Implosion (59 page)

Bhutan’s Happiness

The remote kingdom of Bhutan squeezed in the Himalayas between India and China is Beijing’s latest target. With a tiny population of fewer than 700,000, Bhutan has been a virtual protectorate of India since September 1958 when Nehru rode there on a horse and yak through high mountain passes for a prime ministerial visit. It remains the only totally pro-India country on the subcontinent, though India’s de facto control of its external links, especially of communications, has weakened in the past 25 years or so. In the mid-1980s, when I first went there,
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air flights and even telex messages were routed via Calcutta. Now Bhutan has air links to other nearby countries, as well as internet and satellite television, but the economy is still heavily dependent on exports to India, dominated by sales of hydroelectric power.

China wants to settle 4,500 sq km of land on disputed sections of its 470-km border, and is using that to persuade Bhutan to let it open formal diplomatic links and an embassy in the capital of Thimpu. Only a few countries, ranging from Bangladesh to Finland and Switzerland, have embassies and consulates in Thimpu and, till recently, Bhutan firmly resisted China’s approaches with India’s encouragement. China’s main aim is to extend its territory in the Chumbi Valley, a strategically important ‘v’ shaped area of Tibet between the Indian state of Sikkim to the west and Bhutan to the east.
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This would be extremely sensitive for India because the 3,000 m (9,500 ft) high valley juts down towards a strip of Indian territory called the Siliguri Corridor, which is the only land route – known as the ‘chicken’s neck’ – from the broad mass of India to its northeastern states.
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So sensitive is India about China’s links that the word went round that I was possibly a British spy when I was in Thimpu for a literature festival in early 2011.
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I thought it was natural for a foreign correspondent making a rare visit to Bhutan to ask about China’s diplomatic activities and its access and incursions on the northern and western borders. India’s diplomats, however, seemed to think differently. The spy rumour was circulating by about the second or third day of my visit – I heard it (unofficially) when I went to a dinner in the garden of India’s resident army general.

Bhutan’s royal family and officials did not seem to have the same worry. I am credited there as the first foreign correspondent to be told (for the
FT
in 1987) by the then King Jigme Singye Wangchuck about his plans for Gross National Happiness or GNH. ‘We are convinced we must aim for contentment and happiness,’ he said when I interviewed him in 1987 at his Dechencholing Palace in Thimphu. He put this above more usual targets of economic growth and GNP, and listed the parameters: ‘Whether we take five years or ten to raise the per capita income and increase prosperity is not going to guarantee that happiness, which includes political stability, social harmony, and the Bhutanese culture and way of life,’ he said.
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He had been working on the idea since the mid-1970s and this was the first time that he had opened up on the theme to a foreign reporter. ‘Independence through an independent culture’ was one of the aims, he said. ‘We are fortunate in developing late at a time when other countries, which went through our present stage of development 30 or 40 years ago, are becoming aware of what they have done wrong. Many have developed a modern society but none has kept its strong traditions and culture which we want to do’. For example, he added, ‘corruption began when development started in 1961, maybe not seriously compared with other countries, but serious by our standards.’ That led on to the four principles of GNH: fair socio-economic development including education and health, conservation and promotion of the country’s culture, environmental protection, and good governance.
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In 2006, having just introduced democratically elected governments, King Jigme Singye Wangchuck (or K4 as he is often known) abdicated in favour of one of his sons, 28-year-old Oxford-educated Jigme Khesar Namgyel Wangchuck, who was crowned in 2008. Here was a dynasty that was protecting the country’s heritage while also looking for ways to encourage economic growth. The idea of GNH caught the world’s imagination and Bhutan’s first elected government, which came to office in 2008, tried to quantify and measure various indicators. It also pushed the topic internationally at the UN with a resolution titled ‘Happiness: towards a holistic approach to development.’
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A new government, elected in August 2013, took a more measured approach. When he visited Delhi, the new prime minister Tshering Tobgay and his officials told me that, while it was good for academics to study GNH, he would personally adopt a simpler approach and test every decision against the original basic aims.

China achieved a breakthrough on the fringes of a UN conference in Rio de Janeiro in June 2012 when Wen Jiabao secured his first meeting with Jigme Yoser Thinley, then the prime minister. This was followed by other contacts. Thinley’s nationalist views made him less India-centric, and therefore more open to flattery and proposals from China than the Bhutanese monarchy which was traditionally India-oriented. King Jigme Khesar Namgyal (K5), is also believed to be more open-minded on the subject than his father, whom he succeeded in 2006 but who still has influence on international affairs.

Both King Jigme and the prime minister discussed China and the border issues during visits to Delhi early in 2013, but the urgency eased later in the year when Tshering Tobgay adopted a more pro-India stance
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. Indian officials say privately that they recognize that China will gain increased diplomatic access in Thimpu, and possibly full recognition, some time in the future. When that happens, it will increase India’s sense of encirclement, and will test its questionable ability to move from hegemony to partnership.

Business Security Risks

There are security risks in China’s growing economic involvement with India because its companies are supplying telecom networks and power generation and other infrastructure equipment. Bilateral trade totalling $70bn is heavily weighted in China’s favour. Indian manufacturers do not find it easy to break into the market, whereas Chinese goods, from cheap toys to heavy engineering equipment, sell well. In May 2013, the total value of Chinese companies’ completed contracts and those in progress was $55 bn.
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Some experts argue that such economic activity makes war between the two countries less likely because they would have too much to lose, but that is surely as realistic as Nehru thinking that China and India could become partners. If China decided a war was essential for some greater purpose, it would surely not be put off by the economic links.

