India has reacted very calmly to punitive tariffs imposed by the US: Prof Kishore Mahbubhani

How, in your opinion, is India navigating the current geopolitical landscape? 

Well, I think like all countries in the world, India is bewildered. What is happening now is unprecedented. Never before have we had a situation like this. Since the creation of GATT in the late 1940s, the world has always moved in the direction of greater stability, greater predictability, towards reduction of tariffs, towards removing trade barriers. This is the first significant reversal in 80 years from the GATT principles.  

It is perfectly natural for India to feel bewildered because the whole world is bewildered, including good friends of the US, like the EU. Actually, the nicest country in the world is Canada. Canada doesn’t threaten any country. And Canada has been super nice to the US. Eighty years of being nice to the US since World War II has been repaid with punitive tariffs.  

How do you think India is handling it?

As I said, India is bewildered. When you are bewildered, you have to sit and pause, but don’t take any precipitative actions. India is reacting very calmly to the very punitive tariffs that the US has imposed. To the best of my knowledge, India has not retaliated. 

That is in the context of tariffs. But when it comes to other things like accusations of buying oil from Russia, how do you view India’s reaction? 

You see, news is now coming out that the Biden administration actually encouraged India to buy Russian oil to avoid any shortages in the world that could have raised oil prices significantly, and hit both Europe and the US. So, in some ways, India was doing the United States a favour by buying oil.

And also, the Europeans have been buying oil non-stop from Russia — even now. Yes, they’ve diminished their purchases, but even now they are buying.  

So, is it’s hypocritical of the US and Europe to accuse India of buying Russian oil when they themselves are still importing goods from Russia.

And it’s important to also emphasise that countries with 85 per cent of the world’s population have not imposed sanctions on Russia. Only 15 per cent has. So, India’s stand is in harmony with much of the world. 

You are very pro-China. Can you tell us Indians what exactly China wants from India? Why is it arming India’s enemy and instigating wars? 

I won’t describe myself as pro-China. I’m always pro-Singapore.  

I’ve written a book called ‘Has China Won?’ (in which I say that) the main contest in the world is not between China and India, but between China and the US. As part of this contest, there is a deliberate effort by detractors of China, especially in the United States, to demonise China, which is unwise. A vast majority of countries don’t share this demonisation of China.  

So, when I point out that the points used to demonise China are untrue, I’m basically defending the truth. For example, the Western media says that BRI initiative is a debt trap — that‘s a lie. Many American scholars like Deborah Brothigum— I cite her often — have pointed out it is not true that China has put countries into debt unnecessarily.  

But I also tell the Chinese that they must never underestimate the United States. So I bring messages to both sides. And my goal is to reduce the misunderstanding between the US and China.

But look at it from India’s point of view. China is needling India all the time. Why is that? 

I’m aware that there’s a lot of anti-China sentiment in India. I’ve been studying geopolitics for 55 years. The biggest mistake any country can make in geopolitics is to become emotional. Indians have become very emotional about China. And when you become emotional, you put yourself at a disadvantage.  

When any country says China is completely wrong and we are completely right — the one lesson I learn in geopolitics is, things are never black and white.  

But I am happy that the dialogue between China and India has begun. China has been your neighbour for 2000 years and will be for another 2000 years. The good news is that for most of the past 2000 years, China and India have lived in peace and never had a problem. Your problems in many ways are quite recent. Why not find ways and means of going back to the patterns of the past?  

Compare ASEAN and SAARC. We do have problems (among) ASEAN countries, but we still talk to each other. But SAARC leaders haven’t met for several years now.  

Prime Minister Modi and President Xi are to meet soon. What are your expectations of the meeting? 

One thing I’ve learned in geopolitics is, don’t try and go for dramatic changes. You have got to prepare the ground — it takes time to build up a relationship. 

What do you think India should do to become friends with China? Join RCEP? 

You see I am ethnically a Sindhi. But my friends say I am a failed Sindhi because I never went to business. I worked in government and academia, so I never became a Sindhi businessman. But I have observed Indian businessmen. I can tell you in every country in the world, there are Indian businessmen. The most competitive economic animals in the world are the Indians. 

And you can see how well the Indians have done in the United States, which is the most competitive human laboratory in the world. Indians thrive with competition. So, when you deprive Indians of competition, you are weakening them. When you provide Indians with competition, you’re strengthening them. And I believe that if India joins the Regional Comprehensive Economic Partnership (RCEP), India’s economy will grow faster, not slower. 

Economic theory is very clear about that. And you know there’s something called the Peterson Institute of International Economics in Washington DC, probably one of the best international economic think-tanks in the world. They’ve done a study that shows that India’s economy will grow by $60 billion dollars if it joins the RCE

I know that in India there’s a perception that RCEP is controlled by China. That’s not true. 

RCEP was initiated by the ASEAN countries, right? 10 ASEAN countries, they’re all friends of India. In addition to China and ASEAN, there are Japan, South Korea, the Philippines, Australia and New Zealand, which are all American allies. There are six American allies in RCEP — why do you think RCEP belongs to China? 

The fear is the flooding of Indian markets with Chinese goods. For Indians to export goods to China is not easy. 

India has never really opened its economy in the way that other countries have done so. Look at a country like Indonesia. It is much smaller than India. It’s the biggest country in South-East Asia, but it has 270 million people. Indonesia’s economy has grown. See, economic competition is good for the economy very clearly.  

In 2000, the US economy was eight times bigger than China. Today, it is only 1.5 times bigger. How does China do that? The Chinese welcome the American pressure to open up its economy — they said by opening our economy, we will become more competitive.  

If you protect your inefficient industries, you are slowing down your economic growth. If you kill your inefficient industries, you are you are encouraging your economic growth. 

