Just when all observers unanimously felt that the scheduled Blinken visit will lower the tension between the US and China, the “L’Affaire Balloon” put paid to all such hopes at least in the short term.

The big question is whether this was a honest mistake by China, as it claims, or whether there was malicious intent, as the US believes. Either way, the main casualty is trust, which is a rare commodity in Sino-American ties. Optimists are clutching at straws, by saying the visit has only been “postponed” and not “cancelled”. Diplomats have a way with words but they also attach inordinate importance to them. Be that as it may, Blinken is expected to reschedule the visit in the next few weeks.

The questions why a Balloon and why now, are tough to answer and is best left to spooks and posterity. For instance, advanced spy satellited are available so why use a nineteenth century instrument to gather information. As for the timing, either it was an accident or there are some in China who are dead opposed to a rapprochement with the US. Either way, China has egg on its face and that explains its angry reaction when the balloon was shot down off the South Carolina coast by an American fighter aircraft.

Another intriguing question is why the US waited as long as it did to bring the balloon down. Perhaps, the US did want to acquire the balloon intact to examine the Chinese surveillance equipment inside. After all, the balloon was the size of three buses and was therefore carrying quite a payload. Debris will still be collected by the US and we will know in due course whether something of significance is found.

Bipartisan sentiment in the US Congress has hardened vis-a-vis China. This will make it difficult for the Biden Administration to take initiatives to lower tensions for fear of being seen as “soft” on China. It will be interesting to see what China’s next steps are, for it does seem as though it needs the detente with US more than the US does.

The year 2023 has a busy diplomatic calendar. Biden and Xi Jinping are expected to be together at least on two occasions: one the G20 summit in Delhi in September and the other when Biden hosts the APEC summit meeting in November in San Francisco. Meanwhile, Xi Jinping will visit Moscow to meet his “best friend” Putin and all eyes will on how the two leaders translate the “no limits partnership” rhetoric into concrete steps. This is important because, the war in Ukraine is showing no signs of slowing down and a diplomatic resolution is looking more and more unlikely by the day.

This triangular relationship between US, China and Russia is becoming increasingly complicated with diplomatic implications not just for the parties involved but for others as well. A “menage a trois” of a completely different kind, one might say!

The most important visit of the diplomatic calendar for the year 2023 is arguably the one which will be undertaken by American Secretary of State Anthony Blinken to Beijing on February 5 and 6, 2023. The visit follows the olive branch extended by China with the appointment of the new Foreign Minister Qin Gang who made conciliatory gestures as he was leaving Washington saying that the two countries should not see their ties as a zero sum game. Earlier, President Xi Jinping himself conveyed to President Biden in Bali in November 2022 that the world is big enough for the two countries to develop and prosper together.

So, what is cooking between the two Great Powers? For one thing, it is in China’s interest to ease tensions with the US while it copes with serious problems back home. In that sense, this could be tactical move aimed at gaining time. From the American perspective, a detente, howsoever brief with China would be helpful in allowing it to focus on the main near term threat, namely, Russia. US too needs time back home to focus on economic and social issues. So, there is tactical convergence between US and China for a detente that, ironically, suits both of them.

Because these are two Great Powers, any detente or otherwise between them will have implications for the rest of us. For India there is a twin risk that directly flows from this detente in ties between the two Great Powers: one, it frees up China to flex its muscles, if it so chooses, vis-a-vis India in the Himalayas and this is a clear security risk. Two, could the US be distracted from the Indo-Pacific as a result of its immediate focus on Russia and the detente it may be pursuing with China. This then is the second strategic risk for India.

For this reason alone then, the visit by Blinken to Beijing will be closely followed in India. As part of the tactical “ceasefire” between China and US, some other global issues may get attention. For instance, cooperation in areas such as climate change, transnational crimes (think Fentanyl) and nuclear proliferation (think North Korea) may provide the basis for non-acrimonious discussions.

Blinken will be keen to gauge the Chinese view on the present status of the Ukraine conflict. Are the Chinese discomfited by the trajectory of the war in Ukraine? If so, is there going to be a recalibration of their “no limits” relationship with Russia? Can China be given messages to be passed on to Russia? And can China weigh in with Russia on the dreaded “N” word? All these are valid questions. But the biggest imponderable is whether the two top diplomats can build guardrails so as to stabilize bilateral relations and if they do, what those guardrails will be? A visit worth watching in the new year.

