The New Balance of Power

The new year usually symbolises a fresh and encouraging start. But looking at the troubling international legacy of 2022—from a new Cold War to global energy and food crises—few can be sanguine about the direction of this year. The advent of international conflict and greater militarisation in 2022 scarcely bodes well for peace, stability and continued prosperity.

Armed conflict dominated news in 2022, thanks to Russia’s invasion of Ukraine and raging wars elsewhere, from Yemen and Syria to Ethiopia. Internal conflict was exacerbated in several countries, from Pakistan and Myanmar to Nigeria and Ethiopia. But what has stood out is the international fallout from the war in Ukraine, including the dawn of global energy and food crises and the emergence of greater divisiveness.

Navigating the new global divides will be diplomatically challenging for India, which on January 1 took over as the 2023 chair of the export-control regime, the Wassenaar Arrangement, of which it was once a key target. This year India will have the honour of hosting two major summits—the Group of 20 (G20) Summit in September and the Shanghai Cooperation Organization (SCO) Summit, with New Delhi identifying the latter’s theme as ‘For a Secure SCO’.

At a time of widening international disunity and risks, the task of hosting the G20 and SCO summits will be full of challenges for India. The challenges are also linked to the fact that India will be inviting Chinese President Xi Jinping to both the summits even as China’s Himalayan border aggression persists since April 2020, sustaining a serious military crisis between the two demographic titans.

We should not forget that the current international crisis represents the most dangerous period since the end of the Cold War. Both NATO and the Kremlin have conducted nuclear drills of late.

United Nations (UN) Secretary General António Guterres, for his part, has warned of “colossal global dysfunction”, declaring, “Our world is in big trouble.” The spectre of global dysfunction seems real, with the UN increasingly marginalised in international relations.

The plain fact is that, despite globalisation, the world is getting more divided politically. Greater militarisation could further accelerate in 2023.

Consider how the Russian invasion of Ukraine in February 2022 quickly became a kind of proxy war between Russia and the Western powers, thus igniting a new Cold War. The invasion and the Western strategy of seeking to bleed Russia dry on Ukrainian soil promise to reshape international geopolitics and geoeconomics.

Much of the world has refused to take sides in the new Cold War. Neutral countries include all the major non-Western democracies. Significantly, America’s close ally, Israel, and NATO member Turkey have also chartered an independent line.

Still, the proxy war between Russia and the Western powers is holding the rest of the world hostage. And the rest of the world feels helpless to break out of the hostage situation.

To make matters worse, the spectre of a global recession looms large in 2023, thanks to high energy prices and soaring inflation. Britain is already in an economic recession, while the eurozone is projected to plunge into a deep recession in the coming months. Globally, the stock market rally could soon meet recession reality.

A YEAR OF CHALLENGES

The disruption in global energy markets, which has led to high energy prices, is largely linked to Europe’s rapid shift away from cheap Russian energy, which long powered its growth. Given that the European Union (EU) accounts for 11 per cent of global energy consumption, its switch to alternative sources at a time when international oil and liquefied natural gas (LNG) supplies are already tight is having an adverse global impact.

High energy prices, meanwhile, have spurred runaway inflation in many countries. And high inflation, in turn, has triggered a cost-of-living crisis, including in Europe and the US.

In seeking to punish Russia for its brazen invasion of Ukraine, Europe is punishing itself by turning its back on cheap Russian energy. Europe’s skyrocketing gas prices, by surging a staggering 14-fold from a year ago, have not only spurred hyper-inflation but also destabilised the eurozone’s financial markets.

The fundamental lesson Europe must draw from its energy-switch blunder is that moral outrage should never drive policy, especially at the expense of one’s own interests.

Russia may be suffering from the West’s punitive campaign against it but the imposers of sanctions are also incurring severe costs, with Europe bearing the brunt of the economic blowback. With Europe using its economic power to secure supplies from alternative sources that Asian, Latin American and other economies have long tapped, the ensuing international energy crisis has dimmed the global economic outlook.

More broadly, while 2022 was not a good year for international peace, this year may not be much better, given the new Cold War.

Competition and conflict, however, are inherent in a world in which there is no supranational government to enforce international law or protect the weaker states against the more powerful states. This explains why the history of just the past 25 years is replete with examples of the more powerful states invading smaller, weaker nations, including reducing several of them (from Libya and Syria to Yemen and Afghanistan) to failed or failing states.

