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'Sanctions and all that is big boys game -- the game is poker, not draughts'

Professor Jagdish Bhagwati says the best way to meet the challenge of sanctions is to open up the economy rapidly and push along economic reforms further by way of privatisation, the next major step that had to be taken.

Speaking at a seminar on 'What should be India's economic reaction to sanctions?', the Arthur Lehman professor of economics and political science at Columbia University, New York, also said the government can consider signing the Comprehensive Test Ban Treaty since that would not harm India's nuclear position and yet pave the way for the lifting of sanctions.

In a speech laced with witticism and one-liners that often had the audience in splits, Professor Bhagwati also spoke of the major role that the NRIs can play in tackling the effect of sanctions. "I call this the Trojan horse approach," he said. "Indians abroad are to be found everywhere. There is not a day when some achievement by one Indian or the other is not played up, and this creates a very influential body of persons out there in the US," he said, adding tongue in cheek, "Even the president of the US Gay and Lesbian group is an Indian! We are fast becoming the Jews of the US."

Strangely, Pakistan does not have such an influential body. The same applied to the United Kingdom. "The government must use this lobby. Because an article written abroad by an Indian out there is far more useful than reams of words written by Indians from India," he stated.

The professor felt that sanctions posed three questions that needed attention: one, why were the sanctions imposed; two, the ethics behind the sanctions; and three, what should the victims (India) do in response?

Professor Bhagwati said that initially he too was against the nuclear tests, but on further understanding of the situation he agreed that India's security environment did pose a problem which needed to be addressed. However, he wondered if testing nuclear bombs was the best way of meeting this security challenge. "Was testing a wise decision?" he asked.

The professor said he believed that the US had imposed sanctions mainly to protect the regime of nuclear 'haves' and 'have-nots'. "It is because India has threatened this regime that the US is upset, and is keen to push India back into the regime of have-nots.''

He added that one way for India now to change the situation would be to sign the CTBT. Incidentally, present on the podium along with Professor Bhagwati was Jaswant Singh, who is conducting negotiations with US emissary Strobe Talbott, and where signing the CTBT in exchange for some benefits to India has reportedly been mentioned. Singh sat poker-faced and betrayed no emotion at Professor Bhagwati's suggestion.

"India needs economic strength to acquire influence worldwide, and just nuclear bombs cannot do that," Professor Bhagwati declared, and pointed to Southeast Asia and China as examples.

"Southeast Asia has acquired a global role simply because of its economic success, while China, considered a rogue state, is also important because of its economic might today."

Going to the ethical question, he said it posed the dilemma of how useful were sanctions. He pointed out that while unilateral sanctions were of limited use, multilateral sanctions were not, and could hurt the Indian economy.

Professor Bhagwati pointed to the willingness of the US to sell wheat to Pakistan and the senate's decision this week to allow President Clinton to waive sanctions for one year as proofs of the limitations of unilateral sanctions.

Turning to India's response, he said the way was to open up completely. "The Americans are practical minded people, and looking for investment opportunities. We have the potential for a huge market and if we open up, India will benefit," he said.

Professor Bhagwati lamented the consumer-capital goods divide. "Why are we creating a caste system among goods? After all, goods are goods and bads are bads! The government has every right to offer sops to certain sectors such as infrastructure, but there is no need to place curbs on consumer products," he said. And added: "Very often, those who want to restrict consumer goods are the most keen users of such products."

He insisted that India must not be complacent and must get its act together before the US does. "Multilateral sanctions can and will hurt India. So this one year grace period which the US president is likely to give India will be used by Bill Clinton to garner worldwide support on imposing sanctions against India. Hence it is up to New Delhi to prevent that from happening. This is a big boys game and the game is poker, not draughts," he stated.

Professor Bhagwati also spoke about the political instability stigma that seems to have attached itself to India. "When Moody's downgraded India's sovereign rating, they cited political instability as a reason, and this is because economic issues have now become linked to security issues and the whole South Asian stability question," he said. "To make matters worse, some BJP members have added to this perception with their ill-timed remarks."

The professor had some harsh words for the extreme elements within the Bharatiya Janata Party, but also blamed the moderate members such as Jaswant Singh and Prime Minister A B Vajpayee for not speaking out and clarifying matters. This in turn led to an image problem that the BJP suffered from, at least in the Western media.

"The West calls the BJP as a Hindu nationalist party, which conjures up images of an Islamic fundamentalism and the chaos that accompanies it. This must be addressed at the political level of the BJP."

Professor Bhagwati said the BJP suffered from certain image problems, pointing to the complete lack of intellectuals in the party. "When I recently was introduced to certain well-known economists in your party, I had no idea who and from where they were," he said. "This is perhaps why the party was unable to come up with clear-cut economic policies."

He warned the BJP that no intellectual would be associated with the party as long as it remained pro-Hindutva.

Commenting on the Budget, he said the government's move to hike import tariffs by eight per cent sent out the wrong signals. "If you have to raise tariffs, at least disguise it by saying that it is being done to raise revenue in a year when revenues fell or something like that," he said.