Siddhartha Ahluwalia 0:00

So, I want to start with, is power still concentrated in the US or it’s getting more distributed now?

Rajiv Sikri 0:06

Well, the US remains the number one power for now. Everyone recognizes it. It’s the only true great power.

Siddhartha Ahluwalia 0:17

What do you mean by it?

Rajiv Sikri 0:18

You see, it has power in all domains, whether it is economic, financial, military, technological, cultural, soft power, and a willingness to exercise it.

And it is recognized as being a great power by the others. Nobody will deny that the USA is a great power. Others may say, well, you know, China, yes, it’s aspiring to be a great power, but it doesn’t have all the attributes that the United States has.

Now, one of the biggest things, apart from the things that I’ve mentioned, one of the biggest things that the Americans have is the US dollar as the reserve currency, which they can weaponize and they have been weaponizing. So, this whole business of secondary sanctions, which they impose on other countries, whether in India or Iran or Russia, it upsets the whole world. Because people have foreign exchange holdings in what currency?

US dollar. The yen or the euro or the pound sterling haven’t really, they don’t have the size of the US market or the Chinese. Is anyone going to invest in Yuan? No. Are you going to keep Yuan as a safety? No.

So, that is the way the global economy is structured. And that is a huge benefit of the Americans because they can borrow money. I mean, they are running a deficit of $35 trillion or something like that, rising by one or two trillion every year.

And they’re basically handing out IOUs to people who cannot encash them. But there’s a slow de-dollarization which is underway. Very cautious, very careful because nobody wants to get on the wrong side of America.

But like India or China or Russia or other countries are trading in their national currencies. They say, okay, you know, if we can’t use dollars, then we have to find some alternative mechanism. And that, in my view, represents a long-term danger for the Americans because this biggest tool which they have to dominate the world, they themselves are weakening it.

When you confiscate $300 billion of Russian government assets, what is the message you’re sending to the world? Today, it’s Russia. Tomorrow, it could be somebody else.

So, and, you know, Mr. Trump has said, you know, he’s going to hit those countries very hard, including the BRICS countries if they go for de-dollarization. Nobody is saying we’re going in for de-dollarization. We are not.

We have too much stake in that. But this process is underway.

Siddhartha Ahluwalia 3:34

Can you explain to our audience a bit more about trade wars and what do you see it from a geopolitical and diplomatic lens?

Rajiv Sikri 3:41

Well, trade wars, you know, the sad thing is that the WTO system has collapsed. World Trade Organization, that has collapsed because, you know, it was premised on the assumption that free trade is in everyone’s interest, that, you know, the developing countries need some support. There are fixed rules which everyone will abide by.

All that has gone. The process started many years ago because when the West realized that the world trading system was not working to their advantage because everything had been gamed by them, then they started, you know, putting some obstacles.

For example, the Americans held up the appellate tribunal of the WTO.

So now there is no appellate tribunal to which any country can go in case they have a problem. And of course, see what Mr. Trump is doing now. The whole MFN principle has gone.

MFN meant that whatever duty you charge to one country is applicable to all the others.

Siddhartha Ahluwalia 5:05

Most favored nation.

Rajiv Sikri 5:05

Now you’re saying I will charge so much to country A, so much to country B, threatening, retaliation, all that, you know.

And so that is a huge disruption in world trade. I think it will affect all economies.

Siddhartha Ahluwalia 5:23

So let’s go deep into what trade wars are, if you want to explain to laymen. And what has Mr. Trump caused that has destabilized the world?

Rajiv Sikri 5:33

Well, basically he is saying that if you want to access the American market, which is the largest market in the world.

Siddhartha Ahluwalia 5:41

For exports.

Rajiv Sikri 5:42

For exports. You want to export to America, then you have to pay a tariff. And now I think this is, he’s mistaken in the assumption that it is the exporting country that is paying the tariff.

It is actually the importer who has to pay the tariff.

Siddhartha Ahluwalia 6:01

American consumer.

Rajiv Sikri 6:02

And eventually the American consumer.

Maybe he won’t pay the full amount because, you know, if a thing is costing $100 today and tomorrow it’s $120 and the exporter will take a hit, the importer will take a hit, the distributor will take a hit. So it may be distributed, but the prices will go up.

Now, it’s amazing that today there are many products, electronic products or cameras and stuff like, which are cheaper in India than in the USA because of the tariffs.

