By: Muktha Prasannan, Research Analyst, GSDN

Since January 1984, Iran’s economy has been under various US economic sanctions of increasing scope and intensity. The sanctions progressively increased in scope, encompassing a complete embargo on all bilateral trade, beginning with a prohibition on the sale of American weapons and dual-use technologies and investment, and were extended to secondary boycotts, penalizing foreign companies investing in Iran’s oil and gas sector. United States imposed restrictions on activities with Iran under various legal authorities since 1997, following the seizure of the US embassy in Tehran in which hostages were taken. These sanctions were lifted after the hostages were released. The third set of sanctions was enforced in December 2006 in accordance with UN Security Council Resolution 1737, following Iran’s defiance of UN Security Council Resolution 1696, which called for the country to cease its uranium enrichment program.

The official aim of the sanctions is to force Iran to comply with international rules over its disputed nuclear program. The US Department of State Office of Economic Sanctions, Policy and Implementation is responsible for enforcing and implementing a number of US sanctions programs that control access to United States regarding businesses that conduct specific business operations in Iran. Initially, the sanctions were intended on investments in oil, gas, and petrochemicals, exports of refined petroleum products, and business dealings with the Islamic Revolutionary Guard Corps (IRGC). Over the years, sanctions have seriously impacted on Iran’s economy and population.

Significant unilateral (from 2018 to the present) and multilateral (from 2006 to 2016) sanctions campaigns have targeted Iran. The nation’s economic performance has suffered greatly as a result of these sanctions. Iran is subject to the strictest sanctions in the world, which are layered and cover Iranian sectors, entities, and individuals in relation to human rights, terrorism, and nuclear proliferation. Numerous detrimental macroeconomic effects, such as sharp currency devaluations, significant trade and budgetary deficits, high inflation, and rising rates of poverty, have been brought about by or made worse by these sanctions. Due to the broad nature of the sanctions, Iranians’ right to health, education, and other human rights aspects have been adversely impacted. Iran has not been able to effectively lessen or withstand the sanctions economic pressures.

Between 1984/85 and 1988/89, there was an average annual rate of decline in real GDP of about 2%, but the primary cause of this decline was the percentage decline in the annual value of oil exports during that time, not any other factor, including the limited sanctions. The estimated effect of sanctions on Iran’s real GDP, using counterfactual analysis, is estimated to be between 17 % and a maximum of 19 % for the first three to four years after the sanctions (2012–2015). Iran’s GDP remained below its counterfactual two years following the withdrawal of nuclear sanctions between 2015 and 2017. To comprehend the ways in which the Iranian economy has reacted to sanctions pressure, it is essential to identify the sectoral and firm-level effects of sanctions. Breakdowns in supply chains are the most visible sectoral effects of sanctions. Sanctions placed on Iran had made it more difficult for Iranian firms to maintain reliable supply chains.

In March 2012, the Iranian financial sector was denied access to SWIFT messaging service and the European Union froze the assets of Iran’s central bank, thereby denying Iran access to a secure international payment system. In its nearly 40-year history, Swift had never cut off a nation before this incident. This was in addition to the 2012 oil embargo. In an effort to cut off the Iranian financial sector’s ties to the US and the global financial system, the US imposed a series of sanctions in late 2011, which were followed by the EU sanctions. EU had imposed sanctions on certain Iranian companies, freezing their assets and suspending economic activities. Sanctions on financial sector had blocked Iran’s access to global banking system and prohibiting from partaking in international transactions. As a result, foreign banks and businesses were forced to decide between doing business with Iran and the US. Sanctions have hindered Iran’s ability to obtain goods required for the energy and oil industries, forcing many oil companies to leave the country, and decreased access to technologies that would have increased oil production. Additionally, a lot of foreign businesses have been hesitant to work with Iran out of concern that they would lose access to more lucrative Western markets. In addition to limiting export markets, the sanctions have increased the cost of repatriating oil earnings in convoluted ways that avoid the sanctions, which has decreased Iran’s oil revenue.

The Joint Comprehensive Plan of Action [(JCPOA) (2016–2017)] greatly reduced the severity of the sanctions, which had increased during the Mahmoud Ahmadinejad administration and Iran’s nuclear programme. However, in 2018, the Trump administration’s decision to reimpose economic sanctions and withdraw from the JCPOA caused the sanctions to increase once again. The immediate adverse impact on the Iranian economy were declining GDP growth and oil production, depreciation of Iranian rial, and rise in inflation. Exports and imports dropped down sharply after the sanctions were reimposed. Besides oil, Iran’s industrial metals which was a large source of the country’s export revenue, were also sanctioned. IMF estimates suggest Iran fell into a trade deficit of $3.45 billion in 2020. The country had a trade surplus of $6.11 billion in 2019, according to the IMF. On a large scale the external economic pressure along with internal economic mismanagement and corruption had led to decrease in GDP; resulted in high inflation rate and unprecedented reduction in national currency value. More than 42% of the Iranian population are living in below poverty line.

Iran’s military budget fluctuated throughout the various sanction periods and forms. They demonstrate that a greater short and long-term decline in military spending is linked to an increase in the severity of sanctions. Additionally, it was discovered that the multilateral sanctions had a statistically significant negative impact on Iran’s military spending. Iranian government modified its military budget in response to sanctions. It might not always be the case to make a negative adjustment, though. This is dependent upon how much the income effects of sanctions outweigh the effects on security. In the event that the financial consequences of the sanctions outweigh the security risks, the nation’s militarization could potentially rise. Sanctions may compel the state to divert its meagre funding from non-military (health, education, and culture) to military initiatives since they raise the target nation’s security risks well beyond income reductions. This resource reallocation may leave it challenging to invest in the nation’s healthcare system and enhance the welfare of its workforce.

The devastating consequences of the sanctions had affected all the aspects of healthcare delivery in Iran, restricting the availability of critical medicines and medical devices and adversely impacted the primary healthcare, treatment of complex disease including cancer; medical tourism and medical education and research. Sanctions had led to the interruption in pharmaceutical industry, resulting in shortage of medical drugs and supplies. This had turned the drug companies in obtaining less reliable and low-quality materials, leading to decreased efficacy and unexpected toxicity. Drug shortage has compelled the patients and clinics to turn to black market, at times with tragic side effects as blindness. Certain lifesaving drugs had been vanished from the legal market like lyophilized coagulation factor VIII concentrate for hemophilic patients. With the exponential inflation and significant devaluation of currency, resulted in reduced public access to health care. The sanctions have also diminished the accessibility of vital health maintenance, such as childhood vaccines and anti-rejection drugs for transplant patients. The prices of goods have been doubled from the original price which has added catastrophic expenditure on families and endangering health of patients, as well as widening the gap and tension between the socio-economic classes.

The sanctions caused an overall contraction in Irans manufacturing employment growth rate. In 2011, the manufacturing industry made up 92% of all imports and 19% of Iran’s non-oil GDP. The primary purpose of imports into the manufacturing sector is to provide capital and intermediate items that enhance local output. 16% of all jobs in Iran were in the manufacturing sector. Various industrial sectors are more or less vulnerable to a trade shock. However, the effect on employment is contingent upon how trade restrictions are interpreted by each sector. In some sectors of the economy, the imposition of sanctions may have caused imports and exports to be diverted to other markets where there are still unofficial financial channels and it is more difficult to enforce sanctions compliance. Domestic manufacture might take the place of imports in sectors where deflection is expensive. When it comes to imported inputs, this might result in input autarky or a total stop to production. Therefore, we take advantage of the different ways that different sectors have responded to the trade shock and calculate the proportional short-term job gain or loss in those areas.

It’s crucial to remember that the efficacy and impact of sanctions may alter over time and are often influenced by developments in international relations, diplomacy, and geopolitics. Furthermore, sanctions may harm civilian populations more than their intended targets, leading to unexpected repercussions. Furthermore, policymakers and experts disagree on whether sanctions are effective in accomplishing their objectives.

By: Deeplaxmi Patil, Research Analyst, GSDN

Introduction

Nauru, a tiny Micronesian island, was among the select few nations upholding diplomatic relations with Taipei amidst China’s persistent efforts to sway allegiances. The tiny island nation swiftly announced that it will no longer recognise Taiwan as a separate country. Beijing insists that the island is part of China’s territory.

