SCO Summit Will Show if Modi's ‘Informal’ Talks With Putin, Xi Were a Success

The upcoming Shanghai Cooperation Summit (SCO) in Qingdao on June 9-10 promises to be one of the most watched diplomatic events of 2018.

Qingdao is decked up. Most polluting plants in Shandong are being shut to ensure cleaner air for the summit, and even in the run-up to the event, the Chinese hosted over 120 activities involving SCO participants in a wide array of fields ranging from military to art and culture.

The summit is taking place in the midst of extraordinary global disapproval of American belligerence, sanctions and protectionist measures under the Donald Trump administration, which threaten to cast a shadow over the global economy.

The summit will be held against the backdrop of the strategic formulation of the ‘Quad’ and the ‘Indo-Pacific’ idea by the US, Japan, India and Australia. It comes amid Xi Jinping and Vladimir Putin prolonging their leadership mandates. It is also important in the light of Xi’s rising global diplomacy, the growing Sino-Russian proximity and Modi’s recent ‘informal’ meetings with China and Russia. The upcoming on-again-off-again Trump-Kim summit talks will be another context.

What gives the Qingdao meeting additional punch is the geopolitical shift underway in Asia, compounded by the unpredictability of the US policy under Trump.

The recent meetings of Japanese prime Minister Shinzō Abe with Chinese and South Korean leaders, besides meeting between Prime Minister Modi’s and President Xi may have come as a result of their declining faith in the US as a reliable strategic ally.

Tokyo and Beijing upgraded their communication to better manage not just their economic issues but also  frequent face-offs in contested waters.

Putin factor

The Putin-Modi meeting in Sochi was clearly an effort to reconcile their positions ahead of the Qingdao summit. Putin, who is rarely seen getting excited about ties with India, may have cautioned Modi to be wary of falling into a geopolitical trap that the US has laid for it in the hope of balancing China.

Secondly, Putin quite clearly would have cautioned Modi against walking a lonesome path in the SCO and would have advised New Delhi to keep close consultation with Moscow to avoid the risk of making wrong strategic judgments about the wider region. Russian experts often cite India staying out of the Chinese-led belt road initiative (BRI) as one such example.

Though Sino-Russian relations are currently at a comfortable level, Russia does have differences on many geopolitical issues with China. This is one of the reasons why Moscow wants India to embrace closer ties with Beijing and line up behind its BRI. New Delhi also has an interest in balancing China by deepening its understanding with Moscow, especially when China is going to bolster Pakistan’s interest further through the SCO route.

Modi’s priority

For the moment, Modi appears to be prioritising an improvement of India-China relations. In fact, the SCO summit will show the results of Modi’s informal meeting Putin in Sochi and the extent to which Modi and Xi managed to reset regional alignments at Wuhan.

No doubt, Xi and Modi deserve credit for the success of the Wuhan summit. If indeed a foundational understanding has been reached, it is now time to resolve the prickly bilateral issues in a gradual manner.

Bilateral ties are certainly back on track after last year’s Doklam stand-off. In Wuhan, Xi and Modi agreed to “handle all differences through peaceful means”. The challenge is to translate the confidence built there into a predictable if not durable atmosphere of peace along the Himalayan borderland. Both leaders have issued “strategic guidance” to their respective militaries to lower tensions on the frontier.

Yet nothing can be ruled out. Tensions will rise if both sides continue aggressive patrolling along the borders while also adding infrastructure: new bunkers, helipads, airports, roads and huts.

However, there is growing awareness on both sides – in view of the increased level of intertwined interests and higher level of interdependence in each other’s welfare – that the perpetuation of hostile sentiments  do not serve their national interests. Past experiences also suggest that recourse to coercive measures by either side have failed to yield benefits.

Deliverables

A key deliverable of the Wuhan and Qingdao summits from New Delhi’s point of view would be Beijing finally giving a go-ahead to India’s entry into the Nuclear Suppliers Group (NSG) over time.

Modi is unlikely to flag the much-touted cross-border terrorism issue at the SCO as fervently as before. In fact, his low-pitch emphasis on terrorism at the Shangri-La Dialogue held in the run-up to the Qingdao summit is a pointer to this.

However, whether China will stop ignoring Pakistan-sponsored terrorism against India and stop preventing the addition of Jaish-e-Mohammed (JeM) chief Masood Azhar’s name on the UN list remains an issue. But in the context of the reset in ties, Beijing might feel the need to review its decision on Azhar. Russia had supported India’s stand on JeM and LeT in the Xiamen BRICS declaration last year.

A change of heart is nonetheless visible. Recently, Beijing refused to bail out Pakistan being put on the watch list of the Financial Action Task Force (FATF), the global watch dog on terror financing. India, in turn, backed China’s bid for the vice presidency of the FATF. It also followed reciprocity made by New Delhi in curtailing the activities of the Dalai Lama.

