Please be intelligent

For observers who have a pragmatic view of globalisation and today’s international balance of power politics, both these views are untenable. In the present balance of power system all major powers compete with each other strategically and economically to maximise their respective national interests. Since this is a globalised market economy, decisions on foreign direct investment in another country will be taken by corporations, except in the case of China where the state still exercises great control on corporations. This is the conventional wisdom.

Most western corporations in their FDI decisions are likely to consult think-tanks. Many of these think-tanks or consultancy firms are run by former political office holders who still retain strong links with the administration. The names Kissinger Associates, Cohen group, Albright group, Scowcroft group, etc speak for themselves. Therefore it is naive to think that western FDI is the result of economic decisions exclusively and has no political context from the point of view of the country’s foreign policy. Further, the interaction between the state and the giant commercial firms was highlighted when the French complained that the United States and its close allies (UK, Canada, Australia and New Zealand) make available information derived from the highly sophisticated global signal monitoring system, ECHELON, to major multinationals in their negotiations with their rivals in other western countries which are allies of the US.

While the US allows China to acquire hundreds of billions of dollars of its treasury bonds, the US Congress objected to China acquiring control of the American energy company, Unocal. While the management firm of the United Arab Emirates, an ally of the US, manages major ports in western Europe, again the US Congress stopped the firm from acquiring control over some major US ports. In an earlier era the Shah of Iran, one of the closest allies of the US, was stopped from acquiring shares in the American defence industry. Even today, the US is keeping a close guard on ensuring control over its strategic firms. It would appear the issue is considered on a case-by-case basis. In India the debate is not about such strategic firms but ports and roads.

Purely in commercial terms, foreign firms (including Chinese firms) are interested in doing work of high quality and sustaining their reputation. In the era before Google Earth satellite pictures, there were fears about foreign firms executing such works obtaining information of strategic value. Now most of such information is easily available. In India, of course, we are still clinging to the ridiculous Second World War rules of not permitting photography at airports. Given that mindset among our elite, it is not surprising there are objections to China being allowed to come in with FDI without verification.

If India is to be one of the balancers of power and play a global role, our intelligence agencies should have capabilities to monitor all major transactions of the other major powers, both between themselves as well as towards this country. That capability needs to be created in our agencies, which are at a very incipient stage of development in terms of playing a global role.

But there is a major issue involved. Most of such global transactions by giant multinationals are accompanied by hefty payments to politicians in countries where the projects are executed. This happens even though there are international laws against bribing. That’s why such transactions are kept secret. They need middlemen, foreign accounts, hawala transactions, and so on. Many of our politicians and political parties are beneficiaries of such transactions. Consequently, many in our political class are likely to oppose our intelligence agencies having capabilities to monitor such transactions.

Therefore, the issue is much bigger than adopting a more vigilant attitude towards FDI coming from China and some other countries of concern. Intelligence agencies have to prepare themselves for their global role instead of fighting petty turf wars. But the global roles for the different intelligence agencies, their pace of expansion, their capabilities have to be defined by an expert committee. Unfortunately there are very few past leaders of the intelligence, foreign service and the national security bureaucracy who have displayed adequate understanding of the present globalised balance-of-power international system. That should, however, not hold us back from making the effort to equip our intelligence agencies adequately for the strategic role they have to play. Without such agencies with global capabilities, our politicians and bureaucracies will not be able to meet the challenges of the future.

The writer is a senior defence analyst