Located in the South Pacific, Nauru has switched loyalties in the past. In 2002, it recognised China after 22 years of diplomatic relations with Taiwan. In 2005, it switched back to Taipei. The latest switch came as a blow to Taipei. It left Taiwan with just 12 allies that officially recognise the island as a sovereign state, although it holds strong unofficial relations with the United States, Japan, and other nations

In a significant shift, Nauru has announced the severance of ties with Taiwan, aligning itself with Beijing’s stance that regards Taiwan as an integral part of China. This decision comes against the backdrop of China’s ongoing diplomatic manoeuvres aimed at undermining Taiwan’s international standing. Taiwan attributes this latest diplomatic setback to the aftermath of its recent elections, wherein the election of William Lai, a staunch advocate of Taiwanese sovereignty, as president, has irked Beijing. Lai’s past support for Taiwanese independence has drawn criticism from China, labelling him a “troublemaker” and further exacerbating tensions between the two sides.

China has been gradually enticing diplomatic allies away from Taiwan, partly as a reprisal against the ruling Democratic Progressive Party (DPP), which advocates maintaining the current status quo wherein Taiwan operates with its own government, military, and de facto independent status. Despite never having governed the island, the People’s Republic of China (PRC) has been assertive in its stance that Taiwan must eventually fall under its control. This sentiment has been reinforced by China’s military exercises conducted around the island to underscore its resolve.

Since the initial election of DPP President Tsai Ing-wen in 2016, ten countries have shifted their diplomatic recognition from Taipei to Beijing. In response to Nauru’s announcement of severing ties, Taiwan’s Deputy Foreign Minister Tien Chung-Kwang asserted that China’s one-party Communist government aimed to undermine the democracy and freedom valued by the Taiwanese people.

Challenges for Taiwan

Nauru’s decision to recognize China and sever ties with Taiwan poses significant challenges for Taiwan on multiple fronts. Firstly, it reduces Taiwan’s already dwindling number of diplomatic allies, leaving it with only 11 countries and the Vatican. This diminishes Taiwan’s international standing and weakens its ability to participate in global forums and organisations.

Furthermore, China’s continuous efforts to poach Taiwan’s allies not only isolates Taiwan diplomatically but also serves to punish the ruling Democratic Progressive Party (DPP). The DPP’s advocacy for maintaining Taiwan’s de facto independent status irks China, which considers Taiwan as part of its territory. By pressuring Taiwan’s allies to switch allegiance, China aims to undermine the DPP’s legitimacy and promote its own narrative of eventual reunification with Taiwan under its rule.

Moreover, Nauru’s decision underscores the vulnerability of Taiwan’s remaining allies, most of which are developing nations susceptible to China’s economic influence. China’s willingness to offer financial incentives to countries like Nauru demonstrates its strategy of leveraging economic power to gain political support and isolate Taiwan further.

Additionally, the timing of Nauru’s announcement, just two days after Taiwan’s presidential election, suggests a deliberate attempt by China to undermine Taiwan’s democratic process and challenge its values of democracy and freedom. This tactic not only aims to discredit Taiwan’s democracy but also to assert China’s authority and control over the island. While the United States expressed disappointment with Nauru’s decision, its unofficial ties with Taiwan remain strong, including defence cooperation. However, Taiwan’s diplomatic options continue to dwindle, further limiting its ability to engage with the international community. Overall, Nauru’s recognition of China exacerbates Taiwan’s diplomatic challenges, highlights its vulnerability to Chinese pressure and underscores the complex geopolitical dynamics surrounding the Taiwan-China relationship.

Geopolitical Implications of Nauru’s Recognition of China

The geopolitical implications of Nauru severing diplomatic relations with Taiwan and switching to China are multifaceted and significant:

1. Isolation of Taiwan: Nauru’s decision further isolates Taiwan on the international stage, reducing its already limited number of diplomatic allies. This diminishes Taiwan’s ability to engage with the international community and participate in global affairs.

2. Strengthening of China’s Influence: China’s success in convincing Nauru to switch recognition strengthens its influence in the Pacific region. By securing diplomatic ties with Nauru, China extends its reach and strategic presence, potentially enhancing its ability to project power and advance its interests in the region.

3. Challenges to Taiwan’s Sovereignty: Nauru’s move aligns with China’s narrative of Taiwan as an integral part of its territory. This challenges Taiwan’s sovereignty and undermines its efforts to maintain its de facto independence and international recognition as a separate entity from mainland China.

4. Impact on Regional Dynamics: The switch in diplomatic recognition could have broader implications for regional dynamics in the Pacific. It may encourage other countries in the region to reconsider their own relationships with Taiwan and potentially shift their allegiance to China, further consolidating China’s influence and reshaping the geopolitical landscape in the Pacific.

5. Strategic Considerations for Other Nations: Nauru’s decision may prompt other countries, particularly those with diplomatic ties to Taiwan, to reassess their own diplomatic relationships and strategic interests. It highlights the geopolitical competition between China and Taiwan and underscores the complexities of navigating relationships in the context of competing regional and global powers.

Conclusion

In conclusion, Nauru’s decision to recognize China and sever diplomatic ties with Taiwan marks a significant shift in the geopolitical landscape of the region. This move underscores the growing influence of Beijing in global affairs and its concerted efforts to isolate Taiwan diplomatically. It also highlights the complexities of international relations and the pressures faced by smaller nations in navigating between competing interests. As Nauru aligns itself with China, the repercussions of this decision will undoubtedly reverberate across the Asia-Pacific region, shaping future diplomatic dynamics and alliances.

By: Ayush Shankar

In the coronary heart of South America, where emerald rainforests hug the amazing Orinoco River, a state pulsed with possibility. Venezuela, a land blessed with fantastic oil reserves, dreamt of prosperity. It changed into the 1920s, and the whole world turned crazy about finding and using a treasured aid called black gold. Venezuela, standing on the edge of a destiny formed through its wealthy petroleum sources, changed into keen to make its mark on the worldwide degree.

Venezuela’s preliminary triumphs within the international oil market had been excellent and garnered substantial popularity internationally. During the early twentieth century, Venezuela emerged as one of the leading producers and exporters of oil, which performed a pivotal position in shaping its economy and political panorama. The discovery of oil within the Maracaibo Basin in 1914 marked a turning point for Venezuela. Venezuela quickly found out the giant ability of its oil assets and capitalized on it. The oil industry became the backbone of Venezuela’s economy and the fast upward push within the international oil marketplace brought about a period of economic prosperity and development.  Venezuela’s geopolitical impact grew as it became a key participant in worldwide oil politics.

The plentiful supply of oil in Venezuela had both positive and bad results on the country’s political panorama, shaping its future with a complex interplay of prosperity and demanding situations. Venezuela’s identity as a petrostate has been characterized by prosperity and lots, but complexities have arisen, leaving an enduring imprint on the country’s destiny.

The Rise of Venezuela as a Petrostate

Venezuela’s emergence as an oil powerhouse began with the discovery of oil in the Maracaibo Basin in the 1920s. This discovery caused a widespread monetary effect, with annual oil manufacturing exploding from just over one million barrels to 137 million by way of 1929, making Venezuela the second-largest oil manufacturer after the USA. In 1929, Venezuela installed its first national oil corporation, the Venezuelan Petroleum Corporation (Venezolana de Petróleos or PDVSA), which helped the country’s control over oil and resources. Venezuela’s rise as a significant participant in the international oil marketplace changed into, in addition, solidified when it joined the Organization of the Petroleum Exporting Countries (OPEC) in 1960, along with other primary oil-producing nations.

Venezuela’s economic system has been closely reliant on oil production, which money owed for 95% of its exports and 25% of its GDP. The country’s oil wealth has allowed it to fund predominant infrastructure upgrades and social programs. During the duration from 2006 to the primary half of 2014, high oil prices furnished a boon to the Venezuelan economic system, permitting it to wield political energy. Venezuela’s plentiful oil reserves have played a transformative position in the development of its infrastructure and have caused intervals of prosperity and stability. This wealth has enabled Venezuela to invest in numerous sectors, which include transportation, electricity, and telecommunications (Villarroel et al., 2013). During durations of excessive oil costs, Venezuela experienced monetary prosperity, which allowed for huge investments in infrastructure.

