Time to be a better neighbor, India. If you don't, China will.

According to the International Monetary Fund, China’s trade with India’s neighbors totaled $16 billion in 2008, growing at 14 percent annually. India’s regional trade was barely holding steady at $11 billion.

India's overconfidence

Yet China’s success in the Subcontinent reflects India’s own foreign policy blunders.

First, India has been overconfident, assuming that regional neighbors would naturally choose it over Beijing without providing them with positive incentives to do so. That is the case in Bangladesh, a desperately poor country created with the assistance of Indian forces, whose multiple requests for economic aid and greater bilateral trade India has rebuffed. While Bangladeshis wonder why India does not do more, India wonders why Bangladesh is not more appreciative.

Beijing capitalizes on the gap between them.

Interfering and overbearing

Second, India has been overbearing, giving selective support to political movements inside neighboring states.

In Nepal, India backed a feudal aristocracy for four decades, reinstating the monarchy by force after repeated popular revolts. It trained the Nepalese military, and orchestrated political marriages between Nepalese aristocrats and wealthy Indian families. Pushing India out became the top priority of the Maoist guerilla movement that has majority support and an informal alliance with China.

As the UN peace mission holding Nepal together prepares to close in January, India is pitted against China to control the postwar settlement, with Nepal’s critical water resources (about 83,000 megawatts of hydropower) at stake. The confrontation is reminiscent of the situation in Burma (Myanmar), where China and India spent $10 billion last year to secure the support of a military junta guilty of abusing its own subjects.

As the weaker power, India has more to fear from these confrontations.

Shutting out the region

Third, India has been suspicious, choosing to shut out the region when relations go sour rather than addressing underlying tensions.

Earlier this year, the government announced an immigration regime that will restrict multiple entry visas. Multinationals have protested the move as a blow to business travelers from the West and the Persian Gulf, but its greatest victims are migrant laborers from Bangladesh and Nepal. Many will turn to China for employment instead; others will enter illegally, bringing crime with them.

Nowhere has suspicion been more crippling to Indian policy than in the case of Pakistan. So long as Kashmiri militants – with historic ties to Pakistan – continue to operate inside India, India maintains it cannot meet with Pakistan over the disputed border, or over critical resources like water and gas. But it is the ongoing dispute that creates the very basis for this militancy. In a country with porous mountain borders, such threats are virtually impossible to block out by force.

Yet New Delhi means to try.

US as accomplice to India's bad policy

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