By Vivek Pattanayak in Bhubaneswar, March 31, 2018: After the end of the Second World War two important developments took place, inter alia, which defined the relationships among nations in the world.

First, prolific growth of international organizations like United Nations and its specialized agencies and also international institutions like IMF and World Bank, and now World Trade Organization.

Second, bipolarization of the world popularly called Cold War between Soviet Union and the Communist bloc on one side and USA and its Western countries on the other.

The global scenario changed dramatically with collapse of the Communist bloc and demise of the Soviet Union after less than eight decades of its revolutionary birth, impressive economic growth and meteoric rise of its military.

Encouraged by this sudden development and spectacular victory over Iraq in the first Gulf War, the United States and its Western allies advocated for a new world order of globalization, liberalization and privatization. Many changes to political and economic systems were championed. Socialist model was replaced by free enterprise. No wonder Fukuyama spoke of end of history and last man. This trend also encouraged David Corten to write “When the Corporates Rule the World”.

Interestingly new alliances took shape. The Eastern Europe joined European Union. India liberalized its economy. It recognized Israel. It came closer to USA. South Africa rejected much hated apartheid. Non-alignment movement lost its steam. Regional blocs like OAU, Arab League, ASEAN and SAARC became more active both politically and also in economic arena. In spite of cold war indelible mark was the robust growth of international law, regulatory regime and multiple forum of exchange of conflicting views and some dispute resolution mechanism, more particularly in technical and trade matters.

The global financial crisis of 2008 following subprime lending, contagion it spread across the globe with collapse of banks and financial institutions came as a rude shock followed by years of depression in the Western economies. Monopoly of G7 to guide the world economic order was whittled down with emergence of G20 as the global crisis of such magnitude could not be addressed alone by major economic powers.

In last two decades there have been cataclysmic technological developments with internet and mobile telephone system. This encouraged Thomas Friedman to write “The World is Flat”. Spectacular economic growth of China which kept most of the western economies afloat and phenomena of emerging markets like India, Russia, Brazil, South Africa , Indonesia, Mexico, rise of Asian Tigers like South Korea, Taiwan, Thailand and Philippines gave yet a new dimension to the world economic order.

Establishment of BRICS not geographically contiguous and creation of New Development Bank and promotion of the Asian Infrastructure Development Bank are indications of how the economic balance is shifting. During this period events like 9/11, rise of Al Qaeda, Taliban, fall of Saddam Hussein and Gaddafi, Arab Spring and Jasmine revolution leading to debilitating instability in the Middle East caused by rise of ISIS, a terrorist outfit controlling huge swathes of land with oil resources under control have brought terrorism to the hearts of Europe.

In the background of this it is worth asking what will be world order in the years to come. In his book, Next One Hundred Years the geopolitical scientist George Friedman has made some interesting predictions. USA would continue to dominate the world of politics and economy because of its technological superiority, economic prowess and military strength. China would face tension between the rich coastal area and backward western region. Russia would flex its muscle but wane. India with its internal contradictions will not be a global power.

Events of last few years are worth taking note of while looking at the global order in making.

USA under Trump is taking a stand to resile from Climate Change Accord, build a wall bordering Mexico, reject Trans-Pacific trade agreement ,resorting to trade wars by imposing tariffs on steel and aluminium, not renewing visa to IT professionals coming from mostly India and other developing countries, giving a call for America for Americans, not willing to support NATO unless partners meet the cost and not sending troops in aid of its allies unless paid for. This has created in turn tension in America and alienation of its traditional allies. White Americans have grown increasingly intolerant towards blacks, Hispanics, Arabs, Asians and subcontinent Indians.

Growing rightists movement in Europe, quite naturally reacting after spate of terrorist attacks coming from the immigrants of the Islamic origin, is making the continent insular. Macron is an exception. Merkel was finding it difficult to form a stable government. Poland, Austria, Hungary and even Italy are unfavourable to immigrants. Euro as a currency has created problem for less developed countries like Greece. Imposition of financial discipline exposed fragility of members’ economy.

Crisis overtook Iceland, Ireland, Portugal and Spain. Only recently there was talk of Grexit. Merkel and Macron are believers of greater European integration but resisted in their own countries. Without greater fiscal and banking union, monetary union is giving rise to political tension which may eventually threaten the European Union. Brexit is an indication. Spain faced Catalonia, France has problem of Brittany and Corsica, Flemish nationalism is still showings its temper. Lombardy asked for greater autonomy in Italy.

