Session I
Chair : Amb Eric Gonsalves
Speakers: Mr Shiv Shankar Menon, Foreign Secretary, India
HE Yasukuni Enoki, Ambassador of Japan


Amb Eric Gonsalves

We are in the process of reshaping some of the architecture in East Asia. While this has been attempted before, those attempts, however, soon fell by the wayside. The Joint Statement between India and Japan is full of substance, indicating that we have moved a long way from the past and are beginning to make progress. The centre of gravity in international affairs is returning to Asia.

Mr Shiv Shankar Menon

The India-Japan relationship is too important a relationship to be dealt with merely from a prepared text. How have the two countries come to where they are today?

There has never been any doubt about the compatibility between India and Japan. For India, Japan has always been a most admired partner and as the first Asian country that managed to develop without losing her identity, without losing her "Asianness." Besides great economic complementarity, there has also been a high level of emotional compatibility.

So why has the relationship underperformed? The reasons were clearly external. The Cold War and the bipolar world is the environment in which the two countries had to operate. The situation has now substantially changed and India and Japan too have changed. The Prime Minister has just made a very successful visit to Japan and the response to his speech at the Japanese Diet was quite a revelation. The two countries have reached a moment now where they can actually seriously work to build strategic and global partnership that was promised for so long. This discussion was started during the Mori visit in 2000 and has been carried through steadily. For this, the Japanese side has to be thanked because they have brought to the endeavour the discipline of working in an organized manner through the Koizumi visit and to the stage where today the two countries have a joint statement.

What is the content of the strategic and global partnership that is being talked about? The most immediate result would be much closer political and diplomatic coordination on regional, bilateral and multilateral issues. This obviously deserves the strategic political interest of both countries. In the conversations between the Prime Ministers, it is clear that they both have very similar views of the world, of their own country's place in it and of the potential of working together. In fact, the quality of those conversations is really unprecedented in the relationship. There is a very large element here of their strategic relations of what sort of the world Japan and India want to be in and what sort of world they want to work together in. There is convergence between the visions of PM Abe and PM Manmohan Singh which was quite apparent in the conversations that they had in Tokyo. There will now be annual summit level meetings and there will be regular exchange of ministerial and other high level visits. The two countries will have a strategic dialogue which will be begun by the foreign ministers when External Affairs Minister Pranab Mukherjee goes to Japan in March. He has been very closely associated with this process as last year he went as Defence Minister and really laid the framework for cooperation in defence and for closer defence relations.

Secondly, there is a very large defence and security component in this new partnership. Both countries have common interests in terms of maritime security and security of the sea lanes. Both the navies will also be exercising together and the two countries now have an annual calendar now of defence exchanges cooperation which provides a framework for further expansion of cooperation. India and Japan can also enhance cooperation under the regional cooperation agreement on combating piracy and armed robbery against ships in Asia.

The third element in the relationship is the comprehensive economic engagement which is the core component of the strategic and global partnership. CEPA talks covering trade and services are to start shortly and reach conclusion within the next two years. Interest in business in both countries is at a level which has never been seen before. The two Prime Ministers announced the India-Japan special economic partnership initiative which includes the building of infrastructure in India and is likely to see major investments by Japan in the auto and auto components, petrochemicals and in other sectors in the coming years. These, it is hoped, will be realized through a series of measures including the dedicated freight corridors between Delhi and Mumbai, and Delhi and Calcutta. The JICA has actually done an interim feasibility and the full-fledged proposal should revolutionize the freight movement in India making a huge difference to manufacturing competitiveness The two countries are in the process of formulating a master plan to develop high quality infrastructure through public-private partnership. JETRO will also assist in encouraging small and medium enterprises to set up operations in India. The Japanese Ministry of Economy, Trade and Industry will also be setting up a task force on the Indian power sector to encourage participation by Japanese companies. There are several other steps also as part of this comprehensive economic engagement including a business leaders' forum which will help to develop the roadmap for the future, and a national gigabit backbone network project to be set up with Japanese assistance.

The fourth component that has very long term implications is the science and technology initiative. Japan and India are to undertake joint R&D in areas like nanotechnology, life sciences and in ICT. The two countries have also agreed to cooperate in each other's lunar missions and agreed to set up consultation mechanisms to look into transfer of high-technology. Since this has various implications including security aspects, both countries need to discuss this further and a consultation mechanism has been set up for the purpose.

The fifth component which has perhaps been the missing component so far is that of people-to-people contacts. When the two sides did a comparison of what was the level of exchange between the two countries in terms of students, scholars of Japanese language, and tourists between what Japan has with other countries and what India has with Japan, the figures compared very poorly. It is hoped that all these aspects of the relationship will be strengthened.

