Rags to rupees

India wants its own currency symbol.

The rupee is certainly a strong, and storied, currency, but if China doesn't even have a standardized keyboard and the euro sign isn't yet really universal, what chance does the rupee have of making it as a globally recognized symbol?

The development of a common market (Pakistan, Sri Lanka, and Nepal) would certainly help; bringing together more than a billion people using the same currency in a volatile region would promote greater market integration and freer trade within South Asia. Though not very likely, if implemented, such a momentous change would help to ensure a little more political stability in the 'hood and it just might make for a lasting rupee (and symbol).

(Photo from 8en)

Holbrooke's heroes

Obama's Afghanistan policy review and the following talks at the Hague are being praised for the inclusion of Iran. I've long advocated the inclusion of Iran in Afghan dealings; but a regional solution will only work if every country is involved in shaping strategy. Instead of opening the table to debate, Holbrooke and his team are essentially dictating policy. Apparently, they expect India to accept the notion that Pakistan is a victim of terrorism and a trustworthy partner. Guess what? They're not buying; nor should they be.

The fact that the Obama administration is still supporting Pakistan and now talking with Iran, without any significant conditions, is a huge slight in the eyes of India. Prime Minister Singh has essentially banked his career on the new strategic relationship with the US he helped usher in with the nuclear deal. India, after reorienting their entire foreign policy to align with the US, is being cornered into supporting their enemy, who have still not pursued the planners of 26/11 or even shared evidence.

Treating our strongest ally and partner in South Asia as an afterthought is a huge mistake. Indian elections are this month; the economy is obviously the central issue, but if Mr. Holbrooke continues to talk to India instead of with it, you better believe we will have a much less sympathetic ear in Delhi. Replacing a centrist, liberalized government with a nationalist, populist alliance hostile to most US activity isn't exactly a good change.

(Photo from Politics and Meetings)

Slumdogs and status quos

As awards seasons creeps up on us it's nice to enjoy a little mindless movie gossip amongst the never ending financial commentary. But of course those of us in Washington, which is apparently Hollywood for ugly people, can't just let movies be movies. A little healthy dose of IR theory in our cinema won't kill us, right? Right?! David Rothkopf on Slumdog Millionaire (at his new blog):

When I saw the film...I left the theater wondering to myself about the way that international affairs are covered in the media or discussed in Washington. Most of the stories we write are about leaders, presidents and congresses, about policies and summits, about strategies and budgets. Every so often, in a war, we capture the shot of an injured child or weeping mother, but we miss the essence of it all, the stories of individual people.

Rothkopf is right that we should focus a little more on the people who need development assistance, not the elites tasked with its implementation. This isn't exactly new thinking, though. My favorite economist has been saying this for years; the "capabilities" of people are what matter in helping a country grow. But in trying to steer a policy community as disparate as development, we should be careful to avoid cliches and one-size-fits all prescriptions - the very aspect of established policy circles that got us to this tired method of international study in the first place. 

The movie was fantastic; but take it for what it is - a great story. When pundits and critics start to heap praise like this on it (which everyone seems to be doing) we should be very wary. After all this is the most cliched understanding of modern India that there is:

Juxtaposing the brutal poverty of Mumbai's slums with the glitter and promise of a global television phenomenon like "Who Wants to be a Millionaire?"...[the spirit to overcome this gap] in particular animates all of India.

C'mon! This is straight out of a bad, cheesy travelogue that 20 pages later will tell you which ashram offers the best enlightenment. If you want to reform how people cover and think about policy, don't fall victim to the same generalizing (and frankly lazy) thought patterns. Still, you should go see the movie. 

(Photo by Cine Fanatico)

South Asia double down

I've been slow to write about the events in India for a variety of reasons, but now that (some of) the dust has settled, it seems appropriate to offer a few thoughts. India (especially Mumbai) is a country I love and have spent a lot of time in and I am loathe to think that the US is dragging its feet in response. 

In the midst of condemnations and travel plans, people seem to be forgetting that these are two nuclear powers in a strategically critical part of the world. What the US does is vital to the future security and stability of South Asia. Though their methods may not have been perfect, our present administration has done a wonderful job of simultaneously maintaining good (well, decent) relations with Pakistan and India.  India is, and should be, one of our strongest allies, even if we have to offer some concessions (non-prolifi what?) and Pakistan continues to be vital to our efforts in Afghanistan. The danger of wrong, or even worse - no, action in this scenario may hasten the loss of two of our most important allies.

The US needs to stamp out any speculation that the ISI (Pakistan's intelligence agency) was involved: even if they were, the notion will simply weaken Pakistan's young, struggling civilian government. The simple truth is that we can't afford to lose support from either of these countries and that will require the type of diplomatic nuance the Bush administration widely lacks. Secretary Rice must send a strong message that any military movement or action will be closely watched, roundly condemned, and will result in lost concessions, whether in trade, arms, or technology. Cooperative investigation is the best, and hardest, path to restoring some semblance of normality.

Take notice W: we can't wait until January 20th for any type of resolution. US memory is short and a deft handling of this situation may alleviate much of the disdain the foreign policy community holds for you.

(Photo: EC)

Tata's fall :: China's rise?

Late last year Tata motors unveiled production plans for the Nano, what was to be the world's most affordable car with a retail price tag of $2,300. Their plans were derailed today by farmers protesting land acquisitions in the special economic zone of Singur, home to one of three Nano factories in India. The debate has been brewing since the government "bought" the land under a 2005 economic expansion policy. It is certainly reflective of the tense nature of labor relations in India but more tellingly, the outdated nature of the Indian bureaucracy and government.