International conflict often arises when major powers attempt to maximise their security, including by asserting spheres of influence or seeking to contain rival or emerging powers. If one great power feels that a nation within its traditional sphere of influence is drifting into the orbit of a rival power, it will use all possible means to try and reverse that direction, as exemplified by Russia’s invasion of Ukraine.

Today, Russia is seeking not to expand its invasion but to consolidate its hold on the nearly one-fifth of Ukraine it already occupies.

Since October, Russia has launched volleys of cruise missiles and drones at Ukraine’s critical infrastructure, especially the energy grid, in an apparent strategy of undermining morale by throwing that country into cold and darkness amid freezing winter temperatures. Ukraine, despite receiving a flood of advanced weapons from the West, including air-defence systems, has been unable to stop such debilitating attacks, resulting in widespread power outages becoming common.

In the US, meanwhile, the “save Ukraine” narrative has been eclipsed by the “bleed Russia dry” narrative, which is rooted in the belief that the costs to the American taxpayers for providing weapons, battlefield intelligence and other aid to Ukraine are dwarfed by the benefits. In such cost-benefit evaluation, the risk of a direct conflict with Russia or a boomerang effect is rarely factored in.

The US directed about $50 billion in assistance to Ukraine in 2022, and its new $1.66-trillion national spending plan includes $45 billion in additional aid for that country. The assistance may be massive (it is the largest American aid to any European nation in more than seven decades), yet its proponents contend that, from a bang-per-buck perspective, it is highly cost-effective in helping to degrade an enemy’s military capabilities for a single-digit share of America’s annual defence budget—without the loss of a single American soldier.

In this light, the war is unlikely to end anytime soon, despite its devastating costs for Ukraine and its people.

Eventually, when Russia and the US both realise that they are unlikely to achieve their key objectives in Ukraine, a negotiated settlement to the conflict could emerge.

But with the Ukraine war diverting America’s attention away from the growing strategic challenges in the Indo-Pacific region, the danger is growing that China could move against Taiwan. US intelligence now reportedly believes that Xi could act against Taiwan before the 2024 US presidential election.

A Chinese attack on Taiwan would likely have a greater global impact than the Russian invasion of Ukraine.

America’s role is central to preventing a Chinese takeover of Taiwan, a technological powerhouse with the world’s 22nd-largest economy by GDP. America’s new $1.66-trillion spending plan, however, provides just $2 billion for Taiwan (that too in loans, not grants), prompting the chairman of the US Senate Foreign Relations Committee, Senator Bob Menendez, to quip, “We say we want to meet the China challenge but then we don’t fund Taiwan in a way that is necessary.”

Against this background, 2023 is likely to prove a challenging year for international peace, especially as the war in Ukraine grinds on and China persists with its expansionism in the Indo-Pacific, including intensifying coercive pressures on Taiwan and persisting with its territorial aggression in the Himalayan borderlands.

CHINA’S COVID TSUNAMI

Just when Covid-19 fears are easing across much of the world and relative normalcy is returning in everyday life, Covid infections are exploding in China, threatening to spread new strains globally. The rapid spread of the disease in China could further accelerate during the upcoming Lunar New Year holiday, when tens of millions of Chinese travel across the country to be with their families. Such mass movement of people could potentially turn the week-long festivities into a superspreading holiday.

Three years ago, Xi’s regime created a global pandemic with its cover-up and slow response to the Covid-19 outbreak at home. Now, it has put the world in peril again by abruptly abandoning its unsustainable “zero Covid” policy and easing almost all restrictions in one-go, resulting in a huge Covid surge in China that has reignited fears that the country could export new variants.

That probability has been heightened by another factor: China, instead of containing the current Covid-19 surge within its borders, has just lifted all overseas-travel restrictions for Chinese, leading to a major boom in sales of air tickets out of the country.

This is redolent of how China spawned the pandemic: after Covid-19 originated within its borders, it allowed residents of Wuhan and other virus-battered areas of Hubei province to travel abroad but imposed domestic-travel restrictions on them so that they did not take the coronavirus to Beijing, Shanghai and other Chinese cities. In fact, only after Covid cases with Wuhan links were detected in Thailand and South Korea that China belatedly acknowledged its coronavirus outbreak through the party-run <People’s Daily> on January 21, 2020, including admitting human-to-human spread.

