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Year in Review: The Indian-Subcontinent – IMPRI Impact and Policy Research Institute

Year in Review: The Indian-Subcontinent - IMPRI Impact and Policy Research Institute

Anil Trigunayat

South Asia, with the exception of India, was perhaps the most severely impacted region in the world by the pandemic and the Russia-Ukraine war as the region’s domestic contradictions leading to leadership changes and inequities, and even debt-inducing foreign policies continued to play out and further complicate the adverse impacts.

It was not only the economy or the social landscape of countries like Afghanistan, Sri Lanka, and Pakistan, but their fragile polities faced even more devastating outcomes. Moreover, their smart gaming and balancing acts between the two competing regional super powers in China and India were severely hampered during the year as the Chinese BRI (Belt and Road Initiative) and its debt-trap and “wolf warrior” diplomacy not only came under stress but created a strategic rethink in several countries.

This was especially true for Sri Lanka as they witnessed public protests as well as economic bankruptcy, leading to the removal of the Rajapaksa regime. India, after some hiccups in the second COVID wave, managed its economy and foreign engagements rather well. It became the 5th largest economy by passing the UK and is slated to become the 3rd largest by 2030. Like always, the country once again rose to help the needy nations in its neighborhood in the spirit of “Vasudhaiv Kutumbakam” and its “Neighborhood First Policy.”

Afghanistan continued to reel under the apathy of the international community after the unceremonious exit of the USA last year as the ultra-religious and orthodox Taliban government continued to defy its own population and their aspirations. This was especially the case with their decisions to severely restrict women’s movement, freedom and education, which further alienated their regime, even in the context of receiving humanitarian assistance in a steady manner. Global attention was diverted towards the Eurasian war and in coping up with the adverse impacts of the pandemic.

Taliban internally had to fight with its own factions as well as the competing ISIS-K which continued to mount terrorist attacks on Taliban security outfits as well as on the minority communities like the Hazaras. Instability and societal stress and economic deprivation continued to mar any semblance of a stable future and during the course of 2023, more of the same is likely to continue. Afghan refugees in the neighbouring countries could also not find any respite.

While China, Russian, Turkey, Pakistani and the Central Asian countries retained their embassies, several incidents against them were reported. In the Afghan context, India continued to work with Central Asian countries, Russia and Iran while it reopened its diplomatic mission (more so at a technical level), as the working relations with Taliban were put in place. Taliban government requested India to restart its high-impact developmental projects in Afghanistan, assuring the security of Indians. New Delhi has continued to provide unabated humanitarian assistance, be it wheat, medicines or vaccines.

China and Pakistan tried to keep India at bay and undermine its diplomatic efforts in Afghanistan, but the Afghans have a historical connection with India at the P2P level. Even the Taliban related positively to the Indian assistance and intent despite the Pakistani deep state’s designs. However, due to instability in Afghanistan, some of India’s connectivity projects via Iran and to Central Asia were impacted.

Bangladesh has been doing quite well in recent past. However, due to the twin impact of COVID and war in 2022, energy and food security of the country were adversely impacted. Further, a foreign exchange crisis ensued as well. Consequently, Bangladesh witnessed several protests against the Sheikh Hasina government, giving some handle to the opposition parties. Although Bhutan was able to manage reasonably well with Indian assistance, it did face a depletion in its foreign exchange due to pandemic and the Russo-Ukraine war. It had also put restrictions on travel and import of various items that helped stabilize its economy and averted public uproar.

Maldives, which already is facing a terrible climatic wrath with overflooding, also suffered political upheavals. There are some terrorist groups operating out of the country with affiliations to Al Qaeda, and even ISIS. Further, accusations against India for interference were mounted by the pro-Chinese lobby leading to some protests with the occasional “India Out” campaigns but overall, the relations progressed reasonably well as India remained the first responder during any crisis.

Nepal also faced its own domestic electoral crises as power shuttled between the Communists and others. Eventually, after the elections, PM Pushpa Kumar Dahal alias Prachanda emerged victorious. His policies are likely to veer towards China. The country’s economic woes continue as the impact of war took its toll due to high prices of food and energy. High inflation and higher costs of living along with dwindling foreign exchange reserves led to palpable social unrest. However, US ‘s MCC did bring in some $500 million in funds and projects which led to its own debates and political ramifications. Several policy measures had to be introduced to curb imports and to control foreign exchange.

