Dr. Satu Limaye was named director of the East-West Center Washington in February 2007. Immediately prior to being appointed, he worked with the Institute for Defense Analyses in Alexandria, Virginia., as a member of the research staff. Previously, he served as director of the Honolulu-based APCSS research and publications division from July 1998 to October 2006.

Dr. Limaye was an Abe Fellow at the National Endowment for Democracy's International Forum for Democratic Studies, and a Luce Scholar and head of programs on South Asia at the Japan Institute of International Affairs in Tokyo. He has also written, edited, and co-edited numerous books, monographs, and studies, including US, Australia and Japan and the New Security Triangle, Japan in a Dynamic Asia; Special Assessment: The Asia-Pacific and the United States, 2004-2005; Religious Radicalism in South Asia; and Special Assessment: Asia's China Debate.

Dr. Limaye earned his Ph.D. in international relations at Oxford University's Magdalen College as a Marshall Scholar. He did his undergraduate studies at Georgetown University's Edmund Walsh School of Foreign Service where he graduated magna cum laude and was selected to Phi Beta Kappa.

Korea, the United States and Strategic Relations: India

November 3, 2011

Speaker:

Dr. Satu Limaye,
Director of Washington Programs, The East-West Center

Moderated by
Dr. Stephen Noerper
Senior Vice President, The Korea Society

STEPHEN NOERPER:
We really appreciate your coming this evening for a very interesting discussion with Dr. Satu Limaye. Satu comes to us from Washington, D.C. where he is the director of the East-West Center program. He is one of the bright rising stars on the Asia scene in Washington. He has been responsible for a very important body of work that I'll let him describe to you on why Asia matters for America. It's a sterling initiative and I think that one that we here at The Korea Society are very interested in relative to his findings on Korea. Satu goes back many years on other areas dealing with East Asia affairs and the U.S. relationship. He hails originally from not only India but Seattle, which is where The Korea Society will be on November 14 and 15 for KOREA DAYS: Seattle. Any of you who have friends, family or colleagues out there, please do let them know that we'll be at the University of Washington's Jackson School.

Satu made his mark very importantly in Hawaii as the director of research with the Asia-Pacific Center for Security Studies which is a U.S. government initiative, the brainchild of then Secretary of Defense William Perry in the mid-1990s and an institution that's made a great contribution to confidence-building in the Asia-Pacific. The East-West Center does an incredible amount (and has for over four decades) in bringing Asia and the United States together, and the testimonial to that is the fact that the APEC conference will be held in Hawaii in just a few short days, and so Dr. Limaye and Dr. Charles Morrison, the president of the East-West Center deserve a great deal of credit for bringing the leaders of Asia together in Hawaii. Please help me welcome Satu Limaye to the podium forn this third in our foreign policy series dealing with the United States and Korea and Strategic Relations.

[Applause]

SATU LIMAYE:
Well, good evening, everyone. Thank you so much for taking the time to attend this evening. I'm delighted to be here. I thank the president of the Korea Society and Nikita and Steve. It's kind of a reintroduction for me. Steve and I were together at the Asia-Pacific Center in Honolulu some years ago, and it's been almost a decade since we have met and so it's a delight to be back. I want to congratulate, first of all, the Society on a really innovative approach to Korea. I was in Korea some months back for the Jeju Forum, and as a non-Korea specialist what's fascinating for me is the remarkable strides that Korea has made in global presence, whether it be hosting the G-20, or next year the Nuclear Safety Summit; but its increasingly globalized posture and its role in the world and looking outwards; and this program on Mongolia, Russia and now India.

I think it's really important because these new relationships that are occurring across the Asia-Pacific have even led in Washington, in very strategic terms, to rethink what constitutes the definition of Asia. For example, some of you may have come across this idea of the Indo-Pacific, the idea that the span of Asia runs from India through the traditional East Asia. This is a concept that Secretary Gates spoke about; that Undersecretary Michèle Flournoy has spoken about publicly and many of us have been working on . So, we're talking about a very evolving kind of tectonic plates in the region.

