• Richard Wallace from his blog The Old Quarter

India’s Elusive Backyard: The Struggle for Relevance in Central Asia by

The domestic political scene in India has been electrified with the arrival of the “Modi-wave”, sweeping the Chief Minister of Gujarat, Nerandra Modi of the Hindu nationalist Bharatiya Janata Party (BJP) to power as the Prime Minister-elect of the world’s largest democracy. This controversial politician from humble origins as a former chaiwallah, has defied his long-time critics and ascended to the highest office of the land, promising to bring radical economic and social reforms in his wake. Whilst much of his domestic agenda has been trumpeted over the exhaustive electoral campaign in past months, little is known about the direction he will steer India in on the international level save for a few campaign remarks asserting that India would not be bullied by its neighbours, widely interpreted to mean Pakistan. Naturally, in a campaign tailored to appeal to a domestic disaffected audience weary of 10 years of Nehru-Gandhi family dynastic Congress rule, there was little mention of a strategy to engage states in India’s north-western neighbourhood of Central Asia, comprising the five republics of Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan. Indeed, even over the last decade under Congress there were few solid meaningful attempts to engage in this geopolitical arena, or even to articulate a strategy to plant a firm foothold. Only in 2012 with the advent of a vague “Connect Central Asia” policy did India declare an intention to cultivate deeper ties with the energy-rich region, signifying a rather belated realisation of its value and strategic importance. Despite nominal efforts by the previous UPA (United Progressive Alliance, an electoral coalition led by the Congress party) government, there exists an opportunity for the nascent BJP-led government to assert India’s influence in Central Asia, invigorating a diplomatic activism that never got off the ground. Indeed, there is an intrinsic historic link between Central Asia and India that dates back centuries to the Moghul Empire which had its origins in Central Asia. India was connected to the region by commerce along the great Silk Road stretching from China through to Central Asia and beyond onto Europe in what was a golden era for regional inter-state trade. Yet today, India’s trade with its Central Asian neighbours stands at a paltry estimated $500-760 million (figures vary), revealing squandered potential to drive greater domestic economic growth due to underdeveloped cross- border export and energy markets.

A Toe in the Door

India is the world’s fourth largest energy consumer and crude oil importer, with its energy demands perpetually rising in parallel to national energy shortages and an insufficiently developed energy infrastructure. Thus far, there has been a clear recognition in diplomatic circles of a need for greater energy diversification and Central Asia, with its abundant reserves of Caspian oil and gas as well as uranium and hydropower potential (Kyrgyzstan and Tajikistan), is a crucial piece in the strategy to reduce energy dependency on the Middle East. This has no doubt been a key motivator for current Indian engagement in the region, which can most recently be wrapped up in its “Connect Central Asia” policy, which by focusing on other fields of co- operation hopes to ease India into a closer relationship, amplify its soft power and thereby open up access to the energy markets. Through this, India has planted on the radar its intention to be more active with flagship projects in the fields of medicine, health, IT, energy and education. High level visits by former Vice President Hamid Ansari and Minister for External Affairs Salman Khurshid in 2013 have sent a clear message that India is there to do business. India has made some important strides in the right direction, opening up new channels of co- operation with Tajikistan and Kazakhstan in particular. Tajikistan has vast potential to generate hydroelectric power of great value to Indian industry (19% of India’s energy derives from hydropower sources) which it is attempting to harness with Russian help. For its part, India has assisted Tajikistan in the development of the Varzob 1 hydropower station, providing a $17 million grant, and there have been renewed efforts to work together more closely in the fields of agriculture, tourism, education and research and skills development. Security co-operation with Tajikistan is seen as critical due to its long porous border with Afghanistan and its proximity to Khyber Pakhtunkhwa in Pakistan, both hotbeds of Islamist militant activity. Security experts in New Delhi perceive an “arc of instability” that traverses from the Ferghana Valley, the highly urbanised, impoverished heartland of Central Asia shared by Uzbekistan, Tajikistan and Uzbekistan through to Pakistan and onto North-North Western India. Tajikistan, as the gateway to Central Asia and the closest of the five republics to Indian soil, is therefore treated with heightened attentiveness. India has for some time been providing training to Tajik forces to help them cope with militant threats. India has also sought stronger ties with its main partner in the region, Kazakhstan, which offers enormous untapped mineral and energy (primarily oil) wealth, as well as large tracts of land ripe for macro-scale commercial farming. Outgoing PM Manmohan Singh clearly placed great importance on existing energy ties when he paid a visit to the capital Astana in 2011 in a personal bid to help India gain access to the North Caspian zone, rich in Kazakh oil, gas and uranium. This resulted in the acquisition of a 25% stake in the offshore Satpayev oil block by the overseas wing of the Oil and Natural Gas Corporation (ONGC), one of India’s two state-controlled energy behemoths. India and Kazakhstan are also party to a nuclear energy pact that covers joint exploration and research of uranium and joint co-operation on the construction and running of nuclear plants, a not insignificant achievement in a region once considered the nuclear Eldorado of the Soviet Union.

