in the region. As soon as the situation stabilises, the Russian Federation’s reliability as a partner in economic cooperation, military-technical cooperation, and the political area will always ensure us important advantages.

Question: My question is related to the recent changes in Russia. The new wording of the Constitution, which has come into effect, includes a provision according to which any actions (with the exception of delimitation, demarcation and re-demarcation of the state border of the Russian Federation with adjacent states) aimed at alienating part of the Russian territory, as well as calls for such actions, shall be prohibited. This provision is understandable. This brings me to my question: Does this mean that our years-long talks with Japan on the so-called territorial dispute have become anti-constitutional because they contradict our Fundamental Law? As far as I recall, the terms “delimitation” and “demarcation” have never been applied to the Kuril Islands, or have they?

Sergey Lavrov: Yes, you are spot on. Our relations with Japan are based on a number of agreements. The Russian Federation as the successor state of the Soviet Union has reaffirmed its commitment to all of the agreements signed by the Soviet Union. President Vladimir Putin has confirmed this more than once. This includes the 1956 Declaration under which we are ready to discuss and are discussing with our Japanese colleagues the necessity of signing a peace treaty, but not a treaty that would have been signed the next day after the last shot, that is, immediately after the termination of the war, as some of our Japanese colleagues would like. The state of war between the Soviet Union and Japan was terminated by the 1956 Declaration, which provides for the end of the state of war and for the restoration of diplomatic relations. What else do we need? In other words, a peace treaty we are negotiating should be modern and comprehensive, and it should not reflect the situation of 60-70 years ago but the current state of affairs, when we believe that we should develop full-scale ties with Japan. This document must be essential and inclusive, that is, it should include issues of peace, friendship, neighbourliness, partnership and cooperation, and it should cover all spheres of our relations, including economic ties, which are improving but not in all economic sectors. It should be remembered that our Japanese neighbours have imposed sanctions on Russia, although they are not as all-embracing as the US restrictions, but anyway.

A peace treaty should also cover security topics, because Japan has a close military alliance with the United States, which has essentially declared Russia to be an enemy. Of course, a comprehensive peace treaty should also include our views on foreign policy interaction, where, to put it simply, we disagree on all disputable matters, as well as humanitarian and cultural ties and many other factors. We have offered a concept of such a treaty. Our Japanese colleagues have not responded to this concept so far.

It is clear that the outcome of WWII is the fundamental issue that should determine our relations. Japanese officials have stated more than once that they recognise the results of WWII excluding the decision concerning the South Kuril Islands, or the “Northern Territories,” as they say. This position contradicts the law. Japan’s position must be based on the fact that the country ratified the UN Charter, which essentially means that the actions taken by the winner countries with regard to the enemy countries are beyond discussion.

Of course, our Japanese neighbours keep saying that they would sign a peace treaty as soon as the territorial dispute is settled. This is not what we have agreed to do. We have agreed to focus on signing a peace treaty as stipulated in the 1956 Declaration.

Question: Russia often criticises the US for promoting non-inclusive associations in the Pacific and Indian Oceans to isolate “uncomfortable” states. I am primarily referring to the so-called Quadrilateral Security Dialogue, or Quad. Obviously, the very existence of such formats turns the region from a zone of cooperation into a zone of confrontation. We are certainly not interested in that. However, for all its minuses, the Quad concept is obviously finding understanding from Russia’s strategic partners, for instance, India. The Quad Plus project, where the US plans to invite Vietnam, our strategic partner as well, is also under discussion. Apparently, there is a need to enhance security in the region. Can Russia offer an alternative to such formats to prevent our two strategic partners from being in a position where they have to deter a third one?

Sergey Lavrov: I talked about the appearance of concepts and strategies on forming what US diplomats call “a free and open Indo-Pacific” several years ago. When some initiative calls itself free and open, I always have the impression that this includes a tinge of PR because how can it be called open if every state the region without exception is not invited to join?

When the term “Indo-Pacific strategies” appeared we inquired if they did not deal with the Asia-Pacific Region the contours of which are clear: the APEC, and the mechanisms that were established around ASEAN (the ASEAN regional security forum, the meeting of the ASEAN defence ministers and the partner countries, which is very important and, of course, the East Asia Summit (EAS), a forum that will be a decade old this year). We asked why the established term, Asia-Pacific Region, was replaced with this “Indo-Pacific strategies.” Does this mean that these strategies will embrace more countries, including all Indian Ocean coastal states? We received a negative answer. But what does “Indo” mean then? Will the Persian Gulf, which is part of the Indian Ocean, take part in the new format? We got a negative answer again. The Gulf has too many problems to be involved in these initiatives.

As for the ideas pursued by this Quad, as I have said, they are not really hiding them. These ideas come down to attempts to deter China. Our specially privileged partner India is fully aware of this. Pursuing its multi-vector policy, India is certainly interested in developing relations with the US (and who isn’t?), Japan and Australia. We are also interested in this. But India does not want to benefit from this cooperation at the price of further aggravating its relations with China. They had sad incidents on the Line of Actual Control but we welcome their immediate contacts between militaries, which are ongoing. They reached agreements on de-escalating tensions. Their politicians and diplomats also met. We can see that neither India nor China want their relations to get worse. Therefore, before talking seriously about Indo-Pacific strategies as a future for our large region, it is necessary to explain the choice of wording. If this was done to please India because of the Indian Ocean, just say so.

There are things that have already been established. I mentioned a diverse network of institutions and mechanisms around ASEAN. ASEAN brings together a group of countries that promote unifying approaches in the context of their civilisations and cultures. Everything is aimed at searching for consensus based on a balance of interests. For decades, the members have been absolutely content with developing relations in this venue with its regional security forum, defence minister meetings and East Asia Summits. There is even an expression: “ASEAN-way.” They always emphasise that they want to handle matters in “the ASEAN-way.” This means never to seek confrontation or launch projects that will create problems for other members. Regrettably, Indo-Pacific strategies may pursue different goals, at least under their initial concept.

In the beginning of our conversation, I mentioned the tough claims made by the US against China. They sound like an ultimatum. This is a mechanism for exerting and intensifying pressure. We do not see anything positive in this. Any problems must be resolved peacefully, through talks. Let me repeat that ASEAN is an ideal venue where every participant can discuss its problems with another member without polemics or tension. We are actively forming bridges with ASEAN (I mentioned the EAEU and the SCO). Their secretariats have already signed related memorandums. We will continue promoting ASEAN’s core role in the South Pacific Region.

