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Challenges and Opportunities for India



There have been profound scientific, strategic, technological, economic, political and diplomatic changes in the twentieth century and the early part of the twenty-first century which have altered the strategic orientation of nations the world over. There has been a sea change in the way nations perceive themselves and each other in the international system. The world is fast moving towards a knowledge based economy. China has emerged as a global economic power house, and closer Indo- US ties balance the power in Asia. Also a tie up between India & America could contribute to a security paradigm for the global environment especially Asia.

However America’s view on new world order is questionable. They view that with the fall of erstwhile USSR in the 1980’s the world turned unipolar with the USA merging as the sole super power. The free will of executing the US agenda was evident in the 1990’s like Invasion of Iraq. Once Russia resurrected under Vladimir Putin the US – Europe nexus or the NATO and its expansion has threatened the existence of the most successful security organization like the United Nations. Later the world saw the US presence right at the doorsteps of Russia i.e. in Poland and the fight for the Arctic.

Unnoticed initially , but noticed later by all, there came the third world countries like India, Brazil, South Africa, China and a few developed ones like Australia, New Zealand which formed a group which cannot be wished away. The IBSA (India- Brazil- South Africa forum) & RIC (Russia – India- China forum), Shanghai Cooperation etc cannot be wished away in today’s world.

So what is the new world order? The power houses change so rapidly, moreover the so called power houses like Europe and USA are today on the economic downturn. The subprime crisis of the USA and the unemployment situation is considered to be the worst since 1930’s. So are these perceived power houses today in a shape to project their power outside their national boundaries? Does the new world order belong to the new power houses like India and China who have proved to be fairly insulated from these economic crises?

But the ever increasing conflicts and the under development of nations especially those like in African continent, which cannot be ignored by the world community, is relevant. To add on, these are the Pandora’s Box of richness that is gold, diamonds, minerals and the very green oil. However, it is prudent that these countries need assistance economically and materially and it is those countries which provide assistance who will control the resources. The US, European nations and China have been proactive in their approach and have been exploiting the resources of the African nations for decades. India though sharing a historical and traditional relationship with the African continent has failed to capitalize this relationship to further its economic and political goals. Africa other than being a repository of natural resources is also a conglomerate of fifty two nations with a large standing in all political organizations including United Nations.

Statement of The Problem

Utilizing the emerging situation in the world, with constant change of concentration of powers, it is imperative that India be proactive to have its share of the pie, specially being supported by the booming economy and its recognition worldwide. Hence this dissertation shall seek to analyse the emerging new world order, the growing opportunities for India in Africa and the changes required in its foreign and economic policies to exploit these opportunities.

Justification for the Study

In the fast changing world order, the opportunities presented to any developing country are enormous. Whether it is to restructure its own economy and bring up the standard of living of its population, or to enhance its clout in the global environment. Therefore it is imperative to analyze the changes required in India’s foreign and economic policy especially with respect to the African continent. The requirement of resources of a fast developing India is ever increasing and the demand is expected to outpace the supply in the near future. Africa is the repository of mineral resources that is already recognized by the world and the major players of the world have already taken a lead in exploiting the opportunities provided by the various African countries. With the emergence of India as a global player , it is pertinent that India takes corrective measures to ensure that the traditional and historical relations with the African nations is given further impetus to further the nations interest at an urgent basis.


In the backdrop of above, the study on Emerging new world order and challenges and opportunities for India will essentially attempt at providing an integrated framework of national policy towards Africa. The study will specifically focus on the following issues:-

(a) Emerging World Order with respect to Africa

(b) India’s role in the emerging new world order.

(c) Growing opportunities in Africa.

(d) Exploitation of the growing opportunities in Africa by the major global powers.

(e) India’s involvement with Africa in the present context.

(f) Scope for India’s involvement with Africa with respect to defense, economy, politics and the foreign policy.

(g) Changes required in India’s foreign and economic policy.

