November 26, 2006EconomyForeign Affairs

Premature cooperation

India must not fight shy of competing with China in the quest for energy supplies

This is an archived blog post from The Acorn.

On the surface, the energy and resources game is zero-sum, and for that reason, the prudent strategy for both parties is to compete with each other. There may be scope for co-operation; but such co-operation will not be in India’s favour until it is able to negotiate with China on a peer-to-peer basis. [One China policy]

It turns out that India did attempt to work out a deal with China to prevent bidding wars for energy sources.

While the November 20-23 visit to India by Chinese President Hu Jintao produced plenty of economic commitments, the concept of increased collaboration on securing energy assets was clearly missing from the official agenda.

But this did not deter Petroleum Minister Murli Deora from using his old friend Chinese Commerce Minister Bo Xilai to get a midnight audience with Ma Kai, the all powerful chairman of National Development and Reform Commission, China’s top planning agency. [IE]That the Indian minister had to secure an audience” with an all powerful Chinese leader suggests how unequal such a deal will be.

Bidding wars, obviously, are bad for both parties. However unless India demonstrates its capacity to engage in them, can cause some real hurt (rather than simply talk of one), China is unlikely to take any Indian proposal seriously.

Murli Deora’s petroleum ministry would do well to demonstrate India’s willingness to compete vigorously in the international market. If it does so successfully, it will not need to seek disturb all-powerful Chinese leaders at midnight anymore.

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