We will only welcome Indo-Pacific strategies if they become more understandable, if we are convinced that they lean towards joining the ASEAN-led processes rather than try to undermine its role and redirect the dialogue against China or someone else. However, we are not seeing this so far.

Question: A week ago, experts were polled on US allegations that Russian military intelligence, the GRU, had offered rewards to the Taliban for killing US troops in Afghanistan. All of the analysts agree that the allegation could be rooted in domestic, primarily political reasons. Your subordinate, Special Presidential Representative for Afghanistan Zamir Kabulov, has pointed out that one of the factions in the United States is against the planned troop withdrawal from Afghanistan because US security services have become deeply involved in the drug trade over the past few years. We have not asked you about this situation yet. What do you think about this uproar?

Sergey Lavrov: We have already responded to the hype in the United States over Russia’s alleged connection with the Taliban, who were allegedly financed to fight US troops and even offer bounties for the murder of American military personnel. I can only tell you once again that all this is a dirty speculation. No facts have been provided to prove anything. Moreover, responsible officials in the US administration, including the Secretary of Defence, have said that they know nothing about this.

These allegations fit in very well with the political fighting during an election year in the United States, as if they were invented – and it appears that this is so – for this purpose. The objective is to disgrace the US administration and to discredit everything it has been doing, especially with regard to Russia. I would like to repeat that there are no facts to prove these allegations. But there were facts in the late 1970s and 80s, when the US administration did not make a secret of helping the Mujahedeen, of supplying them with Stingers and other weapons, which they used against Soviet soldiers.

As I have said, we would like both Russia and the United States to draw lessons from the experience they have accumulated in that long-suffering country and to help launch an intra-Afghan dialogue together with the other countries that could help allay tensions there, primarily China, Iraq, Pakistan, and Afghanistan’s other neighbours. We have been working actively towards this end.

As for the United States, we have been acting within the framework of this political process under the agreements being advocated by the United States in its dialogue with the Taliban and the Afghan Government. We are using our channels to make these agreements possible. There is a mechanism for consultations between Russia, the United States and China, which Pakistan sometimes joins and to which Iran has been invited. However, Iran has not acted on the invitation because of its problems with the United States and the actions Washington has been taking against Iran around the world. These consultations are a mechanism for cooperation that is being used to define the spheres where signals could be sent to the sides. This is being done within the framework of the logic of the so-called Moscow format, which brings together all of Afghanistan’s neighbours without exception, as well as the United States, Russia and China. This is more than adequate.

Now, regarding Afghanistan’s drugs and the possible involvement of the US military in the drug business. We have received numerous reports, including through the media, according to which NATO aircraft are being used to smuggle Afghan opiates to other countries, including to Europe. The governors of the concerned Afghan provinces have stated more than once that unmarked helicopters are flying in the area. It should be noted that the sky over Afghanistan is controlled by the NATO coalition. Other reports have mentioned other forms of smuggling opiates.

Of course, we cannot verify such information to the dot, but it has been reported so regularly that we cannot ignore it. If combat aircraft were used in Afghanistan (as I mentioned, it could only be NATO aircraft), the flights could only be made by military or intelligence personnel. These circumstances should be investigated, first of all in the United States. The Americans have agencies that are in charge of monitoring compliance with American laws. Second, investigations should also be held in the country where military personnel are deployed, that is, Afghanistan. This is exactly what Zamir Kabulov said. By the way, established facts show that over the 20 years of the deployment of the US and other coalition members in Afghanistan the volume of drugs smuggled into other countries, including in Europe and our neighbours, as well as into Russia, has increased several times over. Neither the United States nor the other members of the NATO coalition are seriously fighting this drug business. By the way, Special Inspector General for Afghanistan Reconstruction John Sopko noted in a recent report that there are opium poppy plantations right next to NATO bases. This is an established fact. And this is possibly not right from the viewpoint of the US stand on the drug business.

We have regularly tried to attract the UN Security Council’s attention to this issue when we listened to reports on NATO coalition operations in Afghanistan, and we also did this via bilateral channels when we urged our partners to combat the drug industry. They replied that the mandate of the NATO mission in Afghanistan did not include drugs, that it only stipulated counterterrorist activities. But it is a well-known fact that the drug business is used to finance terrorism and is the largest source of funds for terrorist organisations. You can reach your own conclusions. As I have pointed out, we take this problem very seriously.

QuestionA few hours after this meeting of the Primakov Readings is over, an extraordinary UN General Assembly session on combating the pandemic will begin at 10 am New York time. This session was convened by the Non-Aligned Movement (NAM). How important is this session? Who will represent Russia? Do you think the UN is late in responding to the pandemic? What do you think about the Non-Aligned Movement’s principles in these conditions?

Sergey Lavrov: Of course, we are aware that a special session of the UN General Assembly on the subject of COVID-19 will be convened upon the initiative of the Non-Aligned Movement chaired by Azerbaijan this year. It will take place a little later. Today, on July 10, the procedural registration of the rules to be used for convening the session begins, since amid the coronavirus infection, all remotely held events are subject to coordination in terms of their organisational and procedural aspects. Only this matter will be discussed today. The date for convening the special session itself has not yet been determined.

I don’t think we have any reason to believe that the UN is slow or late in responding to the coronavirus infection challenges. The UN General Assembly met twice some time ago at an early stage of this situation. Two resolutions were adopted which were dedicated to the international community’s goals in fighting the coronavirus infection. Most recently, the UN Security Council adopted a resolution on COVID-19. We were unable to do this for a long time because the Americans strongly opposed mentioning the role of the World Health Organisation in the document. Eventually, we found words that allowed us to mention this role and to ensure consensus approval.

Let us remember that the World Health Assembly, by the way, with the participation of the Americans, held a special session in May. The WHA adopted a resolution supported by the US in which the WHO’s role was objectively reflected. It was agreed at that session that as soon as the pandemic and all major programmes are completed, an international assessment of the lessons we learned from the WHO’s work in this area would be made, but without pointing a finger at anyone. It is an objective scientific evaluation of independent professionals.