Method of Data Collection

The primary source of data collection has been through books, periodicals and newspaper, Articles, however an attempt was made to tap some material on the internet and relevant issues have been included in the text. A bibliography of sources has been appended at the end of the dissertation.



It has been clear for the past two decades that a global power shift from the “Euro-Atlantic “ West to an Asia centered East has been in progress. This has far reaching implications not only for the nature of the international order as it emerges in the coming decades and great power relations, but also for the security environment. The shift has profound implications for the emerging world order due to the following reasons:-

(a) Sustained high growth of economic and military power of China leading to perceptions and concerns about the “Rise of China”.

(b) Robust economic growth of India under a resilient democratic political system.

(c) Economic recovery of Japan after the stasis of late 1980s and 1990s.

(d) Economic and political recovery of Russia and its renewed urge to play a global role along with its increasingly closer ties with China.

(e) Rising prices of oil along with the prospects of beginning of its depletion in the next quarter century affecting energy security of developing as well as the developed world.

(f) Emergence of a global financial crisis bringing to fore the limitations of unregulated market structure, warranting greater intervention by the state in regulating the financial system.

In reality a diffused multipolar international order has been evolving into a polycentric system with six major players the USA, China, Japan, India, the EU, Russia impacting the future strategic environment[i].

At the same time economic development patterns in, Africa have become increasingly diverse over the last decade, with more and more success stories; Since the mid-1990s, 19 Sub-Saharan countries have had annual GDP growth of 4.5 percent or higher. The rise in the world price of oil is certainly a major factor at play for some of these countries. One-third of the world’s resource-dependent economies are in Africa. Yet even excluding the oil-rich countries, the fastest growing group of African countries (total 15 countries) has had an average growth rate of at least 4.5 percent. These countries host 34 percent of the region’s people. By contrast, the 13 slowest-growing economies in Africa have seen less than 3 percent growth on average, with some having near zero or negative growth[ii]. These countries, many either engaged in conflict or having recently emerged from conflict, account for 20 percent of the region’s people.

The countries in Africa experiencing strong growth outside the oil- producing nations have been buoyed, in part, by global price increases in other primary export commodities. With the exception of raw materials, whose prices have been relatively stagnant, other commodities, including metals and non-oil minerals, have experienced noticeable increases in their price levels. This worldwide rise of com modity prices has been engendered in large part by the rapid growth of Asian developing countries, especially China and India. They contributed close to 40 percent of global import growth for precious stones, 30 percent for crude oil, and 20 percent for metallic ores. Their demand for these commodities is likely to grow, or at least not change from current levels, in the foreseeable future.

Still, a number of countries in Africa are diversifying their exports, no longer relying solely on the export of a few raw commodities. Exports are increasingly composed of light manufactured goods, processed foods, horticulture, and services such as tourism. Some countries—such as Nigeria and South Africa—have been increasing their shares of exports in technology-based products. In fact, they are moving up the technology ladder and exporting low- to medium-technology products in sectors where Asian countries are increasingly putting less emphasis

The ever increasing significance of the African continent is highlighted by the following turn of events. In 2008, several high-level meetings were organized with Africa’s concerns high on the agenda. In April 2008, the India-Africa Forum Summit was held in New Delhi with 14 Heads of State and Government and representatives of regional bodies. A comprehensive Africa-India Framework for Cooperation was established, covering economic cooperation in such areas as agricultural development, political cooperation, science and technology, social development, tourism, infrastructure, energy and environment, and media and communication. A joint plan of action and implementation mechanism is to be developed within a year. One of the stated aims of the framework is to reinforce South-South cooperation to enable Africa and India to have greater leverage in international forums.

In May 2008, the fourth Tokyo International Conference on African Development (TICAD-IV) took place in Yokohama, with representatives from 51 African countries, including 40 Heads of State and Government as well representatives of African organizations and from many Asian countries. Japan pledged to double its official development assistance (ODA) over the next five years, focusing on infrastructure and agricultural development.