Thirst but not First

Yet despite some successes, India’s footprint is barely visible in the region and its level of Foreign Direct Investment (FDI) is too insignificant to be deemed worthy of citation in many reports. To highlight a case in point, its investment in the Satpayev field (whilst in some ways a geopolitical success in showcasing a growing Indian presence) will yield extremely limited dividends. It is estimated to hold a mere 253 million tons of extractable oil deposits which equates to roughly 3% of Kazakhstan’s known reserves and on paper provides India (assuming it was the only recipient) with 1.5 years of oil supply. Though India exports a wide range of commodities such as pharmaceutical products, medical equipment, machinery, tea, tobacco and consumer items, the volumes are not competitive and the delivery mechanisms for its exports to the region are relatively slow. Historically, there has been little interest in Central Asia from private companies and investors who could otherwise streamline export processes and maximise efficiency in the supply chain. India’s poorly developed financial infrastructure has been identified by none other than the Ministry of External Affairs as a leading contributory factor to India’s difficulties in establishing commercial ties and investments. All this reveals the broader reality in Central Asia, which is that India is unable to keep pace with its rivals Russia and China, two powerhouses in the region who have been around for longer and have long-established ties with the five republics. They are able to bypass this issue by using existing personal connections amongst business and political elites that have been forged over years of bilateral interaction. Russia in particular, as the former hegemon of the region, has maintained its networks and channels of communication to a degree. Also, as the mother country of the lingua-franca of the Central Asian business community, it therefore has a distinct advantage over India, an outsider working its way in. China for its part possesses vast economic resources and a highly efficient state machinery that it can galvanise to project its economic power and hence doesn’t experience the same difficulties in securing access to resources or in operating its delivery mechanisms as India does. Central Asia’s saturated markets have been flooded with manufactured goods from China. China’s capacity to rapidly mobilise resources in its overseas investments in communication and transport infrastructure in Africa, as well as in poorer Central Asian states such as Kyrgyzstan and Tajikistan, is unrivalled in scope, scale and speed. China has constructed roads, railways and pipelines across the Central Asian republics, with Kazakh oil and Turkmen gas pumped across established links to China. It is often said that whereas India spends millions, China spends billions, dwarfing its BRICS (an association of the five emerging economies of Brazil, Russia, India, China and South Africa) rival. New Delhi accepts these facts on the ground but, keen to avoid a resurgence of the Great Game dynamics that accompanied a scramble for resources between the British and Russian empires, has generally committed itself to coordinating its entry into the region closely with China and Russia so as to avoid antagonizing its powerful rivals. India is seeking to co-operate not dominate, though inevitably its interests come into conflict with that of the other two powers, with the former tending to lose out. Notably, India was outmaneuvered during its attempt to secure an 8.4% stake in Kazakhstan’s giant offshore Kashagan oil field, the largest discovery in the past three decades. With the Oil and Natural Gas Corporation (ONGC) on the verge of acquiring its share, Astana withdrew its consent at a late stage, instead purchasing the stake for itself through its own energy company (KazMunaiGas) then selling it on for the same price to China’s National Petroleum Company (CNPC). This was highly symbolic of the asymmetric influence wielded in the region and a huge blow to New Delhi, who viewed its acquisition of the share as a matter of national prestige and as a way to establish a solid foothold in the region’s extractive industry. The embarrassing Ayni base episode further illustrates this point. In 2002, Tajikistan and India had reached an agreement that India would renovate the Ayni air base not far from the capital Dushanbe, in return being granted permission in the future to establish a permanent military presence there and giving New Delhi a vital access point into the region. However, after spending an estimated $70 million upgrading the base, Dushanbe under suspected Russian pressure, performed a U-turn in 2010 and declared that the base would henceforth be solely operated by Russian forces. This was a typical display of geopolitical maneuvering in the region, with one state playing off multiple regional stakeholders against each other to extract the best outcome for itself as part of a multivector diplomatic approach. New Delhi was outplayed by Russia, revealing a severe lack of familiarity with the local rules of the game and a yawning gulf between India’s regional aspirations and the local realities.