Of course, the Non-Aligned Movement is our close partner. We are a guest country that is regularly invited to NAM summits and ministerial meetings in this capacity. This body was created in a wholly different historical context at the height of the Cold War, when the developing countries that formed this movement wanted to emphasise the principle of neutrality with respect for the two military blocs. Nevertheless, the Non-Aligned Movement remains a significant factor in international politics even after the Cold War. I think this is good, since the attempts to cobble up certain blocks again (we have already discussed this today) continue. It is important that this neutrality, non-commitment and focus on advancing the principles of international law be preserved at the core of NAM activities.

By the way, another NAM summit was held in Baku in October 2019. We attended it as a guest. Important joint statements were agreed upon. We confirmed our support for strengthening multipolarity in the international arena and respect for the UN Charter principles. NAM statements in support of Palestine and Bolivia were adopted as well. Back then, these were important topics. We are interested in seeing our status in NAM help us actively work on issues of common interest.

Question: Did Dmitry Kozak give an ultimatum at the talks on the Minsk agreements, telling Kiev to draft amendments to the Constitution of Ukraine on the special status of Donbass as soon as possible? If so, why has this demand become so tough only now that these agreements are already five years old?

Sergey Lavrov: There were no demands or ultimatums. Working as Normandy format advisors, the assistants of the four leaders that are part of our Contact Group, we are trying to ensure, in cooperation with the OSCE, the direct dialogue that Kiev is required to conduct with Donetsk and Lugansk. Conceptually, we are striving for only one goal – we are asking our Ukrainian partners to reaffirm their full commitment to the Minsk agreements as they were drafted, signed and approved by the UN Security Council. When we are told that Kiev is committed to the Minsk agreements but that it is necessary to first establish control of the Ukrainian Army and border guards over the entire border, this has nothing to do with the Minsk agreements. This is a deliberate attempt to mislead the public. When we are told, at the top level, that the Minsk agreements must be preserved to continue the sanctions against Russia, we would like to know if Ukraine is primarily interested in these agreements because of the sanctions, why it signed them and whether it is still committed to what is written in them rather than this absolutely artificial and inadequate link with sanctions. The majority of EU members consider this link incoherent. This is an approach of principle. I talked with the foreign ministers of France and Germany. Mr Kozak spoke with his counterparts as well. We would like our French and German partners to continue to express their views about this as participants in the Normandy format. Every day, we hear Kiev’s official statements that simply discard the agreements that were reaffirmed by the UN Security Council after the talks in Minsk.

For all this, we continue to hold pragmatic conversation with a view to coordinating specific steps on promoting all aspects of the Minsk agreements: security, socio-economic, humanitarian and political issues. At the recent, fairly productive meeting of the leaders’ assistants of the Normandy format states, the participants reached a number of agreements on yet another detainee exchange, and the Contact Group’s security arrangements, including reconciliation of the texts of the orders that must be adopted by the parties to the conflict (Kiev, Donetsk and Lugansk) and describe in detail the actions to be banned by these orders. These issues were agreed upon. The third negotiated item on the political agenda is the presentation by Ukraine of its vision of the document that will contain amendments to the Constitution to reflect the special status of Donbass fully in line with the Minsk agreements.

Understandings were reached in these three areas and were supposed to be formalised in the decisions of the Contact Group that ended its session the other day. In Minsk, the Ukrainian delegation disavowed everything that was agreed upon in Berlin. We noted this, and Deputy Chief of the Presidential Executive Office Dmitry Kozak sent a related message to his colleagues. So, this is no surprise at all. We have always insisted that the Minsk agreements must be carried out in full and with the due succession of actions. It’s not that we are losing patience, but patience helps when there is a clear understanding of what comes next. President Vladimir Zelensky came to power under a slogan of quick peace in Donbass. However, at this point, we have no idea what the attitude of his administration is to the actions that must be taken under the Minsk agreements.

Question: Former US National Security Advisor John Bolton writes in his memoirs that US President Donald Trump was unhappy about the sanctions over Salisbury and Syria. Did you hear about this? Is the agreement with the US on the exchange of top level visits still valid? Is Russia’s participation in the extended G7 format being considered?

Sergey Lavrov: I haven’t read John Bolton’s memoirs but I’m familiar with some parts of his book. Clearly, Mr Bolton has his own view of Russia-US relations, the US mission in the world, and America’s vision of the world order and what it should be. Apparently, every author wants his or her book to sell well (and in America practically every person writes a book after serving in the government for one or two years). To achieve this, it is necessary to make it interesting, and “hot issues” are helpful in this respect. I’ll leave all this on the conscience of Mr Bolton: both his presentation of this material and the spicy and sensitive details. I’ll also leave on his conscience his obvious embellishment of US actions in different situations.

Nobody has signed any agreements on exchanging top level visits because such an agreement implies a certain date for a visit, and the name of the city and geographical location. But nobody is discounting the possibility of such meetings, either. We are willing to work with the Americans at all levels and President of the Russian Federation Vladimir Putin has good relations with US President Donald Trump. From time to time, I talk with US Secretary of State Michael Pompeo. Our deputies also maintain a dialogue. So, if the Americans are interested, we do not see any obstacles. We don’t want our relations to be seen as some appendage to the election campaign and the tough actions taken by the sides as regards each other on the eve of the US election.

As for the G7, I think we have already said everything we wanted to say on this issue. Russia was a full member of the G8. The G8 did not meet in 2014 and not due to any action on our part. Our partners — Europe, North America and Japan — decided not to hold this event in full. This is their choice. President Vladimir Putin said in one of his comments that as before we will be happy to host the entire G8 in the Russian Federation. If our colleagues do not want this, love cannot be forced.

As for the G7, the list of countries invited to attend, as mentioned by US President Donald Trump, shows that the G7 can no longer accomplish much on its own. But even the countries that were mentioned will not make any radical change because the list is incomplete. We are convinced that the serious issues of the world and global finances can hardly be resolved effectively. Apparently, these reasons — the need to involve the main players in world financial, economic and commodity markets — have prompted the resumption and upgrade of activities in the G20. This is an inclusive mechanism that relies on consensus and the principles of equality. We believe the G20 format must obviously be preserved, encouraged and actively used if we want to talk about the underlying causes of current economic problems rather than their use in foreign policy disputes or any other sort of rhetoric.

Question: In Russia, they always say that they are ready to work with any president that is elected by the American people. Can you predict potential development of bilateral relations if former US Vice President Joe Biden wins? Do you think some analysts are correct in believing that he could revise some of President Donald Trump’s decisions, which do not benefit Russia, such as withdrawal from the INF Treaty and the Open Skies Treaty?