Challenges and Signs of Decline

Oil’s allure is normal for any nation. In Venezuela’s case, it converted the kingdom from an agrarian society to a rich oil massive. However, this sudden wealth masked a risky fashion: the overlook of different sectors. Agriculture, production, and provider industries withered below the shadow of oil’s smooth cash. This “Dutch Disease” phenomenon noticed skilled labour migrate towards oil, similarly hollowing out other sectors and creating an economic system dangerously exposed to the whims of the global oil market. The symptoms of overdependence have been obtrusive. Government budgets became almost reliant on oil sales, neglecting funding in important areas like infrastructure and schooling. This lack of diversification left Venezuela at risk of any fluctuations in oil expenses, rendering the complete economy hostage to a single commodity.

Venezuela’s tragic narrative unfolds as a cautionary tale of the risks posed by unchecked oil wealth, epitomized by using the national oil agency, PDVSA. Initially a supply of charm, this immense wealth has become a breeding ground for corruption and electricity struggles, resulting in catastrophic outcomes. The authorities’ mismanagement and political interference caused a drastic 43.6% decline in oil manufacturing from 2015 to 2018, marking a pivotal moment whilst PDVSA fell below army manipulation, eroding democratic principles.

Under the Maduro regime, a violent campaign towards the Ministry of Petroleum and PDVSA in 2014 aimed to consolidate control, causing an exodus of leaders and exacerbating the institutional void. Maduro’s abandonment of Chavez’s “Full Sovereignty Oil Policy” in 2018, choosing a controversial financial “surprise package,” blanketed deregulation, devaluation, hard work gain elimination, and privatization, essentially changing Venezuela’s oil coverage. The prioritization of government hobbies over public welfare induced hyperinflation and shortages, fostering discontent and political instability. Venezuela’s tragic transformation underscores the precarious link between useful resource dependence and political turmoil within the heart of South America.

Oil, by means of its very nature, is a risky commodity. Price fluctuations are inevitable, and Venezuela’s financial system has become ill-geared to deal with them. When oil charges plummeted in 2014, the results were devastating. Government sales plunged, main to crippling debt and the inability to import critical items, along with food and medicine. Hyperinflation spiraled , mismanagement, eroding shopping power, and plunging hundreds of thousands into poverty. The collapse of the oil industry has brought about excessive monetary instability, with hyperinflation attaining 189 % in 2015 and 9,598% in 2019. Oil sales were diverted to repay loans from China, impacting the economy. Venezuela, dealing with economic misery, has closely borrowed from China and Russia, burdening future generations with considerable debt. This reliance compromised sovereignty and exposed vulnerability to outside pressures, posing demanding situations to the nation’s autonomy.

Descent into Crisis

The refugee disaster in Venezuela, marked by an exodus of over 7.72 million people as of August 2023, is not only the largest-ever refugee disaster in Latin America, however additionally one of the largest in the world. This crisis is a direct end result of the financial decline in Venezuela, which has had intense humanitarian results. Shortages of fundamental requirements, healthcare demanding situations, and mass emigration have become regular. Political unrest, monetary decline, and acute shortages of essential sources which include food, medicine, and strength had been the principal drivers of these demanding situations. The scenario was in addition complicated by using a multi-year management battle between Nicolás Maduro, who controversially gained the election in May 2018, and Juan Guaidó, who declared himself president in January 2019. While Guaidó acquired recognition from the USA and over 50 different governments globally, Maduro maintained assistance from China, Russia, several other countries, and the Venezuelan military. This battle has led tens of millions of Venezuelans to leave the country in the lookout for higher dwelling situations and work possibilities.

Currently, there are over 7.7 million Venezuelans living outside the country, contributing to protests and violence inside Venezuela itself. Around 19 million human beings, or 66 % of the populace, require humanitarian help in the country. However, the Humanitarian Response Plan is aimed at helping only 2.5 million humans, leaving a substantial hole in meeting the wishes of the population. This pervasive sense of country-wide lack of confidence is further irritated by the collapse of Venezuela as a petrostate, which has strained its diplomatic relationships across the world. Former allies inclusive of Colombia, Brazil, and Guyana are now grappling with an influx of Venezuelan refugees as they are trying to find asylum due to the financially demanding situations of their home country. The United States, a major oil importer from Venezuela, has imposed sanctions that have further remoted Venezuela on the worldwide level. While the U.S. has pledged US$ 376 million in humanitarian aid, its role in the crisis has come under scrutiny.

Despite the global strain, Nicolás Maduro has managed to strengthen his grip on power in Venezuela through economic reforms inclusive of losing zeros from the bolivar and embracing dollar transactions. Although this began with stabilized hyperinflation, the country’s monetary state of affairs remains fragile. On the political front, international guidance for Juan Guaidó has waned, with the Biden management withdrawing recognition. Maduro’s global status has advanced as communication reopens and he gains assistance from newly elected leaders in neighboring nations. However, the opposition faces internal struggles with plans to contest the 2024 election. Migration, which had slowed in the course of the pandemic, is yet again on the rise, posing similar challenges. Record numbers of Venezuelans are attempting perilous journeys, reflecting the continuing crisis inside the area.

Conclusion

In the vibrant tapestry of nations, Venezuela’s story unfolds like a gripping novel, once a shining example of petrostate success, now a poignant cautionary tale echoing across the worldwide level. Picture a state that danced to the rhythm of prosperity, most effective to find itself entangled inside the sombre chords of disaster. Venezuela, a person in this narrative, becomes a dwelling embodiment of the perils tied to depending too heavily on a solitary useful resource. As oil production in Venezuela soared to its top, the state’s monetary energy teetered on the brink, liable to the whims of fluctuating oil fees. The mismanagement of treasured oil sales forged a shadow over the once-thriving panorama, ushering in a generation of heart-wrenching economic downturn, hyperinflation, and enormous struggles for its resilient human beings. This isn’t always only a story of economics and politics; it’s a human drama gambling out on a grand scale. Families navigating the tumult of hyperinflation, and groups grappling with the impact of unchecked populism — those are the faces of Venezuela’s narrative. Yet, amid those challenges, there are sparkles of desire, moments in which the indomitable spirit of the people sparks an ability for financial revival.

The future of Venezuela hangs in the balance, a narrative with feasible outcomes — a delicate recovery constructed on the pillars of proper governance and balance or the ominous prospect of deeper crises, social unrest, and mass migration. It’s a tale that transcends borders, a human experience hindered with instructions for nations international, as they too navigate the sensitive dance between aid dependency and sustainable growth. The world watches, now not simply observers of a country’s warfare, but as contributors in a shared human adventure, waiting to see if Venezuela will rewrite its destiny or succumb to the echoes of its beyond.

By: Lt Col JS Sodhi (Retd), Editor, GSDN

As Pakistan Occupied Jammu & Kashmir (POJK) suffers from gross under-development and impoverishment, the Government of Pakistan splurged millions of dollars in observing Kashmir Solidarity Day (KSD) on February 05, 2024 regularly since 1991 when it was observed for the first time on the proposal by Qazi Hussain Ahmad of the Jamaat-e-Islami Pakistan in 1990.

Nawaz Sharif, the Prime Minister of Pakistan gave its approval after he came to power with the of support of the Jamaat in 1990 and since 1991, KSD is being observed regularly in Pakistan on 05 February each year.

Though the Government of Pakistan leaves no stone unturned in spending millions of dollars to celebrate KSD to showcase it as an important event, the crude fact remains that POJK has remained underdeveloped since Pakistan illegally captured it from India in 1948. The residents of POJK are in abject poverty and basics like water and electricity comes for only few hours a day. There are no good restaurants and movie halls in POJK and the residents of POJK are devoid of a good quality life.

On the other hand, the residents of the Indian state of Jammu & Kashmir are enjoying and living a good quality of life with movie halls fully functional in the entire Jammu & Kashmir and restaurants open till wee hours of the morning. With a record over 20 million tourists visiting the Kashmir Valley in 2023, the residents of Jammu & Kashmir are reaping rich dividends after the abrogation of Article 370 and 35A On August 05, 2019.

Hence it is but obvious that the residents of POJK are unhappy when they see the good quality of life across the Line of Control (LOC) in Jammu & Kashmir and curse the day Pakistan illegally occupied their territories. No wonder that on 05 February each year thousands of residents of POJK observe Peoples Right Day (PRD) to protest against the illegal occupation of Pakistan of POJK and ask for merger with India. However, the Pakistan Army using ruthless measures, silences these peaceful residents observing the PRD and in the round-up to 05 February each year, thousands of residents of POJK are either jailed or put under house arrest to prevent them from taking part in PRD.

