Stop looking, go East

Amidst the glitz and hubbub of the recent Brics summit, a bilateral event of considerable significance has gone almost unnoticed. This was the Prime Minister’s visit to South Korea just prior to the Brics meeting. Although the bulk of the Prime Minister’s time in Seoul was taken up by the Nuclear Security Summit, he was also engaged in bilateral meetings with the Korean government and business community. This was the first official visit by an Indian Prime Minister to South Korea in 19 years — since Narasimha Rao’s visit in 1993 as part of his effort to make India “Look East”. That approach is increasingly becoming a centrepiece of Indian foreign policy. And Dr Manmohan Singh’s visit to Seoul was long overdue.
East Asia’s importance to India stems from a variety of factors. For one thing, it is emerging as the most economically vibrant region in the world. Its centrality in economic affairs will only increase as Europe and the United States struggle to get their houses in order. For another, it is likely to be the main arena of great power competition, especially between China and the US. And finally, the region lacks any settled architecture of cooperation on political and security affairs. This is a challenge but also an opportunity for India to play a role in shaping security structures that might emerge in the future.
New Delhi’s strategic goal is an architecture that is open, inclusive and balanced. In other words, India will want to ensure that it is an integral part of any such arrangement and that no single power is able to dominate this structure.
From this perspective, India’s relationship with South Korea assumes much importance, both in the economic and security dimensions. Bilateral trade has increased almost 10-fold over the last decade: from a mere $2.5 billion in 2001 to $20.57 billion last year. The Comprehensive Economic Partnership Agreement that came into effect in January 2010 could give a massive boost to trade. During Dr Singh’s visit, the two sides agreed to double bilateral trade to $40 billion by 2015. This is not unrealistic for South Korea has weathered the global financial crisis rather well. Besides, there is a desire not to put all their eggs in the Chinese basket.
South Korea has also been one of the smartest investors in India. They took the lead in sensing opportunities when India’s economy was opening up in the early 1990s and have learnt to work their way in the Indian system. South Korean companies like LG, Samsung and Hyundai have established themselves as market leaders in consumer goods.
Yet South Korean economic presence in India is still well below potential. Their total foreign direct investment in India is $3.3 billion — just 1.24 per cent of their investments worldwide. Going forward, India’s massive requirements for infrastructure development ($1 trillion over the next five years) could open new opportunities for South Korea.
But New Delhi needs to get its act together. The South Korean giant Posco’s proposed investment of $12 billion for a steel plant in Orissa — perhaps the single largest investment by any group in India — has been stalled owing to environmental concerns. Such concerns are important and cannot be brushed aside. But we also need to think about alternatives and move ahead quickly. Prolonged stasis does not help India’s image as an attractive destination for investment. The larger point is that so long as India remains unconnected to the integrated supply and production chains that are central to East Asian economies, we cannot hope to be a serious player in that region.
From a strategic standpoint, too, South Korea will become increasingly important to India. Seoul shares New Delhi’s interest in evolving a balanced regional security mechanism. South Korea’s decision to sign an agreement on civilian nuclear energy cooperation with India signalled its desire to inject a more strategic component to ties with India.
But the “strategic partnership” between the two countries needs to be given more content. In particular, we need to enhance cooperation in the maritime domain by way of increased naval exchanges and exercises. South Korea has considerable expertise in other related areas such as ship building and construction of ports, which need to be leveraged by India. Instituting a regular, high-level annual dialogue on security — such as the one between India and Japan — would be a good way of ensuring that we have a continuous exchange of views and assessments.
This is particularly important at a time when the region is undergoing important political changes. There is a new regime in North Korea whose policy and intent remain as yet unclear. More importantly, China will see a leadership transition later this year. The implications of this change for China’s policy on a range of regional issues will unfold over the next couple of years or so. Further, the US has declared its intention to pivot to East Asia. As part of this, the US is seeking to reinvigorate its formal alliances in Asia, especially with Japan and South Korea. Finally, South Korea itself is set for a presidential election later in the year.
All of these underline the importance of maintaining close ties with Seoul. As Narasimha Rao realised all those years ago, South Korea will be crucial to India’s “Look East” policy. But even he may not have realised how important this policy would become to India.

The writer is a senior fellow at the Centre for Policy Research, New Delhi