Sergey Lavrov: We do not comment on election campaigns. This is done by the media in all countries. The election campaign in the US is creating much interest in the entire world. This is understandable, but officially we proceed from the correct assumption that the choice of the head of state is up to the American people. This is a domestic US affair.

As for how this or that outcome might affect Russia-US relations, if we reason in a perfectly abstract way, we can quote some analysts that have commented on how this will influence disarmament talks. There is an opinion that is probably buttressed by some facts, that the Democrats are less prone than the Republicans to destroy the agreements on strategic stability and disarmament that had been reached over the past few decades. But we have not forgotten that a major anti-Russia campaign was launched during the Democratic administration of Barrack Obama. Many elements of this campaign, including sanctions, are now an element of bipartisan consensus. I don’t want to guess. This situation is unpredictable. Let me repeat, let the American people make their decision.

The OSCE Office for Democratic Institutions and Human Rights that is in charge, among other things, of monitoring elections, has conducted such monitoring remotely and distributed a report that was recently presented at the OSCE Permanent Council. The report contains many critical remarks about the correlation of election processes to American laws. I will not go into details. You can read this report yourself. But the report mentions, in particular, that for a variety of reasons at least 2 million US citizens are deprived of the right of the vote to which they are entitled by law. Interestingly, the report notes such a congenital defect in US election legislation, notably, a two-stage election process.

At first, people elect the Electoral College that later on chooses the president. The report also noted that the creation of the electoral districts is unfair to different ethnic groups. This is an indicative observation on behalf of the OSCE. We have spoken about this for a long time. I also recall that when Condoleezza Rice was US Secretary of State, she complained about our elections. I replied that if she had specific grievances, we had international and domestic observers and many other mechanisms and the entire process would be analysed. I reminded her that in the US a nominee can win a popular vote but a different candidate can be elected president because of different shares of votes in the electoral districts and the Electoral College. This is what happened in 2000 when the Florida votes were recounted for such a long time. Eventually, this process was stopped by the Supreme Court. George Bush Jr became US President and Alexander Gore accepted his defeat. Ms Rice told me then that they know this is a problem but this is their problem and they will settle it themselves. They probably will respond to the OSCE report in the same way.

As for the prospects and the projection of this or other decision on treaties, including the Open Skies Treaty, in line with the current schedule and its own announced decision on withdrawal, the US is supposed to end its participation in the treaty on November 22 or two and a half weeks after the election. No matter who becomes president, the new administration will assume its duties on January 20. Therefore, this decision will not likely be revised if the treaty expires. If the new administration, Democratic or Republican, decides to return to the treaty, the talks will have to be started from scratch. Therefore, at the extraordinary conference of the signatories of the Open Skies Treaty that was held online on July 6 of this year, we urged all remaining parties to the treaty to try and preserve it. We are prepared to continue with it but will take our final decision on whether we should remain part of it after analysing all consequences of the US decision on withdrawing from it, that is unlikely to be revised. It is final and irreversible as we are seeing, in my opinion. This is also confirmed by what happened with the INF Treaty. The decision was announced. This was followed by attempts at persuading them to keep it but to no avail.

But let me return to what I said in replying to one of the questions. We are ready for a situation where nothing will be left of arms control due to the US’s persistent line to throw all of these agreements out. But we are also prepared not to start from scratch but continue our contacts with the Americans on all strategic stability issues. I am confident that all members of the international community will support this approach. That said, we will keep the door open for multilateral talks as well. Let me repeat that these talks must rely on common understanding, voluntary participation and a balanced lineup of participants.

Geostrategic Factors: Will China Wins “World War C”

By Andrew Korybko

Global Research, April 14, 2020

The New Cold War between the US and China abruptly took a new form following the global outbreak of COVID-19, but Beijing still has a solid chance of coming out on top in this struggle for global leadership if it accurately assesses the changed geostrategic situation in the Eastern Hemisphere and accordingly crafts the right policies for responding to it.

Will The World Backtrack On BRI After World War C?

The US & China Are Intensely Competing To Shape The Outcome Of World War C“, as the author noted late last month when analyzing the consequences of the global COVID-19 outbreak on the New Cold War between these two Great Powers, but Beijing still has a solid chance of coming out on top in this struggle for global leadership if it accurately assesses the changed geostrategic situation in the Eastern Hemisphere and accordingly crafts the right policies for responding to it. The Asian Giant is under immense pressure as its envisaged model of reformed globalization under the Belt & Road Initiative (BRI) is increasingly seen with skepticism, not so much because of the intense infowar that the US has been waging against it over the past few years, but simply because of the sudden supply chain consequences that were brought about as a result of the world’s rolling lockdowns. Foreign investors and national leaders alike are no longer ignorant of the strategic vulnerabilities inherent to the globalized world system as a whole, and many are now seriously reconsidering its merits and correspondingly contemplating re-offshoring production back to their own countries or at least their immediate regions.

China’s Grand Strategy

This represents the most profound challenge that China has been forced to confront in the decades since it first decided to reform its economy by opening up to foreign investment. It was hitherto taken for granted that the globalization trend would generally continue unabated, notwithstanding some high-profile expressions of economic nationalism such as the ones most commonly associated with Trump’s “America First” policy, and that only gradual reforms would be necessary to improve this model and thus indefinitely perpetuate it. China, comfortable with its position as “the world’s factory” and flush with excess cash to invest in connectivity infrastructure projects all across the world for the purpose of more closely tying its partners’ economies to its own in pursuit of what it describes as a Community of Common Destiny, took the lead in taking globalization into its next natural phase through BRI. The grand strategic intent was to peacefully replace America’s previously predominant global economic role and therefore enter into a position of privileged soft power whereby China could then shape the world order to its liking through trade and institutions.