The day isn’t far when the PRD movement in POJK will become so large that Pakistan will find it hard to supress this movement, eventually leading to POJK becoming part of India again

By: Darshan Gajjar, Research Analyst, GSDN

“The fault lines between civilizations will be the battle lines of the future.” ~ Samuel P. Huntington

In the aftermath of Hamas-led attack on Israel on October 7, 2023, followed by Israel’s decision to launch a full-scale invasion of Gaza, the Middle Eastern region was thrust into a long-standing conflict that is now spilling beyond the region with global ramifications. With civilians injured and killed by the attack in Gaza, what followed was the collective condemnation of the actions Israel took by Islamic countries and the Organisation of Islamic Cooperation (OIC).

Amid all of this churn, a surprising event took place near the Iran-Pakistan border, with both countries accusing each other of harbouring terrorists and striking each other. Let us look into that particular event and how it can have broader implications in the region.

Iran Strikes Jaish Al-Adl (JAA)

On January 16, 2024, the Islamic Revolutionary Guard Corps (IRGC) carried out missile and drone strikes in a village in the Balochistan province of Pakistan. The IRGC claimed to have targeted Jaish al-Adl, or “army of justice,” which is an ethnic Baloch Sunni Muslim group that has, in the past, carried out terror attacks inside Iran.

The group Jaish Al-Adl, a Sunni Islamic militant group based in Iran’s Sistan and Baluchestan Province, is considered to be a successor to the terror group Jundallah. Jundallah was dismantled after its founder, Abdolmalek Rigi, was executed by the Iranian government in 2010.

Pakistan’s Ministry of Foreign Affairs, in a press release, warned Iran of serious consequences. It says, “Pakistan strongly condemns the unprovoked violation of its airspace by Iran and the strike inside Pakistani territory, which resulted in the death of two innocent children while injuring three girls. This violation of Pakistan’s sovereignty is completely unacceptable and can have serious consequences.”

Operation Marg Bar Sarmachar- Pakistan Strikes Back

It did not take long for Pakistan to retaliate against these strikes, which it claimed were a violation of its sovereignty. While diplomatically it lodged a strong protest with the Iranian Ministry of Foreign Affairs in Tehran, militarily it carried out several strikes in Iran’s south-eastern Sistan-Baluchestan province under what it called Operation Marg Bar Sarmachar. The BBC reported that this attack by Pakistan marked “the first external land attack on Iran since Saddam Hussein’s forces invaded in the 1980s.”

Along with targeting the Balochistan Liberation Army (BLA) and the Balochistan Liberation Front (BLF), Pakistan said in a statement that these strikes, which were carried out with drones, rockets, and long-range missiles with targeted precision, also pestered Pakistani-origin terrorists operating from inside Iran who referred to themselves as ‘Sarmachars’. A total of nine people, including civilians, succumbed to these strikes by Pakistan. It is somewhat ironic that Pakistan, an epicentre of terrorism in the region, which is widely known for harbouring terrorists and terror organisations, is attacking another sovereign country, claiming to fight terrorists.

Pakistan and Iran De-escalating

After nearly destroying each other’s sovereignty, both countries eventually decided, with mutual respect, to de-escalate the situation. Pakistani and Iranian Foreign Ministers, Mr. Jalil Abbas Jilani and Mr. Hossein Amir-Abdollahian, respectively, agreed in a telephonic conversation to de-escalate the situation. They further call for the strengthening of working-level cooperation and close coordination on counter-terrorism and other aspects of mutual concern.

The meeting between the caretaker PM of Pakistan, Mr. Anwaar-ul-Haq Kakar, and Iranian Foreign Minister, Mr. Hossein Amir-Abdollahian, on the sidelines of the World Economic Forum in Davos, on the same day when Iran carried out strikes in Pakistan, is also believed to have facilitated a room for a dialogue and overall de-escalation of the situation.

Clash of Civilizations and Future of Pakistan-Iran Relations

Historically, both Iran and Pakistan have maintained a cordial relationship amid the cold war, with both countries even cooperating with the USA as members of the Central Treaty Organization (CENTO). However, in 1979, after the ouster of the Shah of Iran due to the Islamic Revolution, bilateral relations strained, causing divergence between them. Although Pakistan claimed to be neutral during the Iran-Iraq War (1980–1988), it leaned towards Iraq, further causing tensions with Iran.

In the post-Cold War era, when there was a reshaping of the world order, many countries, including Iran and Pakistan, took major shifts in their policies, especially when it came to economic trade and globalisation. In 2004, both countries even signed a Preferential Trade Agreement which became operational in September 2006. However, much of the potential of such a trade arrangement is yet to be utilised since annual bilateral trade as of 2023 is only around $2 billion.

Despite previous bitterness between them, the status quo has been maintained in the bilateral relationship, with no major occurrence of skirmishes between the two countries. What happened suddenly? Why did Iran feel that it needed to attack Pakistan? Let us see if Huntigton’s hypothesis of the Clash of Civilizations can help us understand the current situation.

In the summer of 1993, American political scientist, adviser, and academic Samuel P. Huntigton wrote his famous essay in Foreign Affairs Magazine on “the clash of civilizations”, in which he argued that the future of conflict will lie in the cultural fault lines. He stresses, “the fundamental source of conflict in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source of conflict will be cultural. The principal conflicts of global politics will occur between nations and groups of different civilizations. The clash of civilizations will dominate global politics. The fault lines between civilizations will be the battle lines of the future.”

In the last few weeks, we have witnessed the manifestation of this clash of civilizations when the Shia majority Islamic country carrying out offensive strikes against a nuclear armed Sunni majority Islamic country. Additionally, the cultural differences between Pakistan’s Punjabi ruling elite and tribal ethnic Balochi people further aggravated the instability of the region. It is also important to note that cultural reasons alone are not sufficient for the clashes between civilizations; they have to be coupled with geopolitical reasons. Now let us explore how the geopolitics of the Middle East is creating chaos in the adjacent regions.

The Middle Eastern Spillover

While the events look like they are not directly linked to the situation in the Middle East, they are perceived as a spillover of the situation in Gaza. The strategic isolation of Iran, especially in the aftermath of Iran’s support for Hamas and other members of the Axis of Resistance, led Iran to be more belligerent, making kinetic escalation not only a means of ultimate deterrence but also a tool of power projection. Apart from targeting terror camps, Iran’s strikes on Pakistan also provide testament to Iran’s offensive missile-strike capabilities.

The USA, on the other hand, is doing its best to portray Iran as the main perpetrator behind the chaos in the region. Recently, on January 28, 2024, a deadly drone attack in northeast Jordan near the Syrian border resulted in the unfortunate demise of three US service members in addition to at least 34 others being wounded. Although Iran denied having any involvement with the attack, the US believed it to be carried out by the Iran-backed militant groups operating in Syria and Iraq. Some US senators even went further, suggesting bombing Iran for these actions. In retaliation for this attack, the US hits hard at militias in Iraq and Syria.

Overall, the situation is grim in the region, and any misadventure by any concerned state or non-state actor can result in a profound catastrophe with global implications.

Way Forward and Path to Peace

In the Middle East, which is perhaps alien to the concept of peace, once the return of hostages by Israel has been secured, the solution to long-term conflict lies in the two-state solution and subsequent recognition of the state of Palestine by global powers. Israel can eradicate Hamas, but if it does not allow a legitimate Palestinian state to exist as a sovereign country, many terror organisations will take birth from the inherent feeling of relative deprivation. India’s former Permanent Representative to the United Nations and the first Indian Representative to the Palestinian Authority in Gaza, Mr. T.S. Tirumurti, rightly remarked, “The two-State solution alone can bring peace. A one State solution is a no-State non-solution.”

Coming back to the situation in Pakistan, the larger problem lies in Pakistan’s, and to an extent Iran’s, oppression of Baloch civilians, which morphed into a popular discontent against the state apparatus, which in turn caused insurgency in the region. For long-term peace, both Iran and Pakistan have to cooperate on resolving the issue of Balochistan, which can start with giving Baloch people more autonomy, if not full sovereignty, over their own land. While it is imperative to fight all forms of terrorism, suppression of political dissent will only lead to more dissent. Further, Iran must ensure not to expand existing conflict to an extent that can invite retaliatory destruction.

By: Harshit Tokas, Research Analyst, GSDN

United Nations in a report recently has issued a warning regarding the resurgence of Al-Qaida in Afghanistan, indicating the establishment of eight new training camps in areas under Taliban control. This resurgence suggests a growing collaboration between Al-Qaida and anti-Pakistan militants, potentially leading to cross-border attacks.

