"A king has no friends; only interests. And a good king is one who ruthlessly follows the path that is in the best interest of his kingdom and his subjects, regardless of his personal feelings on the subject."
Kautilya in Arthashastra, the 2,300-year-old Indian text on kingship, politics and economics

New Delhi occupies a unique geographical position. Draw an arc from the oil-rich states of West Asia to the energy-hungry nations of South East Asia and beyond, and you'll find our national capital sitting bang in its middle. But Indian governments in the past were too insular, weak, timid, idealistic or blind to leverage this geo-strategic advantage for material and political gains. Not any more. In a sign that the government has woken up, belatedly, to the new power game being played out in the continent, New Delhi hosted three Asian leaders-Wen Jiabao of China, Pervez Musharraf of Pakistan and Junichiro Koizumi of Japan-in the space of one month. The headlines and the talking points of the visits, at least those of Wen and Koizumi, were mainly economic, but the undertones were distinctly political and strategic.

First, the issues at stake: The rise of China and its stated goal of assuming the leadership of Asia-and by extension of the entire Third World-have been causing unease in Asian capitals for some time now. India's ties with Japan assume significance in the light of this, and several other developments.

"India and Japan are natural allies," says Brahma Chellaney, Director, Centre for Policy Research, and noted strategic affairs thinker. Adds Nagesh Kumar, Director General, Research & Information System for Developing Countries (RIS), an economic think tank under the Ministry of External Affairs: "The Japanese and Indian economies complement each other very well."

Political and strategic cooperation and deeper economic linkages will, thus, form the two axis of India's future engagement with Japan. Both sides recognise this significant shift-from a donor-recipient relationship to an equal partnership-in the direction of bilateral ties. "Japan and India share strategic interests," Koizumi told a gathering of industrialists at a function organised by the Confederation of Indian Industry, Assocham and Federation of Indian Chambers of Commerce and Industry, adding that the two countries had agreed to set up a joint Indo-Japanese Study Group to strengthen economic relations.

India and Japan, along with Germany and Brazil, have formed a new grouping called the Group of 4 (G-4). The agenda: coordinate efforts to reform the United Nations and ensure permanent seats for themselves in an expanded Security Council. The G-4 has clout; make no mistake on that. Japan is the second largest provider of funds to the UN after the US and contributes 20 per cent of its budget. Germany pitches in with 9 per cent. And India and Brazil are two of the world's fastest-growing economies. So, when the G-4 speaks, the world will be forced to give it at least a hearing. But it's not going to be smooth sailing, not by a long shot. The US wants a consensus on the proposal, a surefire way of ensuring that it is not carried. China's strategy is more nuanced. It is attempting to divide the G-4 by strongly opposing Japan's bid for a permanent seat while endorsing Germany's candidature. On India, it has resorted to rhetoric and doublespeak without actually clarifying its position on the matter. But it's clear that China does not want any other Asian power to wield a veto power on world affairs. Says Chellaney: "We can't depend on the generosity of any country to get what we want." In this context, he points to the increasing asymmetry in the economic and military balance between India and China. "China's economy has been growing at 9.5 per cent annually and it spends about 15 per cent of its GDP on defence. India, on the other hand, has been growing at only 6.5 per cent and its defence spending as a percentage of GDP has come down from 3.5 per cent in 1988-89 to 2.35 per cent now. We have to build up hard power, both economic and military, if we want to achieve our global political goals."

A window of opportunity is now available. Japanese investors are nervous about the fate of their massive investments in China after state-sponsored arsonists ran amok, destroying Japanese properties and products in retaliation against Japanese war crimes during and before the Second World War. China was reportedly building up its case for opposing Japan's Security Council ambitions, but it may have overplayed its hand. India can cash in on this strain in Sino-Japanese relations to offer itself as a viable alternative destination for Japanese investments. "Japan was the first East Asian country to 'discover' us (in the 1980s when Suzuki, Mazda, Honda and other Japanese automobile and two-wheeler companies came into India in droves), but they soon turned their focus away to the newly-industrialised countries of South-East Asia," says RIS' Kumar. "But they're realising India's potential once again."

That's true. Indo-Japanese trade has stagnated at around $4-billion (Rs 17,600 crore) for the last five years and cumulative Japanese investments in India are still short of the $2-billion (Rs 8,800-crore) mark. "There is vast potential for higher levels of Japanese investments in a variety of sectors like infrastructure, telecom, power and construction," says Union Commerce Minister Kamal Nath. This may already be happening. "About 90 per cent of Japanese companies in India are looking to expand their operations," Koizumi told a gathering of Indian business leaders. It is in this context that Japan's proposed $5-billion (Rs 22,000-crore) investment in the East-West Rail Freight Corridor linking Delhi with Mumbai and Howrah assumes importance. In tradition-bound Japan, signals matter even more than the spoken word. And Koizumi's endorsement of the project is a signal that his government is keen on heightened economic engagement with India. Adds Jagdish Khattar, Managing Director of Maruti Udyog, arguably the most successful Japanese venture in India: "It's quite clear that India is once again on the radars of Japanese businessmen. And plummeting Sino-Japanese ties have benefited India." India can also use its muscle in it software to take this relationship forward. Indian it companies have only a marginal presence in the $100-billion (Rs 4,40,000-crore) Japanese software market, which is growing at 10 per cent per annum. So there is massive scope to ratchet up volumes. If and when that happens, it would be another hurrah for India's Look East Policy.

Hand-in-hand: Indian Prime Minister Manmohan Singh (R) greets his Japanese counterpart Junichiro Koizumi during his recent India visit

India's ties with China are more complex. "China is following a simultaneous policy of engagement with and containment of India," warns Chellaney. The Dragon is seeking closer ties with India even as it rings India with a series of potentially hostile military alliances, and proliferates missile and nuclear technology to an openly-hostile Pakistan.

But, this is in keeping with China's political goal of using India's democracy and goodwill in the world to gain concessions at the World Trade Organization, imf and the World Bank while simultaneously encouraging the world to hyphenate India with Pakistan and keeping it pinned down to South Asia. And Pakistan, for its part, is playing the perfect foil to China by stoking the flames in Kashmir. Like China, but for its own reasons, Islamabad, too, wants to stop India from playing a bigger role in Asia and the world, and Kashmir offers it the perfect tool to pursue this policy.

"Japan is more important to India's strategic place in Asia than China and Pakistan combined," concludes Chellaney. "And in any case, you can't really pursue complementarities with adversaries."

India and Japan, thus, have much to gain from closer political and economic ties with each other. Closer relations with China and Pakistan, lofty rhetoric on good neighbourly ties and joint statements on two ancient civilisations marching ahead hand-in-hand are all very fine. But Indian planners will do well to keep in mind that unless they build alliances and proactively set limits on the exercise of Chinese power, the rules of the new Great Game will be written in Beijing. That, as even the most ardent Sinophile will agree, won't be good news for the rest of Asia. It is in India's interest to ensure that power is more equitably balanced in the continent. Kautiliya's ancient book of wisdom might offer a few tips on that.

-additional reporting by Shailesh Dobhal, Kushan Mitra, Kumarkaushalam and
Sahad P.V. in New Delhi, and Rahul Sachitanand in Bangalore