A Concise Analysis Of Afro-Eurasia

Those carefully crafted calculations have suddenly been thrown into uncertainty as a result of World War C, which is why it’s imperative for China to assess the changed geostrategic situation as accurately as possible in order to craft the right policies for saving its global leadership model. What follows is a concise summary of the importance that each region of Afro-Eurasia holds for Chinese strategists at the present moment, which also briefly describes their challenges and opportunities. The Western Hemisphere is omitted from this analysis because China’s relations with Latin America aren’t anywhere as significant for its global strategy as those that the country has the Eastern Hemisphere as whole, and the complex contours of Chinese-American relations will be greatly determined by the outcome of their so-called “trade war”. As such, the author believes that it’s much more relevant to discuss East & Southeast Asia, South Asia, Central Asia, the Mideast, Africa, Russia, and the EU instead, ergo the focus of the present article. Having said that, here are the geostrategic factors that will determine whether China wins World War C:

East & Southeast Asia

This region of the world previously planned to enter into the world’s largest trade bloc, the Regional Comprehensive Economic Partnership (RCEP), irrespective of India’s US-influenced refusal late last year to move forward with this game-changing development. This eastern periphery of Eurasia functions as a future integrated market for Chinese goods and services, conveniently located right next to the People’s Republic. The problem, however — and one that was already emerging prior to World War C — is that these countries’ production facilities inside China are considering re-offshoring back home or to other parts of the region as a result of the trade war, with this trend taking on a renewed importance given the global supply chain disruption in recent months. The same holds true for non-regional companies such as those from the West which are eyeing ASEAN (and especially Vietnam) as a favorable replacement to China, sometimes for political reasons. China will therefore need to ensure that RCEP eventually enters into effect in order to mitigate some of the immediate economic consequences through its envisaged regional marketplace, as well as remain competitive with lower-cost labor from its neighbors in order to slow down the speed of this seemingly inevitable re-offshoring process.

South Asia

The opportunities and challenges that South Asia poses for China are more geopolitical in nature than economic. The US’ successful co-opting of India into a proxy for “containing” China reduces the likelihood of a meaningful economic rapprochement between these two Asian Giants, and instead positions what’s soon predicted to become the world’s most populous country as a possible rival to the People’s Republic in the long term, with the short- and medium-term consequences being that it might become an even more appealing re-offshoring destination for foreign Chinese-based companies than even ASEAN. The global pivot state of Pakistan, however, represents nothing but opportunities for China because of CPEC, BRI’s flagship project. This ambitious initiative serves not only as a geostrategic shortcut to the energy market of the Mideast and the growing labor-consumer one of Africa that conveniently bypasses the increasingly militarized South China Sea and Strait of Malacca, but is also the basis upon which all other major BRI projects will be managed, relying upon the invaluable experiences learned during its years-long implementation. In order to succeed in South Asia in the post-coronavirus environment, China must manage to retain pragmatic relations with India in parallel with undercutting its attractiveness as a re-offshoring center while maximizing every mutual strategic opportunity that it can reap from CPEC.

Central Asia

The Eurasian Heartland is primarily functions as a reliable source of Chinese energy imports. It has obvious connectivity potential for linking China to the Mideast and Europe through the “Middle Corridor” that’s being pursued in partnership with Turkey, but in and of itself, it doesn’t have much economic significance for the People’s Republic due to its comparatively small labor and consumer markets relative to East-Southeast-South Asia and Africa. It does, however, function as a crucial test case for the resiliency of the Russian-Chinese Strategic Partnership insofar as it provides these two Great Powers with the opportunity to reach pragmatic “compromises” in pursuit of their grander strategic goal of multipolarity, but there’s no sidestepping the fact that some in Moscow seem to be increasingly uncomfortable with being replaced by Beijing in the region that they’ve long regarded as their “backyard”. Furthermore, rising Sinophobia in some of these countries as a result of the massive influx of Chinese goods and the replacement of some local laborers with imported Chinese ones creates a possible fault line for the future, albeit one that doesn’t necessarily have to have any security implications since the region’s traditional Russian hegemon has no interest whatsoever in allowing Central Asia to be used as a base for launching terrorist attacks against it in Xinjiang.

Mideast

Just like Central Asia, the Mideast is mostly important to China for energy reasons even though it too has obvious connectivity potential in linking East Asia with Western Europe. Unlike Central Asia, however, some of the most geostrategically positioned countries like Iraq and Syria have been destroyed by Hybrid War, while populous Iran is under sanctions pressure like never before and could very well be the next to follow in the worst-scenario scenario. This makes the Mideast risky from a strategic connectivity standpoint, though that nevertheless hasn’t stopped some Chinese firms from making inroads in this region. The GCC countries, and especially Saudi Arabia, are attempting to restructure their economies in order to reduce their dependence on energy exports, which in turn necessitates Chinese investment in their planned production facilities. China’s growing economic and military influence (in terms of exports) in the Mideast also presents it with the diplomatic opportunity to participate in resolving some of the region’s crises following the model that it’s spearheading in Myanmar, which could prove very valuable for managing other conflicts that might one day arise elsewhere along its New Silk Road.

Africa

Africa’s importance might arguably even overshadow that of East & Southeast Asia when it comes to China’s grand strategy since the People’s Republic is depending on having reliable access to the continent’s raw material, labor-consumer markets, and increasingly, its energy resources in order to maintain domestic growth throughout the present century. Unlike in East & Southeast Asia, however, there are few competitors to China’s plans in Africa, with the only ones that deserve mention being the US’ ongoing infowar campaign to discredit BRI and the nascent joint Indo-Japanese “Asia-Africa Growth Corridor” being supported by the US, France, and the GCC as a possible long-term (key word) competitor to China’s investment model there (focusing instead on “soft infrastructure” like schools, job training, and healthcare services in contrast to the attention that China pays to its “hard” counterpart like physical connectivity infrastructure). Being much more under China’s influence than any other part of the world due to the mutual benefits derived from the premier position that the People’s Republic holds in Africa’s trade and investment spheres, it’s unlikely that many of its countries will be swayed into turning against Beijing’s reformed globalization model of BRI by the Trump-promoted appeal of economic nationalism. This doesn’t mean that China should grow complacent, however, but should instead strive to present Africa as a shining example to the rest of the world of everything that can be achieved as a result of bilateral cooperation through BRI.

