Edward Luce is the Washington bureau chief for the Financial Times. He was the paper’s South Asia bureau chief, based in New Delhi, between 2001 and 2006. From 1999–2000, Luce worked in the Clinton administration as the speechwriter to Treasury Secretary Larry Summers. Educated at Oxford and married into an Indian family, Luce now lives in Washington, D.C.
Ed Luce spoke to Asia Society prior to the Asia Society Business Writers Series program featuring his new book, In Spite of the Gods: The Strange Rise of Modern India on January 18, 2007.
The title of your book is In Spite of the Gods: The Strange Rise of Modern India and you suggest that there is a dichotomy between India becoming an important economic and political actor, while remaining "an intensely religious, spiritual and, in some ways, superstitious society." What is the contradiction here?
I'll answer that with a preface, which is that the title I wanted is the subtitle. They wanted a punchy title, and rather than have elephants and maharajahs imposed on me, I chose something I could live with. Really, all the title does is advertise to the reader that this is not an Orientalist work. It might go a little bit too far. To be honest, that sentence you singled out is not, I don't think, the central thesis of the book, so I would defend it halfheartedly. The other indication, I suppose, as well as being a non-Orientalist work, that I would have signaled with that title is a Nehruvian bias. I'm greatly more enamored of him as a statesman and a figure for a post-colonial country than I am of Gandhi. I guess it's really that too.
But The Strange Rise of Modern India is really the title I would argue for passionately. Again though, there are problems with that in America, because the qualifier "strange" can be taken as pejorative. In Britain, "strange" often has a literary allusion to it, which might mean "curious" or "interesting." It's a non-pejorative, that qualifier. But I had to argue to retain "strange." They wanted The Rise of Modern India and I said no, we must keep "strange." None of which is to disrespect Doubleday, they're wonderful publishers, and my editor, Chris Papalo, who's coming along this evening, is wonderful.
In any case, "strange," as you might have picked up from the introduction, is really about the sequence of development. It's the nature of it, not the fact that it's happening. That's the key thing. It's not surprising that India is emerging as a more significant economic and geopolitical power. It's the way or sequence in which it is doing it that is the strangeness.
You say that over the years, the British, "did a great deal to stoke the divisions [between Hindus and Muslims] from which it claimed to be protecting its supposed victims." Could you elaborate this argument? What have been some of the consequences of this divide and rule policy?
Well, first of all what I'd say is this: there are eternal verities and tiny contingencies. A tiny contingency would be that, to secure the support of Winston Churchill, the leader of the opposition at the time, for an expedited timetable to hand over power to the Indians, the princely states had to be consulted. They went to Harrow with him. They were his friends and his class. That's what Atlee, the Prime Minister at the time, agreed, and it was forced on a very reluctant Nehru and Gandhi as the price for doing this quicker. That's actually something you can imagine in a slightly different course of history wouldn't have happened, and the boundaries would have been imposed by diktat through central negotiation, as most of the rest of the deal for independence was. Whether of course Kashmir would have ended up with India or Pakistan is a moot question. The role of the British in the 19th century, and the art of-and I think it was an art-dividing and ruling, was to exploit and exacerbate existing divisions. I don't think it was to invent them. I do sometimes wince when I read post-colonial studies distantly related to the Derrida and Foucault deconstructionist schools of thought, that claim that this text was invented by the British. I think what the British did was exploit it. I don't think communalism is an invention. I think communalism was drastically exacerbated, however, by the British, when it could have been transcended.
That's not in any way to lessen the culpability of the colonials for partitioning or for post-colonial communalism in India, or for any of the consequences of those, including caste divisions. The whole system of classifying through the census onwards, and then having awards and reservations, isn't confined to religious groups. It's also a caste thing. That was another series of divisions and cleavages in society that the British exploited. Without lessening at all that diagnosis, I sometimes get frustrated when, 60 years later, I hear people still blaming the British for internal Indian divisions. Blaming them for Kashmir is fair and square. That's a colonial legacy. But not for internal Indian communalism and caste politics, because India is a free and sovereign nation and has been for more than two generations. It is capable of confronting more head-on questions of caste, provisions, utilities and material advantages to the lower sections of the society. It's better able to do that than it claims. I think some of this is just hand-washing, and it's often Brahman academics who are doing it. That sometimes frustrates me. There's an element of displacing blame there. That's a rather checkered answer. It's not a clear-cut answer, but I do think it's a complex issue. It's a political issue now too, how you read history.