From my own experience in India (and this can be confirmed by anyone who has worked or lived there), anything the government runs is insanely slow. Employing three people to sell someone a stamp and five people to check your train ticket (not to mention the 4 porters relying only on tips) reflects the far reach of the government and its' woeful inefficiency.

Not only is this frustrating but, as Arvind Subramanian explains, it also spells danger for India's growth and development (especially when compared to China). India is certainly ahead of China in education achievements and political freedoms, but unless the government can be streamlined by selfless reformers (about as likely as it sounds), the country's growth will slow in the coming years. The bureaucratic institutions are a legacy of the British and provided many jobs in the early years of Independence but unless the government can discard this colonial legacy the institutional stagnation will lead to economic stagnation. As Subramanian says, it is easier to create markets than improve a state's capacity. That's good news for China and bad news for India. 

The return of history

Eric Posner over at the Volokh Conspiracy makes an interesting prediction:

"When historians write about the post-cold war era, which began in 1989, the date of its termination will not be 9/11/2001, as has been frequently claimed, but 8/7/2008, when Georgian forces attacked separatists in South Ossetia and Russia responded with an invasion. August 7 marks the end of American sole-superpowerdom, or hyperpowerness, or hegemony, or whatever you want to call it, an interval somewhat longer than but still very similar to the periods of global preeminence the United States enjoyed for a few years after World War I and World War II."

The war in Georgia has sparked some intense reflection on the state of international relations and American power. I agree that the American moment of hyperpower (I really love that term) is over. But this was never an unexpected development: the US used its hegemonic position after the Second World War to foster a liberal international economic order and promote stability, mutual economic cooperation, and growth. But hegemony is a concept that measures states’ relative power capacities, so by encouraging a system which facilitates world economic growth, sooner or later America’s power would decline in relation to the rest of the world. As hegemonic stability theory teaches us, a good hegemon sows the seeds of its own decline.

International relations is driven by political and economic factors. The political events by which we mark history may lead us to conclude that America’s decline is something new, but in reality the economic forces which caused it have occurred gradually since the end of World War II. Thus, while perhaps the political environment after the Cold War suggested an ‘end to history’, a cursory look at the world’s economic structure would have cautioned that, at best, history was taking a short break.

In any case, the world has certainly woken up. State relations will need to evolve to accommodate a new power structure, but I am not particularly pessimistic about a multipolar world. Today, the US is still the world’s most powerful nation politically, militarily, and economically. The United States will continue to lead but increasingly will need to engage with other nations on less favorable terms. That said, we should be careful not to overestimate the importance of Russia’s recent actions in Georgia. Economic growth has empowered both potential rivals like Russia and new partners like Brazil and India.

In many ways, Russia is an outlier in modern international relations and may need to be treated as such. Its wealth is based largely on strategic energy reserves. It is a bully when it comes to trade (look at its relations with the EU regarding natural gas.) But if you look at the other BRIC countries, you see economies with strong global links that have an interest in systemic stability. It is more likely that such countries can become “responsible stakeholders” in the global political-economic structure.

History clearly isn't over. But then again, it never was.

(Related: see Rory’s excellent treatment of the resurgence of nationalism over at IPE Journal)

Talibanistan?

Pakistan is quickly becoming home to more foreign terrorists than ever before. This is not helped by the truce being cut between the government and tribal groups from the northwestern FATA region. Baitullah Mehsud, a warlord widely suspected of plotting Benazir Bhutto's assassination, is leading the charge. The deal comes fresh on the heels of a suicide bomb attack on the Indian embassy in Kabul that killed 41 civilians and injured 139.

While the US demurly denies any direct link between Pakistan and the bombing, the Afghan government has been more than forthright sharing its belief that Pakistan, specifically their ISI intelligence arm, was behind the attack. The rumor mill is awash with tales of varying veracity but one thing is certain. The possibility of success in Afghanistan is directly hinged on a working relationship between its two tenuous neighbors: India and Pakistan.

The lack of news from Afghanistan - a $4 billion G8 pledge for Afghani security and development was pushed to the back page this week - reflects a worrying sense of idleness and complacency. The situation in Afghanistan is growing worse by the day and requires delicate maneuvering by its neighbors to prevent any further decline.

The relationship between India and Pakistan is shaky at best. Foreign pressure and nuclear co-habitation are the two main reasons they still talk and flare-ups, such as the recent protests in Kashmir, are still common, though violence is at an all-time low. But if there is to be success in Afghanistan, Pakistan and India must restrain their public voices and defuse the situation using diplomatic back channels. Their relationship is too perilous to permit unfounded nationalist rhetoric.

Regional stability is at risk but Afghanistan also needs all the help it can get - especially from two such powerful players. The country's development and freedom requires the military cooperation of Pakistan and the economic support and guidance of India. Without these two pillars, peace may never take hold. The bombing represents many things but not a personal attack on India; the Taliban agents carrying out such work are not Pakistani but Chechnians, Uzbeks, and Arabs. Their fight is a global one. India must realize this and work with Pakistan to stamp out such extremism in Afghanistan. The US must help.

It is unwise and unfair for the US to openly criticize the tribal negotiations. Though more jihadis are now in the FATA, this reflects a perceived chance of success in Afghanistan and one of defeat in Iraq. In this case, correlation is not causation. The negotiations may not be to the US' liking but after supporting an autocratic ruler like Musharraf for so long we must be willing to back a democratically elected government, regardless of whether we like their actions. If Karzai can maintain his grasp on Afghanistan and Pakistan can bring quiet to the FATA, even through devolution of power, then the billions of development dollars pouring into both countries may be put to some use. Without security, and at least the semblance of due political process, extremists will continue to prevent any advancement or peace. NATO forces are already planning their withdrawal: shouldn't they at least leave the Afghans a chance of success?