Introduction:
The article discusses former U.S. Secretary of State Henry Kissinger’s legacy regarding his policy decisions during the 1971 India-Pakistan war, which had detrimental consequences for India. Kissinger aligned U.S. strategy with China and overlooked humanitarian crises in East Pakistan to strengthen ties with Pakistan.
Analysis for a Layman:
Henry Kissinger was a top U.S. foreign policy official in the 1970s under President Nixon
He crafted policies aimed at improving U.S. ties with China, seeing India as aligned with the Soviet Union
Declassified records show Kissinger enabled U.S. support for Pakistan during the 1971 war with India, despite internal dissent
This included circumventing laws to provide jets and ammunition via third countries
Kissinger dismissed humanitarian crises and refugees from East Pakistan as an “opportunity to settle the whole problem of Pakistan which [India has] never accepted”
His priorities exacerbated the China-Pakistan nexus which remains a principal security threat for India
Original Analysis:
Kissinger’s decisions during the 1971 war have far-reaching implications even today. His prioritization of forging ties between the U.S., China, and Pakistan strengthened what is now a formidable nexus balancing against India. With continued border tensions and the possibility of further conflicts, India faces heightened threats from two nuclear-armed adversaries allied in part due to Kissinger’s strategic diplomacy.
Domestically, the revelations of covert U.S. support for Pakistan despite lawmakers’ opposition risks damaging Indian perceptions of the U.S. as a partner going forward. As India continues to hedge between alignment with Western democracies and Putin’s Russia, such historical grievances could push policymakers towards non-alignment or further cooperation with Moscow. Trust in the U.S. commitment to democratic values and human rights is also undermined.
For Pakistan, Kissinger’s actions reinforced belief that the U.S. will continue to provide military support regardless of domestic repression or conflicts with India. This could induce further risky provocations against India as Pakistan has historically seen Washington bail it out.
Finally, China gained enormously from alignment with Pakistan and the U.S. facilitated by Kissinger. By supporting Pakistan’s military dictatorships throughout the Cold War, the U.S. gave Beijing a reliable southern ally against India. Now with CPEC and a common rivalry with New Delhi, the payoffs for China from Kissinger’s diplomacy continue growing.
Impact on Retail Investors:
For retail investors in India, Kissinger’s legacy signals turbulence between India, China and Pakistan that can increase market volatility during crises. As sanctions or conflict with either party risks economic disruption and gyrations for stocks, retail investors should ensure their portfolio is well-diversified across sectors and market caps.
Investors should particularly monitor stocks with high China or Pakistan exposure. Automotive manufacturers, for example, relying on Chinese imports or Pakistan exports could face supply chain crises amidst geopolitical tensions. Pharma companies depending on Chinese APIs also carry higher risk.
On the other hand, stocks aligned with Indian government priorities like defense or domestic manufacturing could see upside. Investors can also overweight sectors like software services with strong western client bases insulating from regional tensions.
Overall, retail investors should turn to professional financial advisers during periods of conflict or sanctions between India and its rivals to navigate market uncertainty. Prioritizing financial education and staying abreast of geopolitical developments is also crucial when investing in India.
Impact on Industries:
Multiple major industries could be impacted by prolongation of the China-Pakistan nexus originally enabled by Kissinger:
- Defense – India’s defense modernization and readiness for potential border conflicts comes under pressure facing two nuclear adversaries in tandem. Domestic defense manufacturing and technology transfer cultivation ramps up in priority.
- Manufacturing – India pursues even greater self-sufficiency and reduces reliance on Chinese inputs across industries like electronics, chemicals and automotive. PLI schemes expanded.
- Energy – Seeking alternative fossil fuel supply routes and partnerships beyond the Middle East gains urgency to withstand potential disruptions. Nuclear power also gains appeal.
- Technology – Hardware and software capabilities build up for surveillance, cybersecurity and electronic warfare to match China’s capabilities that could be rapidly shared with Pakistan.
- Diplomacy – India aggressively woos ASEAN, the West, Russia and others to counter-balance China’s Nexus with Pakistan, leverage frictions between Beijing and others.
For each industry, Kissinger’s legacy places India on a more isolated footing across economic and national security dimensions. This requires pursuit of reliable alternative partners and building indigenous capacities as crisis risks endure.
Long Term Benefits & Negatives:
In the long run, the biggest negativity from the Kissinger legacy which heavily influenced the China-Pakistan nexus is that Indian strategists perennially cope with a threat from two nuclear fronts. The costs of perpetual conventional and asymmetric conflict readiness on multiple sensitive borders are exorbitant. Increased defense spending also has opportunity costs crowding out developmental priorities. There are also opportunity costs from reduced trade with Pakistan and maintaining restrictive tariffs against Chinese goods for strategic industries despite lower costs.
