India’s External Affairs Minister S Jaishankar said in an interview a few days ago: “Look they (China) are a bigger economy. What am I going to do? As a smaller economy, I am going to pick up a fight with bigger economy? It is not a question of being a reactionary; it is a question of common sense.”
Obviously, Jaishankar is advising caution in dealing with China because its bigger economy translates into greater military strength and stronger diplomatic clout. Most political and diplomatic commentators have kept quiet about the far-reaching implications of this statement and those who have spoken, have reacted adversely generally characterizing it as ‘capitulatory mentality’.
Leaving aside the question whether External Affairs Minister should have publicly broached the subject or left it to closed-door conclaves of policymakers, one must frankly accept that the whole issue of Economy and Diplomacy is extremely important and needs to be openly discussed. Informed public opinion is essential for the success of Government policies in a democracy. One hopes that Jaishankar’s frank articulation of the problems of pursuing a viable security policy vis a vis China because of economic asymmetry will start a much-needed debate on the importance of economy for defense and diplomacy.
Public should be made aware of facts
China’s GDP is $18 trillion while that of India is $3.47 trillion or 1/5 that of China. In 1950 the GDP of both countries was about the same.
For perspective it may be noted that US GDP is 25 trillion, that of Japan 4.94 trillion and Germany 4.25 trillion. When US power was at its peak in the 1950s after the Second World War, its GDP was 40% of the world’s total. Today its economic and military preeminence is not the same, because other economies have risen and its share of world GDP has shrunk to about 23%.
China’s diplomatic clout has been increasing in the step with its economic power. Mao had famously said that “power flows from the barrel of a gun,” but it is Deng’s pragmatic economic policies exemplified by his famous declaration “no matter it is white cator black as long as it can catch mice” that has transformed China into a global power. With this one sentence he jettisoned three decades of ideological dogmatism in economy and substituted it with result-oriented pragmatism. Within 40 years China became an economic giant and manufacturing hub of the world.
Diplomatic muscle of Japan and Germany
Other examples of diplomatic muscle because of their economic strength are Japan and Germany the third and the fourth largest economies in the world. With large foreign exchange reserves these countries can pursue economic diplomacy to promote their national interest very effectively. The relationship between economy and diplomacy is the same as between body and fist, the power of the latter depends on the strength of the former.
India’s own international footprint has increased since 1991 when under Prime Minister Narasimha Rao and Finance Minister Dr. Manmohan Singh, the economy was unshackled and the suffocating “license Raj” relaxed. In 1991 India was about to default on its foreign payment obligations. With foreign exchange reserves adequate only for about three weeks of imports it had to pledge gold in international market to borrow hard currency for its foreign exchange requirements. Today, with its foreign exchange reserves position comfortable, India is in a position to stand up to international pressures much better and pursue foreign policy dictated by its national interest. The frequent difficulties faced by the Latin American countries to effectively pursue independent foreign policy due to external debt and inadequate foreign exchange reserves, clearly establishes the relationship between economy and diplomacy.
It is easy to establish the correlation between economic strength and diplomatic clout but impossibly difficult to attain it. Often there is a tendency to attribute China’s economic progress to its authoritarian system. It is a mistake. Soviet Union despite its authoritarian decision-making failed to achieve economic progress and collapsed. China’s economic progress took off when it allowed free enterprise in economy while retaining one-party rule politically. Many in India attribute its slow economic growth to the elaborate consultative decision-making progress inherent in a democracy. This is a mistaken notion.
Democracy can outperform authoritarianism
Democracy can outperform authoritarian system in all respects–economic, political, technological–if it has the honest commitment of the people and the leaders for its success. Democracy and economic success need political leadership which truly adheres to the rule of law, justice, equality, individual freedom, human rights, transparency and accountability. Democracy has a self-correcting mechanism which prevents things from going over the cliff as has happened to so many authoritarian regimes in the 20th and 21st centuries e.g., Nazi Germany, Fascist Italy, Soviet communism, dictatorships in Middle East.
On the part of captains of business and industry it requires honest commitment to rule of open and free competition, not pursuit of cronyism for quick wealth. Cronyism is feudalism in economics. It prevents inclusive and sustained growth which alone can make a society stable and strong.
Comparative studies of democracies and authoritarian regimes in 20th century clearly show that democracies have achieved much more economically and have shown more sustaining power politically than authoritarian systems.
But democracy requires patience and honesty on the part of the people for its success. Impatience leads to shortcuts to attain political power and cronyism in business and industry.
Democracy is a government of the patient, for the patient and by the patient just as authoritarianism is a government of the impatient, by the impatient and for the impatient.
All authoritarian leaders display impatience while good democratic leaders act with patience and stamina. Impatience is inherently unsustainable and quickly self-destructs. A study of the 20th century dictatorships and democratic regimes establishes the validity of this proposition. Dictators are gone while democracies plod on.
China will have to one day reconcile its one-party political system with the free enterprise economy. It cannot go on with this dichotomy between its political and economic systems without tensions and conflicts. India for its part will have to protect, preserve, and strengthen its democracy.
Ishrat Aziz is an expert on a variety of subjects including democracy and its connectivity with Islam. A former ambassador of India to several Middle Eastern countries, including the Kingdom of Saudi Arabia, he now resides in the US.