Russia

The future of Russian-Chinese relations is quickly becoming an interesting field of study because of the progress that Moscow is making on reaching a “New Detente” with Washington, the latter of which has been extensively covered by the author in a series of four articles hereherehere, and here. To summarize, Russia’s pursuit of a series of “pragmatic compromises” with the US on a host of relevant issues ranging from NATO expansion to North Korea could lead to a fast-moving rapprochement between the two with serious strategic implications for China, especially if the People’s Republic comes to rely more on the Eurasian Great Power for ensuring reliable access to the markets of Western Europe through the complementary Eurasian Land Bridge and Northern Sea Route. That’s not to say that Russia will ever “cut off” China and/or the EU’s access to the other since the country itself is depending on reaping the economic benefits of facilitating their overland and maritime connectivity with one another, but just that this relationship could be leveraged in more “creative” ways to advance certain political-strategic objectives vis-a-vis China (such as in Central Asia for example, be it in coordination with the US or carried out independently) the same way as it’s alleged to have employed its energy relationship with the EU in the first decade of the present century. In addition, Russia’s envisaged irreplaceable role in facilitating Chinese-EU trade used to be taken for granted but is now highly uncertain since it’ll depend on whether globalization survives World War C and if China even retains an interest in having Russia fulfill this role in the first place to the extent that Moscow previously anticipated.

EU

The last region of the Eastern Hemisphere relevant to Chinese grand strategy is the EU, and it’s definitely one of the most important. This region of Western Eurasia has a large and highly developed consumer market that the Chinese economy depends on for growth, especially considering that most of its members use the euro, one of the world’s strongest and most stable currencies. It’s extremely important that China does everything that it can to ensure that the EU as a whole remains committed to expanding bilateral economic relations, especially through BRI, hence Beijing’s unprecedented soft power outreaches in recent weeks through the provision of medical equipment and healthcare specialists to some of its members like Italy and aspiring ones such as Serbia. Accordingly, it naturally follows that China would prefer for the EU to emerge from this crisis stronger and more integrated than ever in order to facilitate this goal, though that’s also why its weakening, disintegration, and/or pivot towards the US would be so detrimental to Beijing’s grand strategy. If China’s economic reach becomes limited in the EU as a result of the bloc gradually “de-globalizing” (including through re-offshoring Chinese-based production facilities to ASEAN, India, and/or back home [perhaps to the organization’s poorer members along its periphery]) or possibly even embracing a degree of Trump-inspired economic nationalism, then it would greatly reduce China’s influence to its immediate region (East and Southeast Asia) and the Global South (mostly South Asia [except India] and Africa in this respect) and thus make it more easily “containable” through Hybrid War means.

The Three Steps To Success

Taking all of the above insight into consideration, the following three steps are absolutely necessary if China wants to win World War C:

1. Ensure The Continued Attractiveness Of Globalization:

If Trump-inspired economic nationalism becomes a new global trend throughout the course of World War C, then BRI will be in danger of becoming nothing more than a bare-bones project that turns into a skeleton of its formerly so-ambitious self. This would require China to undertake a range of far-reaching reforms at home in order to restructure its economy from its hitherto export-dependent nature and into something more autarkic, though the latter has very real limits given how much the country relies on foreign trade surpluses reaped from globalization processes to drive domestic development and purchase essential resources like energy, raw materials, and even food. Without ensuring the continued attractiveness of globalization, China could very well enter into its worst-ever crisis since the 1949 Communist Revolution that could have unimaginable economic and even political consequences, which is why it’s of the highest priority that the People’s Republic does everything in its power to protect this trade model at all costs.

2. Focus On The Afro-Eurasian Triangle:

Provided that globalization survives in some relevant form after World War C (which remains to be seen but would be attributable in that case to China pulling out all the stops in pursuit of this goal), then China will have to focus on the Afro-Eurasian Triangle of RCEP, Africa (increasingly via S-CPEC+), and the EU in order to guarantee its place as the US’ global systemic rival. These three regions of the Eastern Hemisphere all complement one another in terms of China’s grand strategy as was extensively explained in each case earlier above, though this also means that they’re all possible targets upon which the US can put Hybrid War pressure. China cannot depend on any one of these regions alone if it aspires to remain a global leader, though it could still in theory manage to attain this goal provided that it only “loses” one of them. The “loss” of Africa is highly unlikely, so in the scenario that it “loses” the EU, then China would become a power relevant only to most non-Western countries (which is the still the lion’s share of the world), whereas the “loss” of RCEP would make China more dependent on Russian-controlled trans-continental trade routes to the EU (the “Middle Corridor” through Central Asia and Northern Sea Route) that could be indirectly influenced by the US through the “New Detente”.

3. Manage The US-Indian Strategic Partnership & The “New Detente”:

Both the ever-intensifying US-Indian Strategic Partnership and the gradual progress that America is making on reaching a “New Detente” with Russia represent latent challenges of the greatest geopolitical magnitude if they aren’t nipped in the bud before they blossom or properly managed in advance. There’s little that China can do to influence either of them, though the first-mentioned might fizzle out if India implodes as a consequence of World War C or due to the Hybrid War being waged by the Hindu nationalist government on its own citizens in an attempt to turn the country into a “Hindu Rashtra” (Hindu fundamentalist state), while the second might abruptly be derailed by the American “deep state” at any time and would almost certainly fail if Trump loses re-election. In the “worst-case” scenario of each US-backed “containment” vector entering into force and possibly even combining into an unofficial semi-united American-Russian-Indian front against it, China would do best trying to emulate its global rival’s Kissingerian policy by “triangulating” both between its Great Power neighbors and itself and between those two and the US in an effort to relieve the growing multilateral pressure upon it.

Concluding Thoughts

China’s global leadership ambitions are being challenged like never before as a result of World War C and the subsequent suspicion that many countries now have of globalization processes, especially in respect to the strategic vulnerability inherent to being dependent on foreign supply chains halfway across the world for essential products such as medical equipment. The rolling lockdowns that unfolded across the world over the past two months, beginning in China and eventually spreading to the West, exposed the fragility of the previous world system and will inevitably necessitate some serious reforms to its structure at the very least, with the possible mass movement away from globalization towards Trump-inspired economic nationalism being the absolute worst-case scenario for China since it would completely cripple its grand strategy. It’s for this reason that the People’s Republic must do everything in its power to ensure the survival of as much of the pre-crisis globalization system as possible in order to stand a credible chance of remaining the US’ only global rival, after which it must then focus on the Afro-Eurasian Triangle of RCEP, Africa, and the EU concurrent with managing the dual latent challenges posed by the US-Indian Strategic Partnership and the “New Detente” in the center of the Eastern Hemisphere. Should China succeed with these daunting tasks, then the world’s multipolar future will be assured, though its failure would mean that unipolarity will probably return with a vengeance.

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This article was originally published on OneWorld.