The Ramstein Defence Contact Group meeting took place on January 20 with some 50 countries participating in it. The West’s defence policy in the war in Ukraine could change as a result of this meeting.

So far, the West led by NATO has been careful to supply weapons to Ukraine which cannot easily be used by the latter against Russia. This may be about to change. Although Germany and the US are ostensibly reluctant to supply offensive battle tanks of long-range to Ukraine, it now appears a matter of time before they acquiesce. Certainly, some countries led by Poland are now bent on supplying Leopard 2 tanks to Ukraine, come hell or high water. What accounts for this fundamental shift in position?

The assessment seems to be that Russia is preparing for a massive spring offensive and the only way to pre-empt this is to supply offensive weapons to Ukraine which will enable the latter to eject Russia from areas occupied by it currently in Ukraine. The thinking is that the only way to bring Russia to the negotiating table is to defeat it first in the battle field.

It is not clear what the “liberation of Ukrainian territories” entails. For instance, in addition to areas occupied in Donbas region, does it involve blocking Russia’s access to the land corridor to Crimea. And if this is indeed the ultimate objective, then the million dollar question is how Russia will react to it? React it most certainly will and all bets are off, including the dreaded “N” word!

All this cannot but lead to a very grim prognosis about where the war in Ukraine is heading. We still seem a long way from peace and are destined to see more bloodshed in the months ahead. The year 2023 could not have gotten off to a worse start.

The Stockholm International Peace Research Institute, known by its acronym SIPRI, stated in a little-noticed report in April 2022 that the global military expenditure is set to rise to a whopping 2 trillion dollars for the first time ever. This is something the world has never seen before and it is hard to believe that more and more money needs to be spent to keep the peace in the world!

Unsurprisingly, the US tops the list with a little under 1 trillion dollars annually. Traditionally, the US tops the list, not the least because it has as many as 750 military bases in 80 different countries. To be fair, the US also provides some global goods such as keeping sea lanes of communication open for trade & commerce as also for maintenance of global maritime security.

China looked to have a budget of 230 billion dollars in 2022, so it is nowhere near the American budget, but is fast catching up. As the second biggest spender, China’s aggressive actions on the Sino-Indian border, its unilateral measures to change the status quo in the South and East China sea and its threatening posture in the Taiwan Strait are cause for concern. Its wolf-warrior style of diplomacy does not help, although it has dialled back a little in this regard for tactical reasons.

India normally ranks as the third biggest spender, but here is the surprise. If the German Chancellor’s “zeitenwende” (turning point) moment is taken seriously, then according to SIPRI there would be an annual jump in defence expenditure of 50 per cent which will catapult Germany as the third largest defence spender ahead of India and Russia. India faces a two-country threat and is perhaps the only country to face two nuclear armed neighbours with whom it has fought wars. Russia is of course in the middle of a war itself.

Apart from Germany which announced a huge jump in defence expenditure after the war in Ukraine, there are two other countries which have decided to overhaul their existing defence posture radically. One is Japan, which announced in December last year a brand new National Security Strategy, a National Defence Strategy and the Defence Build-up Programme. Considering China, Russia and North Korea as serious security threats, Japan is slated to increase its defence expenditure by 25 per cent for the year 2023 to something like 52 billion dollars. Japan is a serious military player in Asia now.

Last, but not least, French President Macron has just announced that for the six year period 2024 to 2030 the defence expenditure will be over 400 billion euros. This is a significant increase over the expenditure over the last six year period which was a mere 295 billion euros. The Russian war in Ukraine was mentioned as the backdrop for this announcement.

So, what to make of all this? First, there is no question that we are seeing the increasing militarization of the world, without any exception. Second, this is occurring at a time when the world is going through a “polycrisis” and an overwhelming majority of the world’s population is reeling from poverty, food insecurity and the negative impacts of climate change. Third, if there is anything that the war in Ukraine has taught us it is that big, conventional land wars are not a thing of the past, but are very much possible in the heart of Europe and probably elsewhere.

The upshot is a dangerous militarization of the world and it is something we all have to live with!

The 13th US-India Trade Policy Forum was held in Washington on 11 January 2023. It was to take place last year, but was postponed by mutual agreement.

