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Wednesday, 24 May 2017

Himalaya - Hind Mahasagar Periphery States, Freedom Corridor

Himalaya - Hind Mahasagar Periphery States, Freedom Corridor
One of India’s still-evolving responses of any tangible nature is to partner with Japan on “multiple infrastructure projects across Africa, Iran, Sri Lanka, and Southeast Asia in funding infrastructure and capacity building projects” as part of a “Freedom Corridor” that stretches from the Asia-Pacific to Africa. That is both ad hoc and indistinguishable from OBOR and, unfortunately, will be perceived as such. China’s global thrust has been visible for some years (in Central Asia, Africa and South America), and the formal inauguration of OBOR should not have come as a surprise. If India does have a response, it should have been planned all along and not be suddenly brought to the table as a “me too”.
A better alternative is to let imagery guide strategy and policy – one that evokes a true partnership of nations, not a presumptive superpower dictating the terms of engagement, and an articulation of how this partnership would work in practice.
Now take a look at the image below. What I find particularly fascinating is that the whole Indian Ocean may be conceptualised with a clock metaphor: imagine you are located smack-dab in the middle of the ocean somewhere to the east and north of Mauritius. Straight up north, at 12 O’clock, are India and Sri Lanka; at 1 O’clock are our neighbours Nepal, Bhutan and Bangladesh; from 2 O’clock through 5 O’clock are Burma, Thailand, Malaysia, Singapore, Indonesia (the ASEAN members) and Australia; and at all points from 7 O’clock to 10 O’clock are the nations on the east coast of Africa from Mauritius and Madagascar to South Africa and thence through Mozambique, Tanzania, to Kenya; the Middle East, Iran and Afghanistan at 11 O’clock (ignoring Pakistan). That is to say, this is the Indian Ocean sphere that should be India’s main focus to work out a cooperative international political and economic pact that represents a win-win for all countries involved. It’s a huge space comprising a range of nations with different needs, resources, capabilities and expectations.

The phrase “blue ocean strategy” traces to a book of the same name by two Insead faculty, W Chan Kim and Renee Mauborgne. The basic thesis of their work is that the focus of a majority of research on “strategic thinking has been on competition-based red ocean strategies”. They write that this has been the case because corporate strategy has been heavily influenced by its roots in military strategy. Significantly, they add that in such a perspective, “strategy is about confronting an opponent and fighting over a given piece of land that is both limited and constant”.

India and Japan would be better off imagining, defining, articulating and executing a blue ocean strategy that dismisses China as competition and look to innovate in their foreign economic policy. The Indian Ocean, with its clock metaphor, would be a good place to start. The authors of the Blue Ocean Strategy note that the cornerstone of such a strategy is the practice of “value innovation”, whereby, instead of seeking to beat the competition, “you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space”.
Such a perspective would allow India and Japan to think of the Indian Ocean clock in two halves – the eastern Indian Ocean (12 O’clock to 5 O’clock) and the western Indian Ocean (7 O’clock to 11 O’clock). As my previous article (‘One Belt One Road: How India Can More Than Match China’s Grand Design’) argued, India would need to quickly involve and collaborate with its immediate neighbours – minus Pakistan – to create a South Asian Union that integrates completely with the Indian common market. If we put our minds to it, demonstrate largeness of heart, and offer our neighbours broad-based access to our markets, the SAU could be a reality within five years.
This complete, the SAU members would then have to work assiduously to integrate with the Association of South East Asian Nations (ASEAN). All of this, ideally, should happen in a spirit of generosity and welfare for all where India would need to take leadership and open its markets to neighbours for both products and services. Remember: Lee Kuan Yew of Singapore did invite India to become a founding member of ASEAN. As in numerous other occasions, we passed this over and have regretted it ever since. We now have the chance at recompense, with a much more mature and fast-growing Indian economy, but one also where everyone benefits and is shielded from China’s mercantilist onslaught.
The interesting thing about this eastern Indian Ocean market integration is that financial resources required for infrastructure development – road and rail networks linking the South Asian countries with ASEAN at the edges – would be far lower than OBOR’s capital infusion for its purposes. All that is needed is to connect India and its neighbours to the ASEAN logistics network.
When SAU and ASEAN integrate, a blue ocean strategy for value innovation of the eastern Indian Ocean would have been achieved. This would serve as the model for the western half – to cajole, collaborate and partner with countries along the east coast of Africa to create a similar common market of their region. Here is where India and Japan could come together to create infrastructure networks comprising road, rail and power to knit the countries together. The blue ocean strategy here would be to ensure this is not colonialism of the sort China is rolling out but a markedly different one that emphasises consent, consultation, collaboration and value delivery for every one of the partners.
Value innovation would, and should, emphasise continued ownership of infrastructure and capacity to rest within the respective countries in return for the creation of a common market that would integrate with the eastern half of the Indian Ocean. The private sector of the collaborating nations could participate and invest in assets in the normal course of business, but it cannot be in the form of subsidy capital by India or Japan to promote their own enterprises. That is exactly what China is pursuing with OBOR. India cannot pursue mercantilist ideas of wholesale ownership of everything from raw materials to intermediaries to final products without attracting domestic ire and opposition in several countries.

The essence of value innovation is to eschew a fundamental notion of international diplomacy, particularly foreign economic policy, that individual strategies pursued by nations is a zero-sum game – i.e., the idea of a fixed pie wherein one nation wins and another inevitably loses. A blue ocean strategy for the Indian Ocean, on the other hand, would argue for a growing pie wherein all participants could seek to grow with.
Genuine cooperation is more easily achieved when win-wins are apparent and shared from a large and growing pie. This presents an opportunity for an international economic strategy that is markedly different from China’s, innovates all along the continuum, and makes possible an “uncontested market” for its members.
Pipe dream? Perhaps. The world could never have imagined China would ever realistically roll out or seek to execute OBOR in its current stated form. But they have. China does not emphasise common markets, has not offered a spirit of cooperation or a win-win. It has chosen to tread the past imperialist path of neo-Colonialism modified for the twenty-first century that seeks to pillage and plunder without bloodshed.
That is the difference in thought leadership in international diplomacy that India could offer. The Indian Ocean is big enough for creative partnerships that could deliver on this front. The only thing required: to stop thinking in terms of red oceans and competing with China head-on. Let China not consume our thinking. Leave Pakistan for China to fret over.
Instead, make China irrelevant for India’s purposes and for the purposes of the larger Indian Ocean community. This is a huge market: when the dust settles, it could be bigger than the Chinese market, with two-thirds of its demographics comprising a young population, and serve as effective ballast for the world economy.

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