A few months ago India seemed to have scored over China when it secured a $2.6 billion loan from the Asian Development Bank (ADB). China had aggressively objected to the loan because a significant part ($60 million) was allotted for watershed management projects in the Indian state of Arunachal Pradesh, a “disputed territory” according to China. The ADB does not have a policy on projects in ‘disputed areas’ and had therefore asked India to resolve the issue bilaterally when China objected to the loan. India seemed to have managed to convince the ADB to not indulge China on bilateral issues when it was granted the loan in June.
However, the Indian Express reports that China has now won a ‘disclosure agreement’ which would prevent the ADB from formally acknowledging Arunachal Pradesh to be a part of India. China is said to have won the vote by a narrow margin and in spite of the United States and the Western bloc voting in India’s favor. The vote is not only diplomatically humiliating for India, but it also raises questions about its relations with Australia, Japan and other East Asian countries who voted against it.
Relations between Australia and India are cordial but there are concerns about Australia’s refusal to consider a nuclear deal, and the racial attacks on Indian students there. Japan and India have had strong relations for centuries which were strengthened due to India’s Look East policy. Trade between the two countries is strong and Japan is among the top foreign investors in India. It also has good trade relations with South Korea and recently signed a Free Trade Agreement (FTA) with it. Other South East Asian countries are also being courted by India particularly since the 1990s policy which recently culminated into a FTA with the ASEAN.
The support of these countries during the ADB’s vote on the loan in June was seen as a sign of growing ties. One could hope that if some day the bilateral border dispute between India and China were to require international involvement, the East Asian nations could be lobbied to support India. International support for one particular side or the semblance of it can have a direct impact on bilateral negotiations. But the recent vote in China’s favor concerning the ‘disputed territory’ indicates strong Chinese influence in political matters in the region. India would have to step up its game and concentrate on improving its political clout with its East Asian neighbors. It needs to be alert of Chinese diplomatic manoeuvrings and not relax after winning every small battle.