At Qingdao, the SCO is likely to adopt a ‘Cooperative Security Treaty’ to evolve a sustainable regional security concept instead of singularly targeting an individual state. It may adopt a three-year (2019-2021) action plan to counter the “three evils” – of terrorism, separatism and religious extremism – including setting up a cooperative network of law-enforcement agencies.

The Chinese minister of public security, Zhao Kezhi, is expected to visit New Delhi to explore new ways to deepen engagement in security and counter-terrorism.

Deputy national security adviser Rajinder Khanna recently attended a meeting in Beijing and met President Xi and Zhao Kezhi.

On the positive side, Beijing has reopened access to the Kailash-Mansarovar for Indian pilgrims and also resumed sharing of hydrological data of Brahmaputra and Sutlej water flow.

In fact, these reciprocal moves provide some interesting possible indicators. First, it goes to show that China enjoys stronger leverages than the US in controlling the terror machine in Pakistan – a fact admitted even by US National Security Advisor John Bolton. New Delhi can’t ignore this fact while dealing with Beijing on security.

Quite clearly, Modi’s back-to-back “informal” diplomacy with Putin and Xi wasn’t just for seeking a common ground at the trio of nations but also to roll out a fresh opening on the Indo-Pak front. Modi talking to Pakistan’s new caretaker prime minister Nasirul Mulk in Qingdao can’t be ruled out, for whatever it’s worth.

These apart, China is seemingly looking to open up greater market access to Indian products and possibly resolve the issue of removing obstacles to Indian pharmaceutical exports. On a positive note, China, from May 1, seems to have removed import duties on as many as 28 Indian drugs, including all cancer drugs.

China seems to have also agreed to import more than one million tonnes of sugar worth $500 million from India.

Clearly, post the Wuhan summit, both sides seem to be working on a clear road map to narrow the massive trade imbalance. India’s trade deficit with China stood at $1 billion in 2016-17. To bridge the financial impact of the deficit, China has also committed to make more investments in India.

More importantly, amid rising tension with the US, any Chinese reduction in import tariffs on cars can open up the financial sector and would ultimately benefit India, especially widening the Indian production basket of value-added products in the Chinese market.

There is also a possibility of an announcement on the proposed India-China joint project in Afghanistan that emerged from the Modi-Xi meeting in Wuhan. Obviously, this wouldn’t be easy, especially since Moscow – like Beijing – has been articulating the position that Pakistan is also a “victim of terrorism”.

Fostering “people-to-people exchanges” will be yet another new mantra for bolstering cooperation at the SCO.

A new high-level mechanism on people-to-people exchanges is likely to be announced with foreign ministers Sushma Swaraj and Wang Yi as its co-chairs.

The idea of an India-China high-level mechanism on the people-to-people front that had emerged from the Wuhan meeting will unfold multiple opportunities for the two nations to reverse the centuries-long stagnation in learning from each other.

Way forward

India’s improved ties with China could hardly be construed as a sign of evolving a policy harmonisation process. However, the process of building mutual trust between the two nations has started.

On its part, China will have to eventually shed its misgiving and get used to the growing US-India defence ties so long as they remains bilateral in nature without overtly being taken “with an eye on China”. The same stands true for India’s defence ties with Vietnam. India too will have to get used to the new order with China as a major player.

Qingdao may call to address global governance, trade system, development strategies and connectivity (the Belt and Road Initiative).

Already, China’s flagship project BRI is deeply embedded in the SCO’s cooperation framework, which is nothing but a consensus building mechanism for Beijing to influence the neighbouring states that are pursuing infrastructure projects. Qingdao, the venue of the summit, itself is the symbolic pivot to BRI – connected to Europe through railways and linked to Asia through the Maritime Silk Road.

China has achieved another breakthrough by successfully conducting the trial operation of the China-Kyrgyzstan-Uzbekistan road transport alignment that would change the face of Eurasia.

BRI is backed by financial connectivity through the Asian Infrastructure Investment Bank, the Silk Road Fund, SCO Interbank Consortium and the China-Eurasian Economic Cooperation Fund. With the Panda bonds and RMB financing to the companies, a plan seems afoot to set up an SCO development bank to generate and channel new funding.

According to the latest figures released by China’s Ministry of Commerce ahead of the Qingdao summit, China’s trade with SCO countries stood at $217.6 billion – $150 billion export and $67.3 billion import – last year.

China’s cumulative investment in energy, industrial and other projects in the SCO member states stood at $84 billion at the end of March.

At some stage, New Delhi too will have to find a way to reconcile with China’s BRI – the main elephant in the room – without compromising on its core interest.

The issue is how to get infrastructure surplus capacity in China to solve the infrastructure deficit in India, especially to boost its high-speed rail.

Russia’s Eurasian Economic Union (EAEU) partners and China’s BRI vision is already fully aligned. China signed an FTA with the EAEU on May 17, which will speed up the Russia-China and Central Asia-China trade corridors.

Only Vietnam so far has succeeded in signing an FTA with the EAEU (which has a GDP of over $4 trillion) while Iran, Indonesia and Singapore are scheduled to do the same.