Caspian Pipedreams

India’s quest for access to Central Asia’s bountiful oil and gas supplies to diversify its energy sources has also proven to be fraught with logistical complexities. Three distinct options have been touted at various stages in the last decade. The first is the construction of a pipeline liking India to the Caspian oil fields in Turkmenistan, through an ambitious project linking Turkmenistan, Afghanistan, Pakistan and finally India, commonly known as TAPI. However, there are clear barriers to the fulfilment of this project, including of course India’s torrid relationship with Pakistan, which has proven reluctant to agree to free and open transit across its border to India despite the clear trade advantages and revenues through transit fees it would bring. Until the ice thaws between the two long-time rivals, TAPI is unlikely to become a reality. Then there is the ongoing security vacuum in Afghanistan, which could potentially worsen following the NATO (North Atlantic Treaty Organisation) military pull-out later this year, ruling out a transit through there. Finally, protectionist Turkmenistan has proven to be obstructive to progress, signalling its unease at having the pipeline running through its own territory, and balking at the prospect of a role for Russian energy giant Gazprom in the project, which had been a condition of Russian agreement to broker disputes between India and Pakistan. A second proposed scheme was to install a pipeline from the gas fields in Baluchistan, Iran through Pakistan and onto India, thereby averting Turkmen territory though this fails to address the dilemma with Pakistan. Iran has also been hit by heavy sanctions from the United States, which would likely strongly object to this project as long as the nuclear dispute is ongoing, though there have been recent signals that sanctions will be loosened in time as the détente sets in. The third and, for now, most promising option is the North South Transport Corridor (NSTC) revamped by India in recent years as part of its Connect Central Asia policy, which envisions a partial sea route from the shores of Western India, directly to the Iranian port of Chabahar, and onwards by land and rail to Northern Iran and into Europe. Again, this affords New Delhi the capacity to avoid transit through Pakistan and Afghanistan, and is 40% shorter and an estimated 30% cheaper than the Suez Canal trade route. It will also enable swifter transportation of Russian minerals, energy commodities and agricultural products from Indian-owned agricultural holdings in the Russian city of Volgograd to the north of Iran. However, there is a real risk the NSTC project could be displaced as a viable transportation channel by a SCO (Shanghai Co-operation Organization) managed corridor, running from China through to Russia and onto the Baltic in Northern Europe. Through the SCO, of which India is only an observer state, China and Russia have developed a network of energy and security relations that far surpass that achieved by Delhi, and through Russia has thrown some support behind India’s accession in recent years, full membership remains elusive. India therefore faces a dilemma- how can India overcome such transportation bottlenecks and accomplish successful oil and gas diplomacy in the absence of a direct border with any of the Central Asian republics? Is only a breakthrough in diplomatic relations with Pakistan, or a radical improvement in the security situation in Afghanistan, the solution to India’s dream of securing game-changing quantities of oil and gas from the Caspian?

Hand in Glove?

