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Economic diplomacy: making the most of success

Kishan S Rana | June 23, 2003

We seldom celebrate our success stories, and one such is the extent to which, in the past 30 years, we have adapted our diplomatic machine to serve our external economic interests.

For instance, do we notice that public criticism of Indian missions has become rare? Instead, we encounter situations of genuine public-private partnership between these two sets of actors.

We need to continually revisit our methods and techniques, improve them and learn from other exemplars. The initiative of the minister of external affairs to set up an empowered committee to examine India's economic diplomacy, headed by Planning Commission member N K Singh, is pertinent and timely.

India's foray into this arena began as an urgent response to the first oil shock of 1973 -- and has focused on both structure (the creation of the economic division, which is today a de facto "department" composed of four divisions, and the installation of effective embassy networks) and on process (the integration of economics into bilateral diplomacy).

What are the actions that are now needed to refine our economic diplomacy to make it perform even better?

Inter-ministry cooperation: One of the ministry of external affairs' long-standing problems has been its turf battle with the economic ministries.

This is not unique. The world over, foreign ministries are forced to "reinvent" themselves, abandoning the past exclusive or "gatekeeper" role, and becoming "coordinators" of external relations, working with a multitude of other agencies.

Acceptance by functional ministries of this role comes not from official edicts, but from their willing acceptance that the foreign ministry shares their concerns and helps them in their goals.

This becomes possible if the foreign ministry delivers information, cross-connections and actionable ideas that emerge from the foreign ministry's integrated perspective and its ability to identify linkages that produce leverages.

The diplomatic machine can do this by taking on board functional concerns and creating real partnerships with these ministries. The task is to enlarge this into a performing system.

Personnel "In-Placement": The MEA has traditionally resisted the entry of non-Indian Foreign Service personnel, fearing that this would lead to demands for postings abroad by personnel inducted from other ministries.

Yet the MEA needs access to talent from wider sources, especially in the economic arena.

A simple way to square the circle would be to "pre-select" officials who are to go abroad against the handful of non-IFS posts in missions; these officials would serve in the MEA for two or three years, working in the economic division or in territorial divisions that handle substantive amounts of economic work.

A qualified official at the rank of a senior joint secretary might serve as an "economic adviser".

Such in-placements offer multiple advantages, integrating the MEA into the network of ministries, giving access to needed manpower, and giving non-MEA personnel abroad better connections with their IFS colleagues.

Headquarters strength: The root cause of many problems facing the MEA is a shortage of personnel at headquarters in relation to missions abroad.

Studies show that the best foreign ministries function with a personnel ratio of 1 to 1 or less (for example, China, Brazil, United Kingdom), or at worst, 1 to 1.5 or 1.8 (France, Italy, US).

We are at an incredible 1 to 3.5 or 4. One consequence of this is that personnel are not available to permit territorial divisions to better manage the bilateral diplomacy -- their eco-political oversight role.

The economic "division", with its concurrent role on bilaterals and its multilateral work tasks with the economic ministries, remains especially starved of manpower.

Career development: Currently, a handful of officials take leave to pursue PhD studies, or are sent to Harvard for a one-year programme.

One of the objectives of HR development should be career-planning for officials, to provide the MEA with a wide range of in-house expertise at varying levels of seniority.

Investment mobilisation: India's outreach, advocacy and target-pursuit methods for foreign direct investment harvesting abroad still largely depends on the initiatives of individuals, and need to be institutionalised.

The attention devoted to economic diplomacy by Indian missions on the ground varies, and this is especially true of FDI mobilisation.

Both territorial divisions and the economic division need manpower to monitor the work performed and assist missions in this area. One simple device would be to entrust to apex business bodies the work of support and mobilisation for designated missions, and carry out targeted marketing through such joint actions.

Research support: Even now, the MEA does not have a research institution of its own. When the Indian Council of World Affairs was created, it may have been the expectation that it would become such an institution.

In practice, it is now an institution for public diplomacy, somewhat hobbled by past disputes over its control, and holds little promise as a base for credible research activities.

Economic diplomacy in the field needs to be supported with research tailored to empirical studies, and focus on practical ways in which Indian economic diplomacy can be improved.

This calls for a small research institute that could be perhaps linked with the training arm, the foreign service institute that is to shortly move to its own purpose-built campus, borrowing from the experience of Malaysia and Thailand.

Non-state partners: India's experience in using business chambers and think-tanks as extensions of the diplomatic machine is unique, and has worked on issues as diverse as blunting the impact of external economic sanctions and in operation of Track-Two dialogues.

This is a demonstration of what one may call an India Inc phenomenon. The MEA could consider ways of making this stronger, through institutionalised mechanisms, or by widening the process.

MEA's links with states: Decentralisation of power from the Centre to the states is one of the characteristics of our time. We see this in actions by states such as Andhra Pradesh in external borrowings, and in Kerala in the carving out of a distinct tourism destination identity.

Other large countries show us the way in using the latent power of provincial entities in their actions to mobilise FDI, and push exports.

The Chinese and several others depute personnel from the foreign ministry to the provinces. This latter idea is doing the rounds in New Delhi and deserves action.

Diplomacy today is all about rapid adaptation to changing circumstances, borrowing ideas that others have tried out and produced results. Every concept or method from abroad that seems attractive is not 'transportable' into one's own environment.

One has to learn continually, benchmark against others, and accept best practices.

In the era of economic reform, economic diplomacy as practised through the MEA and Indian missions has a significant contributory role that deserves to be developed.

The writer is former ambassador and author of   Inside Diplomacy and Bilateral Diplomacy.

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