Look East policy: Strategic imperative or imbroglio?

PM Khaleda Zia looking east?. PHOTO: AFP

Through the rise and fall of great powers, three distinct features define the greatness of powerful nation. A great nation of a time has to be the economic powerhouse of the world, with the mightiest military and most important of all, with a stable decentralised political system. Although the variables are in a constant flux, a punctuated equilibrium is reached when the correlation of these three variables takes a nation to the zenith of power, pride and prosperity. Undoubtedly, in today's world the culmination of that equilibrium is the United States of America. And the economic and foreign policy of every nation of today's world is formulated with that geo-political set up in mind.

However, at least one of the sources of great power seems to be shifting once again. China has overtaken the United States in the consumption of basic agricultural and industrial goods. It is now the world's biggest consumer of grain, meat, coal, and steel. Only in oil does the US consume more. China is well ahead of the US in the consumption of goods such as television sets, refrigerators, and mobile phones. The Washington-based Earth Policy Institute says that China is now an emerging economic superpower. However, per capita consumption in China, the world's most populous country, remains far below that of the US. According to the report: 64 million tons of meat were consumed in China in 2004 compared to 38 million tons in the US, 258 million tons of steel were used in China in 2003 compared to 104 million in the US, China's factories and homes burned 40 percent more coal than in the US, the number of PCs in China is doubling every 28 months.

China's economy, the sixth-largest in the world, has expanded by a breakneck 9.5 percent during 2004, faster than predicted and well above 2003's 9.1 percent. China's eclipse of the United States as a consumer nation is another milestone along the path of its evolution as a world economic leader. China is no longer just a developing country; it is an emerging economic superpower. Along with Japan and other newly industrialised Asian economies, China is writing a new Asian economic history.

Look East policy is a natural response to that emerging Asian century. But the foreign policy mechanists of the ruling coalition have been very myopic in their noble attempt and failed in at least two aspects. First, the Look East policy doctrine lacks in defined objective and articulated vision. And second, it has discounted another sleeping giant from the future power dynamics, i.e. India. No wonder, our relation with our neighbour is at historic abyss.

Look East policy was initially a brain child of Malaysian Prime Minister Mahathir Mohammad. In July 1981, Mahathir Mohamad became the Prime Minister of Malaysia, and after six months in his office, he announced an initiative to learn from the experiences of Japan (and Korea) in the nation-building of Malaysia. He considered that the secret of Japanese success and its remarkable development lay in its labour ethics, morals, and management capability. He felt a programme enabling young Malaysians to learn in Japan would contribute to the economic and social development of Malaysia. For this purpose, Malaysia decided to dispatch their students to Japan, to study not only academics and technical know-how but also to learn the labour ethics and discipline of the Japanese people.

This initiative is called Look East policy. The programme consists of two parts. The first is to send Malaysian students to Japanese universities and institutes of technology. The second is to send trainees to Japanese industries and training institutes.

These programmes are funded by the government of Malaysia, and the government of Japan supports these programmes by sending Japanese teachers to Malaysia and also by sharing a part of its costs.

However, the well advertised Look East policy of the ruling coalition has failed to generate critical discourse from the intelligentsia and hence failed to articulate a clear vision for the future of the country. Without a clear vision, any policy doctrine eventually breeds lassitude and lack of sincerity, commitment, and optimism from the masses. Look East policy, unless critically discussed and renovated will be destined to that fate.

Perhaps the more dramatic failure on the part of the ruling coalition is to be ostentatiously oblivious to the rise of India as a global economic powerhouse.

India is brimming with self confidence. It boasts the largest skilled workforce of 472 million in the world, most of them are literate and English speaking; the second largest pool of scientists; a hi-tech medical sector, already attracting more than 100,000 foreign patients a year; a solid manufacturing base, turning out, among other things, the world's largest outputs of motor bikes and three-wheelers; the largest railway network in the world, including a just opened, indigenous $2 billion subway in New Delhi; an information technology sector, which has grown 40 times in a dozen year to $20 billion a year and is poised to cut into the coming boom in the software services, from the $650 billion world-wide today to $3 trillion in five years.

With an annual growth rate of 7 percent a year, India is among the world's top 10 growing economies. In purchasing power -- what your money can buy -- India is fourth behind only America, the EU, and China. The US National Intelligent Council in its long term growth forecast puts India right behind China. But it is more optimistic about India because India has a decentralised political system that can evolve with the increasing domination of free enterprise.

Shrouded under the economic indicators, a new consumer culture is emerging in India. Conspicuous consumption is replacing the traditional values of thrift and savings. About 1.6 million mobile phones are sold every month and 300,000 motor cycles. Auto makers cannot cope with the demand. Banks lend $15 billion a year for housing. India and China Inc. are firing on all cylinders.

This prompted Craig Barrett, CEO of Intel Corporation, the world's largest computer chip maker saying: "I worry for the US and I worry for my grandchildren." China and India, two mighty giants, are out to eat America's lunch.

Look East policy recognises the place of China and other newly industrialised and emerging Asian economies in the future economic and political order. But it is oblivious to the emergence of India as a global economic powerhouse. Look East policy is a strategic imperative, but discounting India from the future power dynamics would be a serious miscalculation. Unless the ruling coalition improves ties with our neighbour, the loss in economic trickle down from the shared prosperity with India might be too high price to pay for the generations to come.

Economic progress through shared prosperity follows the laws of gravity. The pull factor is always greater than the push factor and the geographic distance of the foreign country tends to be negatively associated with the propensity to trade with that foreign country. Although the technological leap in transportation is defying the forces of gravity, a good and prosperous neighbour is always economically more beneficial for a poor country like Bangladesh.

Economic trickle down at the country level is happening all over the world. A relatively large and developed open economy like Canada has more than 80 percent of its trade with its neighbour, the giant US. A relatively small open economy like Malaysia has a very prosperous trade relationship with its richer neighbour Singapore. I am not quite sure how much we have gained from being the neighbour of an emerging economy like India, and Indian prosperity in the IT industry is having virtually no trickle down effect in Bangladesh. This partly has to do with our own failure and partly with India's attitude to treat us as a poor relation rather than a partner in shared prosperity.

But in today's world of foreign policy, the rule of the game is not ideology but opportunity. As a small player in that game we should tap into every possible opportunity to push forward our national interest. Given our geo-political set up, it is a strategic imperative that we build a strategic partnership based on shared prosperity with the great powers, but also cut into the future economic powerhouses by clearly defining the flexible but attainable foreign policy doctrine to align our national interest with that of the future global power structure. In that sense, Look East policy is a strategic imperative, but without a clear vision and understanding of shared prosperity with our neighbour, India, it is indeed a strategic imbroglio.

The economic and political geography of the world is constantly changing. So are we. We have 150 million mouths to feed, but we also have 300 million strong hands. China and India Inc. are oozing cool confidence that each child is born not only with an empty stomach but also with two strong hands. We have to turn our 300 million hands into iron fists and start collecting the bounties of the shared progress in the new Asian century. A silent takeover is under way; unfortunately we are yet to wake up.

The author is a PhD candidate in the Financial Economics Department of the University of Toronto and a Selwyn Scholar (Cambridge University).