Finally, from the diplomat's point of view, the experience of working together for the last few years in the regional and in the global context has been uniformly positive whether it is with respect to the East Asian Summit, or on the proposal for the economic integration of Asia from the Himalayas to the Pacific, on the cooperation for UN reforms and in the G-4. Therefore, when it is said that India and Japan have an external environment which is supportive of their actually using the complementarities which are intrinsic to the relationship, it means that today the two countries have an opportunity that they have never had before. An opportunity is at hand to develop this relationship and to transform this relationship into one of the major driving forces of the new architecture of Asia. As Mr. Gonsalves said, the centre of political gravity has shifted to Asia and cooperation with Japan will help see this process carried through to its logical end. There is strong consensus in both countries cutting across political parties to support this partnership and therefore, the time has come really for India and Japan to pursue their global and strategic partnership.

Comments

• India and Japan as two mature political entities, two mature democracies should find enough reasons to develop their bilateral relations on a sound footing without having to rely on the US or China to provide the reasons

• Para 46 of the Joint Statement has been left rather open-ended. What are the implications of this?

• Is there any difference in the strategic partnership that India has with Japan with those that India has with other countries?

• What were the reasons for Japanese media coverage for Prime Minister Manmohan Singh's visit to Japan being rather low-key

Mr Shiv Shankar Menon

We are in the process of evolving a new Asian architecture - an open architecture, not a binary, exclusive architecture and China is very much a part of this architecture. The Prime Minister has said it often that there is space enough for both to grow and rise together that is exactly what is happening.

The reason Paragraph 46 has been phrased in this loose way is not to conceal anything but to leave possibilities open. It is a work in progress.

India has no reasons to let its standards slip once it is has obtained NSG approval. It has no reasons either to look with fear on the additional obligations. India has always imposed high obligations on itself and kept to them.

Japan and India now have the political understanding and the experience of working together and this is now intrinsic to the relationship and not any longer extraneous. The external environment too is now favourable to the partnership.

Each of India's strategic partnerships has a set of adjectives attached to it by which it has tried to differentiate the different nature of the partnership. A strategic partnership for peace and development is one that is based on an economic relationship but it does have a strategic implications both in terms of its reach and its long term sustainability. A global partnership is one that India perceives to have a huge global impact.

Amb Eric Gonsalves

The number of Indians studying Japanese is increasing and this is encouraging. Similarly, the economic impact of cooperation between the two countries on Asian GDP is also likely to be great. The Japanese commitment is a total commitment and India appreciates Japanese contribution to India's infrastructure development as being crucial and vital.


Session II
Chair : Amb Arjun Asrani
Panelists: Amb Lalit Mansingh
Dr C Rajamohan
Mr Anjan Roy, FICCI

Amb Lalit Mansingh

An event from history is somewhat reflective of India-Japan relations in the past - a young Indian schoolboy studying Japanese history listens to the dispatches on the Russo-Japanese war and was thrilled by Japan's victory in the same. This young schoolboy was Pandit Jawaharlal Nehru. Japanese victory in the Russo-Japanese war made Japan the role model for colonized India. Japan's defeat in WWII was a deviation from the role model envisioned by Nehru following which the two counties gave each other little attention. A belated attempt at course correction was made under Narsimha Rao through the Look East policy; however this policy focused primarily on the Near East.

Japan viewed India as a chaotic and poor country during the Cold War and not as a partner. India was viewed more or less as a local and was always hyphenated with Pakistan. Following the nuclear tests of 1998, Japan suspended all political and economic relations with India. In hindsight, 1998 can be seen as a turning point in Indian foreign policy- the countries that had condemned India's nuclear tests steadily improved relations with India in the post-1998 era. In 2001 the US declared India a strategic partner. Many parallels can be found between India's relations with the US and with Japan. The breakthrough in both relations was made during a high-level visit - President Clinton in the case of the US and Prime Minister Mori in the case of Japan. In both cases, an important role was played by emissaries behind the scenes - Mr Strobe Talbot in the case of the US and Mr Ishiba and Mr George Fernandes in the relationship with Japan. As dialogue progressed, the relationship progressed towards a strategic partnership.

India and Japan are at a crossroads but on the same side today. There are economic, political and strategic reasons for this. As far as economic issues are concerned, Japan is an economic giant on a downward curve while India's economy is growing. India requires technology and investments and its young, skilled workforce could complement the Japanese workforce. Politically, after the Cold War and the East-West conflict, a psychological fence has come down. There is belief in democracy and rule of law. Both India and Japan share these values. Strategically, the two countries have common global objectives - energy, sea lanes and an interest in preventing hegemonic rise in the region.