It is a testament to China’s rising power that, without incurring any international costs, it has effectively stonewalled international investigations into the origins of the Covid-19 virus, including its possible escape from the military-linked Wuhan Institute of Virology (WIV).

Thanks to China’s “Great Covid Stonewall”, the world still does not know whether this disease evolved naturally from wildlife or was triggered by the escape of a genetically engineered coronavirus from WIV which has long served as the centre of Chinese research on super-viruses. Xi’s regime has frustrated all efforts, including by the World Health Organization (WHO), to conduct an independent forensic inquiry into the Wuhan labs, labelling such an audit “origin-tracing terrorism”. The only concession Xi has made is that, after the pandemic had already devastated much of the world, he ordered enhanced oversight of Chinese labs handling lethal viruses.

Meanwhile, little attention has been paid to the lack of interest of US President Joe Biden’s administration in investigating the virus’ origins. Indeed, Biden has effectively let China off the hook by relieving the pressure his predecessor, Donald Trump, had built up on Beijing to come clean on the virus’ genesis. Had the coronavirus originated in Russia, especially in a military-linked lab similar to WIV, would the Biden administration have been as forgiving as it has been towards China?

There is also another factor behind the Biden administration’s reluctance to pressure Beijing: American government agencies—from the National Institutes of Health to USAID—funded dangerous research on bat coronaviruses in Wuhan.

Why were US government agencies funding research on viruses at WIV that, according to Washington’s own admission, was linked to the Chinese military? A January 2021 State Department fact-sheet indeed raised concern over “whether any of our research funding was diverted to secret Chinese military projects at the WIV”.

Against this background, the threat from the pandemic is far from over. As former US Secretary of State Mike Pompeo has warned about Xi’s lifting of all overseas-travel curbs even as infections explode in China, “Just as in the spring of [2020] he sent people around the world who he knew were infected, he’s doing the same darn thing again. He’s going to infect millions more. We shouldn’t let that happen.”

More fundamentally, the enduring lesson from the failure to unravel the genesis of a pandemic that has killed at least 6.7 million people worldwide so far is that “gain of function” research of the type conducted in Wuhan with US and Chinese government funding is the greatest existential threat to humankind ever produced by science—a bigger threat than nuclear weapons.

Such research to enhance the virulence or infectiousness of pathogens by altering their genetic makeup is continuing in some labs in the West, China and Russia. And it must stop to ensure a more secure future for humankind.

A TEST FOR INDIA

India’s fast-growing economy and rising geopolitical weight have significantly enhanced the country’s international profile. India is widely perceived to be a key ‘swing state’ in the emerging geopolitical order.

India now pursues a non-doctrinaire foreign-policy approach centred on shielding its strategic autonomy. The Biden administration’s attempts to bully New Delhi into shedding its neutrality failed last year, despite the president’s top economic adviser, Brian Deese, publicly warning that “the costs and consequences” for India would be “significant and long-term” if it refused to pick a side in the new Cold War.

While preserving an independent foreign policy, India has simultaneously courted different major powers, demonstrating its policy of forging partnerships with rival powers and brokering cooperative international approaches in a rapidly changing world.

India, a founder leader of the nonaligned movement, has in more recent years implicitly moved from nonalignment to multi-alignment. Nonalignment suggests a passive approach as a bystander. Being multi-aligned, on the other hand, permits a proactive approach. Being multi-aligned clearly seems a better option for India than remaining passively non-aligned.

India, unfortunately, is located in a very troubled neighbourhood. Its immediate neighbourhood is so chronically disturbed that India confronts a tyranny of geography. It has the Pakistan-Afghanistan terrorism belt on the west, a renegade China to the north, and, to the east, a sanctions-hit Myanmar and a Bangladesh that has both porous borders and the world’s highest population density, if one excludes microstates.

In this combustible neighbourhood, India may be a beacon of stability, including providing generous aid to its smaller neighbours, from Nepal and Bhutan to Bangladesh and the Maldives. When Sri Lanka’s economic collapse occurred less than a year ago, it was India that came to that country’s rescue, not China whose debt-trap diplomacy was partly responsible for the economic meltdown in that island-nation.

Yet, the return of communist rule in Nepal just before New Year’s Day 2023 is just one example of India’s growing regional challenges.