You have said that it is time for India to become a member of the Permanent Council of UN and that the UK should give up its seat for India. 

It is important to understand the spirit with which the veto power was created in the UN, United Nations. The founding fathers of the United Nations were very wise. They said that if you put the United Nations on a collision course with the great powers of the day, the UN would die. So, to ensure that the United Nations never clashed with the great powers of the day, they gave the great powers a veto saying if the UN wants to do something against you, you can veto it. So, that prevents a clash between the United Nations and the great powers of the day.

But in 1945, the US, Soviet Union, France, UK and China were the five greatest powers. Now, 80 years have gone by. This is 2025. And clearly the UK and France are no longer among the greatest powers in the world, right? And the UK is no longer among the top five economies in the world. India is in the top five economies in the world. So, if the founding fathers of the UN were alive, and you ask them who should we give the veto to, they won’t give it to the UK today; they will give it to India, logically. Because India is among the top five economies in the world, soon you’ll be number three. It is, therefore, in the interest of the United Nations to reform and give the veto to the great powers of today. 

And one easy way out is for the UK to voluntarily give up its seat to India. Now, the British know that they don’t deserve the veto. The UK and France have never exercised their veto, a solitary veto for several decades now. Because they know if they do so, the rest of the world say, “Who are you?”

That’s why the gracious way for the British is to exit and give the permanent seat to India. This is not a frivolous suggestion, it is a serious one.  

But how to make it happen? 

I think it will happen as India’s standing in the world goes up. And that’s the reason why I argue for India’s economy to open up more. Because, if it opens up more, it grows faster. And the faster it grows, the stronger its economy becomes. Then everybody will say, “Of course, India must get a seat.” The size of your economy matters a lot in this game. 

You said recently that the G-7 is like Snow White and the Seven Dwarfs? Can the same be said of the UN. How relevant is the UN today? 

We have no choice, because at the end of the day, remember, the world is shrinking. We now live in a small global village. In any village you must have the village council.

The only global village council has is the United Nations. So, whenever we reach an agreement, like for example, on Law of the Sea — who ratifies it? United Nations. If the United Nations doesn’t ratify it, it’s not legitimate. So, even though the American media rubbishes the United Nations, we in the global south, we should not join the American media in rubbishing the United Nations.  

And in fact, if you want to know what public opinion — global opinion — is, table a resolution in the UN. Then you will find out how many countries support. If you want to know the global opinion on Gaza, don’t read the Western media. Table a resolution (in the UN). 

How much of a problem are the Trump tariffs? We do not see much damage to the global economy. 

In basic economic theory, tariffs are bad for countries. I mean, excessive tariffs. Tariffs are meant to temporarily protect the infant industries. But if you keep the tariffs forever, the infant will remain an infant. If you want the infant to grow to an adult, remove the tariffs. 

But Trump seems to think that the world has taken undue advantage of American generosity, magnanimity and taken the United States for a ride and, therefore, there is now a need to restore some kind of balance.  

If you want to be completely objective, American economists will tell you that actually it is the United States which has an exorbitant privilege in the global system, because the US dollar is the global reserve currency. So, it’s true that United States has been having trade deficits. But to pay the Chinese worker or the Indian worker, you have to make a product and sell. But when the US needs to pay you for the products, all they have to do is turn on the printing machine, print the dollar. So, clearly it’s the United States that has had an exorbitant privilege in the global order. 

It is a tragedy that President Trump doesn’t understand that. Actually, it’s the United States that has benefitted and that’s why it is the most successful country. Certainly, in the last 100 years, by opening itself up to global economic competition, the trade deficit has not hurt the American people at all. The US economy has had more or less full employment, very high standards of living. The working class in America — even though their standard of living hasn’t gone up in terms of income — their lifestyle has improved because they have now have access to much cheaper goods from China, Asia and the rest of the world. 

So, they have benefited from trade. So, you can objectively trade has been good for the American people

So, Trump really does not have a case?  

Well, it is not just me who’s saying this. Ask any American economist. I remember when I was ambassador to the UN from 1984 to 1989, the Americans gave us passionate speeches saying all you third world countries, developing countries, you must open up your economies and liberalise.  

I once accompanied Mr. Lee Kwan Yew to the United States Congress when he gave a speech there in 1985. He gave a very passionate speech saying, thank you America for teaching us about the benefits of free trade. We followed your lessons, and we succeeded.  

Look at Singapore. Singapore is the most trade-dependent country in the world. Our total trade is 3 1/2 times the size of our GNP. And that’s why we are the only former British colony that now has a per capita income not just higher than the United Kingdom, but higher than the United States, too. In 1965, our per capita income was $500; today, it is $90,000. 

Do you think BRICS will succeed in de-dollarization?  

I don’t think there will be de-dollarization. Even if the US economy becomes number two, let’s say 10 years from now, the dollar will still remain the global reserve currency because the RMB cannot replace it. There’s no free capital flows between China and the rest of the world and, therefore, RMB cannot replace the dollar. 

But there can be other alternative units of value that can be used. In my book, Has China Won, I talk about blockchain technology as one example. De-dollarization is not happening, but the relative economic weight of BRICS will grow in the world. But that requires BRICS countries to have good relations with each other. The biggest challenge in BRICS is that the relationship within China and India is not comfortable today. 

And that that will act as a drag on BRICS. But if China and India can normalise their relations, I mean, they don’t have to become friends, you know. They will never become friends. Just normalise the relations, and have normal government to government relations— then BRICS can do a lot of things, because the share of G-7 countries in the global economy has been going down consistently over the last last few decades, and that of the BRICS has been going up. And so G7 is a sunset industry; BRICS is a sunrise industry. 

If India and China can work together, then BRICS can have a lot of promise. And you notice that a lot of countries are applying to join BRICS. I was quite amazed.