2018 second-quarter forecast

South Asia

Everything that informs geopolitics can be found in South Asia: challenging demographics, geographic diversity, and contentious, ill-defined borders. The Himalayan Mountains form the northern border of South Asia, whose two main rivers, the Indus and the Ganges, support the region’s great population centers. India is the region’s dominant country, home to the world’s fastest growing economy. But its rivalry with neighboring Pakistan, a fellow nuclear power and growing consumer market, has made South Asia one of the world’s most dangerous nuclear flashpoints. The region is also a testament to how militancy and militarism can undermine the regional integration needed to unleash higher economic growth.

7 MINS READMar 9, 2018 | 17:12 GMT
Everything that informs geopolitics can be found in South Asia: challenging demographics, geographic diversity, and contentious, ill-defined borders.

Everything that informs geopolitics can be found in South Asia: challenging demographics, geographic diversity, and contentious, ill-defined borders.

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section Highlights
  • A deepening rivalry with China -- on land, at sea and economically -- will push India into closer defense cooperation with the United States.
  • More frequent militant attacks in Kashmir and increasing incidents of cross-border fire from both sides of the Line of Control will add tension to the relationship between India and Pakistan.
  • Intensifying violence in Afghanistan will further strain relations between Pakistan and the United States, prompting Islamabad to strengthen its ties with Russia, China and Iran.
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India and China Go Head-to-Head

During the second quarter of 2018, the competition between China and India will continue to play out across South Asia. Beijing's ambitious Belt and Road Initiative is helping to address South Asia's infrastructure deficiencies in a way that India cannot match and enabling China to forge deeper partnerships with countries that New Delhi would rather keep in its back pocket. Nevertheless, India has cards it can play against China.

To counter China's naval expansion across the Indo-Pacific region, for example, India will strengthen its security partnership with the United States. New Delhi's interest in dominating the Indian Ocean to safeguard its trade and energy routes dovetails with Washington's interest in containing Beijing's maritime ambitions. In the second quarter, the two will advance their relationship, holding the first meeting of their defense and foreign secretaries in April in Washington. The meeting demonstrates India's intention to deepen its partnership with the United States beyond naval exercises and joint air force coordination. Even so, India is unlikely to sign the two outstanding foundational agreements the United States signs with its defense partners, the Communication and Information Security Memorandum of Agreement and the Basic Exchange and Cooperation Agreement.

Along with their bilateral cooperation, India and the United States have resurrected the Quadrilateral Security Dialogue with Japan and Australia. That framework will offer another forum through which New Delhi can challenge Beijing, this time by presenting a unified front with three of China's other maritime rivals. Progress in the group will be slow, though. As a collective platform whose participants vary in their capabilities, the Quadrilateral Security Dialogue will probably move forward in fits and starts this quarter without yielding true military coordination. But even without help from its fellow members, India has made strides in expanding its maritime access along the Indian Ocean rim and is working to arrange new agreements with Oman, Iran and the Seychelles.

On shore, New Delhi will work to improve its military readiness along the Himalayan frontier, another front line in the contest between India and China. Because warming weather eases troop mobility and roadbuilding on the Chinese side of the border, India will take steps to ensure a quick response in the event of another standoff in the region.

Spring weather also will give rise to more cross-border militant attacks in Kashmir and lead to more frequent exchanges of cross-border fire between Indian and Pakistani forces along the Line of Control, further straining relations between the archrivals. Though the governments in Islamabad and New Delhi will work to prevent their border dispute from boiling over, the odds of a major conflict between the nuclear-armed rivals would increase in the event of another large militant attack in India or a miscalculation between their militaries. A significant militant operation in India, for example, would compel Indian Prime Minister Narendra Modi to pursue a military response, such as a cross-border surgical strike.

China and India: When Giants Collide

Breaking China's Spell

Beyond the military aspects of its competition with China, India will continue its quest for regional influence under Modi's "Neighborhood First" policy. Some of its efforts in this arena will focus on Nepal — a vital buffer for India's strategic defense — during the second quarter. Khadga Prasad Oli's return to power in Nepal in December 2017 is a cause for concern in New Delhi. Oli, after all, tried to forge closer ties with China during his last stint in office. To prevent the Nepalese government from drifting too far into Beijing's orbit, India will reach out with a mix of diplomacy, aid and military cooperation. Oli, however, will probably cozy up to Beijing anyway, perhaps by reviving a $2.5 billion Chinese-funded dam project in north-central Nepal, to diversify the country's foreign partnerships.

Elsewhere in its neighborhood, India will resist calls from Mohamed Nasheed, exiled former president of the Maldives, for a military intervention in his island country. Heeding his wishes would only reinforce India's image as a hegemon throughout South Asia and push the Maldives closer to China. Instead, New Delhi will keep appealing to the United Nations to pressure current Maldivian President Yameen Abdul Gayoom to uphold a Supreme Court ruling that would enable Nasheed's return to the country. And in Bangladesh, Prime Minister Sheikh Hasina will try to assuage New Delhi's concerns over her state's warming relations with Beijing while also courting Chinese-backed development projects to woo voters ahead of an election later this year.

It's the Economy

An upcoming election in India will factor into New Delhi's stance toward China, too. Though Modi often touts the virtues of globalization, he probably will indulge in some selective protectionism as he prepares to run for re-election next year. The prime minister not only wants to create jobs but also protect existing ones against the threat of surging Chinese imports. To that end, New Delhi is considering a proposal to slap a 70 percent tariff on solar panels imported from China.

Modi, now in the final stretch of his five-year term, is still India's most formidable politician. But mounting challenges at home — including slowing economic growth, stagnant job creation and unrest among agricultural workers — have eroded the standing of his ruling Bharatiya Janata Party's (BJP) in opinion polls. BJP, in fact, lost some electoral ground to the Indian National Congress (INC) in balloting in Gujarat late last year. As an April vote in Karnataka approaches, Modi and the BJP are hoping for a better performance. The outcome of the election in Karnataka — one of the few states still under the INC's control — will set the tone for the remaining state races this year in Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram. It will also test the INC's ability, under new leader Rahul Gandhi, to challenge Modi and mount an effective opposition to the BJP. And, of course, the outcome of those races are important because state legislatures elect members to the upper house of Parliament, where a BJP majority would help Modi pass the measures he needs to help boost his country's economic growth.

Allies on the Outs

Pakistan, meanwhile, is in the final stretch of its own election season, and it's been a strange one. Former Prime Minister Nawaz Sharif, the country's leading political figure and the powerful army's most outspoken critic, is on trial on corruption charges. Ever since his ouster in July 2017, Sharif has portrayed himself as the victim of a military-judicial conspiracy. But whatever the court's verdict, the army will retain control over Pakistan's foreign policy — a reality that bodes ill for the country's relationship with the United States.

In fact, while India's relationship with Washington will improve during the year's second quarter, Pakistani-U.S. relations will continue to deteriorate. The White House extended the suspension of $1.9 billion in aid to Pakistan as punishment for Islamabad's reluctance to take action against Taliban and Haqqani network leaders operating on its soil. The Taliban, meanwhile, will launch their annual spring offensive across Afghanistan as Washington sends 1,000 more troops into the conflict, along with increased air power to back them. As violence there intensifies, U.S.-Pakistani relations will probably come under even greater strain. The growing animosity between the two allies will push Islamabad to strengthen its ties with regional partners such as Russia, China and Iran. Moscow, in turn, will continue using the war in Afghanistan to gain leverage against the United States, providing low-level support to the Taliban while also offering to host peace talks.

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