The World Trade Organization is dead. Multilateralism is out. Bilateralism is meaningless. Unilateralism is the order of the day. The old world order has been dismantled. What the new world order is or will be is unknown. It is time to stop mourning and move forward.
Kapil Sibal, Supreme Court Bar Association president and former Union minister, former foreign secretary Shyam Saran, former national security advisor Shivshankar Menon and academic and foreign policy analyst C. Raja Mohan attempted to make sense of the new world order emerging with Donald Trump as US President.
In his show Dil Se with Kapil Sibal that dropped on YouTube on Monday, Sibal along with the three experts analysed how India could negotiate policies initiated by Trump as the world tries to grapple with uncertainties.
The Telegraph Online outlines the key inferences from the discussion.
What does Trump stand for?
Saran: This is going to be a period of great uncertainty, unpredictable global environment. We have to recognise that Trump is not a maverick, a strange kind of a figure and things will settle down. It is a tectonic shift precisely for the reason what he represents is something deeper, a deeper change that is taking place not only in the US. It is a more acute representation of what we have been seeing is happening across the world. It is a lurch to the right. The gloves are off. This is a very new kind of a world that we are living in.
Menon: Trump 2.0 is very different from the first term. This time he has a majority, he is organised. He has come with a broad coalition from billionaires and techno-anarchists to those who feel deprived, left out. He is a result of many things that have happened. The Biden administration did not change his China policy. They did not go back to the WTO. He personifies that historic shift in a way that catches eyeballs. He is not a lone wolf… He represents many trends that we have seen coming, but he actually brings them to a head. I don’t think there is a going back. This is a historic shift.
Mohan: Biden tried to manage the challenges to the US by building alliances. This man is saying I don’t care for alliances. Even the closest allies, the Brits, the Canadians. Utter contempt for the liberal policies… There was always a strain in the Republican party, we don’t care about multilateralism… Internally dismantle the administration, reduce bureaucracy, downsize the government and give a free hand to technology companies.
What does Trump want?
Saran: He wants immediate results. He is not looking really at the long term. On the one hand there are his personal predilections. How to bring the rate of the dollar down without losing its dominance. There are various contradictory objectives. His is a sphere of influence thinking. A primordial kind of exercise of power. In the past it was cloaked in some kind of ideology, principle. Those pretensions are off.
Menon: We are dealing with an opportunist who looks at things purely from a selfish point of view. I wouldn’t look for some great integrating principle in what they are doing. He is doing many things. They could contradict each other. Some will work, some will not. But they will be practical in that they will fit with the balance of power in the world today, which has changed. In the Cold War between the Soviets and the US, they had about 80 per cent of the world GDP. Today they are less than 50 per cent of the world GDP and about the same proportion of military power... Trump has a very good chance of making China great again. Because many of the policies are opening the door for China in South East Asia.
Mohan: [Ronald] Reagan was one of the most militarist Presidents but at the same time he was ready to sign off on nuclear weapons with [Mikhail] Gorbachev. This guy says why we have so many nuclear weapons? Russians love it. The Chinese are not going to accept it. In the Right and Left there is an interesting convergence. The US still retains 26 per cent of the global GDP, while the balance of power has changed. The US still has the capacity to force some change in the international system, which is exactly what they are trying to do on the trading system. Changes in the financial order will be far more consequential. All of us have to be prepared for that structural change in the international economic system.
Are new global alliances in the offing?
Menon: If Europe feels you can’t rely on the US anymore, where do they go? They will turn to Russia. Germany is an instinctive, historical ally. And to China. When they say increase Europe’s strategic economy, increase Europe’s ability to defend itself, it also means trying to bring down the level of hostility with Russia. We are going to see shifts in great power relations as a consequence of the uncertainty he [Trump] has introduced into the system.
Saran: Germany says we wish we could go back to a time where we could get gas from Russia, we could get markets in China and get security from the US. That was the best that could happen and they managed to profit from that. That world is gone.
Trump’s blow hot-blow cold with China
Menon: Biden has said multiple times that the US will protect Taiwan. Now they say the defence of Taiwan is not worth the cost. This is a negotiating stage. All the tough talks from both sides reflect an attempt to control the negotiation. They would rather be offshore balancers rather than this control freak who sits in the middle of Europe and the Strait of Taiwan. He is saying let go and see how this plays out.
Saran: I disagree with the notion that the US in reaching out to Russia is trying to do a China on the Soviet Union. Even if US-Russia relations improve it does not necessarily mean China-Russia relations will diminish in importance.
Can India afford to be the neighbourhood bully?
Menon: Our primary interests are much bigger than South Asia. If you think we can improve Indian people’s lives by controlling South Asia it is wrong. Because you are getting involved in an impossible task. We have better things to do in the world.
