Chinese antics have India fuming

May 5, 2009

Chinese antics have India fuming
By Sudha Ramachandran

BANGALORE - China's blocking of India's application for a loan from the Asian Development Bank (ADB) has raised hackles in Delhi, marking the first time Beijing has dragged a bilateral territorial dispute with India into a multilateral financial institution.

China asked for a postponement of an ADB board meeting on March 26-27, which was set to discuss the 2009-12 strategy for India. On the table was an Indian request for a US$2.9 billion loan approval. What appears to have got China's goat was the inclusion of a $60 million flood management, water supply and sanitation project in Arunachal Pradesh. Although China gave no explanation for its move at the ADB meeting, ADB sources in Delhi say that India's inclusion of a project in "disputed territory" prompted the Chinese decision.

China maintains that Arunachal Pradesh, which lies in India's northeast, is "southern Tibet". It lays claim to around 90,000 square kilometers of territory in India's northeast, roughly approximating the Indian state of Arunachal Pradesh. During the 1962 border war, China advanced into and briefly occupied territory here before announcing a unilateral ceasefire and pulling back to the McMahon Line that India recognizes as its border with China. In 1987, there were serious skirmishes at Sumdorong Chu in Arunachal Pradesh.

Despite the general improvement in Sino-Indian ties, China has not given up its claims on Arunachal Pradesh, even becoming more assertive in making these claims in recent years. Incursions into Arunachal and Sikkim have been frequent. The entire 4,057-km-long Sino-Indian border is disputed.

China's move at the ADB meeting isn't surprising. It has always objected to any development whereby India asserts itself vis-a-vis Arunachal Pradesh. Only a few days earlier, China raised objections to India's President Pratibha Patil visiting Arunachal Pradesh and objected to Prime Minister Manmohan Singh's visit there last year.

In 2007, a civil servant from Arunachal Pradesh was denied a Chinese visa on the grounds that he was from Chinese territory and hence didn't need one. During ongoing negotiations on the border dispute too, China is said to be rigid on its claims in Arunachal Pradesh.

Thus, an objection to an Indian loan involving Arunachal Pradesh was to be expected at the ADB.

An annoyed India has conveyed its displeasure with the ADB for allowing China to bring bilateral baggage to bear on its lending policies. It has made it clear that it will not remove the Arunachal project from the plan. This is the first time that an ADB loan to India - the largest recipient of ADB funding last year - has been blocked.

Days after the setback at the ADB, India struck back. It turned down China's informal request to be included in some form, ie as observer or associate member, into the 33-member Indian Ocean Naval Symposium (IONS) initiative started by India last year.

Reports in the Indian media have described Delhi's decision to exclude China from the IONS initiative as a tit-for-tat response. Officials of India's Ministry of External Affairs (MEA), however, deny that the decision on IONS is related to China's action in the ADB.

"China cannot be included in this initiative as IONS is restricted to Indian Ocean littorals, which China is not," an MEA official told Asia Times Online.

India's rejection of Beijing's request to be part of IONS has to do with its long-standing anxieties over China's growing presence in the Indian Ocean. With half the world's containerized freight, a third of the bulk cargo and two-thirds of oil shipments traversing this waterway, the Indian Ocean's importance for global trade is substantial. Its significance for India's economic development and security too is immense as most of India's trade depends on the sea for transport, while nearly 89% of India's oil imports arrive via the sea.

India is uneasy with China's presence in the Indian Ocean as it believes it poses a threat to its security and other interests.

"That India's decision on IONS followed close on the heels of the ADB developments is purely coincidental," the official said.

But a Chinese scholar on South Asia who spoke to Asia Times Online on condition of anonymity said that India is "reading too much on the Chinese move at the ADB". It was a "routine protest that had to be made. Had China not raised an objection, India would have seen it as softening on the part of Beijing on the issue."

"The meeting has only been postponed," he pointed out, adding that China would not sabotage the approval of India's loan when the meeting is rescheduled. "At a time when China is seeking a larger role for itself in multilateral financial institutions, it would not want to be seen as obstructionist or as using its position in these forums to settle bilateral scores," the scholar said.

But Indian officials are wary. With China's clout in global financial institutions growing, there is some concern in India that Beijing will use its influence to keep India in check.

After all, "China's use of its position in multilateral forums to clip India's wings is not new," the MEA official said.

Indeed, Beijing has resisted India's membership in the Association of Southeast Asian Nations Regional Forum and the Asia-Pacific Economic Cooperation and has never been keen on India becoming a permanent member of the United Nations Security Council. At the Nuclear Suppliers Group meet in Vienna last year, when a waiver of restrictions on nuclear trade with India was being considered, China sought to block a consensus from emerging in favor of India.

Indian officials say that China's move at the ADB is an issue of concern not only for India but other countries. China could use its position in multilateral financial institutions to hold back funds for countries that take a position that is more sympathetic and supportive of Tibetan leader the Dalai Lama for instance, or of Taiwan. Beijing could flex its muscles in these situations as well.

Sudha Ramachandran is an independent journalist/researcher based in Bangalore.


http://forums.delphiforums.com/sunkopitiam/messages?msg=28705.1