Trade, Investment, IPRs and Technology are crucial in Indo-American ties. The fact that the trade and investment relationship lags behind the galloping bilateral strategic ties is a cause for concern. Indeed, if not properly managed, this dossier of trade, investment and IPRs has the potential to imperil the larger strategic partnership between the US and India.

The Joint Statement issued after the latest Trade Policy Forum meeting is 6 pages long, indicating that there were serious discussions on all issues. A quick and preliminary assessment is given below:

1) Good discussion on a long list of issues. 

(2) But no breakthroughs on restoration of GSP status for India, on removal of Steel and Aluminium duties (imposed punitively by the Trump Admin ) & India’s retaliatory duties, and on the disputes we have with each other in the WTO. These are necessary confidence building measures that must be taken by both sides without undue delay.

(3) One important outcome of the meeting is the setting up of a new Working Group on “Resilient Trade” which will deal with matters relating to trade facilitation, labour standards, environmental issues and regulatory practices/obstacles. This is welcome. These issues are sensitive for India. But the fact that they are being discussed is a good sign.

(4) Bilateral trade in goods and services was 160 billion dollars, it was agreed that this can be increased manifold.

(5) US and India to work together in the G 20 Trade and Investment Working Group. 

(6) A lot of TBT and SPS issues sorted out or in the process of being sorted out. 

(7) Visa issues and Totalization Agreement mentioned for possible resolution in the future.

(8) They ask officials of various Working Groups to meet quarterly and the Ministers agree to meet again by end 2023. This is again welcome. the November 2021 meeting took place after a gap of four years. This one after 14 months. A way has to be found for Ambassador Katherine Tai and Minister Goyal to meet twice a year: once virtually and once in person. That is the only way progress can be made.

This is a dossier that will also need the attention of President Biden and PM Modi at some point. Things like the GSP, lifting of punitive duties, withdrawing of disputes against each other in the WTO and issues like environment and digital trade will require a push from both leaders at the highest level.

Finally, India is still extending from time to time its Foreign Trade Policy decided for the period 2015-2020. It needs a brand new Foreign Trade Policy, suitably updated taking into account developments such as our ongoing negotiations on FTAs, our policy on digital trade and our approach to some of the new issues such as Labour Standards and Environment.

The new Chinese Foreign Minister Qin Gang, days before his appointment as Minister, wrote an article entitled: How China Sees the World. It is interesting in what it says and what it does not. Deserves careful scrutiny from both China and non-China watchers!

On relations with the US, he quotes the Chinese leader Xi Jinping to make the same point that former PM Manmohan Singh used to make with regard to India and China i.e. the world (PM Singh said Asia) is big enough for the two countries to develop themselves and prosper together. He goes on to say that China and the US now share more common interests, not less. My personal interpretation is that this is a clear olive branch to the one power that China considers its equal, namely the US. Whether it is a tactical move to gain time or a strategic shift, only time will tell.

China’s economic development is a force for peace and is not a growing power to break the status quo, Qin argues. He squarely blames the Taiwan separatists for creating tension in the Taiwan Strait by challenging the status quo of “one China”. In East China Sea, he accuses Japan which attempted to “nationalize” Diaoyu Dao (Senkaku Islands) ten years ago thus altering the status quo. In the South China sea, the status quo is that regional countries are consulting on a code of conduct. He avoided mentioning that this has been going on for some 20 years, mainly because of foot dragging by China.

As to the border issues between China and India, Qin says nonchalantly that the status quo is that both sides are willing to ease the situation and jointly protect peace along their borders. This statement sounds both innocuous and ominous at the same time!

Qin Gang’s statement on Ukraine is noteworthy. He says conflicts do not produce winners, there is no simple solution to a complex issue and confrontation between major countries (read US and Russia) must be avoided. He calls for talks between US, EU, NATO and Russia and then goes on to intriguingly suggest that in the long term, people must realize that grounding one’s own security on other countries’ insecurity won’t work. If that sounds like implicit criticism of NATO and the West, then it is!

Finally, he urges people not to choose to see the world from a “democracy vs. authoritarianism” perspective. I understand this since China does hate binary choices.

Qin Gang’s article, for me, is something in the nature of a Chinese white paper on foreign policy for the year 2023. I am having trouble though in deciphering whether this is Wolf Warrior 2.0 or is it something else altogether? We will see soon enough.