China in Asia has taken up leadership role. It is looking for global leadership. Xi’s speech in Davos in 2017 asking for globalization of economy was sharp contrast to Trump’s call for America for Americans. His appeal was music to Europe. OBOR is like Marshall Plan for Asia and Europe. Integrating Western Europe with East Asia through One Belt One Road (OBOR) concept going through heart of Central Asia by roads, railway lines, industrial complexes, fibre optics communications corridor, hotel, motels and shopping plazas all the way and securing sea routes with multi-trillion dollar project cost having huge employment opportunity extending the arm from the Pacific rim to Africa are undoubtedly a reflection of high ambition of taking the global leadership role.

No wonder Xi does not want limit on his tenure. In this grand plan Russia financially weak is with China. West Europe desperately in need of contracts and projects would join with China. Even USA will benefit economically. And not surprisingly, Trump was ambivalent about Xi’s tenure limit.

China’s claim over South China Sea repudiating the international tribunal’s award ,creating an artificial island to have sovereignty over air, silencing Philippines the main contender to submission through trade deals, ignoring the freedom of navigation, threatening Vietnam, ignoring Malaysia and almost challenging USA reflect its strength. In the past China was accommodative about Taiwan. It advocated for Taiwan “one China two systems” policy like Hong Kong and Macau. It allowed trade with Taiwan. It has air services with the island. It did not care if others had trade and commerce with Taiwan. Of late it is increasingly intolerant.

Recent military exercise of Singapore with Taiwan received hostile reaction from China when its naval vessels on their way back were detained at Hong Kong when docked for refuelling. Singapore received a snub when it was not invited at the highest level for OBOR conference in Beijing. Mongolia had to apologise for inviting Dalai Lama.

South Korea allowed deployment of THAAD missiles by USA following North Korean missile launches. This brought adverse sanction on movement of high end tourist traffic from China to South Korea causing huge loss of business in tourism sector. This was relaxed only after South Korea agreed to three Nos-no further deployment of THAAD, no nuclear deal with USA and no trilateral understanding with Japan and USA on military.

The newly elected President of South Korea during his visit to China agreed to join OBOR with promise of starting of work from the wartime capital of Korea in China. Recent bonhomie between South and North on winter Olympics is the sign of South Korea moving out of sphere of influence of USA. Sudden visit of Kim to Beijing reflect what influence China can bring. Even Trump will be glad to have a deal. Gain of influence over the peninsula will be that of China.

There was high decibel coverage in the Indian media about QUAD, Japan, India, Australia and USA to contain China. One must be realistic. Australia depends heavily upon China for its iron ore, coking coal and bauxite and alumina export. Recently there was scandal that the Australian politicians are under financial influence of the Chinese business. USA and China have symbiotic trade and business relationship going over years with huge US investment in China and vice versa. China has trillions of dollars of US debt bonds.

India invited ten ASEAN leaders to India on the Republic Day. Undoubtedly it was a great public relations exercise for domestic consumption. ASEAN trade with China is massive. They can ill afford to alienate themselves from the economy of the Chinese dragon. They can do so at their own peril to their economy.

China has a strong political relationship with Pakistan going over decades ever since Ayub Khan ceded a portion of J&K to China. Its ambitious China-Pakistan Economic Corridor project would have robust economic integration with Pakistan with access to Arabian Sea through Gwadar port in Balochistan. China has turned out to be the biggest supplier of arms to Pakistan, possibly after its relationship with USA has become sour. Influence of China over Bangladesh and Myanmar is increasing.

In Rohingya refugees’ crisis, it was China which bartered an agreement between the two countries. It is needless to mention the Nepalese communists coming to power will bring Nepal closer to China which will build railway line from Tibet to Nepal, a landlocked country desperately trying to have access to the world beyond India as it has experienced blockade from India in recent times.

China has close ties with Sri Lanka for many years. Managinga port in Sri Lanka on 99 year lease basis is of strategic significance for China particularly with recent developments in Maldives, its regime depending more on China. A naval base in Djibouti by China will secure its freedom of navigation for its merchantmen. In the Indian media a lot was mentioned about India would develop Chabahar port and establish aluminium plant. China has the ambition of setting up the aluminium complex and develop Chabahar port. Iran is tilting in favour of China. The latest news indicates that Iran would invite China and Pakistan to develop Chabahar. This would deny easy access for India to Afghanistan for trade and commerce.

For decades China has entered Africa for exploiting its natural resources. Now it is entering Latin America in a big way. Its presence in Nicaragua to construct a canal joining Pacific ocean with the Atlantic ocean to rival Panama canal shows its strategic depth. China ensured that Costa Rica severes its diplomatic relationship with Taiwan. Its President has visited China twice and Xi and his predecessor have visited San Jose twice to sign multiple trade and business agreements.