Pakistan has been severely hit by internecine political struggles and protests leading to the removal of PM Imran Khan as the people of the country suffered from high inflation, energy blackouts, foreign exchange crisis, mounting public debts and defalcation. Further, there were unprecedented floods which affected 33 million Pakistanis. Despite that, the Pakistani deep state did not give up on the use of terrorism as an instrument of foreign policy against India.

There was no improvement in bilateral relations between both the countries. Islamabad was also helped by its iron-clad friend China who continued to place technical holds on sanctioning of Pakistani terrorists under UNSC’s 1267 Committee provisions. Pakistan’s successive governments of Imran Khan and Shahbaz Sharif were forced to not only sell their properties in the US, but also kept pleading the rich Gulf states and China to defer repayment of loans and credit lines and grant more loans. The CEPC was also hit by terror acts, especially against the Chinese nationals.

Moreover, Pakistan’s biggest headache has turned out to be the Tehreek-e-Taliban (TTP). Baloch insurgency has also emerged as a major challenge for the Pakistani regime. Relations with Kabul have also been strained as the latter refused to assist Islamabad in reining in the TTP. Requests and appeals for loan to IMF remain plentiful as, after a span of four years, the country was taken out of the Grey List of the FATF (Financial Action Task Force). Moreover, under the aegis of UN, a donor conference was recently held wherein nearly $100 bn in commitments were announced. Overall, the cumulative impact of all these underlying factors is likely to decimate the stability of Pakistan even more in 2023.

Sri Lanka went through its worst economic crisis as the public protests against the policies and poor economic management of President Rajapaksa and family who were in power. The protests led to regime change as the people suffering from the domestic problems took to the streets and rampaged the presidential palace and government offices. Debt trap from China, corruption and impact of the pandemic and Russia-Ukraine war further compounded this situation. Tourism, that contributes to nearly 7-8% of Sri Lanka’s GDP also suffered immensely. As per several reports and commentaries, Sri Lanka plunged into one of the world’s worst economic crises.

Food inflation at one point surged to 90 percent, gas stations ran out of fuel, and usable foreign reserves dwindled to a mere $25 million. Sri Lanka’s currency fell by 80 percent and the nation’s economy was practically grounded to a halt. In May, Sri Lanka defaulted on its debts for the first time in its history. China was requested to reschedule the debt and servicing payments which it appeared reluctant to do. Colombo, led by President Ranil Wickremesinghe started seeking IMF help and foreign assistance to stabilize the economic situation and the availability of daily requirements like food, fuel, fertilizers (3Fs), and medicines.

India was the major neighboring country which urgently provided humanitarian assistance, grants, loans and lines of credits worth over $ 4 billion. This partially alleviated the plight of ordinary Sri Lankans in these difficult times.

India was the only beacon of hope in the region as its economy continued to grow and it enjoyed the reputation of being the fastest growing major economy in the world, surpassing UK for the 5th place and likely to be the 3rd largest by 2030. Of course, several western outfits continued to berate and accuse India of democratic deficits. However, India’s foreign policy and domestic resurgence remained robust and resilient under the strong leadership of PM Narendra Modi, who tried to play a significant role in alleviating the global hardships via a policy of “Vasudhaiv Kutumbakam”, dialogue and diplomacy.

At Samarkand he even told his friend President Putin that “This was not an era of war” urging him and Zelensky to return to the negotiating table and end the war. During the second year at the UNSC, it focused on several major global governance and peace generating initiatives, including that for sustained equity for global south, and for the freedom of navigation in the maritime domain. Despite China’s aggression and hegemonism on the borders, especially in the Galwan and Tawang incidents, it preferred dialogue and diplomacy to resolve the issues.

Even though the SAARC did not move much, India provided the requisite impact and support to the BIMSTEC, a sub-regional collaborative mechanism encompassing India’s “Neighborhood First” and “Act East” policies. As it heads the G20 in 2023, India aims to be a bridge builder, voice of the Global South, and is hoping to depoliticize food, fuel, medicines and fertilizers which have been weaponized during the year.

The article was first published in the Ytharth as Cripples and Ripples in South Asia: India’s Neighbourhood 2022 in Review on March 11, 2023.

Read more by the author: India’s G20 Presidency comes at a Difficult Time.

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