Sunday, July 01, 2007

Who'll be the Global Soft superpower?

China is soaking up resources in Africa and Latin America. And everybody else is eating their hearts out. Or are they? In its desire to lay hands on pretty much every mineral and fuel source it can find, China has laid out the diplomatic red carpet in these two regions. But while China has been totally unstoppable, India is moving in its slow, slightly chaotic way to improve its footprint in Africa and Latin America.


While the ambitions of the emerging powers may intersect, the approach and quality of China and India’s presence in these regions could not have been more different. In fact, you can almost distinguish between the Indian model and the Chinese model. But however you look at it, the underlying competition is one for soft power supremacy in a huge chunk of the world.


The Chinese model is pretty straightforward — exchange between money and diplomatic influence in return for unfettered access to natural resources. Take Africa. China first came into contact with Africa when their legendary explorer-conqueror Zheng He returned from Kenya around 600 years ago — with a giraffe. Today, China’s blitzkrieg through Africa, building roads, railways, power plants, football stadiums, writing off loans and removing tariffs bears no resemblance to Zheng’s adventures. In return, China gets loads of oil, timber, copper and other raw materials.


The Indian model is very different. From India’s freedom struggle and subsequent commercial success of the Indian diaspora in Africa, the non-aligned movement etc, India has been a subterranean constant. The difference was, India was more an inspiration than a way to fill coffers.


But China forced India to think differently. Today, India has certainly become more ‘business-like’ in its approach, though it stops short of being purely mercantilist. Senior Indian officials involved in India’s diplomatic push in these regions summarise the difference in approach. ‘‘China’s is resource-based investment, Indian investment concentrates on capacity building.’’


India’s big China jolt came in 2004 when it lost out on a huge oil bid in Angola. China blew India away with a $2 billion grant in comparison with a measly $200 million Indian offer to develop Angola’s railways. It made India sit up and take a hard look at its diplomacy and investment push in Africa. The story was no different in Latin America. During the 2007 World Cup, India made heavy weather of building one stadium in Barbados. China built six, and it doesn’t even play cricket.


But also, by 2007, the Angolans had joined a general buzz against China in Africa. Zambia was the first to start, after a Chinese-owned copper mine blew up. The Zambian opposition launched riots led by their fiery leader Michael Sata, to the extent that Chinese president Hu Jintao took the Chambishi copper belt off his schedule when he visited Zambia in February.


Angolans have complained bitterly about lack of job opportunities which the Chinese presence has worsened, and sources say Chinese companies have been pulled out of a refinery project. In South Africa, Thabo Mbeki warned against a ‘colonial’ relationship with China .


In Zimbabwe, China’s getting into bed with Robert Mugabe has not gone down well with the locals. The crux of the matter is: Chinese investment brings with it Chinese labour (many reportedly from prison camps) the growth of Chinese ghettos and little for the local population, but lots for corrupt dictators. The often irrational fear that China may be silently invading Africa is now commonly expressed.


India has taken a different path. Indian investments are largely private sector, riding on the back of the lines of credit given by the Indian government. They are also generally more equitable for the locals. Intent on keeping costs down, Indian companies find it easier to employ locals. In the process, locals end up with a greater stake in the Indian projects.


In Mexico, Indian IT giant TCS has set up a global delivery centre in Guadalajara with the declared intention of hiring 5000 staffers. The idea is to be close to its US customers. According to company reports TCS has a presence in Brazil, Uruguay and Chile — and all with local talent. Indian IT company FirstSource has just set up office in Argentina employing about 300 locals.


Mexico is the biggest beneficiary of Indian investment — over $3 billion — its proximity to the US and low costs working to its advantage. Dr Reddy’s Labs bought a Roche facility in Mexico and populated it with Mexicans. The result: Latin America is beginning to look at Indian companies as ‘partners’ not out to rob them of jobs and resources, as the Chinese are now believed to be doing. Indian energy major Reliance is reportedly planning a huge investment in Colombia, in collaboration with its US stakeholder Chevron, that is likely to run into several billion dollars.


In Africa, Reliance is planning a push into Sudan’s oilfields in a few years when the current political crisis has settled, an investment, company insiders say, that will be around $3 billion. And in the Greater Nile Petroleum Operating Company, India is the second largest stakeholder.


China has taken more flak on its investments in Sudan than anywhere else for its cynical policies — CNPC is the majority stakeholder in both Petrodar and Greater Nile and China reportedly lifts about $2 billion of oil per year. But China has also supplied weapons to Khartoum for the genocide in Darfur and shielded the Bashir regime from international sanctions in the UN Security Council. Its only after the international NGO circuit started dubbing the 2008 Beijing Olympics as the ‘genocide games’ that Beijing decided to act.


This has been a lesson to India as well. In 2005, Manmohan Singh refused permission to ONGC to invest in two big oil deals in Nigeria because of due diligence concerns. Although India is also in Africa for economic reasons, there is an effort at humane-ness. In fact, India’s big push is to get Africa connected and educated. Ethiopia, South Africa, Ghana, and Mauritius will be the initial countries for the Indian government’s $1-billion pan-Africa e-network project, a joint initiative with the Africa Union (AU).


The project aims to develop Africa’s information and communication technologies by eventually connecting all of the 53 African countries to a satellite and fibre-optic network. It’s ambitious and imbued with virtue. India also plans to export its open university system, among the largest in the world, to Botswana and Uganda, among others in Africa.



Of course, India is no China when it comes to focused attention to resources, but strategists in the government are convinced this is the way India would like to go in Africa — a more inclusive presence. These are aspects of Indian soft power that India believes will pay greater dividends in years to come. More than the Chinese model.
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