The first Turkey-Africa Cooperation Summit was held in Istanbul in August 2008 with the participation of representatives of 50 African countries, among them several Heads of State and Government. Turkey’s trade and investment relations with Africa have increased dramatically over the past few years and Africa is a major market for Turkish contractors. Turkey has also formalized relations with AU and with AfDB.

In October 2008, a ministerial conference on economic cooperation between South Korea and Africa was held to discuss major economic development issues and share South Korea’s economic development experiences with African partners. Other middle-income countries such as Brazil are also intensifying their economic and diplomatic ties with Africa. These developments are taking place against the recent backdrop of high growth in Africa, increasing demand for commodities, especially in emerging economies, and the search for low-cost locations for investments in simple manufacturing. They have helped halt the trend of Africa’s declining share of world trade and foreign direct investment (FDI) flows[iii].


Security Environment in 2025:India’s Interests and Strategies Air Commodore Jasjit Singh,AVSM,Vrc,VM, (Retd) USI JOURNAL JANUARY- MARCH 07

2 Africa’s silk road – Harry.G.braodman.

3 United Nations Economic Commission Report on Africa, 2009




The centre of gravity of the emerging international order and strategic affairs is increasingly shifting to the Asian landmass (and contiguous island territories). The 21st century is likely to be Asia-centred due to some of the reasons outlined below:

(a) Asian landmass is where the most far-reaching social, economic and political changes are taking place. How these countries manage change will largely influence the course of world events in the coming decades.

(b) The region still has extensive un-resolved disputes extending from issues of sovereignty to ideological issues which are often constructed on religious extremism.

(c) By 2015, seven out of ten largest economies would be Asian countries (including three out of the four top being Asian, the other country being the United States with its deep and extensive interests in Asia).

(d) Seven out of nine nuclear weapon states are located in Asia (including the United States which has strategically shifted forward into the Asian contiguous oceans, has deployed nuclear weapons in Asia, and will remain an “Asian” power).

(e) World’s energy “demand heartland” composed of Japan, Koreas, China and India is in Asia. And so is the energy “resource periphery” extending from Siberia, Central Asia, Persian Gulf, North Indian Ocean, South China Sea, and East China Sea. Future needs and availability of energy resource base are likely to further emphasise the Asia-centred world order while enhancing the role of major centres of power.

India as the world’s largest democracy is now on the move in economic and technological terms. It has successfully progressed in what can only be described as the human history’s most ambitious experiment – of transforming a traditional society into a modern one, of transforming an agrarian-based economy into a comprehensive industry-service sector- agricultural economy, rapidly increase social mobility transforming the country into a class-less society, and so on, all through processes of consultative politics. The World Bank estimates that India will possess the fourth largest economy in the world by 2020. Since independence India has made rapid strides and now has the world’s second largest pool of highly competent scientific and technological expertise while its software strength is likely to play a major role in the coming years. India’s economic growth, not as dramatic as that of China or the East Asia “Tigers” has nevertheless shown increasing rate of growth in every decade since the late 1960s.

India’s geostrategists have a changed perception vis-à-vis the third world and other NAM countries, which the country was historically aligned to[iv]. India has used both “soft power” and “hard power” options to increase its influence on third countries. This perception is based on the following assessments:

(a) India discontinued its government to government development cooperation with all but six bilateral donors (DFID, EC, Germany, Japan, USAID, and Russian Federation). Instead donors could assist NGOs directly.

(b) India has gradually changed from a recipient of aid and assistance to a giver of aid. Minister of state for external affairs Rao Inderjit Singh stated in April 2005: “Our technical and economic cooperation programme – ITEC [to 156 states] is almost four decades old. …a rough monetary value to the wide range of training and other facilities that we have shared with our friends from Africa, I am sure he would estimate it at well above a billion dollars”. [32]

(c) India Development Initiative (IDI) dedicates a $1.5 billion soft credit fund over five years through the Exim Bank for supporting development projects mainly in Africa.