In March 2005, the Prime Minister of India appointed a high level committee headed by Retired Justice Rajinder Sachar to prepare a report on the social, economic and educational status of the Muslims of India. You write at length about the condition of Muslims in India. Could you comment on the recently published results of the Sachar Commission?
Yes. If I can give you a preface again, the fact that you have reservations for lower castes but not Muslims strikes me as odd. You have, of course, a separate civil code, but I think that's a remedy that's worse than the disease. I hate to accidentally coincide with the BJP position there, because it would be for very different reasons. There are a number of reasons why Muslims are disadvantaged. It's very hard to prove but I think there are signs of systematic discrimination by the private sector in India. I'm not going to name companies, but one of them is very big and begins with R…! Amongst their 5,000 or so top white-collar executives, tell me the proportion of Muslims employed at the senior levels. Nobody's done that survey, but I can bet my bottom dollar it will be a fraction of India's Muslim population. Tell me the proportion of Muslim class 1 civil servants. I think it's 1.2 or 1.3 percent. The Muslim portion of India's population is 14 percent. Now, what an Indian private-sector company can say is, well, we select meritocratically. If the education system doesn't provide equality of opportunity, we're not to blame. It's the system. That's a plausible answer. But when you look at how minutely detailed and Byzantine India's system of reservations is for the public sector for Hindus, you've got so many subcategories now of OBC some of whom represent as little as 0.5 per cent of India's population. What do Muslims represent? 14 percent, but 0 reservations. There are Muslim untouchables. There are Muslim OBCs, Muslim shudras and so forth.
I think that's part of the explanation for it. The rest is the more obvious and bigger one, which is that there is a very powerful Hindu nationalist movement in India. There's also a Saffron wing to the Congress party. That might be less obvious now but there has been, through India's post-colonial period. They represent, on and off, India's Muslim minority as a fifth column, a dagger aimed at the heart of India's national identity. That has its consequences in manifold ways, in terms of their status in society and the opportunities they're provided. Again, it's a complex problem. Because I've been so absorbed in my new job, and it's only come out since I moved to the States, I'm only really aware of the headlines of the report. I haven't read it, so I'm probably not qualified to comment on it. My preface was in fact the entire answer!
Let's turn to Pakistan, and the key issue of Kashmir, what do you think explains the fact that in 2004 General Musharraf unexpectedly - as you point out - dropped the demand for a plebiscite in Kashmir? This demand, as you also say, had formed the core of Pakistan's Kashmir policy for more than 50 years. What made him change his mind?
Well, that's a good question. I remember when he dropped it in an interview to the Reuters Islamabad bureau chief, to my chagrin, and not to the FT, which was a bad mistake on his part! I think as a demand or precondition, the plebiscite had become entirely academic. There was and is no chance of having a plebiscite in Kashmir, unless there's some kind of all-out war with India that displaces India from Kashmir. There is no flicker of flexibility on India's side on that question, and never has been. By 2004, we're six years into a decisive move of America towards India. We've had the Kargil operation where Clinton came down on Vajpayee's side. We'd had three years since 9-11 by the time Musharraf dropped that demand. I think therefore that it was a good opportunity to present something as a concession which was actually not a concession, because it had become a sort of catechism that bore no relation to what was doable or possible. Musharraf's a very clever posturer, as is Vajpayee. I'd suggest that that was the reason. It was a concession that wasn't really a concession.