Substantial trading ties did not, for example, stop it dangerously escalating a confrontation with Japan in 2013 over possession of disputed islands in the East China Sea, though the counter view is that China would not eventually allow such a row to escalate too far.

Telecom imports from China in 2010–11 totalled $6.7bn, ranging from phones and attachments to networks, with two Chinese companies, Huawei and ZTE, becoming major suppliers of low-cost networks and other equipment.
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Huawei was founded in 1998 by Ren Zhengfei, a former officer in the People’s Liberation Army, and it is hard to believe that he can now have a totally independent existence, even though he has said he has cut ties. The company has a five-year $2bn investment plan in India and is the second biggest provider of networks after Ericsson, with a 25–30 per cent market share. It supplies all of the country’s top telecom operators and individual companies and also has a substantial share of the market for devices such as data cards and phones. Huawei is also active in the Maldives, Nepal and other neighbouring countries. I have asked various Indian officials and policy pundits about the extent of the national security risks of such a Chinese presence in India’s communications. Most have ducked the issue, offering no solution and taking the same line as India’s telecom operators – that the products are irresistible. Huawei says, for example, that its total costs of ownership (purchase prices plus maintenance) are 25–30 per cent lower than rival companies such Alcatel-Lucent, Ericsson and Nokia Siemens
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The potential international threat was highlighted in October 2012 by a US Congress intelligence committee, which warned that companies such as Huawei and GTE could disrupt America’s information networks and send sensitive data secretly back to China.
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Huawei and others denied the allegations and explained how they co-operate with governments and other users to screen and secure their equipment. Huawei responded in 2013 by suggesting it might be cutting back on its US business plans, but also suggested that the US view was a protectionist ploy encouraged by its telecom companies. Other countries such as Canada, Australia and the UK are also worried and there have been some blocks on the companies obtaining government network contracts.
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China also has orders for potentially sensitive power plant equipment exceeding 44,000 MW
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and is backing up its contracts with financing deals, sometimes with financially vulnerable companies that urgently need help. The debt-strapped Reliance Group controlled by Anil Ambani, for example, placed two orders totalling $10bn for power equipment from Shanghai Electric Group in 2010 and raised $2bn financing from Chinese banks for that order and for some refinancing of its telecoms business. There are also security concerns about Chinese bids for Indian power transmission grids. The State Grid Corporation of China has been looking for contracts in India.
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Other areas include engineering and construction projects.

Future Contours

The contours of the likely long-term relationship between the two countries began to emerge as Wen Jiabao finished his 2010 visit to Delhi and fiew on to Pakistan.
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Economic and cultural ties would grow and trade would boom, but China would continue indefinitely to rattle India’s nerves in a variety of ways, not least by becoming closer to Pakistan and claiming territory on the Himalayan border. Beijing would not see this economic carrot and diplomatic stick approach primarily as a bilateral matter because India is merely a (rather large) pawn in its overall ambition to become a superpower, alongside, and one day replacing, the US. That ambition necessitates keeping India in check because China is determined that it should not become a rival.

A key to these contours, as seen from Beijing, came from a Chinese official who told a former top Indian bureaucrat and ambassador in 2010 that India needed to understand three things.
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First, political differences would not impede economic growth and trade relationship between the two countries. Second, India should not meddle with its neighbours (meaning presumably that China would meddle in places like Myanmar, Sri Lanka, Nepal and Bangladesh, but that India should neither object nor try to counter its efforts). Third, India should accept China’s growing links with Pakistan, which would continue (presumably because arming and aiding a nuclear Pakistan is a key way to keep India in check). This meant that, while China was content to see India’s prosperity grow and to participate in its economic growth, India should not expect to become a regional power, even though the US might like it to do so. It also probably meant that, though China was surprised and rather taken aback by India’s rapid economic and industrial advances in the first decade of the twentieth century, and was rattled by growing close ties (and the 2008 nuclear deal) with the US, it knew that it was way ahead in terms of overall development and as a regional power.

King Goujian’s Revenge

The contours laid down for India by the Chinese official – which, of course, India would not accept – tie in with the long-term question for the whole world of whether China will be a ‘Friend or Foe’, to quote the title of a special report in
The Economist.
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Did China’s (rather clumsy) regional belligerence, which was developing in 2010, indicate that the ‘foe’ angle was gaining supremacy in Beijing as the country became economically powerful and the PLA’s influence grew? The magazine’s foreign editor wondered whether a story about Goujian, a fifth century king of Yue in what is now Zhejiang, was an alarming parable about China’s ambitions, as it could indeed well be. Goujian was defeated and humiliated by another king, but bided his time as a meek prisoner and then wreaked revenge. The story of how he ‘slept on brushwood and tasted gall is as familiar to Chinese as King Alfred and his cakes are to Britons, or George Washington and the cherry tree are to Americans,’ said the article. ‘In the early 20th century he became a symbol of resistance against the treaty ports, foreign concessions and the years of colonial humiliation’.

It looks as though Goujian-style revenge may have begun, but with an economic and strategic slant. China has been aggressively stepping up the confrontation with Japan over the oil-rich, uninhabited Senkaku islands in the East China Sea, as it has also done with Vietnam, the Philippines, Malaysia and Brunei over the Spratly and Paracel islands in the South China Sea. It has also argued with Vietnam over oil rights, in which Indian companies have been involved, and unilaterally announced an air defence identification zone that laid claims to international airspace over the East China Sea covering territories that China did not control. This ‘Chinese art of creeping warfare’, as Chellaney calls it,
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is supported by extensive academic research into supportive historical maps and documents.
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It shows a greater willingness to disrupt relations with neighbouring countries than in the past.