The report, released by the UN Analytical Support and Sanctions Monitoring Team, sheds light on the alarming development of Al-Qaida camps in Afghanistan’s Kunar province. These camps are reportedly conducting training for suicide bombers, with the aim of supporting operations carried out by Tehrik-i-Taliban Pakistan (TTP), a terrorist group known for its attacks against Pakistani security forces.

The findings of the report underscore the strengthening relationship between the Taliban and Al-Qaida, particularly with the latter’s regional affiliate in the Indian Subcontinent (AQIS). Despite Pakistan’s repeated requests to curb cross-border militant violence, the Taliban has maintained its support for TTP, with little response to Pakistan’s concerns.

According to the report, the Taliban’s assistance to TTP includes supplying weapons, equipment, and providing refuge to its members. Additionally, the Taliban’s relocation of TTP personnel away from border areas has been interpreted as a tactic to deflect pressure from Pakistan.

The UN report highlights the financial support provided to TTP by the de-facto Afghan authorities, with reports indicating a monthly allowance of over US$ 50,000 to TTP leader Noor Wali Mehsud. Moreover, the emergence of Tehrik-e-Jihad Pakistan (TJP), operating from Afghan territory and possibly backed by Al-Qaida, adds to Pakistan’s security concerns.

TJP has claimed responsibility for several high-profile attacks against the Pakistani military, further exacerbating tensions between Pakistan and Afghanistan. The proliferation of weapons from stockpiles left by the US-led coalition after their withdrawal from Afghanistan has also contributed to the escalating violence.

The report mentions instances where Taliban commanders have provided significant quantities of weaponry to TTP, including sniper rifles and night vision equipment, enhancing the group’s lethality in attacks against Pakistani security forces.

However, the Taliban government spokesperson, Zabihullah Mujahid, rejected the allegations made in the UN report, dismissing them as propaganda. Mujahid reiterated the Taliban’s commitment in preventing Afghanistan’s territory from being used against other countries, including Pakistan.

Despite the Taliban’s assurances, concerns persist regarding the resurgence of militant groups in Afghanistan and their potential to destabilize the region. The collaboration between Al-Qaida and TTP, coupled with the Taliban’s support, poses significant challenges to regional security and stability.

By: Aasi Ansari, Research Analyst, GSDN

Introduction

Bangladesh 2024 election held on 07 January, resulted in the return of Prime Minister Sheikh Hasina for the fourth time straight term and fifth all over.  The Awami League (AL) got victory by winning 225 out of 300 seats. India welcomed the victory of Awami League on winning the 2024 election. Prime Minister Narendra Modi tweeted on ‘X’ to congratulate Prime Minister Sheikh Hasina that “We are committed to further strengthen our enduring and people-centric partnership with Bangladesh.”

In recent years Bangladesh has achieved significant economic growth under the leadership of Prime Minister Sheikh Hasina. In 2020, United States committed to be “a key partner in the Indo-Pacific region” with Bangladesh. In 2022, Ito Naoki, the ambassador of Japan, said Bangladesh is a vital country in geopolitical terms. In 2022, the President of France, Emmanuel Macron visited Bangladesh to “consolidate” France’s Indo-Pacific Strategy. However, the Bangladesh 2024 election results have triggered protests and violence at many places in the country, leading to mass arrests and crackdown on the opposition. This has raised questions against the legitimacy and fairness of Awami league’s victory. It could also have geopolitical impact on Bangladesh’s balancing strategy, affecting the technological, economic, political, military and diplomatic relations throughout the fourth consecutive term of Sheikh Hasina.

Bilateral Relations of Bangladesh

Bangladesh has multiple diplomatic relations with many nations in the world including India, China, United States, Japan, among others with mutual benefits such an economy and defence. The biggest source of humanitarian aid for Bangladesh is Japan, looking forward to increase economic ties with Bangladesh as was confirmed by Prime Minister Sheikh Hasina’s visit to Japan in 2023 by three Memorandums of Understanding (MoUs). Similarly, Australia signed the Australia-Bangladesh Trade and Investment Framework Arrangement in 2021 to boost its trade with Bangladesh.

The geographical location of Bangladesh connects south Asia to Southeast Asia increasing its strategical importance in the Indo-Pacific region, especially to India. Since, India covers 4100 km of the border of Bangladesh and has illegal immigrants issue and Human Trafficking in states such as West Bengal, Assam, Meghalaya, Mizoram and Tripura. The majority of these migrants are the people from Rohingya because of Rohingya crisis in Myanmar. Bangladesh is trying to solve this illegal immigration issue, since India is a close neighbour and strategically powerful ally. India also has strategic impact due to Islamist extremist group probably of violence in the bordering states, although India supports the status quo and considers the ruling party in Bangladesh as an ally.

Maritime security is an important part of Bangladesh since 90% of their international trade is done through sea. Bay of Bengal is also considered to have gas reserves, which makes it a bigger challenge to Bangladesh. Bangladesh aims to coexist in the Indo-Pacific region with many multilateral partnerships for maritime security with peace and diplomacy. For instance, the maritime boundary resolution with India (2014) and Myanmar (2012), the Ganges water sharing agreement (1996), the Chittagong Hill Tracts Peace Accord (1997), and the Land Boundary Agreement with India (1974).

Bangladesh geographical location has strategic significance. China is trying to become globally stronger with the help of Belt and Road Initiative (BRI) and is developing multiple maritime projects with the help of Maritime Silk Road Initiative. For instance, in 2023, Sheikh Hasina inaugurated its first submarine base with the help of China. With Myanmar having political instabilities, Sri Lanka has a lot of debt with a weak army and navy compared to India and China, and India not having strong strategic relation with China, China has a chance of a foothold in the Bay of Bengal.

Bangladesh, being the second biggest defence customer of China, has strong strategic ties with China. China sees Bangladesh as a “strategic development partner” and has sought to build strong economic and defence relationship with Awami League government. China stated, on the occasion of 96th anniversary of People’s Liberation Army (PLA) of China, that both China and Bangladesh is looking forward to strengthen their military with peace and friendship. But because of dissatisfaction in arms deals with China, Bangladesh has many defence dials with India as well, worth US$500 million and both Bangladesh and India held fifth annual defence dialogue in 2023.

It is essential for India that Bangladesh has better relation with the United States, since America is an ally to India. If Bangladesh has better and stronger relation with China compared to India, it could have detrimental effect to India’s strategic defence. China also keeps warning Bangladesh against United States. Although Bangladesh has multiple ties with US as well with US being the biggest trading partner of Bangladesh. Bangladesh had US$ 7.8 billion trade ties in 2020, which kept increasing and becoming US$ 10.5 billion in 2021 and US$ 13 billion in 2022.

Impact of Bangladesh 2024 Election

The victory of the Prime Minister Sheikh Hasina resulted to a campaign of strikes, violence and protests in many places within the nation asking questions against the legitimacy of the ruling party and their politicians. Not only the opposition party but many other countries have expressed concerns about Bangladesh 2024 elections. For instance, United States of America says Bangladesh election is not free or fair and United Nation too has expressed concerns about violence and irregularities in the elections. However, against all violence and boycott from the main opposition party, the Awami League was triumphant in the 2024 elections.

As the Awami League has won the elections, they have promised to work on the development of the nations by implying “friendship to all, malice to none” policy, given by the father of the Nation Bangabandhu Sheikh Mujibur Rahman. The government of Prime Minister Sheikh Hasina has anticipated to work on democratic values, economic dynamism, multilateral engagement and upholding international law and institutions while protecting our national interests.

Bangladesh has to balance the diplomatic relations with both India and China since both the countries has grown their economical and defence rivalry within last few decades. Prime Minister Sheikh Hasina, winning the four consecutive victories in the Bangladesh elections, has been trying to balance the bilateral relation with many countries. Under Awami League, Bangladesh has balanced the international influence by making bilateral and multilateral partnership and receiving foreign aids all while trying to grow their economy and military defence. For instance, trade between India and Bangladesh was about US$ 15 Billion in 2022 and the trade between Bangladesh and China was near US$ 25 Billion in the same year. Bangladesh has been balancing economic and technological ties with both India and China such as Bangladesh-China-India-Myanmar Corridor (BCIM), which has granted access of Mongla port to both countries.

