COUNTERPUNCH

A few days from now, Bush will go to India and reaffirm his newfound love, becoming the only Republican President to visit India after Nixon. Bush and his ‘mouthpieces’ are quite vocal about their need of India – to compete with the EU, to check China, to control unpredictable regimes and to expand the war on terrorism etc. But it is quite interesting to note how India’s consistent positive response to these advances is generally taken as paradoxical, or else simply as succumbing to ‘external’ pressures. However if we take notice of the transformation of Indian capitalism and of the aspirations of the Indian ruling class, we can easily find the reason behind this mutuality.

India has already expanded its interests beyond South Asia and other neighboring economies. It has business assets and interests to secure both in developed and underdeveloped worlds. In fact, Indian capital has been ‘flying’ through legal and illegal routes since 1956 when the Birla group of companies made a large-scale investment establishing a textile mill in Ethiopia. In the late 1970s-early 1980s, the phrase “third world multinationals” was popularized to differentiate them from the first world multinationals. It was generally perceived that unlike the latter, which were motivated by the firms’ internal growth process, third world multinationals were products of demand-side bottlenecks, the statist restrictions on monopolistic and trade practices, other imperfections and distortions created by the state and political forces. This argument is negated by the fact that the companies going abroad where mostly those who had profiteered in the phase of ‘interventionism’. They were firms having “a diverse and established presence at home”. As one scholar from that period, Rajiv Lall noted in his study “Multinationals from the Third World: Indian Firms Investing Abroad” (Oxford University Press, 1986): “These firms tend to be part of large industrial houses with a conglomeration of holdings that give them an imposing rule in the Indian market.”

However, until 1978, majority equity participation in firms abroad was generally prohibited. Despite this, the Indian firms investing abroad managed to retain management control. After that, the pace of capital export has been unceasingly maintained, with its tremendous unimpeded nature in the post 1991 phase. The post-1991 scenario has rendered new directions to the Indian “export of capital”. The State itself has emerged as a leading segment in this trade, concentrating on sectors that allow a smooth process of capital accumulation domestically and internationally–energy and finance, being true to its role of expressing the general conditions of accumulation and devising overall economic strategy.

The energy requirements of India’s economy have been constantly increasing and as a result indigenous corporate oil interests have evolved, which initially were restricted to brokerage in export and import. But as the regulation for the outflow of Indian capital for investment and acquisitions abroad has been eased out, there has been heavy investment to ‘proactively’ secure energy supplies from abroad. Indian oil companies, especially, Oil & Natural Gas Corporation­Videsh Ltd (OVL), are acquiring assets in oilfields in Russia, Latin America, the Middle East and ex-Soviet Central Asian republics. India is particularly using its erstwhile non-aligned image to gain access to the African oil and gas fields – Chad, Niger, Ghana, and Congo in particular. In Sudan, it has already made its largest investment acquiring the assets from a Canadian company, which left Sudan after human rights organizations charged it of committing genocide in Darfur region. On this front, once again, China is India’s main competitor and collaborator, as both have been trying to ‘secure their energy supplies’ in the context of bigger players.

One may point out that these are still public sector endeavors. However, on the contrary, there have been increasing efforts to open up India’s energy market for private investment, and domestically it is already in place now with Reliance Industries Ltd (RIL) and other private corporates expanding themselves in petroleum and power sectors. Further, at the present fluid state of India’s capitalist expansion, the public sector leadership provides a systematic character to the expanding tentacles of Indian capitalism. Because of the specific character of property relations and rent system involved in it, the oil sector is totally different from other industries and requires state-to-state relation for any negotiation to succeed. In the present state of uncertainty in the energy sector internationally, even if India further liberalizes this sector, its international expansion will remain largely a government affair. Further, especially after 1991, state companies in India have been increasingly corporatized, independently competing for the access to finance and capital markets, and strategizing on their own expansion. The corporatist character of the state-owned enterprise brings together several individuals, having interests and aims distinct from the State, who make contributions during the course of development of the enterprise in the capacity of managers and investors. The State is only the initial investor of the enterprise, while its subsequent expansion is dependent on factors internal to it and its presence in the market. Eventually the state’s ‘share’ is effectively reduced, and the enterprise acquires an independent character similar to the private sector. This leads to crises–on the one hand, the state and the managers are frequently in conflict, and on the other, the state control is de-legitimized.

