India and its neighbours: Do economic interests have the potential to build peace?

India and its neighbours: Do economic interests have the potential to build peace?

The aim of this report is to conduct a preliminary investigation into the linkages between India’s growing economic and political clout and its correlation, if any, to peacebuilding in South Asia, with particular emphasis on conflicts in Sri Lanka and Nepal.

Until a decade ago, India was regarded largely as a poor developing country with low visibility on the global political and economic front.

A multitude of factors, most prominently its emerging global economic strength, have led India not only to redefine its self-image but also to adopt a new political role both internationally and within its immediate neighbourhood.

The report starts from the premise that India occupies a special position in the region, economically and politically. Owing to this unique position, India has a particular potential vocation to become the driving force for greater regional peace and prosperity. The analysis in this report supports the argument, recognised by many Indian policy-makers, that India’s long-term prosperity hinges to some degree on a conflict-free neighbourhood; that an economically integrated region is in India’s overall security interests.

The report examines in detail India’s spectacular economic performance, its strengthening position in the global order and its evolving special relationship with the United States. It lays down the larger landscape within which the ‘new India’ views the world and the region and examines India’s broader foreign policy concerns as its increasing financial muscle triggers a shift from moralpolitik to realpolitik. This shift is most visible in the change from its traditional path of non-alignment to a strategic alliance with the US. India’s complex relationship with China shows how India is seeking economic complementarities with its giant Asian neighbour, while at the same time consciously competing with it on procuring energy and on geo-strategic and political levels.