The Awami League claims Bangladesh to be the second-largest economy in the entire South-Asia. Bangladesh has future planes for advanced technology development in semiconductors, artificial intelligence and renewable energy. According to the Awami League future plane of action, Bangladesh will become a near trillion-dollar economy by 2030, enhancing the regional economic balance and stability. The Awami League also working to solve the illegal immigration issue by repatriation of all displaced Rohingyas to Myanmar. Bangladesh, being a secular and democratic country, is also looking forward to fight terrorism or any extremist act.

On the contrary, according to the critique of opposition political party ‘Bangladesh Nationalist Party’ – (BNP), Bangladesh has lost respect not only nationally and internationally. The Bangladesh Nationalist party claims that the Awami League is corrupt and instead of securing foreign investment the Awami League has been busy fending off criticisms. This corruption led to violation of human rights, Bangladesh’s democracy and constitution resulting in sanctions from the international community. At the same time, Bangladesh’s economy also continues to deteriorate due to country’s political crisis. The Foreign exchange reserves have reduced to less than $ 20 bn USD simultaneously increasing the external debt on Bangladesh by $ 100 bn USD.

Conclusion

Both Awami League and Bangladesh Nationalist party have opposite views on the each other. They both claim the other one to be irresponsible, corrupt and undiplomatic. Similarly, they both criticise each other by claiming that the country will lose its image and economic value in the opposition’s hand. According to Nobel Peace Prize winner Muhammad Yunus, the government of Bangladesh is willing to eliminate anyone and anything if the government sees it as a threat. The government, military, and the law have become corrupt thought out the years. The political scenario of Bangladesh is violent and there seems less probabilities for the improvement anytime soon.

The balancing act of Bangladesh has served rather well for the nation to maintain its multilateral relations. Regardless of who comes in power, both Awami League and Bangladesh Nationalist party claim to be committed to the development of the nation by the means of trade, defence and multilateral cooperation through peace and diplomacy. For the future, Bangladesh should continue its balancing act by improving relations with other nations through peace and diplomacy for technological, economic and military development.

By: Pinkle Gogoi, Research Analyst, GSDN

Introduction

The recent victory of Bhutan’s People’s Democratic Party (PDP) in the National Assembly elections holds significant implications for the nation’s foreign policy, particularly its ties with India. Economic recovery took centre stage during the election campaign, with the PDP emphasizing a commitment to modernizing bilateral relations through investment and commercial ties with Indian cities like Mumbai and Bangalore.

The article discusses the evolving foreign policy dynamics, noting the shift in power from the outgoing Druk Nyamrup Tshogpa (DNT) party to the PDP. Despite the economic focus of the election, cooperation with India remained a key theme among all major parties, with the Druk Phuensum Tshogpa (DPT) party explicitly underlining the need for closer ties with New Delhi.

Historically, Bhutan has had to delicately balance relations with its large neighbours, particularly China and India. The 2017 Doklam standoff and subsequent developments in Bhutan-China boundary talks have added complexity to the diplomatic landscape. The article highlights the differing threat perceptions of Bhutan and India concerning China, with Bhutan primarily concerned about herders from the north swamping its remote hinterlands.

While Bhutan’s relations with China have intensified in recent years, its unique and trust-filled relationship with India has been sustained by regular high-level visits, dialogues, and socio-economic support. India has played a pivotal role in Bhutan’s economic development, particularly in the hydropower sector.

The article also discusses the potential opening of a Chinese embassy in Thimphu and its implications for India. It notes the delicate balance Bhutan maintains between its neighbors, guided by its sensitivity to India’s security concerns. The recent visit of Bhutan’s King Jigme Khesar Namgyel Wangchuk to India in November 2023 set the stage for enhanced connectivity and economic cooperation between India and Bhutan.

The focus on improving India-Bhutan connectivity, the development of the first-ever rail connection between Bhutan’s Gelephu and Assam’s Kokrajhar, and the exploration of new avenues for economic and commercial ties were key outcomes of the royal visit. The article underscores that hydropower cooperation is likely to remain central to the India-Bhutan bilateral economic partnership.

As the newly-elected Tobgay government takes charge, the article anticipates a continuation of efforts to strengthen bilateral ties. It emphasizes the significance of ongoing projects and agreements, highlighting areas such as trade, technology, cross-border connectivity, and mutual investments. The Tobgay government is expected to seek additional funds from India for Bhutan’s economic stimulus package, maintaining a guided approach in pursuing relations with India.

Elections 2024

The runoff election held in Bhutan on January 09, 2024 resulted in Tshering Tobgay and the People’s Democratic Party (PDP) claiming victory over their opponents. They defeated former bureaucrat Pema Chewang and the Bhutan Tendrel Party (BTP).

The PDP secured a significant win, capturing 30 out of the 47 seats in the national legislature. The election saw the participation of 3.2 lakh out of the registered 5 lakh Bhutanese voters.

This victory comes after a primary election in November 2023, where three parties, including Lotay Tshering’s ruling centre-left Druk Nyamrup Tshogpa party, were ousted.

Tshering Tobgay, aged 58, is noted for his background as a conservationist and a former civil servant. He holds a master’s degree in public administration from Harvard University. Tobgay founded the liberal People’s Democratic Party in 2007 and had previously served as the prime minister from 2013 to 2018.

It will be interesting to observe the developments and policies that Tshering Tobgay and the PDP implement during their term in office.

The report highlights Bhutan’s democratic process as a promising and transparent model, contrasting it with the situations in neighbouring countries like Pakistan and Bangladesh, where election fairness is often a subject of concern. Even after the incumbent’s removal in November, Bhutan maintained a peaceful political transition without reported crackdowns, violence, or imprisonment of opposition figures on politically motivated charges. 
Indeed, Bhutan’s transition from a monarchy to a parliamentary democracy in 2008 is a remarkable accomplishment. Despite retaining a symbolic role for the monarch, King Jigme Khesar Namgyel Wangchuk, actual political authority lies with elected officials, reflecting the country’s commitment to democratic principles.

The evolution of Bhutan’s democratic system over the past 15 years is noteworthy. From the initial elections that featured only two competing parties, the recent runoff election involved five candidates. This growth in the number of candidates suggests a maturing democratic process and a broadening political landscape.

Furthermore, the shift in election dynamics is evident in the candidates’ engagement with specific promises and positions. In contrast to earlier elections, candidates in the recent race presented more defined stances, providing voters with a more nuanced and challenging decision-making process. This development signals the increased sophistication of Bhutan’s democratic framework and the growing engagement of both candidates and voters in the political process.

The continued progress of Bhutan’s democracy is a positive sign for the nation’s political development, showcasing a commitment to expanding political participation and fostering a genuinely competitive and vibrant democratic environment.

Economy

The backdrop of Bhutan’s recent election was marked by significant economic challenges. The nation’s tourism industry is grappling with the prolonged impacts of the Covid-19 pandemic, and a staggering 29 percent youth unemployment rate adds to the economic woes. With over half of Bhutan’s population under 30 years old, classified as ‘youth,’ addressing youth unemployment becomes a critical concern.

Furthermore, data indicates that one in eight individuals in Bhutan is currently “struggling to meet their basic needs for food” and other essentials. Over the past five years, Bhutan’s GDP has shown sluggish growth, averaging around 1.7 percent. This economic stagnation has contributed to a surge in young people emigrating from Bhutan, seeking better opportunities, with destinations like Australia becoming increasingly popular.

The economic challenges present a complex backdrop for the recently elected Tshering Tobgay and the People’s Democratic Party (PDP). Their victory comes at a time when the country is grappling with the aftermath of the pandemic, high youth unemployment, and a slow GDP growth rate. Addressing these economic concerns is likely to be a priority for the new government as it takes office, with a focus on revitalizing key sectors and exploring strategies to retain and create opportunities for the youth population.

Geopolitical Implications

India remains a key player in Bhutan’s political and economic landscape, acting as the country’s largest donor and ally. The recent election victory of Tshering Tobgay and the People’s Democratic Party (PDP) comes at a critical juncture as Bhutan faces economic challenges, with India expected to play a crucial role in the nation’s recovery.

India is actively involved in funding various infrastructure projects in Bhutan, with a newly announced railway project being among them. Bhutan, known for its untapped hydroelectric potential, presents an opportunity for collaboration with India, making it a potentially lucrative client.

Despite the strong ties between India and Bhutan, the region has been a stage for tensions involving China. The Doklam border region, claimed by both China and Bhutan, witnessed clashes between Indian and Chinese troops in 2017. Recent satellite photos released by India’s NDTV purportedly show a Chinese military presence on land claimed by Bhutan. Bhutan, while not maintaining formal diplomatic relations with China, engaged in joint cooperation with Beijing under the previous Prime Minister, Lotay Tshering. He signed a cooperation agreement in October 2023, outlining the responsibilities of a joint technical team in delineating the border between the two nations.