The answer in the long run may lie in Afghanistan. It could well serve as an arena not only for greater regional co-operation with Russia, but also for the spread of Indian soft power and influence in the region, facilitating access to natural resources. Russia and India have common security concerns in Afghanistan. Russia fears the spread of Islamist extremism into its Southern flank via Central Asia, whilst India is wary of a wave of jihadist radicalism making its way southwards through Pakistan and into India. Seen in this way, a stable Afghanistan is the lynchpin of regional security. There already exists some security co-operation between India and Tajikistan, and there is scope for this template to be extended further. India can use Tajikistan as a base to develop its relationship with Afghanistan, whilst Russia’s infantry division based there could potentially serve as a security guarantor underpinning such efforts in the event of disruptive extremist violence. Indeed India plans to train elite Afghan army units at counter-insurgency academies in addition to providing light weapons to Afghan forces and assisting in the training of Afghanistan’s fledgling air force. Russia and India can therefore play a complementary rather than a competing role in establishing stability in Afghanistan, which fits well into New Delhi’s narrative of pursuing a pragmatic, non-provocative foreign policy framework in the region. Aside from security co-operation, there are ample opportunities for Russia and India to share the burden of development and humanitarian assistance to the war-torn country, spreading the financial risk of such ventures and increasing the level of assistance. India has already been involved in the building of hydropower dams on Afghan rivers, and has emerged as one of the largest regional donors to the country, also providing security personnel for relief and construction work. There is room for further involvement however and Russia and India could consider jointly investing in Tajikistan’s underdeveloped infrastructure and promote increased growth in trade across the Tajik- Afghan border for example. Indeed, all five republics are ripe for infrastructure investment, and until now, the key benefactor has been China who has bankrolled the large scale projects. Russia and India are in a good position to jointly invest and if their abundant skilled and unskilled labour resources are pooled, Central Asia could reap the benefits of boosted trade and greater stability. Commercially, India stands to benefit from Russian business expertise if the two co-operate. The experience of Indian private companies in the region is limited and partnering with Russia could promise heightened exposure and penetration into Central Asian industries and markets through the acquisition of local know-how and connections that India sorely lacks. Through such a duel strategy of commercial co-operation and development assistance, India can amplify its soft power further in the region. Afghan perceptions of India are already generally positive according to a 2009 poll which showed that 71% of interviewees viewed India favourably. Thus, if the regional equation in the eyes of Delhi policy-makers is revised from a zero-sum Great Game calculation of power and influence, to a new formula of mutual co-operation in which Russia is viewed as an asset not a rival, Delhi stands a far greater chance of asserting a meaningful level of influence in the region. For geopolitical strategists in Delhi of the realist school of thought, it could also usher in a new strategic front of soft-power against Pakistan by generating goodwill amongst Afghanistan’s political elites, and indeed Islamabad has long feared such a development. Historically, Pakistan’s strategic posture in relation to Afghanistan has been geared towards enhancing its “strategic depth” against India, in the event of a major conflict. Without a doubt, much of India’s interest in the region stems from a desire to outflank Pakistan, particularly in light of its own recent overtures to the republics. Pakistan’s former Chief of Staff, General Kayani, visited Tajikistan and Kazakhstan in 2013 to discuss the strengthening of military and technical co-operation. India has expressed growing concerns over intensifying ties between China and Pakistan. China has been investing significantly in the development of the Pakistani port of Gwadar, which it is lining up as a potential export hub linking China and Russia and Central Asia to warm waters via inland roads and railways which China also plans to construct. Such a transit route if it comes to full fruition would undoubtedly strengthen Pakistan’s geopolitical clout in the region, a cause for concern for Delhi. However, conversely it is also possible Pakistan has been positioning itself in the region in response to India’s overtures. Moreover, Pakistan has security concerns of its own and has a vested interest in a stable post-NATO Afghanistan, fearing a further spillover of militancy over its borders after the withdrawal later this year. A New Modi-Operandi?