First, I'd like to sort of place India in the world. It's taken as given that India is a big power, and it is a global presence. How is it a global presence? Where is it a global presence? What countries matter to it? What regions matter to it? Why and how do they matter? The second thing I want to talk about is a little bit about India-Asia. Because in a way, the whole question [as to whether] India is part of Asia, what is India's relations to Asia is a kind of a curious one historically. After all, India was the birthplace of Hinduism. It was the birthplace of Buddhism. Its civilizational elements (whether linguistic or otherwise culturally) have spread throughout Southeast Asia in particular, and you can find traces of it including in a place like Japan where I lived for three-and-a-half years; where I worked. I want to talk about what it means to talk about India in Asia, because that's a relatively new concept for Americans, such as myself, to think about India playing a role in East Asia; what we in America, in the United States would call Asia running from sort of Burma east. And so, this is something I want to talk about.

And finally, I want to talk a little bit about U.S.-India relations and where they fit in this evolving Asia Pacific dynamic, and what the implications are for Korea. So that's the structure. But before I say that, I said something about why and how and where India matters. That gives me the occasion to introduce something that Steve mentioned, and I'd like to take it just a second. We've created several websites and a written product (and I've brought some copies. I'd be happy to distribute them to you) called "Asia Matters for America" which tracks how Asia impacts every U.S. state, and inside every congressional district across a set of variables: exports, jobs, investment, ethnicity, immigration, students.
We've just released last week with Senator Webb and Congressman Reichert on Capitol Hill "Korea Matters for America" which shows the impact of Korea by every state and district. And we also have them for Japan and ASEAN and we will soon be releasing Australia, India and then, of course, the granddaddy of them all (if we can get the statistics right) and that's China, which is a very, as you know, a very sticky subject in Washington these days to get the right data.

But let me turn to my talk and we'll try to keep it very informal. I love to engage in conversations. Frankly, one of the attractions of coming up to New York was getting a non-Washington perspective on some of these issues, as we tend to look at them very internally.
[Let's talk about] India and the world. I think that India is a global player, for sure. It's a big player. Everyone talks about its population now that we've reached the seven billion mark this week, or so they think. But I think it's important to have a more textured understanding of India's role, and I think the way to deconstruct that is three things: one is India's global economic role, its diplomatic security role and its multilateral role.

Now when you think of India, you hear all these reports of its economic growth and at the same time poverty and juggling… Almost anything you say about India, I find, you can find some[thing] counterfactual. India's population is declining. Yes, [in] some states and some districts it is. In some states, [it's] booming. India's growing very fast. In some sectors, it is. In some places, it is. In others, it's not. So, it's a huge, big country of 1.1 billion people, very diverse. But can we make some macro judgments about what matters to India?
I think four things matter to India on the economic front measured in terms of dollar amounts, absolute amounts, share of GDP and the growth rate (negative or positive). Those four are trade, external debt, diaspora (which leads to remittances) and oil imports. In other words, these four factors, if you disaggregate within the Indian economy, become very important whether by share of the economy, by dollar amount or by growth rates. Also important are foreign direct investment, foreign institutional investment, outward investment and project assistance. And of course, the granddaddy of them all in the India economic context which is poverty alleviation and income inequality. These are sort of domestic political economy. In the external sector [are] trade, external debt, remittances and oil imports.

So, where in the world matters to India? So how do we understand the relationship with Korea and how do we understand a relationship with Asia based on these economic factors? Well, first is that in terms of countries and these four factors, no country is more important to India than the United States. This isn't a moral judgment or a value judgment. It's simply an economic judgment. Whether India is on the private capital markets; whether it's in terms of trade (although China is very big) in terms of remittances from overseas Indians of different categories (India has several categories for its diaspora)… In all of these ways, the United States matters an awful lot.

Now China is beginning to loom very large on trade. China now, I believe (and you know these figures…) If you count Hong Kong and China together and take out services, I think China is now the biggest export partner; but the U.S. is the largest source of commercial borrowing. The United States is still key (not by itself because of bilateral assistance) but very important for overseas assistance, whether it be [through the] World Bank or other actors. Almost 50 percent (and I've tried to get the exact data from the Reserve Bank of India and have never been able to) but it's estimated that about 50 percent of all Indian remittances (which are about give or take $4-5 billion a year) come from the United States. Now the Persian Gulf is also important, but those remittances tend to be smaller amounts because they tend to be laborers in the Gulf rather than educated professionals, etc. We estimate that Saudi Arabia and the Gulf Cooperation Council countries give India about $5 billion in remittances.