In fact, the crisis is already evident in India. The Indian government and the managers of its Public Sector Undertakings (PSU) are increasingly at loggerheads over risk assessment etc. For example, OVL’s commitment to corporatism and market is coming increasingly in conflict with its political directors. Recently, OVL had successfully bid a 45 percent stake in a Nigerian oil and gas field. It was the only case where it could beat the Chinese. But in the end it had to face, as some OVL officials put, “a huge embarrassment” and “a loss of credibility” because the government turned down its proposal at the very last moment on the ground of it being “risky”. This must be understood in the context of the political debate over divestment in the profit making PSUs. It remains a very contentious issue. Moreover, the left support to the present Indian government has moderated the Indian state’s intensive neo-liberalism, scuttling its recent vigor. Therefore, it needs to put stop to the statist expansion in the energy sector by other means, by playing the political game of calling the investments risky, and motivating the private corporate sector to come up. Besides this, a private-public partnership in the energy sector is already in place, domestically with private oil companies like RIL, while internationally with “diasporic” capital like Mittals.

Recently, some analysts have argued that India’s expansionary involvement with oil-producing countries for securing energy supplies itself is risky as these countries are in conflict with the United States over human rights or non-proliferation issues. And the latter will tolerate India’s alliances only to the extent they are trade-focused. A “diasporic” apologist of the Indian submission to the “American Imperium”, Economist Deepak Lal (Business Standard, November 15 2005) argued that this risk “could involve not merely putting the “Gurkhas” on the oil field, but in essentially taking over the country”. Quite unabashedly, he argues, “If these foreign investments are to be made on a commercial basis by an Indian oil company, it would be best to privatize the state-owned companies and let them then decide whether such investments are in their commercial interest.” However, he concedes, “The Indian government could justifiably use its diplomatic clout to help [a private investment project] fructify”. Does not this diplomacy include an employment of “gunboats and Gurkhas”?

Besides energy, another sector where the “public” is supposed to be in command in India is the banking sector. Indian banks too have been buying assets in Africa and Asia. Significantly, this expansion is a typical case of what was classically conceptualized as “finance capital”–a merger of banking and industrial interests. These state-run banks have been providing financial resources to overseas Indian projects, both private and public. More importantly, they are involved in giving loans, credit lines and other financial helps to fragile economies for infrastructure building and other industrial projects on the condition that they will employ Indian firms. In other words, the banking sector expansion has been an important vehicle in exporting Indian capitalist interests overseas, and also reclaiming the Indian “diasporic” interests, as they are increasingly using these financial institutions to their advantage. The “public” nature of this expansion gives it a ‘systematicity’, which otherwise would have been lost in the global market. Further, it creates a direct linkage between the Indian state and capital.

However, “most outward FDI goes to the manufacturing sector, especially, pharmaceuticals”, and non-financial services that account for as much as 36% (UNCTAD, “India’s outward FDI: a giant awakening?”), and here it is the private sector that reigns. Definitely, whether “public” or “private”, they involve imminent “risks”. However, these risks can be India’s asset too. On the one hand, the unstable polities in countries hosting these investments legitimize India’s political intervention to secure its economic assets and interests. In the post-9/11 political parlance, this is what is termed as overseas “security interest” of a powerful country. The recognition of this ‘interest’, the ability to legitimize it by manipulating ‘global opinion’ and forming favorable international alliances constitute the criteria for becoming a power.

On the other hand, India’s mastery of ‘unreliable’, and ‘rogue’ polities, and its ability to forge indigenous clients in those polities make it a worthy partner for other global powers whose recent hyper-interventionism has reduced their own ability in this regard. Conflicts in Afghanistan and Iraq have further attested this inability of the US hegemony, at least–political forces against which wars were waged in these countries were erstwhile US allies. These conflicts are symptomatic of the crisis of the US hegemony more than the unipolarity of the post-Cold War era. Unlike the ideology of the “Soviet threat”, the post-Cold War ideologies of human rights and non-proliferation could not form the legitimate basis for forging international alliances, since the duplicity of the “global powers” on those same accounts are too apparent. In fact, the orientalist bases of these ideologies have further curtailed the First World’s ability to directly manipulate political forces in the “third world”. At this juncture, ‘mediocre’ powers like India could become relevant interfaces between the two worlds, for perpetuating and sustaining global capitalism and its political structure.

Answering some objections

There are two points that can be raised regarding the “export of capital” from India–that it is quantitatively insignificant, and that the biggest host of the Indian export is the United States and other First World countries.

Regarding the first point, the export is not so insignificant, as the ratio of outward to inward Foreign Direct Investment (OFDI/IFDI) is significantly high and increasing, amounting to around 20% in 2005, while in 1997 it was less than 6%. However, even if we concede this point what matters more is the ability and will of a State to defend the rising interests from this insignificant amount–how does this OFDI shape up the character of Indian capital and state, irrespective of its amount? How much it has affected India’s relationship with the Nepalese, Sri Lankan and other neighbouring economies and polities? How much it has defined India’s intrusion in the African economies (like Sudan, Libya, Nigeria)? How much it has helped in evolving India’s aggressive oil interest, especially since OVL has invested in many African and ex-Soviet Central Asian republics’, Vietnamese, even Cuban oilfields? How much it has defined the active Indian interest in the oil price war, in lowering the “differential oil rent” accrued by the oil economies, and hence how much it has shaped the Indian hobnobbing in the Middle Eastern politics, its vote on the IAEA resolution on Iran?