(d) India has leased an air base in Ayni in Tajikistan which it argues is for non- military purposes, but others see this is as part of India’s move towards increasing its strategic depth in central Asia.

(e) India has assisted Afghanistan in projects that range from roads to hospi- tal building as a way of maintaining its influence in the region. It has extended more than $100 million in credit to the outlawed Myanmar regime, including for upgrading their railway. India has thus emerged as Myanmar’s second largest market, absorbing 25 per cent of the country’s exports.

(f) India maintains its influence in several south Asian states like Nepal, Maldives, Sri Lanka, as is well known.

In this context India has gradually dis- engaged from the large southern groups that it once partnered and has played a key role in forming new groups like the G-4, G-15, G-20 and G-33. India has become part of many regional groupings, like India-Brazil-South Africa (IBSA), Asia- Pacific Economic Cooperation (APEC) and the Bay of Bengal Initiative for Multi Sectoral Technical and Economic Coopera- tion (BIMSTEC), as a more direct way of promoting South-South Cooperation as well as establishing a stronger political and economic relationship. This gradual but significant disengagement with the third world is driven by India’s great power perceptions. Its aid policies follow the intentions of the west in the creation of markets for Indian capital. The concept of “soft power” policies remains part of the neo-realist framework, where the interest of the state is primary, regardless of the impact on citizens.


4 CHENOY Kamal Mitra, CHENOY Anuradha M * From Economic and Political Weekly September 1, 2007.



As the ‘dark continent’, Africa has typically been painted with broad-brush strokes, as a place of uncivilized people, as savage and superstitious, as tribalistic and nepostic. Africa is a vast and exotic continent of about 900 million people in 54 independent countries. It has a total area of over 30 million sq. kms, about three and a half times the size of the United States and 10 times the size of India. It is the second largest continent in the world after Asia. It stretches from the shores of the Mediterranean in the north to the Cape of Good Hope in the south. Africa is rich in mineral and natural resources with large parts of its terrain teeming with wild life and magnificent plant life.

It possesses 99 percent of the world’s chrome resources, 85 percent of its platinum, 70 percent of its tantalite, 68 percent of its cobalt and 54 percent of its gold, among others. It has significant oil and gas reserves. Nigeria and Libya are two of the leading oil producing countries in the world. Africa’s enormous agricultural potential is vastly untapped. Africa’s vast mineral wealth and strategic significance have encouraged foreign powers to intervene in African affairs. African oil constitutes 8% of the world’s oil resources.

Political Importance of Africa is further compounded by the fact that it comprises the 54 votes that African Union (AU) maintains in the General Assembly. With world markets in turmoil, an unexpected and overlooked continent may benefit from its very isolation.


The continent has witnessed a trend towards democratisation that is visible in multi-party elections across the continent and the emergence of a democratic South Africa. It is also visible in the launch of the New Partnership for Africa’s Development (NEPAD) through the joint efforts of South Africa and Senegal. This action plan promises to remove the tag of the ‘Hopeless Continent’.

Yet all this has been accompanied by a steady drumbeat of optimism about the continent, and confidence in its prospects. Despite of the problems, the 48 countries of sub Saharan Africa (hereafter referred to as plain Africa) are, by several measures, enjoying a period of unparalleled economic success. And despite the turmoil in the world’s financial markets, international investors still think they can make money there.

In 1990-94 annual GDP growth was a weak 0.9%; since then, growth has averaged closer to 5%. Before this autumn’s financial meltdown, the IMF was predicting GDP growth of 6.6% this year; now it is predicting only a slightly lower rate. Annual GDP growth per person was 1.1% in the late 1990’s; from 2004 to 2006 it was around 4%. In 1990 47% of Africans lived in poverty; in 2004 41% did and, if present trends continue, only 37% will by 2015. Zimbabwe apart, most African countries have been bringing inflation down, even if the trend is now creeping up again, in line with the rest of the world.