Saran: It is not a question of controlling your neighbourhood. It is certainly in your interest to reduce your vulnerability because if you leave open spaces somebody will walk in. It is important to secure your neighbourhood, even if not control… If you really open out your market to your neighbours it will be a small fraction of your market. You become the engine of growth for the entire region. You become the security provider for the entire region. Then the ability to play that larger role becomes much more optimal.
Menon: The most important thing is you have a role in their domestic politics whether you like it or not. You have to be seen as neutral and sometimes above that, have some kind of cooperative vision for the subcontinent. SAARC is not a failure unless you let it be a failure, make it a failure. If you let India-Pakistan relations drive SAARC then you are guaranteeing trouble. That does not make sense. You have to be a security provider, be a source of stability in their politics, be a source of prosperity. How did Sri Lanka survive 26 years of civil war with only one year of negative growth? Because they were joined to our economy. You have the ability to work the neighbourhood, but you have to give them a broader vision and not a sphere of influence.
Saran: In our relationships with Maldives, Sri Lanka, Nepal and Bangladesh – whether by design or it just happened – we have developed very dense cross-border linkages. Bangladesh textile industry is unable to survive if it does not get power from India. Maldives came up with 'India Out' campaign and yet had to retreat in a sense because access to supplies, the ordinary Maldivians have to get from India cheap food, essential items.
For India the way forward is to open the economy
Mohan: Ours is one of the most protected economies. If we say I don’t want to change internally but I want a favourable international environment, can we reform our trade policy? Right now we are saying we are negotiating with the Americans, the Europeans, the Brits and now the New Zealanders. If there is actually a strategy to reform the trade policy there will be opportunities.
Menon: There is a huge opportunity to correct your foreign economic policy. The commerce minister has said, we shouldn’t be so protectionist. The Japanese are masters in this. They use foreign pressure to do the things they want to do. We use crises to do the things we know we should do but we find it difficult politically – 1991 is the best example. Now is the chance. You walked out of RCEP. You are not a part of global supply chains, you raised tariffs steadily for eight years, if you want to grow and transform India you cannot do these. This is your chance, use it. As relations improve between China, US and Russia you will have space.
Saran: Without building your technological capabilities, without developing your economic capabilities the kind of room for manoeuvre that we are looking for will not be available.
The Pakistan conundrum
Saran: There is no neighbourhood policy which is possible without some managing of that adversarial relationship with Pakistan. Not that you must become a friend tomorrow. Treat Pakistan as any other state. If you make Pakistan a factor in your domestic politics, then it becomes very difficult. This is a good time. None of their patrons, neither the Chinese, nor even the US or even the Gulf kingdoms are ready to give a blank cheque to Pakistan as they were able to do or ready to do before.
Menon: Today it is in Pakistan’s interest to come into some accommodation with us. They are under pressure from the West, they are fighting a war with Afghanistan. The ceasefire has helped because it has worked in the interests of both sides. Makes sense to actually build on that. But you must assume the army etc will stay hostile. You have to accept that. That does not mean you should hand over the rest of Pakistan to them. There are civilian politicians and businessmen who you should be working with.
Mohan: We saw by cutting off completely you cede the entire population to the hostile forces. Pakistan is in a deep crisis. Our GDP is 10 times bigger than Pakistan. Pakistan has grown at 0 per cent rate in the last four years. They are stuck at US $350 billion GDP. We have to take the initiative. There is a hesitation because of domestic reasons.
What should India do in the changing world order?
Saran: Today you have been pushed to the margins of the Asian economy therefore the sooner you get back to the economic game, be bold, get into the RCEP, CPTPP. Those are the things that will give a degree of economic heft and a bigger role in the region without that facing the China challenge will be difficult.
Mohan: Part of the problem with RCEP has been, South-East Asians have been great champions. Today China is growing from 35 per cent to 40 per cent of global manufacturing; they are just dumping goods in South-East Asia. Today India, Laos, Indonesia are scrambling to protect the small industries because China is relentlessly expanding. Part of the problem of Asia-first diplomacy has been the economies are complimentary. If we can succeed in negotiating free trade agreements with America, Europe then you create a much greater balance in terms of economic power.
Menon: Next four-five years they [US] will be domestically preoccupied. Trump is basically doing a domestic cultural revolution. He is trying to remake America. Xi Jinping has his own issues at home. He is also trying to remake China. He has a society and polity that has been changed by rapid growth. He has to learn how to keep single party rule going on there. They will both be preoccupied at home. Their relationship is decided equally by the trajectory at home by four Ts- trade, tariff, Taiwan and technology. On trade, tariff, technology there are vested interests on both sides. China will like to try its luck with Taiwan. The real problem is that the US has become unpredictable. If it can change once, it can change again. Do you do long-term deals, you trust in the future or you just take what you can? You do what you can do, take what you can. India needs to invest in its people.