The article underscores the delicate geopolitical balance Bhutan must navigate, caught between the longstanding alliance with India and the complexities arising from its proximity to China. The evolving dynamics in the region will likely be a significant factor in shaping Bhutan’s foreign policy and economic strategies under the new government.

Conclusion

The recently elected Bhutan Prime Minister, Tshering Tobgay, is perceived as pro-India, marking a significant shift in the country’s political landscape and offering a boost to India’s strategic interests in the region. This contrast in diplomatic inclinations becomes crucial against the backdrop of recent tensions involving Bhutan and China.

Tobgay’s pro-India stance has been acknowledged by Indian Prime Minister Narendra Modi, who, extended his congratulations to Tobgay via Twitter (now X). In his tweet, Modi expressed his “heartiest congratulations” to Tobgay, referring to him as a friend, and conveyed anticipation for working together to strengthen the “unique ties of friendship and cooperation” between India and Bhutan.

The congratulatory message from Modi underscores the importance India places on fostering strong and cooperative relations with Bhutan under Tobgay’s leadership. As the geopolitical dynamics in the region continue to evolve, Tobgay’s pro-India position is likely to play a crucial role in shaping regional alliances and partnerships.

The article concludes by highlighting the potential collaborative efforts expected between India and Bhutan under Tobgay’s premiership, further solidifying the close friendship and cooperation that has long characterized the relationship between the two nations.

By: Ananya Sharma

Introduction

The rise of China as a regional hegemon in South Asia is an inevitability that cannot be ignored. China’s rich political and economic history has led to its establishment as a formidable force in the region. China’s presence in South Asia can be classified into four historic and distinctive phases (Godwin, 2019). The ancient phase saw an emphasis on trade, cultural exchange, and Buddhism studies. In the medieval phase, there was a development of Buddhist art, architecture, and technological advancements. During their remote phase, China distanced itself from South Asian affairs as European colonialism began to gain power in the region. However, the fourth phase was marked by a significant shift in China’s stance towards South Asia. During the Cold War, they actively supported socialist movements and saw themselves as leaders of the global communist movement, motivated in part to counter the influence of India and the Soviet Union. Presently, the People’s Republic of China is the second-largest economy in the world after the United States of America, and its current positioning in South Asia is characterized by opportunities, growth, competition, and tensions (Wright, 2020). This paper aims to explore the factors contributing to China’s rise as a regional power in South Asia, delving deeper into its political, economic, and strategic objectives. It will first delve into China’s growing presence in South Asia, in the economic, political and security spheres. It will then go on to discuss how countries in South Asia have responded to their rise using strategic alliances and partnerships. The final section will investigate the implications of China’s dominance in the region and finally offer some suggestions for the future.

It is important to understand the rise of China and its consequent impact on the regional order as it has significant implications for the balance of power in the region and gives an insight into the changing partnerships and alliances which will aid policymakers to anticipate potential conflicts, opportunities for cooperation and effective policies to manage China’s rise in the region.

China’s growing presence in South Asia

For a comprehensive understanding of China’s rising economic imprint in this region, one must have a clear grasp of South Asia’s geography. The South Asian Region (SAR) is formed by seven nations: Sri Lanka, India, China, Bangladesh, Nepal, Bhutan, Pakistan, and the Maldives. Pakistan, Bhutan, Nepal, and India all share a border with China. SAR has 22% of the global population and is currently the centre of middle-class expansion (Romi Jain, 2018). The U.S. has considerable economic and trading ties with South Asian nations, which enabled it to have a massive influence on regional affairs in South Asia (Saylor Academy, 2016).

Essentially every nation in South and Southeast Asia is now influenced by China’s presence. China has altered the power dynamics in the region by sponsoring infrastructure projects, developing the Belt and Road Initiative (BRI), and fostering trade and investment ties (James McBride, Noah Berman, and Andrew Chatzky, 2023). The world economy’s centre of gravity has shifted to South Asia as a result of China’s resurgence as a significant economic force. China ranks first in economic relations and second in economic resources, which include variables like economic scale, international leverage, technology, and connectivity, according to the Asia Power Index, which analyses power in all possible fields (Romi Jain, 2018). China professes to be a regional “integrator,” which I feel has consequences. It has the authority to wield influence and generate interdependencies in the region. They have offered nations loans, grants, and technical assistance. The link between China and South Asian economies in terms of bilateral trade has never been better. Improved infrastructure and communication across the subcontinent have been promised by regional economic projects like the BRI. Countries, policymakers, and critics disagree, arguing that once their interests are served, they will no longer act in the country’s best interests (Grossman, 2020).

Although China approaches SAR nations differently, it pursues the same eventual outcome. They would be dependent on China. Links between China and these nations go back to the cold war, as seen most prominently by its “all-weather” alliance with Pakistan. They provided military equipment, assisted in the development of nuclear weapons, and aided them in all confrontations on Indian and Chinese border crossings. Nevertheless, with the developing friendship between India and the United States, both China and Pakistan have agreed to build the China-Pakistan Economic Corridor (CPEC), which is the foundation of BRI. The goal of CPEC is to link Western China and Western Pakistan. This will alleviate China’s ‘Malacca Dilemma,’ as they will be the greatest consumer of energy by 2023 (Singh, 2018).

Nepal, another nation in the area, has joined the BRI. According to the website of the Nepalese Ministry of Foreign Affairs, “The Chinese support to Nepal is divided into three categories: grants (free aid), interest-free loans, and concessional loans… Upper Trishuli Hydropower Project- Power Station and Transmission Line Projects (Concessional Loan); food/material aid (Grant) in 15 bordering districts of northern Nepal; Kathmandu Ring Road Development Project with Flyover Bridges – (Grant); and Pokhara International Regional Airport (Loan) are some of the key ongoing projects under Chinese help” (Romi Jain, 2018). China has also obliged Bangladesh, a low-income nation in SAR. They have been yearning for infrastructure such as roads and bridges. and power – projects. With weak institutions and poor infrastructure, they find it tough to find a grounding in the developed world. China has come to Bangladesh’s rescue which they have eagerly accepted (Romi Jain, 2018).

Traditionally, India dominated the region, but it failed to match the expectations of the countries in the region. However, China is cultivating goodwill among the SAR nations by offering aid and material assistance to them. This is a means of limiting India’s presence on the subcontinent. China’s BRI programme offers infrastructural connections spanning Asia, Africa, Europe, and South Asia. China has completed BRI projects in Sri Lanka, which has increased the country’s electrical supplies. From 2016 and 2018, Pakistan and Bangladesh were the leading receivers of Chinese investment. Yet not all nations in the area support the BRI programme and have reservations about the additional help that China so generously provides. In contrast to Bhutan and India which have not joined the BRI (Jacob, 2019).

The BRI projects will have the same negative effects on the region, despite their promises of improved connectivity, increased commerce, economic growth, and connectedness. The effort, for instance, has drawn criticism for harming the environment. Several nations worry that they may fall prey to “debt trap diplomacy”, which refers to China’s strategy of using debt to further its geopolitical objectives (World Bank Group, 2019). Dept trap diplomacy has been seen in Sri Lanka with the Hambantota Port, the apprehension of other countries with context to this seems legit. Even though there isn’t much literature that proves that debt-trapping countries are China’s hidden intentions, there are multiple case studies that support this theory. Security considerations are a significant issue with this endeavour. The BRI is unpopular in India since it crosses through its territory, Gilgit-Baltistan. Militants have targeted and even killed Chinese workers who had been in Pakistan. I believe that another downfall of this project could be that a lot of countries will be forced to be at China’s whim in the biggest project they undertake. Notwithstanding, China faces numerous issues with this project. In my opinion, this project that is driving China to seize control and alter the regional order in SAR is the BRI effort (Awasthi, 2018).

Responses to China’s rise in South Asia

Recently, Sino-Indian undercurrents have become widespread. The Act East Policy became the foundation of Indian foreign policy after 2014, giving it fresh life. The reactions to China’s growing influence have been varied. Some nations have embraced China’s investments, while others are acting on the other end of the spectrum to balance their strength.