Positively, dealing with repeated conflicts and crises from adversaries may spur Indian resilience and self-reliance. Examples like the space program and pharmaceutical industry attest to security threats seeding technological advancement for dual civilian and military benefit. Forced self-sufficiency also aligns with the signals global investors want to see India emit, shifting perceptions. Diplomatically, a clearly defined adversarial China-Pakistan nexus also simplifies Indian alignment choices across potential partners like the U.S., EU and Russia.
Short Term Benefits & Negatives:
In the near term as frictions can again boil over into actual conflict, the risky pursuit of crisis brinksmanship will beget disruption and casualties. So long as the China-Pakistan nexus enables aggressive Pakistani policies, terror attacks and incidents along the LoC or LAC remain highly possible. These risks will deter investors, strain budgets, and radicalize local populations against the central government in areas impacted by frequent skirmishes. Similarly, sanctions back and forth with Beijing and Islamabad amidst clashes also threaten recent gains made in business ties across apparel, food products and electronics. Supply chain contortions risk stagflation for India.
Positively, brief crises rally Indian citizens around the flag against clearly defined external threats. This could help dissipate tensions from domestic issues like inflation or unemployment that currently steepen inter-communal divides. In terms of business opportunities, security-oriented tech firms and local manufacturers may see a spike of interest from Indian companies and government contracts during periods of confrontation needing rapid capability upgrades. But overall short term loss potentials heavily outweigh the benefits.
Companies to Gain:
Listed below are publicly traded Indian companies across defense and technology sectors most likely to directly benefit from prolonged tensions with Pakistan and China caused by Kissinger’s legacy:
- Bharat Electronics (BHEL) – State-owned defense electronics manufacturer would see heightened orders for radar, communications and electronic warfare systems from expanded military readiness.
- Larsen & Toubro (L&T) – Engineering giant and shipbuilder is a major Indian defense contractor who can capitalize across naval, land and missile platforms.
- Tata Motors (TMT) – Leading automotive OEM can leverage expertise into scaled up defense vehicle programs including the Futuristic Infantry Combat Vehicle project.
- Infosys (INFY) – IT services leader is deeply embedded in government infrastructure projects including strategic ones that will accelerate with security priorities.
- Tech Mahindra (TECHM) – Major telecommunications equipment and cybersecurity capabilities make it a go-to defense contractor as digital threats rise amidst India’s tensions with China and Pakistan.
- Astra Microwave (ASTRAMICRO) – Key supplier of frequency control & microwave components for missiles and satellites would grow further as strategic military and space capabilities expand.
Companies to Lose:
Listed below are publicly traded Indian companies most vulnerable from economic, trade and supply chain contortions caused by persistent showdowns with China and Pakistan due to Kissinger’s legacy:
- Tata Motors (TMT) – While defense upside exists, passenger vehicle and commercial truck sales still significantly rely on imported Chinese components vulnerable to supply shocks during times of conflict.
- Bajaj Auto (BJAUT) – Major two and three wheeler manufacturer depends heavily on exports to Africa and Middle East markets most easily reached via Pakistan, risking revenue losses if trade routes are disrupted amidst crises.
- Reliance Industries (RELIANCE) – Petrochemical and oil giant likely to face recurring energy supply and pricing shocks as India scrambles for alternatives beyond status quo Middle East oil trade partners.
- Infosys (INFY) – Success still tied to U.S. and European clients that could pressure India amidst human rights criticism during confrontations with Pakistan or border disputes with China.
- Wipro (WPRO) – Over $1 billion in Chinese operations remains vulnerable and growth dependent on continued access, facing backlash risks locally as tensions with India heighten around elections or Taiwan.
Additional Insights:
In the long view of history, Kissinger’s South Asia policy while a Cold War necessity, planted seeds of persisting India-Pakistan conflict that also enabled a formidable Beijing-Islamabad nexus. As frictions remain perennial, India pays the costs while China reaps the benefits. But India’s rise may gradually reshape the paradigm.
Conclusion:
Kissinger’s role enabling U.S. support for Pakistan against India in the 1971 war had heavy costs. The strengthened China-Pakistan nexus endures as New Delhi’s principal security threat, driving defense costs and risks. While sporadic crises may carry marginal benefits, perpetual confrontation on two fronts leaves India isolated and domestically divided.
Source:
Author: Pranab Dhal Samanta
Title: Henry Kissinger Leaves Behind A Troubling Legacy for India
Date: Dec 1, 2023
Publisher: The Economic Times
URL: https://economictimes.indiatimes.com/news/defence/henry-kissinger-leaves-behind-a-troubling-legacy-for-india/articleshow/96027947.cms