India Looks to the East Bloc

BOLL, MICHAEL M.

IN SEARCH OF INCREASED AID India Looks to the Ecist "Bloc by michael m- b°ll The devastating economic effect that the higher cost of oil is having on the developing countriesódespite their being...

...was finally signed...
...Until the signing of the Soviet-Indian Friendship Treaty in 1971, Soviet aid was loosely organized through a series of intergovernmental agreements limited to specific projects...
...Yet if Mrs...
...Equally important, given India's monetary position, CMEA has the advantage of being a "soft-currency" tariff and investment union...
...Continued concern about Chinese expansion could eventually lead New Delhi to enter into an Asian security pact with Moscow, as could a new conflict with Pakistan...
...The following year, a joint commission was created to coordinate the fiveMichael M. Boll teaches history at California State University, San Jose...
...Indeed, the trend for several years now has been toward closer economic and political ties with the Soviet Union and its Eastern European satellites...
...Prime Minister Indira Gandhi's responses, however, offered little apparent encouragement to her guest's proposal...
...foreign aid reduced, India may have little choice but to turn to the USSR for more assistance...
...This is likely to become apparent first in India, a country that uses only one-fiftieth as much energy per capita as the United States but depends on chemical fertilizers produced from petroleum to raise enough food to feed its hungry masses...
...When Brezhnev returned home, political commentators uniformly concluded the Soviet plan had been rebuffed in the largest non-Communist Asian state...
...Thus its traditional policy of nonalignment, which has been steadily "tilting" away from Washington since the 1971 Bangladesh war, might give way to an alliance with the Soviet bloc...
...The lengthy joint communique issued at the conclusion of the five-day summit contained this statement: "The two sides agree that the basic relations between all states ought to be [governed by] such principles as renunciation of the use of force in relations between states, respect for sovereignty and inviolability of borders, noninterference in internal affairs, broad development of economic and other cooperation on the basis of full equality and mutual advantage...
...As a result, the nation's already shaky balance-of-payments position will be further weakened, its efforts to industrialize will be set back, and its hope to become self-sufficient in agriculture will be postponed once again...
...Gandhi disdained to initial a formal pact, she did accept its fundamental principles...
...Each visit produced a joint communique promising expansion of existing trade or investment ties...
...Yugoslavia, North Korea and North Vietnam have associate status, permitting them to participate in projects at their discretion...
...The bank, which can have dealings with any country regardless of its social system, is specifically authorized to enter into fiscal relations "on the basis of equality" with banks in capitalist and developing nations...
...Besides providing for mutual consultation between the signatories if peace were threatened in Asia, however, it stressed the importance of past economic, scientific and technological cooperation...
...Last year high Indian officials, including President Varahgiri Venkata Giri and Planning Minister D. P. Dhar, undertook state missions to three CMEA countries, and delegations from three other East European members were feted in New Delhi...
...Soviet Party chief Leonid Brezhnev's visit to New Delhi last November added a new 15-year agreement that promises a major expansion of aid to enhance the productive capacity of installations already in place and to facilitate the movement of Soviet capital into Indian light industry and food processing...
...Even if the Arab League is true to its promise to grant friendly third world states cut-rate prices, India's oil bill is expected to at least double this year to over $1 billionómore than the sum of foreign aid New Delhi will receive from all sources?and it will not be able to afford all the petrochemical nutrients it needs...
...With U.S...
...Its Investment Bank is capitalized at 1 billion rubles, contributed by member states for the purpose of "crediting capital investments mainly in the production sphere...
...Three days after Brezhnev's departure, Chechoslovakian Party chief Gustav Husak arrived in the Indian capital to negotiate "broad-based" cooperation aimed at doubling trade between the two states by the end of 1974, and including future plans to initiate common investments in third countries...
...Moreover, the scope of the agreement fed speculation that the Indian government was considering the possibility of joining the Soviet-dominated Eastern European Council of Mutual Economic Assistance (CMEA...
...Coming on the eve of the Indo-Pakistani War, this pact was interpreted by most Western observers as a guarantee of India's northeastern border should China choose to side openly with Pakistan in the then developing conflict over Bangladesh...
...Repeatedly, she stressed the unique pattern of India's political evolution and the importance of maintaining nonaligned status...
...Nevertheless, the desirability of the vast CMEA markets may ultimately prove irresistible...
...CMEA, often referred to as Comecon in the Western press, has experienced alternate periods of lethargy and activity during its 25-year history, but for now at least the official line is that the organization will play a key role in Soviet economic development for the remainder of the century...
...This has long been regarded by Western observers as a thinly veiled attempt to engage India's support in the containment of the People's Republic of China...
...Nonetheless, no statute forbids associate membership for any non-Communist state willing to abide by the council's rules...
...A major attraction of CMEA for India is that regular trade with its members would offer a more stable basis for industrial growth...
...One of the major objectives of Brezhnev's visit was to press again for a Soviet-backed collective security pact in Asia...
...year plans of the two nations and insure maximum opportunity for expanded economic ties...
...The oil and fertilizer shortage has knocked the growth rate to near zero and forced the government to drastically revise its ambitious $71-billion five-year development plan, originally set to begin in April...
...Though the total amount involved was left deliberately vague, the oil, gas and copper industries were singled out for special attention, and a pledge was made to build a subway system in Calcutta...
...From 1955-71 Moscow extended over $1.5 billion in credits to the Indian government, and today it is providing assistance for 70 major economic projects...
...Domestically, India is suffering its worst economic crisis since Independence...
...The pressure this has generated for New Delhi to join CMEA is partially offset by the fact that the Soviet bloc is itself in short supply of the commodities India needs most...
...In part, India's tilt toward Moscow may derive from a wish to redress the balance between Washington and New Delhi through the threat of abrogating nonalignment once and for all...
...specific agreements were reached with Hungary, Poland and Bulgaria...
...Full membership is limited to the Warsaw Pact countries, plus Cuba and Mongolia...
...Significantly, these are precisely the words Brezhnev has used for more than a year to describe his proposal...
...The contingency plan for India's joining a Soviet-sponsored security arrangement for Asia thus appears to be in place...
...It is difficult to see how India will be able to fulfill this pledge, or a similar promise contained in the new Soviet-Indian accord, without participating in the financial framework of CMEA...
...Surely it was not accidental that 13 days after Brezhnev's visit an agreement settling an outstanding economic dispute with the U.S...
...IN SEARCH OF INCREASED AID India Looks to the Ecist "Bloc by michael m- b°ll The devastating economic effect that the higher cost of oil is having on the developing countriesódespite their being the world's lowest fuel consumersówill inevitably bring significant political consequences...
...So long as there is no further deterioration of relations with the U.S., the degree of India's adherence to the Soviet bloc will probably be determined by the nation's economic and defense needs...
...Facilities constructed with Soviet aid now account for 80 per cent of India's output of heavy industrial goods, 60 per cent of its electrical equipment, 35 per cent of its petrochemicals, and 20 per cent of its steel...

Vol. 57 • April 1974 • No. 7


 
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