Financial markets have plenty of issues to worry about, but an escalation in the China-India border clashes is not one of them, at least not for now, as both sides have taken significant measures to cool tensions down over the past week.
But a serious escalation remains, quite literally, one gunshot away.
** China’s Defense Minister Wei Fenghe and India’s Defense Minister Rajnath Singh held an “unofficial” meeting yesterday after attending the annual Red Square Victory Day parade in Moscow to discuss border tensions between their respective countries after a series of deadly clashes in the remote Galway Valley.
** At that meeting, the defense ministers agreed to resolve border problems through peaceful means and vowed that both sides would do their utmost to avoid an intensification of the conflict on their frontier, or even an outright war.
** Coming on the heels of a trilateral video meeting on Tuesday between China’s Foreign Minister Wang Yi, India’s External Affairs Minister S. Jaishankar, and Russia’s Foreign Minister Sergei Lavrov, as well as a second, commander-level, meeting between the two sides on the border on Monday, the desire by both sides to de-escalate is public, deliberate and clear to all. Beijing, and China’s Central Military Commission, however, remain on high alert for what they claim could be further provocations from the government of Prime Minister Narendra Modi.
** Security officials in China point to two “extraordinarily significant” remarks that were made by Prime Minster Modi at an “All-party” virtual meeting on Friday, June 19, one conciliatory, and the other more troublesome. The first statement to catch Beijing’s ear was that, “nobody has intruded into our border, neither is anybody there now, nor have our posts been captured.”
** While that comment could be construed as defensiveness against accusations in the domestic press and by his own hardliners that Modi has in fact been soft, or is being rolled by China, Beijing sources point to them as acknowledgment that the conflicts indeed took place on China’s Line of Actual Control (LAC), as alleged by China’s Ministry of Foreign Affairs and the Western Command of the People’s Liberation Army. More to the point, sources in Beijing also choose to interpret that “acknowledgment” as an intent to cool down tensions and avoid an even deeper overall deterioration in Sino-Indian relations.
** At that same party meeting, however, Modi also warned that “the army has been given the freedom to take necessary measures, including the use of firearms, along the border.” Chinese sources point to that one line as a de facto declaration by Prime Minster Modi that India will no longer abide by the Border Agreements between India and China of 1996 and 2005 that disallow the use of firearms during face-offs between the two sides.
** For all the tensions to date, the threat of the firing of even a single shot is a significant change in the risk of a casus belli. Indeed, the 1996 and 2005 agreements explain why even at the height of the most recent tensions between the two sides, the fatal border clashes came in the form of bloody, bizarre, and almost medieval hand-to-hand combat with instruments including bamboo poles covered in nails, with no shots fired.
** The abrogation of the 1996 and 2005 agreements, and new rules of engagement, could lead to an inadvertent escalation in tensions between India and China, although between the two nuclear powers the risk of that would seem unlikely. More problematically, it could serve now as a hair trigger pretext for a more deliberate renewal of tensions to redraw the facts on the ground.