You're extremely critical in the book-with good reason, obviously-of the extreme levels of poverty and inequality that exist in India. At the same time, you seem to be very supportive of the economic globalization that India has undertaken in the last 15 years. How do you respond to critics who argue that these vast inequalities exist precisely because of the nature of this economic liberalization?
I'd say that that's not only nonsense, it's worse than nonsense. It's defunct propaganda. Having said that, markets and growth never lift people out of poverty by themselves. Poverty exists for a number of reasons. But if you look at all the examples of other countries, whether developed or developing, that have lifted people out of poverty on a large scale-China being the most obvious, but there are many others-the state has played a very active interventionist role in tandem with economic growth. Growth is a sufficient but not necessary condition for lifting people out of poverty. You must have growth plus an effective state. If you have an effective state minus growth, you're not going to get very far. If you have lots of growth minus an effective state, you're not going to get very far. But nevertheless, since growth rates have picked up, the reduction in the poverty level has also picked up. It just hasn't picked up as fast as growth has. India's now getting an 8 per cent annual growth rate, and poverty's only falling 1 per cent a year. That 7 per cent gap is, I think, a serious indictment of the nature and working of the Indian state. I would argue that maybe in a different life the title of this book should have been In Spite of the State, rather than The Gods. I would argue that so many roads in India lead to and from the state, and to see the state simplistically as the ally of the left and the market as the ally of the right is, I think, such a defunct way of looking at the world. Anybody who isn't a student knows that it's both, that you need growth and a neutral state that plays referee neutrally and is not open to capture by special interests. Sadly, the Indian state is open to capture by special interests, and ironically those special interests are companies beginning with R! It's not the poor that capture the state. So I think the whole tendency to oppose one to the other is just a non-useful way of thinking.
It seems to me from the way you describe the consumerism of the Indian middle classes that there's something quite unique about it. What, in your view, distinguishes the consumerism and materialism of the Indian middle classes (the kind, as you say, that would make Gandhi turn in his grave had he not been cremated) from that which exists in much of the rest of the world?
Not much. I guess it's the context. It's the fact that the backdrop is a sort of semi-official ideology of anti-consumerism. In terms of the ethical culture of it, that's the Gandhian side, but also in terms of the priorities that economic planners gave India which was to treat consumption as a low priority, and production as a high priority. Again, that's a fairly outdated way of thinking because the two are intimately connected. The second aspect would be the speed with which it has exploded. It was impossible to buy X, Y, and Z, but every single civil servant who was writing these minute regulations saying what you can and can't import-how much currency you can spend every day when you're overseas, all these controls and quotas-were the same people who when they went overseas had the best systems for buying what they wanted and sending it back. Indeed they were sending their children to be educated outside, their mother-in-law to have their operation outside and so forth. Once that lid was taken off, there was a kind of hundred flowers' bloom of consumerism, which persists. I think it will persist for a long, long time. Arguably, once you start solving all these problems you go back to the beginning and think, "Oh God, maybe Gandhi was right!" What a depressing thought.
Turning to international relations, you've said in another interview that you hope India will become a permanent member of the UN Security Council. Under what conditions do you think China would support India's bid?
That's a very good question. I can only guess at an answer. China's problem is really Japan, not India. China doesn't want Japan to become a member of the Security Council. Of course, India and Japan are now getting closer and closer to each other. The interesting half-answer to that question will be to see how China responds to the India nuclear deal when it gets submitted to the Nuclear Suppliers Group (NSG) in the next few months. Now that it's past Congress here, it'll go to the NSG soon. That's the next step. Maybe it goes to the International Atomic Energy Agency, then the NSG. But China is in the NSG, and it's also of course in the IAEA. That will make a de facto sixth member of the five-member nuclear club, a club whose members also comprise the UN Security Council. We'll see how China treats India there, what conditions, objections and so forth it raises, whether it starts playing games and saying Pakistan must be given equal treatment, or whether it only puts up symbolic conditions before basically accepting the deal. That will give some of the answer to that question. China's in a little bit of a difficult position because China agrees that the non-colonial powers should be better represented on the Security Council, but it can't say South Africa but not India. That's ludicrous by any measure, unless it takes a ridiculously turgid continental view of the world and say it doesn't matter that Asia has two-thirds of the world's population, we should have somebody from the Caribbean or something! China will have a hard time actually standing up and arguing that point.