With the Cold War’s historical context and India’s growing proximity to the US, China felt endangered. Yet nothing in international relations is static. India has always had a multipolar vision of Asia. Following 2014, the Modi government expanded bilateral and multilateral relations with ASEAN since they shared the same goal. India and China have been at odds over several topics, including the Nuclear Suppliers Group, CPEC, and the Line of Actual Control conflict. Nonetheless, India is now a component of all existing South Asian platforms. ASEAN countries expect India to strengthen the region and act as a counterweight to China. Myanmar and Australia have also been included in Act East Policy. India has adopted a strong stance in the conflict over the South China Sea. The bilateral ties between India and Japan are another alliance that keeps Beijing on its toes. With their rise, India and Japan have altered the regional security system (Sujan R. Chinoy, 2020). This will guarantee that Asia stays multipolar. Vietnam and India have improved their ties. Vietnamese ports in the contentious South China Sea have been made available to Indian ships. Indonesia has presented China with one of its most difficult challenges. The dilemma of Malacca. Indonesia has made it clear that if the Malacca strait falls into the hands of unfriendly players, China would be deprived of its oil source. India and Indonesia enjoy friendly maritime ties. Indonesia has granted India access to this port as part of its overall commercial infrastructure development. China is hence quite worried. The Malaysian Prime Minister has ordered a reassessment of all 3 key Chinese projects in the nation, anticipating that they would not provide the advantages promised. This indicates the fear of countries vis-a-vis China’s “aid”. Myanmar contributes significantly to the power balance as well. To establish its influence in the Bay of Bengal, China seized key areas of the peninsula. Myanmar’s new leadership has resulted in strengthened relations with India. India and Australia have joined hands to contain China’s overarching presence in the region. India is a part of QUAD, the Quadrilateral Security Dialogue has improved defence cooperation between member countries, primarily, India Australia Japan and the US (Erik Brattberg, Philippe Le Corre, 2019).  The securitization of the QUAD makes China uneasy. Improved Indo-US relations over the past few years have empowered India to be a worthy balancing muscle against China. The Communication, Compatibility and Security Agreement (COMCSA) became the prime outcome between India and the United States. The US has encouraged India’s presence in the Indo – Pacific, and the two countries have conducted tri-services exercises. The Indo – Pacific has also given India and Japan a good opportunity to contain China’s dominance. The alliances formed in SAR are majorly in response to China’s rise. India from their ‘non-aligned’ stance has turned to be more proactive. India and China have tried to establish bilateral relations, PM Narendra Modi and President Xi Jinping have met numerous times – yet their relations seem more to be driven by insecurity and competition than cooperation. This has curtailed full growth for the region. Sino – Pak relations are detrimental to India, and the growing closeness of Indo – US relations pushes China and Pakistan closer (Singh, 2018). Countries have managed to form meaningful alliances and strategic partnerships to boost infrastructural development, strengthen their military capabilities, and increase trade. These partnerships and alliances are attributed to a response to China’s rise. In my opinion, this serves two main purposes for the region; first, if countries focus on further strengthening these ties, it could empower countries making them less dependent on China which also allows them to be completely sovereign to make political decisions that are fully in favour of their country and not influenced by anyone else. Second, strategic partnerships in the region can also act as a balancing factor towards western hegemony.

Implications for the regional order in South Asia

China’s growing influence has impacted the regional order in innumerable ways. Implications of the same could be broadly divided into 5 categories. First, the economic impact, which in my opinion is the most evident. BRI and other investments made by China in South Asian countries, as discussed above can translate into development for the region, however, it raises economic concerns for smaller nations such as unequal power dynamics, corruption, and debt sustainability. The security impact of the expansion of China’s military powers and assertiveness is a big implication for the regional order. Their growing naval presence in the Indian Ocean has made India fear a potential strategic encirclement. China has also phenomenally increased its involvement with the countries in SAR, this is a diplomatic impact that comes hand in hand with the rise of China (Art, 2010). Their primary motivation remains to underpin India’s dominance in the region. Which has resulted in closer ties between India, Japan, and the US. Counterbalancing China’s rise on the contrary is what brings historic rivals together. Another factor that plays up in these power equations is China’s unflinching support towards Pakistan, this political implication suggests, China’s support for authoritarian regimes that undermines democratic institutions in the region. The environmental impact that infrastructural projects taken on by China has raised questions, rightfully so, about environmental degradation, particularly in the areas such as the Himalayas and the Brahmaputra Basin. All these factors mentioned above play a huge role in changing the Balance of power dynamics in the region. Indo – China competition stands at the centre of all these factors. In my opinion, smaller states could benefit from this rivalry, they could empower themselves, however, the chance of getting crushed if a full-blown conflict ever broke out it would paralyse their functioning. Hence, self-sufficiency should be the end goal for them. They need to tactfully establish their relations with both India and China. China’s debt diplomacy as discussed earlier has also been a significant implication for the regional order. Sri Lanka and Maldives have faced the brunt of it, and many others fear the same (Brian Lee Crowley and Shuvaloy Majumdar and David McDonough, 2017).

In this final section, I would like to discuss the potential for conflict and cooperation in the region. The rising influence of China has very evidently made the region a perfect breeding ground for both cooperation and conflict. The first potential conflict would be between India and Pakistan. China’s military, political and economic aid to Pakistan is a major bone of contention between India and China. The CPEC passing through the disputed territory of Kashmir is a huge security concern for India. China blocked India’s move to declare Maulana Azhar a global terrorist, this is because China needs Islamabad’s help in quelling the terror network in the western province of Xingjian. Another potential conflict is the escalation of the LAC dispute between India and China. The Chinese military has shown aggression in the past which was responded to by the Indian Army with equal force. These escalations can further into full-blown conflicts if the two big powers in the region don’t resort to cooperating with one another (David M. Malone, 2010).

Keeping that in mind, there also have been attempts to bolster cooperation in the region. India and China have met at numerous international forums and multilateral organizations like the BRICS group, the Shanghai Cooperation Organisation (SCO) and the Asian Infrastructure Investment Bank (AIIB). India and China are part of these organizations intending to promote economic cooperation, conjoining in the domain of security and the cultural sphere. However, the tensions in my opinion currently outweigh the cooperative measures that are undertaken. The two countries must share a common vision and need to be less insecure about each other’s presence in the region for true cooperation and growth to occur.

Conclusion

The regional order has been significantly impacted by China’s ascent in South Asia. China has resorted to using a variety of methods to increase its influence in the area. The driving forces behind this expansion have been economic might, border militarization, and infrastructure development. China has recently grown increasingly forceful and hostile, which has had a significant impact on the SAR. The growing competition between India and China, which drives the South Asian narrative, is one of the most significant shifts in the area. China now totally succeeds India as the main power in the area, which it previously held. The path involves CPEC, financial aid, and assisting smaller nations in developing infrastructure. adopted by China to amplify its hegemony. I think China will continue to take an aggressive approach in this region in order to further its geopolitical goals in the future. It won’t let India make a declaration of supremacy. Having said that, India and many other countries like Bhutan, Vietnam, and Indonesia in the region and coming together to counterbalance China’s position. One such potent illustration is the Malacca Strait dilemma. Future issues will arise for China if its stance incites hostility among the region’s nations. When it comes to security, China needs to be more sympathetic to India’s attitude towards Kashmir if it wants to create a constructive partnership. Now, India sees it as a tremendous violation of its national sovereignty. South Asia is not yet a unipolar zone. China’s supremacy is actively being restrained by international groups like SAARC, ASEAN, and SCO. It is critical to keep in mind that China’s growing influence in South Asia extends beyond only economic and military considerations and encompasses soft power operations as well. China has been pushing its media, language, and culture there, which has allowed it to establish a presence and win over the hearts and minds of the populace. For India, which has always possessed a cultural and linguistic edge in the area, this has posed a serious issue. India must increase its efforts to market its soft power assets and forge closer cultural and academic linkages with the nations of South Asia if it is to compete with China in this area. India can only expect to offset China’s increasing influence in the world by achieving this. However, to promote a brighter future for the region, India and China need to function cohesively, and they need to strengthen their economic ties. Asia can emerge as a force to reckon on the global stage if both countries, engage in producing meaningful outcomes. This can be possible through better diplomatic efforts, and confidence-building measures such as humanitarian aid, cultural exchange etc. Capitalising on shared interests such as making Asia the new epicentre of the world economy and boosting growth by helping smaller nations develop sustainably could be another way forward. China and India need to address the imbalances caused by the reasons mentioned above for a brighter future for the region of South Asia.