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December 6, 2010

Ranking bilateral relationships

Relations between nations are shaped by a complex interplay of a variety of factors — historical, geographic, political, economic, cultural, strategic and so on. Governments operate within given circumstances and it takes a lot of political energy on the part of any head of government to alter the nature of a bilateral relationship based purely on government-to-government interaction and relations.

Indeed, as Prime Minister Manmohan Singh told a meeting of the US-India Business Council in November 2009,

“In today’s economically integrated world, economic relationships are the bedrock on which social, cultural and political relationships are built. A strategic relationship that is not underpinned by a strong economic relationship is unlikely to prosper. On the other hand, a web of economic relationships intensifies both business-to-business and people-to-people contacts, promoting a deeper and better understanding between countries. That is the kind of relationship we wish to see with this great country, the United States.”

The bilateral relationship between countries, that is the “country-to-country” (C2C) relationship is a sum of three distinct, even if interacting, aspects of such bilateral relations. These three are: people-to-people (P2P), business-to-business (B2B) and government-to-government (G2G). The equation can be stated simply as P2P+B2B+G2G = C2C.

It is, in fact, possible to arrive at a quantitative guesstimate of the intensity and importance of the bilateral relationship between various countries based on this simple formula. It is possible to undertake a more sophisticated and quantitatively satisfying exercise by trying to measure each component in terms of some broad indicators, the way the UNDP’s Human Development Report estimates the Human Development Index by using proxies for health, education and livelihood status of people.

Thus, the number for P2P can be estimated from information pertaining to tourism data, migrant population, number of front-page stories in print media, or minutes of television time devoted to news from that country, popularity of cuisine and culture, interaction in sports and so on. In a democracy, the media’s view of other countries is shaped by all the three variables, that are P, B and G, and the media, in turn, shapes thinking at all three levels.

Bilateral Relationship Index

The B2B variable can be more easily estimated using data relating to trade, investment, movement of professionals and workers, joint ventures and so on. It is more difficult to quantify G2G, but one can use proxies like defence purchases/sales, bilateral summits, trade treaties, cooperation in high-technology and strategic industries.

Based on these numbers, a Bilateral Relationship Index (BRI) can be constructed and countries ranked in order of their importance for India. Take 10 countries that figure prominently in the media, and see how they rank on a 1 to 5 scale of importance. In P2P rankings, the United States, Britain and Pakistan would figure fairly high for different reasons. The P2P interactions between India and China, Russia, Germany and even Japan would be much lower.

In the B2B ranking, the United States would now be at the top, along with countries like Britain, France and Germany. China, of course, does more trade with India than most but it would figure lower in ranking because of the structure of trade, and the limited extent of real B2B partnership. Japan lags behind only because it has been a latecomer and has been a hesitant investor till recently. However, it is easy to see both China and Japan improving their ranking on the B2B scale.

In G2G, Russia still remains at the top but with the growing strategic engagement and increasing defence cooperation between India and the United States, and now with the decision of the Obama administration to lift high-technology export controls, the United States is likely to move up very quickly on the G2G ranking. Indeed, 10 years ago the G2G score for the United States would have been a lowly 2 or even 1, against the backdrop of post-Pokhran-II sanctions imposed against India.

It is a testimony to the fundamental change in the relationship, first initiated by Prime Minister Atal Behari Vajpayee and President Bill Clinton and then accelerated by the strategic partnership launched by Prime Minister Manmohan Singh and President George Bush, that the G2G score for India and the United States will undoubtedly go up. But whether it will be stuck at 4 or go all the way up to 5 will depend on the level of “trust” that President Barack Obama is able to inject into the G2G relationship.

President Obama started off brilliantly with a well-crafted letter written to Prime Minister Singh in September 2008, even when he was on his campaign trail, wherein he said: “I would like to see US-India relations grow across the board to reflect our shared interests, shared values, shared sense of threats and ever-burgeoning ties between our two economies and societies.” But through his first year in office, President Obama did and said things that diminished the trust quotient.

More recently, President Obama has been trying to retrieve lost ground and take the relationship back to where his predecessor had left it. If he can convince Prime Minister Singh that he means what he says now, unlike when he wrote that letter in 2008, his visit can be declared a success. Winning the trust of India’s Parliament, when he addresses it today, the way Dr Singh won over the US Congress in July 2005 (with 35 interruptions of applause in a 39-minute speech), is the key to getting the G2G number to 5!


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