So, if the U.S. is the most important and Saudi Arabia and GCC is important in remittances, what are the regions that matter to India? It's not Asia. Ironically, it's not Asia. The regions that matter for India are still the EU, because it's its largest overall trade and investment partner, amalgamated as a whole. The Persian Gulf is the second largest regional trade partner at $20 billion. Actually, the new figures, according to the Wall Street Journal, have it ranked higher. According to them, if you count in United Arab Emirates and GCC combined (I think it was in yesterday's Wall Street Journal or today's—I forget) it's $67 billion. So, it's a huge amount [from] the Gulf. This is the piece from the Wall Street Journal.

The other fact is that the Middle East is the source of India's oil. And petroleum, oil and lubricants (POL), of course, come from the Middle East. And for India that's very important because the changes in price become very important because India is, of course, a huge importer of these items. And so, it's a great impact on the GDP and on growth rates [of] India if that changes.

Now, Asia, meaning Southeast Asia and China ([who], of course, as I said is a big trade partner) but Southeast Asia, in particular, is beginning to be one of the fastest growing areas of Indian trade. Not Japan, not Korea; but China and mostly Southeast Asia; leaving out the Philippines (fairly small) but if you look at trade ratios with Singapore. Indonesia, now. Indonesia, the trade with India in 2010 with Indonesia was $16 billion, which is about the same as it is with India-Korea, which is about $17 billion. So just to give you a kind of scale of what's going on.

Now the other curious thing about India is that it's trade is highly diversified, not only in products but in terms of countries and regions where it goes. Roughly (give or take the year and how you cut out services and goods and all that kind of thing) roughly 40 percent of India's exports and 60 percent of India's imports are not traded with its top ten partners. In other words, there are many places in the world where India trades a small amount; but India trades all over the world. It's not focused on its immediate neighborhood. For example, I think U.S. trade with Canada and Mexico (the NAFTA countries) is almost 36 percent or something like that, total two-way trade. So, very high percentages just with the immediate Canada and Mexico.

So, that's the economic picture, and if I have thing to leave with you, the message is that…two messages. One is that India is a global power but widely distributed, thinly global power. In none of its major trading partners, whether China or Asia or EU, is India a major share of that trade. It's an important element, but it's not a share. For example, if you look at Southeast Asia, the ASEAN countries, India today only accounts for about 2.5 percent of Southeast Asian trade. It's grown rapidly; it's grown from nearly nothing; but it still remains relatively low.

Let me turn to diplomatic and security interests. Whenever you try to determine where a region like Asia and a country particularly like Korea fits into the Indian profile, I think there are basically the following things that matter to Indian diplomatic security interests on a day by day basis. The first is strategic autonomy. India, since the 1971 Indo-Soviet pact--in which they had a kind of quasi-prototype alliance relationship with Russia—to the present; India seeks, above all, the flexibility to maneuver. It is not going to be a U.S. ally in the traditional sense of a U.S.-South Korea ally or a U.S.-Japan alliance or a U.S.-Britain alliance. And we could talk about why that may be and how could that change, etc. But let me assert that. So the first interest is strategic autonomy.

The second interest is economic and social development. India's primary purpose, the thing that animates its elected leaders every day (aside from some nefarious things) is the desire to have economic and social development at home, and to manage domestic politics in a highly fractured, highly competitive and diverse society.

The third diplomatic security interest is arms imports, and this is a remarkable change. Some years ago, India basically had 80 percent of its arms purchases from the former Soviet Union or Russia. I just read a piece today on India's submarine purchases. They've asked the Spanish. They've asked the Dutch. They've asked the Germans. They've asked others. India has a whole number of choices with whom it can work for arms imports or military cooperation.

Recognition of India's nuclear status as a nuclear weapons state and as [both] a de jure and de facto weapons state. This has implications for India-Korea relations, because they've signed an agreement for civil nuclear cooperation. Support for a UN security council seat, for example, is another objective. India also wants to counter pressure from Pakistan, clearly, and it wants friends against China, in case things go bad with China. These are some of India's interests.