As far as India’s investment in the US, which hosts the largest chunk, is concerned, it makes the Indian economy (like many other economies) dependent on the ups and downs in the American market. Since Indian capital is just one of the many players here, the Indian state’s task as the protector of its capitalist class (Non resident Indian (NRI) or non-NRI) is to provide it an edge in the competition. This makes the Indian state, furthermore, subservient to global coalitions. On the whole, the OFDI brings Indian capital and state in the consortium of global imperialism, which is presently under the police administration of the US (this status of the US is defined economically, politically and historically.

Pratyush Chandra

Every ‘bold’ and ‘independent’ step by a ‘third world’ government is seen as congenitally progressive and even anti-imperialist. Any ‘third world’ alliance is welcomed on the ground that it will develop multi-polarity in the ‘unipolarising’ world. Today, in India at least the middle class “progressives” have the tendency to visualise every dinner party between Delhi, Peking and Moscow to be progressive and a step against imperialism. While trivialising the very notion of imperialism as a world system, this nostalgia for an “anti-imperialist” statist cooperation has made our “progressives” remarkably moody – the Indian state’s apparently contradictory, adulterous relationship with the US hegemony seems to negate the promise revived by Manmohan’s courting of Putin or the Chinese leadership. The simultaneity and intensity of all these relations put our “progressives” totally out of mind, making them giddy.

They must be really sick, if they come to feel the potentiality of anti-imperialism in business ties, as recently in the partnership between ONGC Videsh Ltd (OVL) and the China National Petroleum Corporation (CNPC) for jointly bidding for promising projects. This particular partnership is definitely significant not only for the energy supplies to India and China, but also perhaps for global energy politics. But to consider it as challenging the global hegemonies is undoubtedly a maddening extrapolation.

It is true that India and China both are major players in the world market, and the global polity cannot be understood by ignoring their activities. But it must be admitted that their position is largely, if not solely, dependent on the cheap labour-force and its vast reserve army (regimented by the informalisation of labour markets along with the statist integration of ‘labour aristocracy’). Their underdevelopment has been a boon in this global rise of these economies. It has carried the segmentation of labour market to an unprecedented level, along with a multiple diversification of the demand structure. These are the gifts of the “differential of contemporaneousness”, as Sidney Pollard would call it. (1) Do we want to term this rise as “progressive”?

Further, the Indo-Chinese “collaboration to compete” is already in place in various international and regional trade, business and political forums, both struggling against the protectionist west and claiming low labour and environment standards as their comparative advantages. Even though global capital on the whole – western and indigenous capital and multi-nationals – is effectively using these advantages for its expansion, its identitarian heterogeneous configuration forces a competition that requires cornering of each other through shifting coalitions.

With regard to the Sino-India cooperation, three points are very important. Firstly, its political manifestation need not exactly pattern with the economic. In fact, all international alliances and cooperation in the phase of neoliberalism tendentially seek to ‘depoliticise’ the economic management. Are we not used to frequent statements from businessmen and politicians that call for not mixing ‘national’, ‘pragmatic’ economic interests with politics? However, “depoliticization is highly political” – it puts the economic management beyond the effects of political uncertainties that mar political systems today, especially democracy. In effect, this means putting economic instruments beyond the possibility of democratic control, beyond any reciprocal effects of the social fallouts of capitalist competition and collaboration. (2) There is a high probability that we will see political and border conflicts between India and China intensifying with the increasing economic cooperation. In fact, the reformist China has been very efficient in depoliticising its international relations and also its labour market, by carving a near-ideal panopticon (Bentham’s “confinement house”) out of the Chinese society, as “mechanism of discipline, secure management of a multitude and extraction of labour”. (3). Only a rampant depoliticization of all economic relations – i.e., by forcing labour to surrender – China could achieve its “global rise”. The said Indo-China cooperation is developing in this context.

Secondly, any global intervention on the basis of this cooperation will be more of a competitive-collaborative character designed to redistribute the booties gained in the areas where they compete, or more exactly for the “division of the rest of the world”, left by the “great powers”. They collaborate to compete, and their collaboration in the energy sector, where cartelisation is an inherent tendency, is exactly of this nature.

