Sunanda K Datta-Ray: Trade vs national pride

WHERE MONEY TALKS

Is economics really the solvent for all disputes and differences?

People who were brought up on the old trade-follows-the-flag adage must find its reversal in contemporary statecraft a little bewildering. To add to confusion, recent developments in India's relations with the United States and China don't suggest that the flag "" in the sense of closer political ties "" always does follow trade.

Man does not live by bread alone, as the Sino-Japanese conundrum illustrates. Japan and China trade massively, around $190 billion in 2005. Until three years ago, China received the largest dollop of Japanese overseas assistance. But the two countries hardly see eye-to-eye on the conflicts of the 1930s, World War II, the Yasukuni Shrine's place in Japanese public life or Japan's defence ties with the US.

Similarly, exports and imports between Japan and South Korea are worth about $40 billion. There is substantial Japanese direct investment in South Korea. They share similar perceptions of the common adversary and both rely on American military support. Yet bilateral ties are far from easy. Like China, South Korea wants Japan to rethink its wartime role and apologise for perceived offences. The two countries have been squabbling for months on the terms of a free trade agreement.

These instances from contemporary politics should be remembered by those who chant in the wake of Hu Jintao's visit that economics is the solvent for all disputes and differences. China's apologists have long advanced this plea to excuse (if not justify) repression at home. Their claim is that freedom of expression is far less important than freedom from hunger and that the right to a basic living standard is the first human right. They go on to claim that once fundamental rights (to food, education, housing, clothes, medicine and employment) have been met, other rights (to assembly, to organise, to disagree, to speak out, to pursue individual lifestyles and demand alternative governance) will automatically follow.

No earthly force, they say, will then be able to arrest the march of democracy. That might indeed happen but over such a long period of time and for such a multiplicity of interlocked social, political and, yes, also economic factors as to rob the simple trade-off thesis of its relevance.

So, too, in bilateral ties. Addressing the Asia Society in February, George W Bush identified US foreign policy with the fortunes of GE, Whirlpool, Domino's Pizzas, Pizza Hut, Boeing and Texas Instruments. But India's appetite for their products won't persuade any Indian government to sign a security treaty with the US like Japan or South Korea. Nor will the US follow up sales to India by abandoning Pakistan.

If economics were all, the US and China, its third largest trading partner, should be close allies. Not only has soaring trade ($231 billion two years ago) saddled the US with a $162-billion deficit but cheap Chinese readymades, shoes, electronics and other domestic goods sustain the average American's standard of living at a reasonable cost.

So, why are they not buddies like Tony Blair's Britain and Bush's US? Why does the US court India to "" no matter how delicately it might be phrased "" contain the burgeoning might of a China on which Americans depend heavily for their low-cost luxurious lifestyle? And why should China seek Indian cooperation in what amounts to toppling the US from its unipolar throne? After all, the US is the main buyer of huge Chinese exports and the principal source of foreign investment in China.

It's not that, quoting Pascal, "the heart has its reasons which reason knows nothing of." The reason is that the software of international diplomacy "" national sentiment, ethnicity, history and culture "" can both enhance or counter the impact of economic benefits.

The mantra of Sino-Indian trade hitting $20 billion this year, doubling to $40 billion by 2010 and perhaps eventually toppling the US as India's principal trading partner, will not, therefore, flesh out the so-called "strategic partnership" as some optimists and innocents expect. For most Indians, China is "a riddle wrapped in a mystery inside an enigma," citing Churchill on the Soviet Union. That rules out a national consensus until Indians are satisfied that the "political parameters and guiding principles" to which Manmohan Singh and Wen Jiabao agreed last year will not betray any sense of national pride. It's a matter of izzat. We should note till then that when Hu says India and China "share broad common interests in advancing multipolarity in the world and democracy in international relations and on other major international relations" he means they must oppose American hegemony.

Perhaps. But what about the cat of Asian hegemony that Sir John Kotelawala famously unloosed among the Bandung pigeons all those decades ago, to Jawaharlal Nehru's intense irritation? What about the 5,000-sq km sliver of Kashmir that Pakistan gifted to China, the 38,000 sq km Aksai Chin plateau through which China drove National Highway 219 linking Tibet and Xinjiang, or the 90,000 sq km of Arunachal Pradesh it claims? Ultimately, differences may be as important as trade. Until they are solved, India and China will remain business partners rather than friends. No flags need be put out just yet.

sunanda.dattaray@gmail.com