Now what's fascinating about this to my analytical outlook is that unlike economics, the political compulsions and security compulsions of India make Asia a lot more important than even on the economic front. Now this asymmetry between the diplomatic and security interests of India and the economic interests, I think, is a very interesting divergence in India's global approach, because countries like South Korea, like Japan, like Australia, like Southeast Asia become increasingly important as India looks for legitimacy, looks for partners as China rises, looks for cooperation on maritime issues, looks for support on India's global aspirations whether a UN Security Council seat or a membership in organizations like the East Asia Summit or the G-20, which, as you know, Korea hosted last year.

My takeaway point on this issue is that India is now really looking at Asia to help buttress its diplomatic, political and security aspirations even as it seeks to build investment and trade ties, which are somewhat lagging in some of these areas. It's very interesting to note that Steve said that we are hosting APEC next week in Honolulu. India's not a member of APEC, but India is a member of the East Asia Summit, which will meet in Bali later this month, in November. And that's very significant, because India's at the table with eighteen other countries of great importance.

Let me talk a little bit about India's immediate Asia[n] relationships, because I think those will lead us to Korea. As I said, there is something very curious about the idea that India is reemerging in Asia. Prime Minister Nehru, the first Indian elected leader after independence was a keen advocate of India's Asia ties. Some of you will recall, perhaps in your reading or thinking, that India was one of the earlier leaders of the so-called Afro-Asian movement; the idea that the decolonized countries of the European empires would form a kind of "third way" (I'm putting this very crudely) in the bipolar structure of the US-Soviet Cold War. Sometimes this was called "nonalignment."

This aspiration to have very close ties with developing Asia or post-colonial Asia was very prominent in Prime Minister Nehru's earlier writings. But that's not it has played out. The very blunt fact is India has been basically missing in Asia for the last fifty to sixty years. And the curious question is why?

First, as I said, its main military and security ties were with the Soviet Union; its economic ties were spread thinly all over the world; its closest political links were with the Non-Aligned Movement (NAM)… Sometimes called the Non-Aligned Movement; later called the Group of 77; sometimes called the Global South. And its closest personal, educational and intellectual ties were with the West; particularly the United States and the United Kingdom.

So what happened? Why did India… It's a very interesting puzzle how a country that gave the world Buddhism, Hinduism culture, etc., sits at the end of the East Asian landmass… Why did it go away from Asia? Why were its relations so poor and thin with much of East Asia with which it is now trying to integrate. Well, I think there are several factors, and I think it's important to run through them, because they are part of the core argument about what's changing; what's going on that is bringing India and Korea across that 3,000 mile expanse back together.

The first factor that took India away from Asia was the emergence of China. The October Revolution in 1949 that led to the Communist arrival in China brought a competitor to India's aspirations to be a leader in Asia. By the 1955 Bandung Conference, Sino-Indian relations had already begun to turn sufficiently awkward and sour that it was clear that India would pull back. The Zhou Enlai and Nehru meeting, for example, at Bandung in 1955 went very poorly, indeed. Zhou Enlai thought Nehru was extremely arrogant. Nehru thought Zhou Enlai was insufficiently appreciative (maybe that's not quite the right word) that India was one of the first countries to support Chinese aspirations under the new dispensation.
The second [factor], of course, leading out of this was the war in 1962 between China and India in which India was soundly defeated by the People's Republic of China. This made India turn inward. It destroyed Nehru's health, I believe. It made Nehru extremely weak politically, but also in terms of health. He died very shortly thereafter in the spring of 1964. [Another] factor was the India-Pakistani wars. Remember that India and Pakistan had been created out of the British partition. And they had fought one war, upon being created independently, a short war in 1948. Then they fought another war in 1965 and another one in 1971 that created Bangladesh. So you have this ongoing India-Pakistan tension that kept India's attention diverted this way, to the west, rather looking out at East Asia. That's a second factor.

I think a third factor is leadership changes. As I said, Nehru died in April of 1964. Indira Gandhi, his daughter, began to consolidate power first under a syndicate. Then later, in 1966, she began to consolidate power and turn towards an increasingly closed Indian system. India also had terrible relations with the superpowers, particularly the United States. The United States imposed an embargo on India in the 1960s. And basically the U.S. withdrew from relations with the subcontinent by 1965.