You also quote the head of the Confederation of Indian Industry as saying that, "The economies of India and China are complementary". What potential conflicts do you see developing between these two giant emerging economies?
Funnily enough, since I finished writing this book exactly a year ago, the trade pattern has changed a bit. China has moved into surplus, whereas India was in trade surplus with China. It's not huge either way. It's not such a big deal. But the proportion of Indian goods which India exports to China that are unprocessed, in other words, raw commodities-in particular iron ore which feeds China's steel hunger-has grown. That isn't a very good sign, from India's point of view. I think already we're seeing some Indian backlash there. Chinese companies that wish to invest in India are finding themselves blocked on national security grounds, where American companies, British companies, Japanese companies and so forth are not. China's already being singled out. India has the most anti-dumping actions under the World Trade Organization's rules. That's where you impose special duties on a country's exports, say electronic goods from China. You impose a 50 per cent countervailing duty, as they call it, which essentially makes it uneconomic and they can't compete. India has more anti-dumping actions against imports than any member of the WTO, and most of them are on China. I think that's a friction that is already very visible. There are frictions between all sorts of countries that trade with each other. This might be a particularly egregious one. But look at Europe and the EU. In the Bush era, large parts of the EU and America have fallen out, but even in the period of the acme of transatlantic relations, there were always trade disputes going on. I don't see that conflict, that friction, spilling over into conflict outside the economic arena.
How will they address their energy security needs? You talk about this a bit too, especially with respect to some of the problems that may arise, the most obvious being cooperation with Iran given how the US may respond, and how indeed the situation may develop.
There's a ghastly phrase that was developed I think at Harvard by some MBA teacher-co-opetition.
You use that in the book too.
Yes. Horrible phrase, and I use it in inverted commas. I do think that China and India are both behaving in a mercantilist fashion. In other words, they are sending state-owned companies out around the world to secure oil supplies at source, rather than tying up oil purchases through the market. That means they distrust the global market. China is a way ahead of India on this. There's something like $45 billion of Chinese investment in places like Kazakhstan, Sudan, and Burma, whereas India only has $4-5 billion. India's always quite slow to get the wheels moving, but it is moving in that direction, and it will pick up speed. I don't see any huge clashes with China over that. The pipeline is arguably something that China ought to promote. It's not in China's interest to see a Pakistan-India conflict. It really isn't, and China's been behaving much more responsibly on the India-Pakistan front in the last decade or so than it had done before. Anybody with common sense can see that a pipeline going from Iran to India would bind Pakistan and India together in common need, regardless of what the Americans think and the extent to which they want to isolate Iran. I sometimes think of Indian-American relations in the same way I think of British-American relations, except that India is playing America. It can really do what it likes, because America really needs India. When it looks to the future, the next decade or two, America really needs India.
In what sense? As a counterbalance to China?
As a counterbalance to China, as a large and growing market, as a democratic ally, and as home to 2 million Indian-Americans, who are the richest ethnic group in America and whose lobbying power and visibility are growing. America needs India, and India knows that. So India can afford to do all sorts of medium-level things that would irritate America, like vote unanimously against the invasion of Iraq, even if it was a symbolic vote. That's not going to bother America really, it will complain. I think, now that India's got this nuclear deal, it can probably abstain on Iran at the IAEA and at the UN as long as it isn't a vote with Iran, or against whatever resolutions America's putting forward, and as long as there's no hint of weapons proliferation technology or material from India to Iran. I think India can build its pipeline. The real question isn't whether America stops it, which it can't ultimately. There are two questions. One is whether India and Pakistan can actually get together to do it. The other is whether they can afford it, because who's going to insure a pipeline that goes to Pakistan through India. That's a juicy target! Who's going to insure that and how much would the insurance cost? That would be the real question.