India in a post-American world

Everybody, Peter Zeihan here coming to you from the Naval Postgraduate School in Monterey, California. This is where a lot of naval officials go for their mid-career training on issues of security and energy and technology, international politics and on and on and on. And I just gave a lecture here, which is a lot of fun, anyway, because it’s kind of naval theme. But today we are going to talk about India in the post-American world. We’ve already covered a few other regions, and India is one that comes up as a significant power that is not going to be suffering many of the negatives that we’re going to see sweeping the world. Their energy comes from the Persian Gulf, they’re not going to have an economic crisis, their agricultural system is broadly self-sufficient, including for the fabrication of fertilizers, and they are in an area that is not dependent on trade. A little bit like the United States, they chose not to participate in the economic aspects of the global order, because they saw it as an American plan. And they kind of tilted towards the Soviets during the Cold War. Which means if that system goes away, today, they’ll get hit just like everyone else, but not nearly as hard and not nearly as long. So what does the future of India look like? Well, we can hit it kind of from four different directions. The first is manufacturing.

Like everyone in the developing world, the Indians have really been hit hard by the Chinese development process, because you used to have every middle power producing a significant portion of their own manufactured goods until the Chinese showed up. And the Chinese were able to do things at scale with subsidies and a lot of deliberately hostile economic penetration policies to drive a lot of industry out of business. And so in many ways, what the United States has experienced has been the Indian experience as well, with Chinese products flooding in and driving local manufacturers out of business. Now that the Chinese system is near the end, the Indians are gonna have to do the same thing that the US is going to have to do, and if they still want stuff, they’re gonna have to build it themselves. The difference between the US and India, however, is that the United States has friends, partners and allies to do this, most notably Mexico and Canada. India doesn’t have anything like that. The states that are on its borders it has a broadly hostile relationship wit, Pakistan, obviously, being the most significant and the most extreme. But there really isn’t anyone else they can lean on. Now, luckily, the Indians have a very wide range of skill sets within their — sorry about that, one of the weird things about mid-career training is the dudes that aren’t married decide to use their time here to purchase themselves a very loud car, anyway — Indian manufacturing, so they don’t have partners, they don’t have friends. Now, within India, you’ve got a number of different types of industrial bases just within the country, because it’s so big. So they can get a bit of a US-Mexican style synergy going within their own country. But it’s not going to be at the same technological level, it’s not going to have the same amount of capital, it’s going to be a more difficult operating environment, and the quality and variety of products that they can kick out is going to be lower. So you can have a country of one and a half billion people that becomes a global manufacturing superpower, but only produces for the Indian market. And this sort of breakup of global manufacturing is going to kind of happen everywhere. But India is the emblematic example of what it’s going to look like. Second, demographics. India’s a relatively young country, but not as young as some people think it is. When Indians talk about the demographic dividend, they look at all these people that they have that are under age 40. And that is very impressive. But it’s not all sunshine and gold. The problem the Indians have is the same as everybody else, and that they started industrializing, and the birth rate plummeted. For the Indians, that started about 35 years ago. So they’ve got a pure pyramid at the top, and then you hit the 35 year olds and go straight down, and we’ll include the demographic picture here. And now what that means is they do have this period of hypercharged growth, because when you have a lot of people aged 20 to 45, but they don’t have a lot of kids, instead of buying diapers and paying for preschool, they’re buying cars and they’re going on vacation. And that generates a lot higher octane growth, it’s more productive, it generates more money for the economy has more supply chain steps to support it, and generally get a very robust economic growth experience. The question the problem is whether or not the birth rate can stay high enough to sustain that in the long term. In the case of India, the birth rate hasn’t dropped nearly as fast as it has in places like say Japan or Korea or China or Germany. But it is something to keep an eye on but even even in the worst-case scenario where the current rate of decline holds. You’re not looking at the Indians being in say a German style economic and breglio within 40 years. So worst case scenario, the Indians have a good 40-year runway ahead of them. And that’s a lot of time for things to go wrong, but it’s also a lot of times for things to go right. And if any country can kind of have a bended curve on the demographic situation, a country that is as large and diverse and as stable as India is probably where it’s going to happen. All right, third, let’s talk strategy. India’s a pocket power. People forget about that. It’s basically in a region that is bounded by either hostile countries, Pakistan, deserts, the Thar, mountains, the Himalayas, or the jungles and mountains of Southeast Asia, it can’t go anywhere. And even if it were capable of conquering every country, it borders that doesn’t appreciably expand its economic footprint, or improve its strategic environment. So this is a country that is limited to the Indian ocean basin. And since it has so many potential hostiles on its land borders, it will never be able to be a significant naval power. So it can’t go beyond that region. That means that culturally, strategically, India is insular, the Indians like to talk about themselves as an up-and-coming global power, but they will never be able to break out of this geographic box. But it also means it’s difficult for others to break into it. So one of the interesting things that we’ve seen in US strategic policy over the last decade is this effort to kind of cord India away from its old pro Soviet thinking.

It’s not working, it’s not going to work, because India does things for India, and it never has had a history of having allies ever much less family. And so you can cut deals with India on a case by case basis. And I’m not suggesting that American Indian relations ever have to be hostile. But they’re not family, they’re not friends, they’re never going to be an ally. And that just needs to be accepted by all sides. That doesn’t mean there aren’t opportunities for cooperation. But it does mean there’s a limit, because the Indians have never had a bilateral relationship that is based on trust or sacrifice. And that’s a very different starting point compared to all of the Western nations, or even countries where the United States has had a deep military experience like say, Taiwan, Korea, Japan, or even turkey.

What that means is you need to look at what the Indians are going to feel that they need to do for India, in order to determine where this goes, that means they’re not going to do anything that we would consider overly helpful for Ukraine, but not overly hurtful, either. It means that if the United States get into a spat with China, they might cheer from the sidelines, but they’re not likely to do a lot on their own unless they feel there’s an opportunity. And it means if we get into a world like I’m anticipating where energy is really hard to come by, the Indians will take action with Indian forces by themselves for Indian reasons. And if I wouldn’t, is in the Persian Gulf, I would not be worried about the United States or China or Japan or Britain or France, I wouldn’t be worried about India, because they’re very close. And India is one of the very few countries that could get to the Persian Gulf in force if they wanted to. And it’s difficult to imagine any country with the exception of maybe the United States, being able to even theoretically inhibit them in that process.

When will that happen? We have to have our energy crisis first. So far, the Ukraine war hasn’t triggered one so far, the Chinese with their Taiwan ActiveX haven’t triggered one. But it’s probably only a matter of time because the United States no longer has forces in the Persian Gulf in force. All right. It’s gonna be a fun show, you guys take care.