If we see counter-hegemony in India-China partnership, can we call the formation of OPEC as progressive, or anti-imperialist? OPEC was constituted by five oil-producing countries in 1960 to stabilise their own income against the earlier system of royalty arbitrarily fixed by the oil concessions. “The royalty rates …were exclusively geared to the extent of political domination of international oil companies and their governments with respect to this particular oil region.” (4) OPEC was formed as a collective body of rentiers to negotiate with Occidental companies, linking the oil rent system to oil price. However, at the time some did call it anti-imperialist, but considering its relationship with the non-OPEC ‘third world’ it hardly seems so. The collaboration of the OPEC countries individually and collectively with the global hegemony has been quite pronounced except over division of oil income, which is more like a conflict between landlords and capitalists, or an intra-capitalist class conflict, as there are local oil companies too. Further, there is hardly any political unanimity within OPEC except on oil dealings.

Similarly, the Sino-Indian collaboration internationally will be geared towards regions and sectors where they are unable to compete individually, and this collaboration does not require any mutual ‘political’ understanding, except a level of trust required for any business relationship. And, of course, a ‘political’ collaboration is required to the extent that it facilitates their collaborative business to fructify.

It is here that the last and most important aspect or implication of the ‘outward-oriented’ Sino-Indian relationship resides. The fruitfulness of this relationship as a rule will be determined by and will lead to an intensified intervention in the regions of this collaborative landing. It is nothing but chimera to imagine a peaceful Asia under the unlikely leadership of China and India. Particularly in the energy sector, the conflict between the ‘Indo-China nexus’ and OPEC will become more direct and intensive, which will be similar to the conflict between the West and OPEC, that of between ‘oil rentiers’ and oil companies. Nothing can prevent India and China, not even the ideology of “Asian Continentalism”, from collaborating with the West on the basis of this commonality of business interests, which does not take much time in getting politically translated into either active collaborationism or neutrality, or even armed conflicts (when intra-class conflicts intensify).

In some regions, the interventionist collaboration between India and China is already politically visible. In Sudan and other African oilfields, Chinese and Indian businesses have been remarkably coordinating with highly conflicting local hegemonies to stabilise their own interests, tempering and tampering the global aid and ‘humanitarian’ regime for these ravaged economies to their advantage. Further, these interventions are not totally devoid of militaristic component, as India (and China, too) has been involved in training local military personnel and supplying arms. In sharply fragmented and divided societies such interventions cannot have any other purpose but “neo-colonial”.

In South Asia, where India knows that any slackening on its part in any field can give the Chinese a tremendous advantage, and China is aware of the near impossibility of shaking off the Indian hegemonic influence on the region, the collaboration between them acquires a different level of intensity. Both require stabilising local polities and curbing any ‘nationalist’ hostilities for safe intrusion and spreading. More important in the region is to facilitate market integration and capital flow, for which infrastructure too should be provided for. China and India are aware of the futility of trying to negate each other in the region. Any attempt to shutting off each other is bound to fail and result into greater instability, as both have groomed their political agencies in all the regional societies for many years now.

Moreover, the nature of capitalist regulation from the firm level to the industry level, further up to the economy and to the global level has changed. It has transformed the character of “the division of the world between capitalist associations and great powers”. The corporate structure has intensified competition within a firm among diverse stakeholders and shareholders for greater share in profit. The same struggle is every moment transformed into greater collaboration that constitutes the firm. Similarly the “division of the world” is increasingly fluidised. Particular (national) capitals compete for attracting more and more profit, but they need to collaborate to compete with others or even to go on competing among themselves. The presence of India and China in South Asia and elsewhere too has acquired this dimension. They compete with one another, collaborate to compete with others, and collaborate with others to compete with one another. We cannot take one of these moments to be all defining as most analysts do when they analyse the rise of these two “Asian Powers”. Their analysis on the basis of one set of events is always negated by another, and they find India’s alliances with competitive powers contradictory.

Notes:

(1) Sidney Pollard (1992), Peaceful Conquest: The Industrialization of Europe, 1760-1970, Oxford University Press, Oxford.

(2) Peter Burnham (2000), “Globalization, Depoliticization and ‘Modern’ Economic Management”, in Werner Bonefeld & Kosmos Psychopedis (ed.), The Politics of Change: Globalization, Ideology and Critique, Palgrave, New York.

(3) Massimo de Angelis (2002), “Hayek, Bentham and the Global Work Machine”, in Ana C Dinerstein & Michael Neary (ed.), The Labour Debate: An Investigation into the Theory and Reality of Capitalist Work, Ashgate, Hampshire.

(4) Cyrus Bina (1985), The Economics of the Oil Crisis: Theories of Oil Crisis, Oil Rent and Internationalization of Capital in the Oil Industry, Merlin Press, London.