Business

Jim Yardley
New York Times News Service

LAHORE, Pakistan – On the day the Indian trade delegation came across the border, Pakistan was having another political crisis. The prime minister was embroiled in a showdown with the country’s Supreme Court. Early elections were rumoured. And Islamists had just staged a rally in Karachi to protest “foreign intervention” on Pakistani soil.

Not, perhaps, the perfect moment to hammer out closer trade ties.

Yet Rajiv Kumar, a leader of the Indian delegation, was pleased. It was mid-February, and his business group was staging the first Indian trade show ever held in Pakistan. Tens of thousands of visitors would attend during three days. And Indian and Pakistani business leaders, as well as both countries’ commerce ministers, swapped cards, sipped tea and feasted at lavish banquets.

“Look at this!” Kumar exclaimed as his car rolled up to the convention centre here in Lahore, where crowds were thronging for the trade show. “My God! Quite good, I’d say.”

One truism about the tortured relationship between India and Pakistan is that there is never a perfect moment. For six decades, through three wars and one nuclear standoff, diplomats have tried, and failed, to improve relations. Now, the private sector is giving it a shot. Trade has become the most promising opening in the latest round of diplomacy, as progress remains largely stalled on tough issues like terrorism, water rights and the status of Kashmir.

The foray into Pakistan is further proof of the increasingly important role of India’s private sector in foreign policy. India’s leaders, eager for a bigger footprint in global affairs, now aspire to a permanent seat on an expanded United Nations Security Council. But the Indian Foreign Service, though consisting of top-notch officers, is too understaffed to provide a comprehensive global presence.

To compensate, the government often relies on the private sector to serve as an intermediary abroad. India’s two leading business groups – CII (the Confederation of Indian Industry) and FICCI (the Federation of Indian Chambers of Commerce and Industry) – now have offices around the world and sponsor informal diplomatic dialogues between India and countries like Japan, China, Singapore and the United States.

As India’s growing economy demands more natural resources, its business leaders have led the country on an aggressive push into Africa and South America. Last year, Prime Minister Manmohan Singh toured Africa, pledging aid and good will in a high-level trip encouraged by an Indian private sector competing with China for resources on the African continent.

“These are places that are incredibly important to India, but the Indian state doesn’t have the resources to maintain a major presence,” said Ashley J. Tellis, a former United States diplomat who served in India. “Business has really become the de facto substitute for Indian diplomatic engagement. And that works out nicely for India.”

India, a nation of 1.2 billion people, has about 800 diplomats serving in 162 missions and posts around the world. The United States, by comparison, has a diplomatic corps of more than 11,000. Even tiny Singapore surpasses India, with 847 foreign service officers.

In a background interview last year, a senior Indian official agreed that the country’s diplomatic corps was far too small to adequately represent India’s global interests. An expansion and hiring program is under way, but the process remains tediously slow; as a result, India’s Ministry of External Affairs is often forced to borrow bureaucrats from other ministries. Or, the senior official said, the ministry sometimes leans on the private sector.

“The presence of Indian corporations, both public and private, does help to expand our presence,” the official said. “Our footprint will also expand through the private sector.”

CAUTIOUS OPTIMISM

“More and more, economics and commerce are seen as the primary drivers of international relations, which they were not in South Asia until very recently,” said Kumar, who is now FICCI’s secretary-general.

To a large degree, Kumar has been playing catch-up. For more than a decade, the other major Indian business group, CII, has operated as one of the most influential interlocutors of Indian foreign policy, helping to facilitate closer Indian ties with Japan, Singapore and, most importantly, the United States.

In 2001, CII partnered with the United States-based Aspen Institute to sponsor a meeting between Indian and American “thought” leaders in the Indian city of Udaipur. The United States and India, after decades of frosty relations, had suddenly warmed up to each other, especially after a visit to India by Bill Clinton. But neither side knew how to move forward.

The Udaipur meeting brought together Henry A. Kissinger, the former national security adviser Brent Scowcroft, the Harvard scholar Joseph S. Nye Jr. and others on the United States side to meet with an Indian delegation that included the industrialist Ratan N. Tata and the influential diplomat Naresh Chandra.

“We started talking about defense, about energy,” recalled Tarun Das, the former head of the CII. “We started talking about HIV/AIDS. The dialogue went into: ‘What else can we do? How can we build trust between the two countries?’ There was only mistrust after 50 years.”

Since then, the CII has sponsored 14 more exchanges in a United States-India relationship that, if still fractious at times, is fundamentally changed. The two countries are now strategic partners, with growing cooperation on defence issues where one had not existed before. Today, India buys American military hardware and participates in joint exercises with the United States.