The Indo-Soviet Friendship Treaty also alienated much of Asia, whether it was pro-U.S. countries throughout Southeast Asia and East Asia, which were friendly to the United States, were quite alienated by India signing an agreement with the Soviet Union. Remember ASEAN. The Southeast Asian nations formed a grouping in 1967. Turning towards the Middle East, the 1970s oil crisis completely impacted India. India began to really have to pay attention to the Middle East because they depended so much on oil imports, and the cost was prohibitive, etc. So their attentions again became turned towards the West.
And if I may say, this pattern is very interesting, because for the United States, too, our Asian colleagues are always telling me, "You always look towards Europe because of cultural affinity; or you look towards the Middle East because of energy requirements. You never put enough emphasis on Asia." Mrs. Clinton's very major article last week (as some of you may have seen) called for the United States to pivot, to turn our attentions more structurally towards Asia. And India's had this problem, too. India constantly gets pulled to the West by either events in Pakistan or by the Middle East because it's very close. Almost every Middle Eastern country is a much shorter distance geographically from New Delhi than is anything in East Asia.

And finally the most important thing that took India away from Asia, I believe, is that India adopted an economic policy which was essentially, ultimately a failure, and it became increasingly inwardly looking as an economic policy: socialist policies, autarchic policies. And this was at a time when much of East Asia and particularly the "Four Tigers" (including South Korea) began to boom and began to grow; and so India was cut off from any natural economic ties with India.

That's history, but it's very important to understand because something change[d], and here's what change[d].

Two things happened at the end of the Cold War. One, its best friend goes away. It ceases to exist. The Soviet Union. So India is left in a world almost utterly isolated. It can't depend on anyone for arms imports. It can't depend on anyone for economic support. It can't depend on anyone for vetoes in the UN Security Council. So India has to begin to look very actively for new partners, new players. And obviously one of the areas of the world it's going to look for, both geographically close, historically close, but also important in economic and political security terms is Asia. And this is the process that began in the early 1990s with the launching of a so-called "Look East" policy by India.

The second factor is the default. By 1991, India almost was about two weeks away from defaulting on its external debt because it had so mismanaged the economy by that point. And Japan, by the way, very importantly, Japan was one of the key countries that came to India's rescue in the early 1990s.

Now Asia also wanted to diversify its contacts. At the end of the Cold War, it didn't know whether the United States was going to stay in the region. So as Asia began to look around, they also realized, Well, if India is going to begin to reform and begin to look outward, maybe we should [do so, as well]. So over the last twenty years (1990s, early 2000s) this slow two decade process has begun which brings us to the mutual engagement across the Asia continent, on the west end and on the far east end, which brings us to India and Korea and I'll just kind of close it.

I think there are essentially ten things about India-Korea relations as I think about them based on this history.

First is they're democracies. They both share values. They have a certain common view about a globalized world order dynamics. India has a "Look East" policy. As I understand it, Korea has a "Look West" policy or a "Go Global" or a "more world" policy. These are likely to meet. It's quite natural, though these ties are really only a decade old. I mean in serious, substantive terms, meaning prime ministerial visits, presidential visits from Korea. They're really only in the last few years. So it's a very young relationship.

Second, there are no historical conflicts. For both India and South Korea in their respective regions have an enormous burden of history, whether with Japan or with China. But these two countries, at the ends of the Eurasian landmass really don't have that much of a complicated history. To be sure, there's some Cold War leftovers in both societies. There are Indians who question why Korea is so subservient to the United States of America (from their perspective. I'm not suggesting it is). Why does this alliance have to be so tight? Why is it so close? From the Korean perspective, there must be certainly some suspicions of what does India really want? What are its ambitions?

Both countries also have problems in their immediate neighborhood; most obviously, near-failing states, if you will. That may be going too far, but certainly very troubled states in the case of both North Korea and Pakistan. And for both countries, whether South Korea in the case of the DPRK; for India in the case of Pakistan; these are very complicated and immediate problems that confront their countries. That's a common interest.