The joint declaration emphasises bilateral, regional and global levels of interaction. Cooperation, however, is open-ended and inclusive. While the joint declaration speaks of the bilateral relationship in glowing terms, challenges to the India-Japan relations can emerge from many quarters. The first challenge may arise as a consequence of Japanese Constitutional changes. The second factor could be from India's politics and economics. The third challenge could be China. A structural change is on its way and a rift between hegemonic China and maritime Asia may prove to be inevitable. The US could be the fourth factor. Japan is an ally of the US while India is a strategic partner. Differences remain in the support extended to the US by the two countries on different issues. These differences could strain the bilateral relations between India and Japan.

Looking to the future, the end of the Cold War has enabled an atmosphere of freedom. Relationships are formed between states despite historical antagonisms. Such promiscuity has sometimes tested the reliability of traditional friendships. The freedom to form new relations without the baggage of the cold War has enabled India to develop partnerships without disturbing older relationships. As a consequence, the future will witness balance of power politics rather than a unipolar world.

India has significantly improved bilateral ties in East Asia. While there is no cause to suspect that India's relations with any state in the region will be jeopardized in the future, in the event of a conflict of interest between Japan and China, it would be interesting to hypothesize which country India would support. Would it be a traditional friend Japan or the new economic partner China?

Dr C Rajamohan

The shortest paragraph of the Joint Declaration is paragraph 46 which calls for cooperation between Japan, India and other like minded states. It is important to realise why this paragraph is crucial. It talks about an idea that has been around for sometime - cooperation between India, US, Japan and Australia in a strategic sense. Any discussion on Asia invariably is about China, and this paragraph may not be an exception. In terms of policy it would be interesting to see what implications this paragraph might hold and whether it implies a new beginning in the region.

The idea of quadrilateral cooperation is not entirely new. It was idea that was fairly strong in the late 1960s. Prior to the normalisation of US-China relations, the anti-China sentiment in India was high, not only because of the border conflict but also because China during the Cultural Revolution was viewed as attempting to destabilise other countries through the export of revolution. The idea of quadrilateral cooperation to manage China was thus in vogue. Normalisation of relations between the US and China however ensured the early demise of the notion and other Asian countries were encouraged to improve ties with China in its wake. The last twenty years of the Cold War saw the emergence of new alliances with the US, China and Japan on one hand and India and Russia on the other.

The idea of Quadrilateral Cooperation was revived after the Tsunami relief operations when the relief operations became the model to be followed by the four navies. There was much talk of establishing interoperability between the four naval forces. Prime Minister Abe's book revived the notion of cooperation between Asian democracies. Perhaps this allusion of cooperation between democracies was an attempt to wrap a strategic move in ideological terms to ensure greater acceptance in the region. The US seemed rather cool to the idea for there were serious reservations over quadrilateral cooperation at a time when the US was engaged in the North Korean Nuclear talks where China played an important role.

Indian eagerness to be part of quadrilateral cooperation must be understood not as 'anti-China' but simply as an opportunity to interact with other powers and is reflective of a jump in the ideological thinking in the country.

Cooperation in the quadrilateral form will be incremental but is a great opportunity for the navies of the countries involved. Pranab Mukerjee's visits to the US and Japan in recent years established the basis for closer defence cooperation. The moment for choice has not yet arrived. And if India keeps improving its relations then it will be in a very good position at a later date and will be able to bargain for her interests better.

Mr Anjan Roy

Any analysis of India-Japan relations would necessarily involve an assessment of the economic relationship between the two. This would involve a review of economic relations, reasons for its current state, the way forward and an evaluation of relations between India, Japan and China.

Japan has slipped from the position of importance from the third most important economic partner in 1993-94 to being the seventh in 2003-04. The composition of the basket of trade has also remained constant over the last ten years and Indian exports continue to be largely low value. Despite this, there has been a turn around in trade over the last three years and economic relations today are valued at $ 6.3 billion with a target of $7-8 billion by the end of the year.

Bilateral trade has even seen negative growth levels in the recent past. The reasons for slow trade growth are many. There is a process of trade diversion taking place. Japanese trade has been seen to have linkages with Japanese investments. It is those countries in which Japan has invested large sums of money that see a favourable rate of growth in bilateral trade. Japanese investment in India has been rather limited and thus there are few linkages between trade in investment to spur economic relations. Japanese standards and requirements are also very high. Indian exporters are often unable to meet these regulations and they are increasingly becoming a trade barrier. India has not become part of the seamless cross border production matrix. The inability to integrate into the process of cross border production prevents Indian trade from growing. If India forms linkages with countries that trade with Japan, it could significantly improve its trade profile. The poor perception of India vis-?-vis infrastructure also inhibits greater economic interaction. Not only are Indian transport and other logistical facilities seen as unsatisfactory, but Indian manufacturing is perceived to be of poor quality and India is viewed as an unreliable supplier with regard to agricultural products.