Andrew Korybko is an American Moscow-based political analyst specializing in the relationship between the US strategy in Afro-Eurasia, China’s One Belt One Road global vision of New Silk Road connectivity, and Hybrid Warfare. He is a frequent contributor to Global Research.

Featured image is from OneWorldThe original source of this article is Global ResearchCopyright © Andrew Korybko, Global Research, 2020

Trials and tribulations of Central Asia integration

Trials and tribulations of Central Asia integration

A man leads a horse on the Suu-Samyr plateau along the ancient Great Silk Road from Bishkek to Osh, some 200 km from Bishkek. Photo: Vyacheslav Oseledko / AFP

The pros and cons of being the Heartland in the 21st century

By PEPE ESCOBAR, NUR-SULTAN, KAZAKHSTAN

Trials and tribulations of Central Asia integration

Crossing Tajikistan from west to northeast – Dushanbe to the Tajik-Kyrgyz border – and then Kyrgyzstan from south to north all the way to Bishkek via Osh, is one of the most extraordinary road trips on earth. Not only this is prime Ancient Silk Road territory but now is being propelled as a significant stretch of the 21st century New Silk Roads.

In addition to its cultural, historical and anthropological pull, this road trip also lays bare some of the key issues related to the development of Central Asia. It was particularly enlightening to hit the road as previously, at the 5th Astana Club meeting in Nur-Sultan, Kazakhstan, I had had the pleasure of moderating a panel titled Central Asia at the Intersection of Global Interests: pros and cons of being Heartland.

The Heartland in the 21st century could not but be a major draw. Any serious analyst knows that Central Asia is the privileged corridor for both Europe and Asia at the heart of the New Silk Roads, as the Chinese-led BRI converges with the Russia-led Eurasian Economic Union (EAEU).

Banking experts such as Jacob Frenkel, chairman of JP Morgan Chase International, insist that the path towards inclusive growth in Central Asia entails access for financial services and financial tech; Nur-Sultan, incidentally, happens to be the only financial center within a 3,000-mile radius. Only a few years ago it was basically a potato field.

So it will be up to Kazakhs to capitalize on the financial ramifications of their independent, multi-vector foreign policy. After all, aware that his young nation was a “child of complicated history,” First President Nursultan Nazabayev from the beginning, in the early 1990s, wanted to prevent a Balkans scenario in Central Asia – as proposed as a sort of self-fulfilling prophecy by Zbigniew Brzezinski in The Grand Chessboard. Recently Kazakhstan mediated quite successfully between Turkey and Russia. And then there’s the Kazakh hosting of the Astana process, which quickly evolved as the privileged road map for the pacification of Syria.

A link or a bridge?

Frederick Starr, chairman of the Central Asia-Caucasus Institute in Washington, made a crucial point in the sidelines of our debate: the UN recently passed a unanimous resolution recognizing Central Asia as a world region. And yet, there is no structure for cooperation inside Central Asia. Tricky national border issues between the Amu Darya and the Syr Darya rivers may have been solved. There are very few pending questions between, for instance, the Uzbeks and the Kyrgyz. Most “Stans” are SCO members, some are EAEU members and all want to profit from BRI.

But as I later saw for myself on the road as I crossed Tajikistan and then Kyrgyzstan, tariff barriers still apply. Industrial cooperation is developing very slowly. Corruption is rife. Distrust against “foreigners” is inbred. And on top of it, the fallout of the US-China trade war affects mostly developing nations – such as the Central Asians. A solution, Starr argues, would be to boost the work of an established commission, and aim towards setting up a single market by 2025.

At the Nur-Sultan debate, my friend Bruno Macaes, former Minister for Europe in Portugal and author of the excellent The Dawn of Eurasia, argued that the thrust for the New Silk Roads remains sea transportation, and investment in ports. As Central Asia is landlocked, the emphasis should be on soft infrastructure. Kazakhstan is uniquely positioned to understand differences between trading bocks. Macaes argues that Nur-Sultan should aim to replicate the role of Singapore as a bridge.

Peter Burian, the EU Special Representative for Central Asia, chose to stress the positives: how Central Asia has managed to survive its new Heartland incarnation without conflict, and how it’s engaged in institutional building from scratch. The Baltics should be taken as an example. Burian insists the EU does not want to impose ready-made concepts, and would rather work as a link, not as a bridge. More EU economic presence in Central Asia means, in practice, an investment commitment of $1.2 billion in seven years, which may not amount to much but targets very specific, practical-minded projects.

Evgeny Vinokurov, chief economist of the Eurasian Fund for Stabilization and Development, touched on a real success story: the 15 day-only transportation/connectivity rail between China’s central provinces, Central Asia and the EU – now running at 400,000 cargo containers a year, and rising, and used by anyone from BMW to all manner of Chinese manufacturers. Over 10 million tons of merchandise a year is already moving West while six million tons are moving East. Vinokurov is adamant that the next step for Central Asia is to build industrial parks.

Svante Cornell, from the Institute for Security and Development Policy, emphasized a voluntary process, possibly with six nations (Afghanistan also included), and well-coordinated in practice (way beyond mere political integration). Models should be result-oriented ASEAN and Mercosur (presumably before Bolsonaro’s disruptive practices). Key issues involve facilitating smoother border crossings and for Central Asia to position itself as not just a corridor.

Essentially, Central Asia should think eastwards – in an SCO/ASEAN symbiosis, keeping in mind the role Singapore developed for itself as a global hub.

What about tech transfer?

As I saw for myself days later, when for instance, visiting the University of Central Asia in Khorog, in the Pamir Highway in Tajikistan, set up by the Aga Khan foundation, there is a serious drive across Central Asia to invest in universities and techno centers. In terms of Chinese investment, for instance, the Asia Infrastructure Investment Bank (AIIB) is financing hydropower in Kyrgyzstan. The EU is engaged in what it defines as a “trilateral project” – supporting education for Afghan women and universities in both Kazakhstan and Uzbekistan.

This may all be discussed and deepened in an upcoming, first-time-ever summit of Central Asian presidents. Not bad as a first step.

Arguably the most intriguing intervention in the debate in Nur-Sultan was by former Kyrgyz Prime Minister Djoomart Otorbaev. He remarked that the GDP of four “Stans,” excluding Kazakhstan, is still smaller than Singapore’s. He insisted the road map ahead is to unite – mostly geoeconomically. He emphasized that both Russia and China “are officially complementary” and that’s “great for us.” Now it’s time to invest in human capital and thus generate more demand.