India was expected to fill-up the power vacuum after the British and the French withdrew and Japan surrendered. The Americans came in to stave off the Chinese influence after the Korean War and remained bogged down to Vietnam until fall of Saigon. India’s defeat in war against China in 1962 was a blow to her hopes of the Asian leadership. India’s spectacular victory in 1971 creating Bangladesh even after hostile sabre-rattling by China and US misadventure to send seventh fleet to Bay of Bengal resurrected India’s image.

Mao during the visit of Nixon pleaded with him to teach India a lesson; such was the humiliation of China being unable to support its ally Pakistan during its fragmentation. India’s intervention in Maldives to rescue its President against a temporary coup enhanced the image of India having received adulation from Reagan.

India’s liberalization of economy was an epoch making event in the early nineties forced due to financial crisis and global change of power play with exit of Soviet Union and US flexing its muscle in Iraq. The country experienced spectacular economic development only after a decade of liberalization. It escaped global financial crisis. It became the beacon of hope of the global business houses as investment destination. To quote Obama in 2010 India already has emerged, not emerging.

Then came scams after scams, from 2G to Coal scam followed by Adarsh building and Commonwealth game scam. There was, as media called, policy paralysis. Media was hyperactive, there was judicial activism and civil society took up the lead to make laws from the street. Executive was somnolent and bureaucracy demoralized.

Election of 2014 brought a leadership change. In last four years many demonstrative decisive actions have been taken like demonetization which has halted growth. Introduction of GST was disruptive. 100% FDI in civil aviation neither led to fresh investment pouring to the country nor the increase in caps in FDI in other sectors brought any significant achievements on ground.

Much hyped Make in India is yet to make a mark. Start Up India is struggling. Stand Up India is sill to make any headway. Jobless growth has been criticized. Interest rate has remained unchanged in order to fight inflation, domestic investment has been disappointing, fiscal deficit continues to go beyond the statutory limit, exports have fallen, imports have been straining our FE reserves, oil price is rising, FII exited by Rs 11000 crore recently responding to interest rate of Federal Reserves, NPAs of banks have reached Rs ten trillion, PNB fraud has shocked the country, India’s inability to keep POSCO a South Korean company was a dark spot in the effort to attract investment to the country, Maoists in Chhattisgarh and terrorists in J&K are taking heavy toll.

Across the LOC with Pakistan there is an unabated hostility. Transparency International has reported index of corruption has gone up in last four years. According to FORBES Asia India is the most corrupt country in Asia. Infant mortality is very high in comparison other emerging countries. Level of pollution in Delhi was so high that some diplomats left the capital to other cities. Although India is reported to be a big arms buyer it s


eems the army is not happy with budget allocations. Rafale deal is being questioned as Bofor became sore point in the past. While Pakistan is freely buying arms not caring for public opinion, India shrinks when “scandal” is reported. From the above one can appreciate whether India as a rising power can compete with China.

Japan made a spectacular progress after the devastation of the Second World War becoming the second largest economy of the world. For last two decades its growth has been sluggish due to lack of structural economic reforms. With ambitious China in the door step and unpredictable Kim in North Korea and undependable Trump, Japan under Abe would rewrite the pacific constitution imposed on her to militarize. This would impose a heavy financial burden. Its strength is its sophisticated technology mostly in the domain of robotics and artificial intelligence. What market it will capture to gain financial strength is anybody’s guess. India and Japan economic relationship as demonstrated through bullet train is undoubtedly a future bulwark against the rising China.Much would depend upon India to take the advantage of the Japanese financial and technology strength.

Russia under Putin has dismembered Georgia. Two regions of Georgia South Ossetia and Abkhazia are virtually under Russia. Chechnya has been subdued. Crimea was annexed. Ukraine is unstable with the Russian separatists being supported from Moscow. Belarus is aligned close to Putin. Russia continues to have influence over Armenia and Azerbaijan over their disputes. Heavy presence of the Russians in Kazakhstan can tilt the balance if at any later stage Putin’s secret and hidden ambition to recreate old USSR has to fructify.

What would be the role of UN and its agencies in the unfolding of new power equations in the world? These institutions have come to stay and assist in providing forum of exchange of views and international understanding in variety of issues. Influence of USA over UN system would wane due its growing distancing from other nations. In the past contributions of USA, Japan and Germany were almost 50%. Now China’s contributions are increasing. The reform in UN system will be marginal and not structural. India’s entry to the Security Council as a permanent member would continue to be elusive as long as China has veto power.

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Sandip K. Dasverma

Excellent article. I learned a lot. Please keep writing.