The way forward would have to include the use of Japanese trading houses to export Indian goods not to third countries but to Japan itself. India's production also needs to be reoriented. With regard to textiles, the market requires finished garments. To be saleable, these garments would have to follow international trends and match high standards. Also, with regard to agricultural products, India exports raw meat while the market for processed meat is far bigger. Value addition to export goods is required to meet market demands. A reorientation of Indian export industry is thus necessary. Indian manufacturing too would have to integrate into not only cross border production processes but also establish direct links with Japanese importers and producers in order to identify market trends and demands. Only 20 items form the majority of export goods to Japan. It is thus vital that exports be diversified. An FTA with China or a pan-Asian FTA are not in the interest of India, an FTA with Japan on the other hand, would provide India access to manufacturing goods market. Prior to more extensive economic engagement however, it is imperative that Indian exports and manufacturing be reoriented and a thorough study of the economic requirements be made.

Amb Arjun Asrani

The closeness in India-Japan relations is an attempt to mitigate the indifference of decades. Both Koizumi and Abe have followed top-down initiatives to strengthen bilateral relations and each Prime Ministerial meeting has brought the two states closer. The recent Joint Declaration is a consolidation of earlier statements. Japan's policy can be viewed as an attempt of denial of vacuum to China and prevent hegemony.

The most important change in this Joint Declaration is the weight of the economic content. Japan assisted ASEAN in the 1980s through a master plan for investment in infrastructure. This Joint Statement outlines a similar master plan for India. An EPA/CEPA is conceptualised instead of a regular FTA so as to ensure that trade is not limited to goods. A taskforce on the Indian Power Sector is also envisioned with power projects proposed in Arunachal Pradesh and Tamil Nadu. It these are followed up on then this will be a breakthrough in power generation in India. It will also enable high technology transfers and facilitate hi-tech trade. The desirability of quadrilateral cooperation has been mentioned by Abe. Such a quadrilateral dialogue is likely in the context of democracy and human rights. The inclusion of the word "strategic" should be avoided. With most countries India has joint commissions but not so with Japan. Japan is attempting to establish ministry to ministry high level contacts which have a better chance of being implemented. This highlights a big change in Japan where policy formulation is moving from the bureaucrats to the ministers at the top. The opportunities for closer bilateral ties are thus immense.

Comments

• The quadrilateral arrangement was a non-starter not only because of the Cold War but also because of other complications, including Australian fears about the Indian navy.

• While both Japan and India are committed to their relationship, one problem lies in the lack of sync with the economic component of the relationship. Japan cannot go against this rationale, especially with respect to China.

• China will be a part of the Asian architecture and India and Japan will need to resort to multiple balances of power and along different planes.

• An Asian system will also help deal with the US on a more equal basis.

• There is a need for Indian industry to shape up. It cannot be excessively cautious and wait too long for the moment when it will feel itself sufficiently strong to compete on a global scale.

• Paragraphs 10, 11 and 12 deal with the subject of maritime security and this is perhaps the first time that the issue has been dealt with at such length in any official statement by India. This is obviously a Japanese initiative, given the fact that most of their oil supplies pass through the Indian Ocean. In the context of diplomacy, maritime security should be a close adjunct to it.

• The core group during the tsunami operations can be the basis of improved relations with Australia and for more proactive relations at sea.

• The degree to which each Northeast Asia and Southeast Asia look at issues sub-regionally rather than at an Asian level has to be acknowledged. Northeast Asia for example is concerned in security terms only with China, Japan and North Korea.

• India is beginning to look more closely at Northeast Asia and Southeast Asia which is a new development.

• Policies emanating from Asian capitals are geared toward ensuring a multipolar Asia and should not be considered as trying to contain China.

• Had the quadrilateral come about too quickly, it would have caused consternation of some note in the region. Australian policies have however, changed since the 1980s with respect to India.

• There is a need to shift the vision from the nitty-gritty to a broader vision of the economic relationship.

• Cooperation on anti-piracy between India and Japan cannot be very effective as the most vital chokepoints such as Malacca are no go areas due to the sensitivities of Malaysia and Indonesia.

• The rise of China is the single most important development of our times and how we deal with it is important. There is no reason to think that the quadrilateral would be an affront to China. The Japanese strategy has to be appreciated for what it is and there are opportunities here for India.