Fourth is nuclear cooperation. South Korea is emerging as a major exporter of nuclear capabilities, technologies, know-how, etc. And there is a prospect given the signing of the U.S.-India nuclear deal which was approved the Nuclear Suppliers Group (I think it's forty-four or forty-six members, of which South Korea is one) that there might be a future potential for South Korean nuclear cooperation with a growing market. India still has ambitious plans (at least on paper). Whether they'll be financially, technically and otherwise feasible remains to be seen; but has stated ambitions of expanding its civilian nuclear program. So that's a fourth issue.

The fifth is traditional economic engagement: trade, investment, aid. Korea has indicated that it plans to expand its aid, and I noted recently that Japan, despite cutting its overseas development assistance (ODA); it has not cut a penny to India. India is one of the countries where Japan has not cut… And in fact I believe over the years, has increased incrementally its aid. So that's another area where Korea and India may have a lot.

I want to express some caution here. As I said to you, India-Indonesia trade is almost $17 billion, the same as Korea and India. And India still remains compared to (in world terms, if you look at the history of India's presence on the trading scene in the world) actually India trades today less than it did prior to independence. Now, trade has expanded hugely, and Indian trade over the last twenty years has expanded considerably; but it's still a relatively small player on trade; and given the size of the two economies (which, by the way, are roughly equal), it's something…

Now, there is a comprehensive economic cooperation agreement. I have not looked at every chapter or line by line; but hopefully this will also facilitate some element. Actually, the numbers on investment, despite the huge POSCO investment, which is very important (the largest single investment in India from a foreign source) there's some evidence that the data for trade is actually declining from Korea as a share of all countries investing in India.

The sixth area is multilateral. As I said, next week there will be APEC where India will not be present because it's not a member. But the following week in Bali there will be the East Asia Summit where the United States will be present with [the attendance] of President Obama for the first time. India is a member. So increasingly, Korea and India have to cooperate or be cognizant of each other's views in managing regional institutions and regional order in the Asia-Pacific, and this will inevitably bring their diplomats, their security officials, their politicians, their parliamentary elected leadership more in contact over time.
The seventh is, as I said, the convergence of foreign policies which is that Korea is beginning to look beyond the Peninsula. India is beginning to look beyond South Asia. Somewhere they're going to meet, and the G-20, for example, is one of those places where they're beginning to meet.

Finally, strategic cooperation. Now this is a very vague term. Having worked for the Defense Department for many years, I tend to think people tend to throw around "strategic" very loosely when things [having to do with] military cooperation are very concrete and detailed. I think two areas where you'll see particular cooperation is [the] maritime area, where both countries have a lot of interest in all these maritime dimensions, where trade and energy roots run. I think you'll see some expanded efforts there.

And you may see some small efforts on exercises as part of more multilateral exercises. That remains to be seen. For instance, there was an Australia-Japan-U.S. trilateral, for example. There are different kinds of these configurations, and someday we may see India and South Korea, perhaps, doing some work in part of a grouping with the United States.
How big is China? The ninth factor is China. How big is that? I think there are some Indians who argue that the rise of China is a basis for India-ROK relations, and I wouldn't argue. I mean, in principle I think China would be an important factor for both Korea and India to talk about, to think about, to discuss.

But I will tell you I'm also cautious about that. If you look at the relative profile of both India and ROK with China, both have an enormous stake in a cooperative relationship for very natural, concrete interests: trade, investment, cooperation on global issues. India's positions on global trade talks and climate change, for example, are somewhat more similar to China's than they are to [those of] the United States, for example. So it's not going to be completely China as something that ROK and India work against. Rather, it's going to be part of this increasingly complicated mix of players in the Asia-Pacific.

And the final big, unanswered question is how much mutual energy, resources and attention can India and the Republic of Korea devote to each other when they have so many pressing, immediate concerns? Both [are] vibrant democracies on their own; countries which have national elections and local elections and mayoral elections, etc. Every country is, to some extent, occupied internally.

For this year, for example, someone who I interviewed to prepare for this talk who is a Korea specialist was telling me this year the foreign ministers and defense ministers of India and Korea did not meet as scheduled, which is somewhat disappointing in order to keep the momentum in both bureaucracies going. My point is not to say that this isn't important or that the Korea-India relationship is not beginning to gain some traction and some depth. It's to say that some effort will have to be expended on both sides to keep the momentum going, to keep the structural interest going.

[Applause]

[End of presentation]