As Ambassadors, we were required to send a end-of-year cable just to recount what happened during the year and to see if any geopolitical inferences can be drawn. Not an easy task in this age of instant communication, soundbite-based analysis and super-quick assessments. Nevertheless, old diplomatic habits die hard, so here goes.

War in Ukraine has certainly upended both geopolitics and geoeconomics. Just when all of us believed big land wars are a thing of the past in Europe (even if it happened in Yemen and Syria), Ukraine has proved us all wrong. Use of tanks, thousands of soldiers dying, missiles and anti-missile systems colliding and the threat of nuclear weapons. It all seemed like a James Bond movie, except this was all terribly real and very tragic in consequences. Europe was of course the worst affected; but the war had its worst impact on the poorest of the poor countries in terms of food security and poverty. And even emerging countries like India were not spared.

China started the year with a bang but ended it with a whimper. Xi Jinping may have been crowned as the modern-day Emperor of China but politics, even in China, moves in mysterious ways. The anti-COVID protests dented Xi Jinping’s authority for sure. China doubled down on its “no-limits partnership” with Russia, but will this split the world into two blocs? China is holding out an olive branch to the US. But this may be a tactical move more about gaining time, rather than signalling a genuine change of heart. China was guided by nationalism and parochialism.

EU has been stirred and shaken by the war in Ukraine. It will have to cope with issues of energy security, internal differences and a Franco-German alliance which shows signs of weakening. Either way, EU has a challenge on its hands.

Russia could not have had a worse year in retrospect. It has had less than expected military success, lost considerable military hardware (not to mention loss of life) and its economy seems to be in a tailspin. Ukraine has serious problems of its own; but it seems buoyed by Western economic and security assistance and even its worst critics will concede that the people of Ukraine have shown enormous spunk.

All things considered, India managed things pretty well in 2022. It has maintained channels of communication with all parties, avoided a breakdown in relations with any power and most important, has not sacrificed its vital national interests. It did face a major security challenge from China at its borders, but it is fair to say India put up solid resistance. Not enough can be said to praise the commendable effort of India to vaccinate almost its entire population. You only have to see what is happening in China now, to admire what has been accomplished here.

As the year drew to a close, India took over the G 20 presidency from Indonesia and has thus a huge opportunity to prove its diplomatic mettle.

2022 was an annus horribilis in international relations, no question about that. It cannot possibly get worse, can it?

Japan is a key player in the Indio-Pacific. After all, the very concept of a free and open Indo-Pacific is attributed to the late Japanese leader Shinzo Abe. So when Japan produces a National Security Strategy and a National Defence Strategy document, it must merit the attention it deserves. But the Russian war in Ukraine and the Football World Cup has perhaps resulted in the Japanese decision going under the radar!

While the documents (three to be precise, National Security Strategy, National Defence Strategy and the Defence Build-up Program) will need to be studied in depth, one thing is abundantly clear: Japan is shedding the last vestiges of a “defensive” security strategy and is well on its way to crafting a “dynamic” and “offensive” security strategy. Justifying this shift, the National Security Strategy says that Japan is in the midst of the most “severe and complex security environment since World War II”. The result is that Japan will increase defence spending and will acquire counter-strike missile capability. Of course, the document also refers to the necessity of Japan working closely with allies and friends and India is mentioned in this context.

One does not have to be rocket scientist, to determine which country all this is aimed at: China, of course. Indeed, the National Security Strategy describes China as the biggest strategic challenge. Interestingly, China is not described as a “threat” while North Korea is. This goes beyond semantics and constitutes a paradigm shift in Japan’s defence strategy. Countries like India should sit up and take note. We too must develop our independent deterrence vis a vis countries like China in the Indo-Pacific. Excessive reliance on external balancing and plurilateral groupings such as Quad, can only serve India thus far.

China and Russia are expected to conduct joint live-fire naval exercises in the East China sea beginning 21 December. This must be seen in conjunction with statements emanating from Japan that it cannot sit idly by if Taiwan is attacked and invaded by China.

As Zelensky goes to US for arms shopping today, former Russian PM Medvedev has reached Beijing and has had a meeting with Xi Jinping, presumably with a message from Putin. We will know in due course how this plays out. The sad truth is a diplomatic solution to the Ukraine conflict seems as distant as ever.

Nevertheless, Indo-Pacific remains the epicenter for all diplomatic activity as a tumultuous year ends and another one appears on the horizon.

