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India and the Pacific Alliance

Saurav Jha @SJha1618

Updated: June 6, 2014, 2:32 PM IST
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The Pacific Alliance (PA) is an emerging trade bloc comprising Chile, Mexico, Peru and Colombia. It accounts for about a third of Latin America's GDP in dollar terms and is developing EU-like characteristics sans a monetary union of course. It has been denounced by Brazil and the Bolivarians in South America as a Western imperialist project to check the tide of Leftist movements in the region. However the political economy in the PA countries may ultimately want to tread a more centrist path provided they have a partner to assist them in the same. India could be that partner.

China is looking to rebalance its economy and has to draw down its manufacturing estate in order to save whatever is left of its natural environment. This means that before this decade is out China may no longer drive resource based activities in the PA. At the same time the United States (US) is increasingly looking to become a resource exporter itself (e.g Appalachian coal, shale gas etc) and its interests are no longer aligned in the same way with PA countries as they were till recently, even though it has staunch allies within PA such as Colombia and a lot of influence in Chile and Mexico.

Indeed, as the US gradually withdraws from West Asia and pivots to the Pacific, it is likely to focus greater attention on managing the engagement of PA countries with East Asia in way that suits its new posture. The Trans Pacific Partnership (TPP) of which two PA members are already a part (i.e Chile and Mexico) seems to be dovetailed to this new approach. However the political economy in both Chile and Mexico may not respond favourably to TPP in the coming years and resistance to US moves may increase.

This means that Indian commercial interest can no longer hope to and should not expect to piggyback on the US profile in Latin America. Given India's own need to increase the share of manufacturing in GDP from the current 16 to at least 25 per cent with the concomitant increase in demand for natural resources, a deep enduring relationship with PA countries is imperative. Beyond being resource suppliers, PA countries particularly Peru and Mexico are also well suited for inbound Indian investment into the secondary sector on account of the availability of both labour and water.

It must be noted that India has already tried to cultivate the two other poles in Latin America i.e ALBA (Bolivarian Alliance of Cuba, Venezuela, Bolivia, Ecuador and five others) and the Brazil-led Merocsur and has friendly engagement with both. Brazil is after all a part of BRICS and India does have some 'old' socialist bonhomie with ALBA. However ALBA's links with China, Russia and Iran run deep on ideological and strategic lines whereas Brazil sees itself as a natural leader in the region. Keeping aside internationalist currents, whether BRICS or NAM type solidarity, in the region itself, India is a bit player and cannot really supplant a China or an Iran in the kind of 'services' they are extending to ALBA or ally with Brazil hoping that its interests are looked after. To be sure India's relationship with individual countries in ALBA will continue to grow but dealing with the larger 'strategic' goals of the bloc is a different matter.

Now it is precisely to balance the other poles, that PA seems to have been born. However TPP notwithstanding, these countries will not be able to rely on the US to shore them up in the medium term and will be open to new partners from elsewhere. Given India's own need to find balancers to in Latin America, PA seems a natural fit. Peru after all is one of the fastest growing markets for Indian textiles anywhere.

Economic ties depend greatly on the availability of cultural intelligence. This is obviously true for PA countries where barely noticed political undercurrents can catch investors off guard. The need of the hour therefore is to device a program for creating organic linkeages between India and PA, at the people to people level with continuous augmentation of our knowledge base of the region and its people. Understanding what the people of the region want is the key to optimizing our political outreach. A deep view of both historic and emergent traits will enable us to develop the right partnerships with individuals and entities in these countries thereby guaranteeing the safety of Indian investments and paving the way for future cooperation.

India should take the initiative in enhancing ties directly with the indigenous people of PA who are crucial to the viability of most projects in the region. For instance things could be got off the ground with a conference on the shared perspectives of indigenous people from PA and India's own tribal communities with respect to industrial development. Cultural and literary ties which already exist can be greatly augmented through careful selection of candidates genuinely interested in India-PA dialogue.

At the strategic level the relationship with these countries must focus on military co-production and even co-development. India must shed all inhibitions in this matter and besides training should look to supply hardware to these countries. Of course, counter-insurgent intelligence cooperation should also be on the agenda. India and the PA both have a lot of experience in dealing with left-wing guerrilla outfits.

In the future Canada might just join the PA as well, completing a 'resource rim' that one way or the other will have to be co-ordinated with India's inevitable trajectory as a manufacturing powerhouse. It is better that this is done sooner rather than later, concerns from other players notwithstanding. Developing a bilateral relationship with PA will give India a bird's eye view of the travails of TPP, political currents in South America, economic intelligence on PA's neighbours and on China as well.

Follow Saurav Jha on twitter @SJha1618

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First Published: June 6, 2014, 2:32 PM IST

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