Many countries have been helped by better macro-economic management and big inflows of Western aid, investment and debt relief-as well as by more unquantifiable investments from Asia, particularly China, and the Middle East. The surplus petrodollars of the Gulf States have been flowing into East Africa. The IMF estimates that foreign investment and loans to Africa rose from $11 billion in 2000 to $53 billion in 2007. Much of this has stemmed from the commodities boom. Oil- producing countries such as Angola and Nigeria, and even war-torn Sudan, have supplied the soaring growth s, and much of the foreign investment has gone into extractive industries.

Economic development patterns in Africa have become increasingly diverse over the last decade, with more and more success stories. Ghana, Africa’s first nation to win its freedom from Europe, recently celebrated its 50th anniversary of independence. This is both cause for reflection on the past half-century and a reminder of how young African nations are.

In the past seven years we have seen the end of seven major conflicts: in the Democratic Republic of Congo, Sierra Leone, Liberia, Cote d’Ivoire, North-South Sudan, Ethiopia-Eritrea, and Angola. We are on the verge of a peace deal in northern Uganda. Although conflicts are still ongoing in Darfur and Chad, and the peace is fragile in several other places, the trend in Africa is toward the resolution of conflict. More importantly, the capacity of African nations to deal with conflicts has risen dramatically. African peacekeepers are increasingly active not only in Africa but around the world.

Most starkly, Africa is going through a very real economic resurgence. Economic growth is estimated at around 6.5 percent last year, the highest in memory, while inflation is in the single digits. High growth and low inflation are projected to continue this year despite a global economic slowdown. This success is not just in oil countries; about two dozen sub-Saharan African nations are enjoying real growth rates in excess of 5 percent. Only one nation — Zimbabwe — is really going backward quickly, a direct result of President Mugabe’s scorched earth policy of clinging to power at any cost. That sad nation is entering its ninth consecutive year of a shrinking economy, and inflation is now well over 100,000 percent.

The striking thing about Africa today is really its massive economic potential[v]. After half a century of very low growth, combined with the colonial legacy which chopped up the continent into so many small countries, the economies of Africa are still tiny: Baltimore’s economy is about ten times the size of Ghana’s, and more than twice the size of Nigeria’s. Only South Africa is larger, and not by much. The positive economic picture we now see in Africa is being driven by a host of factors, including a boom in commodity prices. But economic reforms inside Africa are also a big part. Macro-economic reforms undertaken over the past decade, with international assistance and encouragement, have brought down inflation and improved the investment climate. Countries are now turning to micro-reforms to make it easier to open, operate, and grow small businesses — the true engine for turning poor countries into rich ones.

We are also seeing growing foreign investment in Africa[vi]. This is obviously led by oil, gas, and mining, but there are exciting trends in other sectors, such as telecommunications, agribusiness, and business services. Countries such as Ghana are starting to build specialized back office services like India has done so successfully. We are also seeing more interest from private equity firms, hedge funds, and other non-traditional investors that bode well for Africa’s economic integration into global financial and business networks. Indicative of this interest, Africa was recently featured on the cover of Business Week for the first time ever. Another very encouraging trend is the returning of African professionals. Bankers who have gotten experience in New York and London are now going back and setting up their own investment firms and banks. We can see this clearly in the banking boom in places like Nigeria and Ghana.

Africa is clearly on a positive trajectory in terms of conflict, democracy, and economic prosperity. But all of these are extremely fragile. 2007 was one of the best years in recent memory for the continent.