So, Indian and Chinese troops have clashed again, this time in the Tawang sector in Arunachal Pradesh. The place of the clash is significant, since China has often claimed, outrageously, that “Zagnan” (Chinese reference to Arunachal Pradesh) has always been part of the Tibet Autonomous Region of China. Indeed, China refers to it as South Tibet. The Indian Defence Ministry has put out a statement saying that Chinese troops had encroached into Indian territory and sought to change the status quo, much like what they tried to do in Ladakh in June 2020 leading to deaths on both sides. Fortunately, no casualties have been noted by either side this time, though injuries have been reported. India has said that the transgression by Chinese troops was repulsed and they have been forced to go back to their posts following disengagement of troops. Chinese Foreign Ministry gave no details about the incident, saying blithely the situation on the Sino-Indian border was generally stable. The good news is that local military commanders appear to have followed the laid-out procedures and tried to defuse the situation. It is understood that India has raised the issue through diplomatic channels as well.

While details will emerge in the next few days, it is important to ask why the Chinese did what they did. Could it be a reaction to the joint Indo-American joint military exercise “Yudh Abhyas” done last month within 100 Kms from the Sino-Indian border in Uttarakhand. This was objected to by the Chinese Foreign Ministry spokesman at the time who said it violated the spirit of the bilateral agreements of 1993 and 1996. More broadly, India is also basking in the limelight of just having taken over the presidency of the G20 and is preparing a series of meetings in the run-up to the summit meeting in September 2023 in Delhi. Could it be linked to this?

Whatever the motive, the incident taken along with the more serious ones that happened in June 20 in Ladakh, is cause for worry. The Chinese are making a habit of preventing India from patrolling in areas where they have done so earlier, using the disputed nature of the border as a pretext. India, which has successfully resisted transgressions so far, is thus having to be in a situation of eternal vigilance. Valuable resources are having to be deployed and maintained at the border by India.

When the recent COVID protests happened in China and President Xi Jinping was forced to beat a retreat, the question was posed by observers as to how China would conduct its foreign policy. Could it possibly lead China to be more belligerent vis-a-vis some of its neighbours? In this regard, do the recent clashes in Arunachal Pradesh provide a clue? Hopefully over time, answers to these questions will emerge.

When unprecedented protests in China occurred last month, most China watchers did what is known as “spread betting” without clearly outlining what will happen next. Yes, some had predicted loosening of covid controls but not without adding in the same breath that there could be massive state repression. In the event, what is a matter of great surprise is the extent of loosening of covid controls over the last few days. At the time of writing, several Chinese cities have eased covid controls. The most important of these have been: doing away with the stringent requirement of commuters to present the covid test result for travel on public transport and allowing apartment residents who test positive to quarantine at home rather than in central quarantine facilities. Other moves to ease citizens’ lives may well be under way.

On whether or not there has been massive state repression and action against “protest leaders”, it is hard to say. There has been a discernible increase in police presence in public spaces for sure, but no other reports (yet?) of widespread violence.

In an extremely unusual move, China’s supreme leader Xi Jinping acknowledged the protests to the visiting EU delegation led by European Council President Charles Michel and reportedly said that “frustrated” students were behind the protests following the strict covid restrictions over the last couple of years. This is unheard of for a Chinese leader since it is tantamount to discussing China’s ‘internal affairs’ with outsiders, that too with leaders of the decadent West!

So, what just happened in China? It is hard to avoid the impression that the scale and manner of protests did rattle the powers that be. At a minimum, Xi Jinping did not want further escalation of these protests in a way that would have irreversibly eroded his authority, only weeks after his coronation as China’s unquestioned leader at the twentieth Communist Party Congress. It does seem as though Xi Jinping has bent to the will of the protesters, even if this is temporary and tactical.

The timing of the protests may have also contributed to Xi Jinping’s decision to loosen covid controls. China is facing serious economic headwinds, intense geopolitical rivalry with the US and a global economy on the brink of recession thanks to the war in Ukraine. To have internal dissent and disharmony at home at a time like this would have been too risky and dangerous, even for a country as authoritarian as China. Viewed this way, the loosening of covid controls is a shrewd move by a leader who knows when to give in. But the long term implications of this for China are harder to assess. Will this embolden the Chinese people further in expressing themselves in the future, making governance of some 1.4 billion people that much more difficult? China watchers will simply tell you to wait and watch!