ASIA'S FASTEST GROWING RELATIONSHIP

An article by PhD candidate Victoria Tuke, Politics and International Studies

This year marks the 60th anniversary of diplomatic relations between two of the world’s largest democracies - India and Japan. In this article, Warwick PhD candidate Victoria Tuke investigates their complex shared history and asks if their deepening relationship is here to stay.

'Asia's fastest growing relationship'. That is how ties between Japan and India have been described in recent months as the year 2011 saw several upgrades in bilateral relations. On December 28, whilst international attention was focused on the elaborate funeral ceremonies of Kim Jong-il in Pyongyang, Japanese Prime Minister Yoshihiko Noda held talks with his counterpart, Manmohan Singh in New Delhi. The visit was part of an agreement established in 2006 to hold annual reciprocal summits between Japanese and Indian state leaders.

Background

Relations between Asia’s second and third-largest economies have progressed significantly since 2000 when former Japanese Prime Minsiter Yoshirō Mori (2000-01) neutralised diplomatic ties as a result of India’s 1998 Pokhran nuclear tests. Relations were given a boost under Prime Minister Shinzō Abe (2006-07),who had a personal vision for ‘values-driven diplomacy’ and the creation of an ‘Arc of Freedom and Prosperity’ stretching from Japan as far as Eastern Europe. During Abe’s 2007 visit to Delhi, Japan and India elevated ties to form a ‘Strategic and Global Partnership’.

Hesitation on the part of several regional leaders to China’s reception of this concept, and internal unease within Japan’s bureaucracy, soon led to the demise of ‘values’ as a diplomatic tool. Shared interests, however, remain and relations have continued to develop on a more practical path, unaffected by changes in government.

No-change under the DPJ

When the DPJ (Democratic Party of Japan) took control of the Lower House in 2009, many feared a downgrade or at least halt in bilateral progress. Then-Prime Minister Yukio Hatoyama concentrated diplomatic energy on rebalancing relations with Washington and improving ties with China.

Despite domestic unpopularity, however, Hatoyama still visited India in the closing days of December, no doubt in part on the urging of Foreign and Trade Ministry officials who were keen not to see relations slide. Prime Minsier Naoto Kan made no specific moves towards India, except indirectly by endorsing a ‘New Growth Strategy’ which encouraged the export of nuclear technology, followed soon after by the announcement that Japan would enter into bilateral negotiations with India to provide civil nuclear energy technology.

Nuclear technology trade

Given Japan’s long-standing defence of the Non-Proliferation Treaty (NPT), which India refuses to sign up to, this step marked an important turning point in relations and Japanese diplomacy. Some domestic opposition emerged but overall the Government of Japan prioritised the economic, as well as diplomatic, benefits that negotiations would provide. Not only Japan and India are set to profit from any agreement; the US too has a stake in its conclusion due to the peculiar make-up of Japan’s top power plant providers who share stakes with foreign firms.

The events at Fukushima from March 11 onwards put a temporary halt on negotiations but even so, some predicted a positive announcement during this visit. This was not forthcoming, though leaders did state a shared desire to press forward with talks, suggesting agreement is more a matter of ‘when’ than ‘if’.

Japan’s foreign direct investment into India has reacher $3.62bn in the past two years.

2011 - an eventful year for relations

But setting aside the failure to conclude a nuclear deal, 2011 witnessed an acceleration in ties. In February the long-awaited CEPA (Comprehensive Economic Partnership Agreement) was signed after 14 rounds of negotiations, coming into force on August 1. Despite the devastating earthquake and tsunami which hit Japan’s north-east coast on March 11, Japan also maintained its Official Development Assistance commitment (Japan has been India’s largest bilateral donor since 2003-04).

Economic ties have long been the foundation for cooperation, as further demonstrated this week. Noda met Indian Railway Minister Dinesh Trivedi who expressed a strong desire to import Japan’s bullet-train technology into India and Japan pledged a readiness to invest $4.5bn in the Delhi-Mumbai Industrial Corridor Project, the ‘flagship’ economic initiative between the two governments.

Japan’s foreign direct investment into India has grown exponentially, reaching $3.62bn in the past two years. With some business interests in Japan fearing saturation and/or instability in the Chinese market, the growing Indian opportunity is seen as one of the few frontiers yet to be explored. In particular, Japan is interested in India’s fast-growing middle class; as Noda himself commented: ‘I believe that India's middle class will be the driving force’ to increase trade volumes, which currently stand at a puny $15bn; a fifth of that between Japan and China.

Whilst not the juiciest of announcements, Noda’s visit also saw the conclusion of a $15bn currency swap pact, to replace the £3bn fund which expired in June 2011. As India’s rupee has performed poorly over the course of the year, the agreement allows both Japan and India to access each other's exchange reserves in case of liquidity problems.

Shifting power equilibrium

Japan-India ties need to be seen in a wider context of shifting and developing power balances within Asia. The US remains a ‘residual power’ and one that, as President Obama stated in his Autumn tour of the region, is here to stay. December also saw the first official trilateral dialogue between Japan, India and the United States where a ‘wide range of regional and global issues of mutual interest’ were discussed.

Each participant-state was keen to stress that the meeting was not designed against a third party (i.e., China), but with an increasingly assertive and internationally active China, it is highly unlikely that the issue of how to deal with China’s rise was avoided. Warnings of considerable reductions to US defence budgets and uncertainty over the direction of future US administrations also encourages Japan and India to seek strategic cooperation.

China’s reaction was relatively calm, despite several state-run media outlets labeling the Noda-Singh talks part of a ‘containment’ conspiracy. China’s official response was to play down such rumours and even ‘welcome the mutual state visits between Japan and India and their peaceful efforts in promoting regional development’. Japan and India can certainly play a positive role in securing the sea-lanes of communication (SSLC) through the Indian Ocean and the Strait of Malacca, which are also in China’s interests.

Divergency in opinions

Yet despite positive maritime complementarities, relations between Japan and India are not all smooth-sailing. The relatively recent efforts to deepen relations means that each government still has a great deal to learn about the other. As dialogue continues, areas of disagreement, as well as agreement, begin to surface. For one, whilst Delhi and Tokyo have made the strategic decision to work closely with the US, Japan's commitment is far stronger than India's will ever be. On the PSI (Proliferation Security Initiative) the two hold different viewpoints. Japan has been praised for ‘demonstrat[ing] clearly the leadership role it is prepared to take in stopping the proliferation of weapons of mass destruction.’ Yet India remains cautious of the US-origins of the initiative, implications for relations with Iran and risk of being intercepted itself.

Looking ahead

This year marks the 60th anniversary of diplomatic relations and will no doubt witness further coordination of interests. Of particular note are the joint maritime exercises between Japan’s Maritime Self-Defence Force (MSDF) and the Indian Navy announced during Indian Defence Minister A.K. Antony’s visit to Japan on November 1.

The DPJ has come to adopt a security strategy largely in line with that under the Liberal Democratic Party (LDP), deepening relations with Washington (the easing on arms exports and purchase of F-35s are just two recent examples). Japan’s government is also continuing LDP policy vis-à-vis India, keen to elevate ties as high as they will go. Prime Minister Singh might well have been correct in saying the ‘sky’s the limit’ for this bilateral relationship.