5 World Bank Report, “Can Africa Claim 21st Century”,2000.

6 Released on March 18, 2008 Source: U.S. Department of State, Bureau of African Affairs


























The twin phenomena of a new 21st century global scramble for Africa’s strategic energy and mineral resources and the on-going global economic slump are admittedly taking a heavy toll on the continent’ s nascent democracy and security. This was the poignant conclusion of a high-level meeting of African experts and practitioners Convened by the Africa policy institute in Pretoria, South Africa in July 2009.

The world economic slowdown, now ravaging African economies, comes on top of the global race for the continent’s resources crucial in the global political economy and security, especially mineral and energy resources. The new rush for Africa has increasingly drawn in cold war protagonists of Europe and Russia and more increasingly newcomers mainly China, and to a lesser extent, India, Brazil, South Africa, Korea and Malaysia. With the cost of food and fuel spiraling, commodity boom turning into bust, remittances from the African Diaspora falling, investments drying up and climate change taking its toll, questions remain about the implications of the new scramble for Africa and the both the swirling recession on the stability of the continent’s democracy and long-term security.

The new scramble for Africa has unfolded against the backdrop of globalization in the post-Cold War era, which galvanized acute demand for African resources and the consequent integration of its economies into the global political economy. . With Africa’s relatively weak markets and unskilled labour pool playing a marginal role in the knowledge-driven global economy, the new race for Africa has targeted strategic mineral and energy resources such as oil and gas which have immense strategic importance in the global political economy and security calculations of major powers. But despite integration of African natural resources in the global economy, the African labour has become even more marginalised, with studies indicating that the “new scramble appears to be diminishing rather than increasing the prospects for employment of African labour and undermining the foundation of African livelihoods” . The trend by neo-liberal globalization to divorce the African from his resources is spawning new dynamics of intensified internal conflicts and creating a new fault line of conflict between Africa and the global order[viii].

Secondly, the demise of apartheid in 1994 marked the complete liberation of the continent with South Africa becoming a key leader in what has been enchanted as ‘African renaissance.’ However, as a result of rampant poor governance, corruption and internal wars from Somalia to Darfur (Sudan) and Kenya to Zimbabwe, African leaders failed to use the continent’s immense natural resources to ensure effective and pro-poor development. As such, while the newly liberated South African powerelite spearheaded the creation of a complex governance and security architecture within the aegis of the African Union to stabilize the continent, civil wars, poor governance corruption and unemployment intensified in the context of the new scramble for continent’s resource’s In turn, this has reinforced political instability and democratic crisis. The new scramble for Africa’ s natural resources, especially oil, is therefore, supported and sustained by the predatory African elites who are the major beneficiaries, while majority of the poor Africans at the periphery of the economy continue to be more marginalised from the economic benefits of the new scramble.

Thirdly, the emergence of new economic powerhouses in the former ‘south’ including India, Brazil and, more saliently, China increased global competition for energy and refocused world attention on Africa as a new frontier in the search for alternative source of fossil fuels and land for growing bio-fuel and food crops to supply domestic and global markets, thus triggering the new scramble for Africa.

The entry of China and other new players into the African scene increased competition with western powers for oil and mineral resources, but the jury is still out regarding the impact of the interests and strategies of these newcomers on Africa’s fledgling democracy and overall security.

But China’s policy of “ not mixing business with politics” or the see- no-evil, hear-no-evil” policy on governance has collided with the West’ s emphasis on governance and human rights as a precondition for engagement with Africa, leading to non-cooperation between the two and intensifying the race for spheres of influence on the continent[ix].

Finally, in the last two years the continent has experienced the full weight of the raging global financial and economic recession which has shattered its economic growth and development prospects, threatened its economies and fostered a climate of political instability. The current global melt-down has intensified Africa’s serious socio-economic and political challenges relating to endemic poverty, unemployment, rising inequality, debt over-hang and the knock-on effects of climate change. But the effect of the global recession on the scramble for Africa and their implications on Africa’s democratic crisis are not patently clear.

The current scramble for Africa is markedly significant in two ways. First, it is a scramble

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