Here’s the irony of ironies: Indian communists, instrumental in the rise of Nepalese communists, have become increasingly marginalised in Indian politics due to an eroding grassroots base, while their comrades in Nepal remain ascendant, regaining power through a marriage of convenience between rival groups in which they are split.

Through then-Prime Minister Manmohan Singh’s UPA 1 government that they supported, Indian communists helped engineer the ouster of Nepal’s monarchy, the symbol of that country’s stability, continuity and unity for 239 years. The monarchy was removed at the instance of the Nepalese Maoists without ascertaining the will of the people by holding a national referendum.

Singh’s government, dependent on communist support at home for survival at that time, played a zealously interventionist role in Nepalese politics, including accommodating the Nepalese Maoists’ demand for the monarchy’s removal. It hosted a meeting between Nepal’s Maoists and Nepalese opposition parties in November 2005 at which an accord to abolish the monarchy was reached. The Singh government did not think through the long-term consequences of actions that would help empower Maoists and other communists in Nepal.

 The upshot was that Nepal went from being a Hindu kingdom (indeed the world’s only officially Hindu nation) to coming under the sway of communists, who largely filled the void from the monarchy’s removal. And when Nepal became the world’s sixth communist-ruled state in 2018, it opened the path for China to make major strategic inroads into that country. Communists have returned to power in Nepal after just a 19-month hiatus.

Nepal exemplifies how India’s tyranny of geography, to some extent, is self-inflicted. Failed policies of the past have compounded India’s strategic challenges in its immediate neighbourhood, including in relation to Pakistan. India’s steadily eroding clout in its strategic backyard further exposes its inability to influence political developments in its neighbourhood.

More fundamentally, the tyranny of geography means that India must look beyond its immediate neighbourhood for meaningful regional cooperation. India is now a member of multiple regional organisations that have little to do with South Asia.

The sharpening international geopolitical rivalries, however, constrict the potential of regional groupings of which India is a member, like BRICS, BIMSTEC and SCO. The Quad, for its part, is perhaps becoming stronger through greater engagement among its leaders and senior officials, yet it paradoxically appears in danger of losing its Indo-Pacific strategic vision and purpose because of Biden’s focus on European security and his more conciliatory approach towards China.

Another complicating factor is US sanctions policy which targets India’s neighbours like Myanmar and Iran, even as Washington has resumed its coddling of Pakistan. For example, US sanctions policy against Myanmar is becoming a stumbling block to turning BIMSTEC into a vibrant grouping. The US has stepped up pressure on ASEAN and New Delhi to isolate Myanmar, India’s gateway to continental Southeast Asia.

America’s sanctions often work to China’s advantage. For example, US sanctions against Iran have enabled China not only to secure oil at a hefty discount but also to become a top investor in, and security partner of, Iran. US sanctions are similarly pushing resource-rich Myanmar into China’s arms and complicating India’s diplomacy.

Meanwhile, the challenges of 2023 for India are also being underlined by the increased burden on the Indian economy being cast by the current international crisis. India’s import bill has risen sharply since last year.

Energy supplies and defence equipment constitute the biggest chunks of India’s imports. Thanks to the proxy conflict between the Western powers and Russia, the costs of both energy and arms imports have risen significantly, putting a heavier burden on the Indian economy.

However, India’s foreign exchange reserves remain relatively large. And India’s economic fundamentals are strong. Furthermore, India enjoys political stability. It has a stable and strong government whose approval ratings are exceptionally high, although it has been in power for more than eight years.

Another significant fact is that, at a time when the spectre of an economic recession haunts the West, India remains one of the world’s fastest-growing economies.

In a global recession scenario, there is little doubt that India’s economic growth will slow. However, India is better positioned than most other major economies to absorb global shocks. It is worth remembering that India weathered the 2008-09 global financial crisis much better than most other major economies. India’s GDP, in fact, grew by an average of 6 per cent in every quarter during the 2008-09 global financial crisis.

The Indian economy is actually quite different from most other Asian economies. India is a story of services-led economic growth. More fundamentally, the Indian economy relies largely on domestic consumption, not exports, for growth. By contrast, China’s trade surplus is now the main engine of its economy. Without it, Chinese growth would likely stall, especially as Xi strengthens state control over private companies.

The challenges of 2023, nevertheless, will test Indian leadership and its diplomacy, economic policy and management of defence and internal security.

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