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Dollar diplomacy

April 17, 2008

Diplomacy is nothing but war by other means. This principle, first propounded in the Mahabharata, gained popular acceptance across the world after it was incorporated in Niccolò di Bernardo dei Machiavelli’s “realist” political treatise, The Prince. It is not known whether the Florentine political philosopher was exposed to the ideas contained in the Indian epics, but that is not the point of this editorial. The point lies elsewhere.

Wooing Africa: India is leaving no stone unturned
India is leaving no stone unturned in wooing Africa
India’s economy is jogging along, despite the media hype about a slowdown. But India Inc. needs crucial raw materials that are available only in other countries. Rather belatedly, the Government of India is waking up to the economic potential of diplomacy. The India-Africa Forum Summit is the first serious attempt by India to tailor its foreign policy to fit the remit of its economic requirements. The country desperately needs oil, iron ore, bauxite, uranium and other natural resources to keep its growth engine ticking. And India Inc. is spreading its net far afield in search of these resources.

But frequently, its efforts are being stymied by the absence of a coordinated “public-private” strategy. Other countries—most notably China—don’t suffer from such policy paralysis. There, the so-called “corporate sector” is simply an extension of the government.

So, large state-owned companies—like Sinopec, CNOOC and PetroChina—face little difficulty in “winning” contracts in countries that have already been “softened” up by official Chinese largesse.

This is where GoI is finally waking up to reality. The announcement, by Prime Minister Manmohan Singh, of a more than $500-million (Rs 2,000 crore) package— comprising direct aid, export incentives and investments— to assist African nations develop is a step in the right direction.

But much more needs to be done. First, the government needs to clearly spell out its geopolitical goals and declare Africa, Central Asia, South East Asia and South America as thrust areas. Then, it should use its massive foreign exchange reserves to “buy” influence, if necessary, in these countries.

Many will argue that this is nothing but a replay of the game played by the European powers from the 17th century onwards and that it goes against India’s “principled” foreign policy positions since Independence. That’s a lot of balderdash. Countries don’t have friends or ideologies; they only have interests. The government is belatedly realising this. Now, it should act fast.

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