It is not yet clear in what direction the BJP government will take India on the international stage as Modi’s foreign policy goals were not fully articulated during the electoral campaign. It is therefore difficult to gauge what kind of “world leader” Modi will be. However, there are a few breadcrumbs that can offer a useful glimpse. It is well-established that Modi is more business-friendly than the previous Congress led government, and he has clearly stated his desire to foster a friendlier investor climate in India, rolling out his “Gujarat model” on a national scale. Positioned on the right of the political spectrum, the BJP’s stated aim is to unleash to a greater extend liberal, free-market forces into the economy to jolt it into life after its recent cooldown. Thus, it is likely that we will see a more commercially-driven foreign policy focusing on regional trade and he has previously stated that the Ministry of External Affairs should focus on “trade treaties” rather than strategic issues. As Chief Minister of Gujarat, Modi has hosted international summits, such as the biennial Vibrant Gujarat Global Investors Summit, which brought together business and diplomats from Asia, Europe and Canada; and has led business delegations to China and Japan. It is likely therefore that we will continue to see engagement in Central Asia with the new government, and further attempts to penetrate the energy markets. India’s diversification dilemma remains a real problem, but perhaps a more bullish PM in Modi will bring about a more activist foreign policy in the region. He has previously remarked that he will not tolerate India being bullied by its neighbours, hinting at perhaps a hawkish tone in foreign policy expected of a nationalist party, particularly in relation to Pakistan. The previous administration has been accused of soft touch diplomacy, or “biryani diplomacy” in the words of Modi, referring to the serving of biryani to former Pakistani PM Ashraf shortly after the beheading of Indian soldiers near the border in January 2013. It is probable that as NATO winds down its operation, Modi will seek to ensure Pakistani influence in Afghanistan is contained, and deeper relations cultivated with Kabul to outmanoeuvre its neighbour. Modi will also need to satisfy his party’s Hindutva support base who will not entertain a resurgent Pakistani presence in the region. Appealing to these sentiments, Modi has repeatedly mentioned throughout his campaign that there will be no talks with Pakistan so long as terrorist attacks (considered Pakistani-sponsored) cease, deploying rhetoric engineered to galvanise nationalist support. On the other hand, Modi may be compelled to respond to the ongoing demands of the business community in Punjab and Rajasthan, who are thirsting at the prospect of an open border, fluid cross- border trade and greater commercial ties with Pakistan. Indeed, the Chamber of Commerce and Industry within Modi’s home state of Gujarat have been lobbying for an overland trade route for some time, recognising the boon such a détente would bring. As a possible portent of things to come, a number of Pakistani delegations have visited Gujarat in recent years, who have also invited Modi himself to reciprocate by paying a visit to Karachi. Sources in the BJP has separately signalled a desire to revive the spice road linking India to Central Asia, which would require co-ordination with Pakistan. With the election of the equally business-minded Nawaz Sharif to power next door late last year, the ingredients for advanced co-operation may be there. Sharif has recently stressed his desire to seek greater co-operation not confrontation in South Asia, when speaking at the Pakistan Envoy’s Conference, as well as in his own election campaign last year. This coupled with possible new regional access to a post-sanctions Iranian market if a peace deal on Iran’s nuclear deal can be reached (which again requires Delhi to open land trade routes with Pakistan) may prove to be the magnetic force that pulls the two states closer together. Yet, similar positive predictions of closer ties were made during the tenure of former BJP Prime Minister Vajpayee who succeeded in ratifying the Lahore Treaty with Sharif’s government in 1999, which articulated a shared goal to achieve long-term peace and stability. Yet, despite enjoying support from across the political spectrum in pursuing normalisation of ties with Pakistan, he ultimately failed to achieve a meaningful thaw in bilateral relations. A fundamental shift in posture will of course depend on whether Pakistan’s powerful military allows Sharif breathing space to pursue such a foreign policy. Relations between the two have ever been turbulent as evidenced by the military’s decision to pursue military action against India in Kargil (May-June 1999) without consulting Sharif, Prime Minister at the time, who was then later deposed by a military coup. For there to be a rapprochement, Sharif will need to convince the military of the value of becoming a stakeholder for peace and progress, whilst Modi for his part will need to moderate his rhetoric so as not to antagonise Pakistan. He will also need to manage the expectations of his nationalist support base, who may place considerable pressure on him to make good his promises to deal with the perceived constant “terror threat” from Pakistan.

Whither India

It is clear that there is a dire need for a more proactive and holistic strategy in the region. India is a latecomer has much catching up to do and which, for many observers, has been distinctly slow to realise the geopolitical importance of Central Asia. The last decade can be summed up as one of missed opportunities, slow starts and second place finishes. Russia and China’s deep roots and equally deep pockets have conditioned local realities on the ground that have so far precluded India’s ascent as a regional powerhouse. However, this is no cause to be defeatist, and India must find creative and bold ways to engage local stakeholders and private enterprises, whilst projecting its valuable soft power. It must also be patient, playing the waiting game until it can secure access to the energy resources in the region via Afghanistan-Pakistan and Iran or China, which is not likely in the near future.It is wrong, as many Indian analysts are inclined, to categorise the struggle for influence in the region as part of a cold-war style game of chess. Though the influence of Russia and China is far from negligible, Central Asian states are independent sovereign entities capable of practicing a complex game of multi-vector diplomacy, playing off states against each other to extract the maximum advantage. It is in these cracks and windows that India can seize the initiative and carve out in-roads, and whilst India has to reconcile its regional ambitions with limitations in its power, it can still emerge as a powerful force in the Central Asian region. However, so long as there is no real progress in advancing real and intensive co-operation with Pakistan, Central Asia will remain an elusive backyard, near but just beyond reach.

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