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SANDERS: India’s perfect storm of problems

- - Sunday, September 4, 2011

Pollyannas had looked to the globe's "emerging economies" - China, India, Brazil, et al. - for growth to help ward off worldwide economic recession, as the Western economies and Japan stumbled.

Now it's clear that isn't going to happen. China is trimming its sails to dampen inflation, putting the brakes on job-producing infrastructure expansion at any cost while trying to meet increasing constraints on its subsidized exports. Brazil, with a new administration enmeshed in corruption scandals, faces a crash in commodity exports while fighting off devastating import competition to its manufacturers from its major customer, China.

But what has been largely ignored - what with the dramatic euro crisis and the threat of double-dip American recession - is that India, too, is slipping back into its traditional morass. At stake is the hope that 1.5 billion people, almost a quarter of the human race, can move with democratic values into a modern society. That possibility was long seen as counter to "the Chinese model," which, while economically successful so far, is essentially old-style Oriental despotism.

Heading the list of New Delhi's woes is a leadership deficit. Sonia Gandhi, the Italian-born 64-year-old widow of a former prime minister and back-seat driver to the ruling Congress Party, has been secreted away to New York for cancer surgery (being performed by a noted Indian-American physician). She leaves behind a power vacuum, not only in the ruling party but also in the government as a whole. Prime Minister Manmohan Singh, a technocrat, is increasingly drowning in problems that include massive corruption, growing inflation and a flight of capital escaping the country's crippling bureaucracy.

Rahul Gandhi, Mme. Sonia's 41-year-old son, has yet to prove he has inherited the charisma of the previous generations of independence leader Pandit Jawaharlal Nehru's family, which imperiously has dominated the country's early politics and, arguably, preserved the country's unity. Caught in India's worship of priestly figures, authorities mishandled a traditional hunger strike by an anti-corruption hero, Anna Hazare, with Mr. Singh having had to backtrack from Mr. Hazare's arrest. The government, correctly, is terrified that Mr. Hazare's high-minded tactics could be appropriated by other anti-government, anti-business campaigns, further paralyzing governance and the economy.

India's international role, too, is in jeopardy. Naive Washington hopes for a U.S.-India alliance against Beijing's growing aggressiveness have been dashed. American forgive-and-forget efforts have dawdled in extending nuclear and other advanced technologies after New Delhi defied the world to build atomic weapons - matched by archrival Pakistan. Shockingly, American vendors recently were left off the shortlist for a $10 billion fighter plane bid for India's military.

Meanwhile, addiction to a decades-old Moscow alliance continues among India's diplomats, illogical as it might be what with mounting Russian arms delivery failures and Moscow's massive military sales to China. Furthermore, India's proposed huge overseas defense purchases may not meet its security requirements. Mr. Singh has called "Maoist" insurgencies in a dozen Indian states the country's greatest security threat. New Delhi and state governments have passed responsibility for fighting the rebels back and forth with little success. These social conflicts grew out of pro-Chinese proclivities of Bengal's Communists, whose 30-year hold on Kolkata, India's second city, was recently broken, at least for now.

After 3 1/2 wars, negotiations continue fitfully to reach a compromise with Pakistan, the twin regime bloodily carved out of British India over half a century ago. With India's Muslim population as large as Pakistan's, Indian leaders increasingly appreciate that an implosion across the border would threaten their own stability.

Pakistani terrorist groups, fueled by the perennial dispute over Kashmir and aided by links to the Pakistani military, add to the tension, made even more dangerous by occasional clashes of regular forces such as took place in early September. Washington, after fitful attempts, has failed to mediate the feud, caught between aiding a bankrupt Islamabad and a desire for warmer relations with India.

This picture is clouded even further by New Delhi's fishing in troubled ethnic waters in Afghanistan and inside Pakistan itself. The Pashtun terrorist hotbed on the Afghan border is where Pakistani, Indian and Chinese interests conflict. China continues a campaign of seduction of Pakistan, pursues a massive Tibet buildup, including missiles and probably nuclear weapons, and is infiltrating the Himalayan border states of Nepal and Bhutan and at both eastern and western ends of the 1500-mile border.

Sol Sanders, a veteran international correspondent, writes weekly on the intersection of politics, business and economics. He can be reached at solsanders@cox.net.