But once again, the inescapable factor is always China. Otorbaev, referring to BRI, insisted, “you must offer to us the highest technological solutions.” I asked him point-blank whether he could name a project with inbuilt, top technological transfer to Kyrgyzstan. He answered, “I didn’t see any added value so far.” Beijing better go back to the drawing board – seriously.

The RCEP train left the station, and India, behind

The RCEP train left the station, and India, behind

Prime Minister of India Narendra Modi during the 16th ASEAN-India Summit in Nonthaburi, Thailand, on November 3, 2019. Photo: AFP / Anton Raharjo / Anadolu Agency

Biggest story at ASEAN was convergence of moves toward Asia integration, leaving Delhi out for now

ByPEPE ESCOBAR

A pan-Asia high-speed train has left the station – and India – behind. The Regional Comprehensive Economic Partnership (RCEP), which would have been the largest free trade deal in the world, was not signed in Bangkok. It will probably be signed next year in Vietnam, assuming New Delhi goes beyond what ASEAN, with diplomatic finesse barely concealing frustration, described as “outstanding issues, which remain unresolved.”

The partnership uniting 16 nations – the ASEAN 10 plus China, Japan, South Korea, Australia, New Zealand and, in theory, India – would have congregated 3.56 billion people and 29% of world trade.

Predictably, it was billed as the big story among the slew of high-profile meetings linked to the 35th ASEAN summit in Thailand, as RCEP de facto further integrates Asian economies with China just as the Trump administration is engaged in a full spectrum battle against everything from the Belt and Road Initiative to Made in China 2025.

It’s not hard to figure out where the “problem” lies.

Mahathir ‘disappointed’

Diplomats confirmed that New Delhi came up with a string of last-minute demands in Thailand, forcing many to work deep into the night with no success. Thailand’s Commerce Minister, Jurin Laksanawisit, tried to put on a brave face: “The negotiation last night was conclusive.”

It was not. Malaysian Prime Minister Mahathir Mohammad – whose facial expression in the family photo was priceless, as he shook hands with Aung San Suu Kyi on his left and nobody on his right – had already given away the game. “We’re very disappointed,” he said, adding: “One country is making demands we cannot accept.”

ASEAN, that elaborate monument to punctilious protocol and face-saving, insists the few outstanding issues “will be resolved by February 2020,” with the text of all 20 RCEP chapters complete “pending the resolution of one” member.

RCEP dwells across a large territory, covering trade in goods and services, investment, intellectual property and dispute resolution. The Indian “problem” is extremely complex. India in fact already has a free trade agreement with ASEAN.

New Delhi insists it is defending farmers, dairy owners, the services industry, sectors of the automobile industry – especially hybrid and electric cars, and very popular three-wheelers – and mostly small businesses all across the nation, which would be devastated by an augmented tsunami of Chinese merchandise.

Agriculture, textile, steel and mining interests in India are totally against RCEP.

Yet New Delhi never mentions quality Japanese or South Korean products. It’s all about China. New Delhi argues that signing what is widely interpreted as a free trade agreement with China would explode its already significant US$57 billion a year trade deficit.

The barely disguised secret is that India’s economy, as the historical record shows, is inherently protectionist. There’s no way a possible removal of agricultural tariffs protecting farmers would not provoke a social cataclysm.

Modi, who is not exactly a bold statesman with a global vision, is between a heavy rock and a very hard place. President Xi Jinping offered him a “100-year plan” for China-India partnership at their last informal, bilateral summit.

India is a fellow BRICS member, it’s part of the Russia-India-China troika that is actually at the center of BRICS and is also a member of the Shanghai Cooperation Organization.

Questions remain whether both players would be able to work that out before the Vietnam summit in 2020.

Putting it all together

India was only part of the story of the summit fest in Thailand. At the important East Asia Summit, everyone was actively discussing multiple paths towards multilateralism.

The Trump administration is touting what it calls the Free and Open Indo-Pacific Strategy – which is yet another de facto China containment strategy, congregating the US, India, Japan and Australia. Indo-Pacific is very much on Modi’s mind. The problem is “Indo-Pacific,” as the US conceives of it, and RCEP are incompatible.

ASEAN, instead, came up with its own strategy: ASEAN Outlook on the Indo-Pacific (AOIP) – which incorporates all the usual transparency, good governance, sustainable development and rules-based tenets plus details on connectivity and maritime disputes.

All the ASEAN 10 are behind AOIP, which is, in fact, an original Indonesian idea. It’s fascinating to know that Bangkok and Jakarta worked together behind closed doors for no fewer than 18 months to reach a full consensus among the ASEAN 10.

South Korea’s Moon Jae-in jumped in extolling the merits of his Southern Policy, which is essentially northeast-southeast Asia integration. And don’t forget Russia.

At the ASEAN business and investment summit, Russian Prime Minister Dmitry Medvedev put it all together; the blossoming of the Greater Eurasian Partnership, uniting the Eurasia Economic Union, ASEAN and Shanghai Cooperation Organization, not to mention, in his words, “other possible structures,” which is code for Belt and Road.

Belt and Road is powerfully advancing its links to RCEP, Eurasia Economic Union and even South America’s Mercosur – when Brazil finally kicks Jair Bolsonaro out of power.

Medvedev noted that this merging of interests was unanimously supported at the Russia-ASEAN summit in Sochi in 2016. Vietnam and Singapore have already clinched free trade deals with Eurasia Economic Union, and Cambodia, Thailand, Indonesia are on their way.

Medvedev also noted that a trade and economic cooperation deal between China and Eurasia Economic Union was signed in late October. Next is India, and a preferential trade agreement between the union and Iran has also been signed.

In Thailand, the Chinese delegation did not directly address the United States’ Free and Open Indo-Pacific strategy. But Medvedev did, forcefully: “We are in favor of maintaining the effective system of state-to-state relations which was formed on the basis of ASEAN and has shown a good track record over the years.

“In this regard, we believe the US initiative is a serious challenge for ASEAN countries, since it can weaken the association’s position and strip it of its status as a key player in addressing regional security problems.”

Summits come and go. But what just happened in Thailand will remain as another graphic illustration of myriad, concerted moves leading towards progressive, irreversible Asia – and Eurasia – integration. It’s up to Modi to decide when and if to hop on the train.

Pepe Escobar on Al-Mayadeen

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