India’s case for an FTA with the EAEU is still pending. Is it contingent on India joining the BRI first?

The Wuhan meet may have infused a lot of strategic confidence for India to operate at various levels. Qingdao will show whether India and China are prepared to take the Wuhan process forward, and if it has already given an impetus towards improving China-India ties.

Risks galore

However, there is no guarantee that forces both inside and outside India will not sabotage closer India-China ties from gathering momentum.

Modi’s first attempt to “reset” ties with China in 2014 was probably derailed by ill-informed advisors at the cost of wasting enormous time and resources.

Modi’s displeasure at playing the Dalai Lama card was known, but his zealous aides left no stone unturned to use the Tibetan Lama for irritating China, albeit in the name of promoting Buddhist diplomacy. They may have squandered enormous amounts of money in the garb of culture only to end up with an advisory note issued by the cabinet secretary for the officials to stay off from the Dalai Lama and other exiled Tibetan leaders.

There is no guarantee his latest efforts may not be sabotaged, but after four years, Modi may have hopefully gained more experience and wisdom to take his own call.

For now, the loud noises in the country have suddenly become quiet after Modi and Xi agreed to enhance military communications and provide “strategic directions” to de-escalate border frictions.

But a hawkish and chest-thumping media continues to look for negative reportage  to play mischief. For example, a report of Chinese mining operations across the border from Arunachal Pradesh was instantly flashed widely in the media to create friction along the disputed Himalayas.

Complexities at the SCO

Surely, for India to fly with the flock of ‘wild swan geese’ in the Eurasian sky will not be easy. First, multiple conflicting interests would intersect at the SCO, ranging from global to bilateral issues.

Second, the grouping’s environment is dominated by former communists, dictators and autocrats, who tend to take an anti-American position and prefer to align themselves either with Russian or Chinese viewpoints on critical regional and global issues. India’s preference is to either take the US policy line or remain ambiguous in most cases, thus turning it into  an outlier whose positions make a united Eurasian story rather difficult and incomplete. One can already hear some pessimistic rumbling about India playing a “disruptive” role, thus holding back the prospects of both the SCO and BRICS.

In contrast, and as the SCO moves ahead, Pakistan is likely to put forward many positive regional cooperation agendas on the table such as CASA-1000, TAPI, CPEC and the Quadrilateral Traffic in Transit Agreement (QTTA) among others. Islamabad is already displaying, at least outwardly, a cooperative spirit, standing up for a united position along with Russia, China and others on issues like conflict in Afghanistan, terrorism and connectivity etc.

The work on the CASA-1000 power transmission project to supply 1,300 MW of electricity from  Kyrgyzstan and Tajikistan to Afghanistan and Pakistan will start this year. This will have an impact on Afghanistan and on its development.

Among others, CPEC could become a critical variable for Pakistan to provide the shortest sea route to the Central Asian states. Almost all of them have shown an interest in joining the CPEC.

In comparison, India’s Chabahar project, given the many hurdles, can’t provide sufficient impetus for SCO members.

In any case, India’s interests in SCO would recurrently clash with either those of Pakistan or China. Others will make full use and interpret India’s lack of interest as an obstructionist stance, which in turn could increase sympathy for Pakistan by default.

New Delhi would do well to avoid a zero-sum game with China in Eurasia, because others would then advocate admitting more South Asian states such as Maldives, Sri Lanka, Bangladesh and Nepal into the SCO. Iran, Afghanistan, Belarus and Mongolia are observer states, while Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey are already SCO’s dialogue partners.

In a way, for India, navigating regional diplomacy in the SCO would prove to be far more complex and challenging than in any multilateral forums so far. New Delhi will have to decide whether to embrace the spirit of Asian-centric regional cooperation or continue to vacillate.

China upsets the core Indian mindset, especially of the West-oriented Indian elite class, and considering the high level of Sinophobia fed to the people, any attempt at making a shift wouldn’t be easy. At the same time, China is not a country with which India has any intrinsic disagreements.

Looking ahead, and to make a fundamental shift in policy, New Delhi’s approach must be nuanced and calibrated with the purpose of displaying a willingness to move ahead cooperatively.

Constant vigilance is certainly required, but overall transactions with China need to be adequately de-securitised. India also need to ensure that its policies towards China are steered less by the intelligence communit and more by those having comprehensive knowledge of dealing constructively with China.

China and India both have a shared stake in bringing the ancient trade routes back to the Eurasian continent after three centuries of “Euro-Atlantic domination”.

Similarly, both India and China are keen to revive what was once the world’s richest trading network in the world – the Indian Ocean economy – stretching from China to the Middle East with India in between. Restoring these old trade routes across Eurasia and the India Ocean after centuries-long stagnation makes sense to both India and China.

India is a geographical lynchpin for China’s BRI. In turn, the initiative affords India a historic opportunity to play a pivotal role in the region.

P. Stobdan, a former Indian ambassador to Kyrgyzstan, is an expert on Himalayan and Inner Asian affairs.