The Era Of ‘Poker’ Diplomacy

Posted on November 22, 2011 in GlobeScope

By Dhruva Mathur:

The world political scenario can at any given point of time be viewed as a game of poker — with a difference. The participants (countries) are playing not for money, but the ability to influence decisions at a regional as well as global level. For long the players have been recurrently changing with each player being replaced by a new one. Thus, there is a constant continuity in this whole cycle along with greater participation by different countries which prevents an unrivaled uni-polar system from being established.

Since the Soviet Union’s fall, world diplomacy has been entirely dominated by the Western Hemisphere. As true as this fact may be, an entirely different situation is unfolding right before us. With the US Budget Deficit crisis continuing, it’s expected that Uncle Sam might replace its expensive military programs with a new policy which excludes active US involvement during a crisis.

For starters, US has been giving pro-active assistance to rebel groups in enemy states like Iran. Modern weaponry is being supplied to nations like Saudi Arabia in the middle-east as advance policing fee for the region when USA exits from Iraq. Critics of this theory highlight the increased US involvement in Pakistan as a counter theory but the fact remains that this involvement of the US is not at a proactive level. This role that the US is trying to fit itself into is that of an observer state. To maintain its domination while staying an observer state, it must forge excellent relations with the countries that counter-balance its enemies – and one of the biggest threats at the moment for Uncle Sam is the growing clout of the Chinese Dragon.

What constitutes the pot?

Accumulating absolute power is often the reason for these ‘international’ poker games. Migration, an international economy that is in danger zone and acquisition of arms by both legal and illegal entities are crises faced by modern nation states. Enhanced awareness of human rights and improvements in the regional as well as the global economy, political and security scenarios are the only remedy to this problem. These collectively determine the path that a country may take for the acquisition of resources to achieve its ends.

China can be quoted as an example of a state that has adopted an active-aggressive approach in order to address its ends. This hypothesis is based on past positions adopted by the Chinese government on various issues like Chinese claims of ‘indisputable sovereignty’ over the South China Sea, treatment of citizens of Jammu and Kashmir and incursions by Chinese troops beyond its borders. All these actions have directed negative attention on China and disturbed policy-makers in distant countries. Of the various solutions devised, none seems as effective as portrayal of India as a counter balance.

In order to counter the Dragon, the Indian Elephant is being portrayed as the future global power. This has led to certain questions that have certainly puzzled the western policy makers and have even started to baffle them (read the Copenhagen scenario). The question that is being repeatedly asked is: Is the West trying to push its luck a bit too far by pitching India against China?

Playing a bluff a little too often?

Despite being pitched against each other repeatedly, the two Eastern giants have also come together to act as a counter balance against the US. This counter balancing act practiced by India and China is based mainly on issues of development and environment with respect to the developed and developing country differences. Thus, even as the US retreats from the Eastern hemisphere, giants sleeping on the Eastern half of the planet are now slowly starting to wake up. This is evident by the approaches that India and China have taken to resolve their disputes with their neighbours so as to play a wider role in the region and the world.

China has followed a policy of what is known as ‘flexing their might’ which involves showing off the military strength of the country and thereby subduing the opponents. They are doing it in a manner which has caused some brows to sweat in Washington DC, New Delhi and even Tokyo. The rapid Chinese military build up along the borders is seen as an act of aggression. Some neighbours try to counter it, as in India’s case by bolstering the military capabilities while countries like Japan approach Washington for support where they are given the same reassurances of assistance in case of a crisis.

However, the fact of the matter remains that all these countries will, in the long run, prefer to support each other rather than the US for the simple reason that all of them want peace in the neighbourhood. The Dragon perceives its aggression only as a precaution against encirclement by the US and its allies. Almost all countries neighbouring China have some form of close ties with NATO (a major US ally). Be it Philippines, Thailand, Japan, South Korea, Vietnam, Australia or India, all share a close relationship with the US with some having a kind of a treaty with the US guaranteeing US assistance during crisis.

Thus, it can be said that the Chinese fear of America is not an irrational thought made up by a government which is trying to divert attention from its internal problems. At the same time, the Indian fear is that of a total Chinese controlled South Asia which would be the biggest challenge to achieving a status at par with the US in the future; and India also has its fair share of theories of how the Chinese are expanding their support base.

The present Look East policy of the Indian government seems to lack that excitement which had originally resulted in success. For example, there has been little publicity regarding the work that India is doing in the countries which are a part of the Look East policy. It was only after the Chinese started advancing into Myanmar that the Indian government opened its eyes and stepped up its efforts to reach to the people of Myanmar. However, there’s been very little progress after that. Thus India has been taking a less pro-active stand on how it wants to go about making inroads into other countries except the West and Russia.

Nations close to both India and China have naturally been wary of their ambitions. However, this is more so the case with China as many countries fear the Chinese expansion dream i.e. the Greater China dream and this is where the US comes in. It has given these countries many guarantees regarding their safety.

However, how long will these assurances last?

Which player will call a fold?

As the pot keeps on getting bigger and bigger, the chance of kicking off a row also gets bigger. The important question, however, is: who will be the first to call a fold. A fold in this game has tremendous effects which affect both the political and economic functions of the country. For instance, the demise of the Soviet Union saw many socialist or communist economies shifting to the capitalist fold. Hence, if any shift is to take place, the consequences will be bigger than what they were when the Soviet Era came to an end.

The diplomatic power of a country is vastly affected by the monetary condition of the country. For starters, an increasing budget deficit means that other countries are a little wary of buying its currency bonds which dries up a source of finance to manage unsustainable expense. This results in spending cuts across the board in order to reduce this deficit and regain the confidence of those other countries. Certain departments like Defence are the first to be hit by budget and spending cuts which directly impacts the military might and thereby the arm-twisting strength. Inevitable budget cuts to other areas like Development Aid also reduce the clout of the country as nations shift their allegiance to more generous nations.

The West has been suffering from a self-created economic crisis. The current double-dip recession, for instance, can be attributed to the Bill Clinton Administration. Emerging countries like India and China don’t face such problems. A large amount of sustainable fund will always be easily available to them. Creation of efficient and sustainable infrastructure is the problem they face. Despite credible advances in infrastructure, they still lack sustainability and the problems like the recent China super-fast train crash only add worry.

Another aspect that adds shine to a country at the international level is the respect for human rights shown by the country and the amount of freedom that its citizens have been given. India triumphs over China in this regard, having been recognised by the International Community as a true Democracy. This gives India its fair share of positive light on the International Stage along with the constant pressures of upholding the functioning of democratic institutions in a nation which is becoming home to active participation of citizens in various matters of policy, be it economic or political in nature.

Hence if we were to look at this game of poker in a holistic manner, we can say that the developed countries can still take calls on diplomatic matters only if their internal politics allows them to take significant decisions. At the same time, India and China perform better than their counterparts despite their fair share of problems, provided both are on the same side of the table.

The conclusion of the events down at South China Sea might help us in coming up with an answer to the question India or China but until then, I would as an investor like to invest in both of them equally.

To use Wall Street lingo, one should not expect any gains or losses, but in the long run, as the players revaluate their strategies and come up with the perfect consumer pitch, the sight of the bull and the bear will become common. Till then, let’s allow the speculators to earn their bread.

Thus for the time-being as players work on their strategy and the speculators operate the market, the game stretches on to infinity.