So this is going to reduce the trade volume. And I’m not sure that this is going to benefit America.

Siddhartha Ahluwalia 6:48

Because then countries who are dependent on selling in the US, you know, they’ll still sell for less, they’ll sell lesser amount of units, but still at a higher price.

Rajiv Sikri 6:59

Well, it depends on what the US consumer is willing to bear. These are early days. I think in a day or two, Mr. Trump is going to announce which countries are going to have these enhanced tariffs. He’s got a deal with China, UK, Vietnam, but I don’t know how many other countries will be involved, whether India.

Siddhartha Ahluwalia 7:24

How is India affected? I think that’s my next question.

Rajiv Sikri 7:28

India, you know, it’s India is the largest, USA is the largest export market for India. And there are certain things, the labor intensive products, which are very important for us, textiles, garments and so forth. We want to preserve that.

There are also some manufactured items, for example, a lot of auto parts and celeries are going from there. Now, in this mini trade deal that we have been negotiating with the Americans, the Americans want us to open our agricultural sector to genetically modified products, dairy products, and so forth. And that is politically very sensitive for India, because, as you know, Indian agricultural holdings are small, many millions of farmers are dependent on it.

So the government, I don’t think wants to take any kind of a risk on the agricultural front. Historically, also in the WTO, we have been making the point that India, for India agriculture is not a trade item, but a livelihood issue. And so let’s see what happens.

We’ve got important Bihar elections coming up. I doubt if the government wants to clear the pitch before that.

Siddhartha Ahluwalia 8:59

Yeah, destabilize the entire north of India.

Rajiv Sikri 9:01

No, also, you see, you get into a situation where then you are very dependent on inputs from foreign companies. Now, if you have genetically modified seeds and so forth, then where will you get them from? At present, you will get them from Monsanto or from the other American companies.

And then there is also the danger that they could infect your local productions. It could wipe out. It’s too dangerous for a country like India at the present stage of development.

And given the composition of our population, it is so dependent on agriculture and of course, the political sense.

Siddhartha Ahluwalia 9:46

Today, 46% of Indian population is dependent on agriculture, which has gone up in recent times from 42% some years ago, more and more dependent on.

Rajiv Sikri 9:58

Of course, I think India does need to see how we can become an agricultural exporter.

And I think we are taking some steps in that direction, some value added products and so forth. But there’s a long way to go. And then we have the problem of having the proper inputs for agriculture, the techniques you have to be there.

How do you increase the size of the holdings? Because right now, there are too many small and marginal farmers. It’s a very complex issue.

And if you remember, over the last few years, we’ve had farmers agitation.

Siddhartha Ahluwalia 10:42

MSP minimum.

Rajiv Sikri 10:45

MSP and so it’s a difficult issue.

Siddhartha Ahluwalia 10:48

And how does it affect the India-US relationship right now, which has been building over for the last 20 years, since Mr. Bill Clinton took over the presidency? There have been more and more dialogues, at least.

Rajiv Sikri 11:03

Well, I think we are obviously very keen to have some kind of an agreement with the United States, because it is our largest market, and we don’t want to lose that market.

We thought we could get things done with the new Trump administration. But it’s a difficult job. We may have a mini trade deal limited to certain items.

And there was the expectation that by September, October, we’d have a full-fledged bilateral trade agreement. I don’t know. I think the coming days, once the July 9 deadline is passed, we have a clearer idea.

Of what the American policy is. I mean, the government is going to face a lot of headwinds in the coming parliament session. So, there’s a lot of politics mixed into it.

Siddhartha Ahluwalia 12:08

A lot of instability in the environment.

Rajiv Sikri 12:11

Yes, yes, definitely.

Siddhartha Ahluwalia 12:14

And these things have only escalated the situation.

I don’t know, as you said, right, how all these trade wars are helping the US market. Or what is the intention of even starting it at such an important time in the global macro order, when almost three wars are going on at any point in time.

Rajiv Sikri 12:32

I think Mr. Trump’s priority is his MAGA base. So, there has been some pushback from his supporters, because on this immigration, for example, he started throwing out illegal migrants. And then a lot of the industry and said, you know, the hospitality industry, the agricultural workers, who’s going to do that job? So, he’s had to pull back a little bit.

Siddhartha Ahluwalia 13:09

And I think today, it’s impossible to bring back manufacturing into America.

Rajiv Sikri 13:15

Well, A, there’s a question of availability of skilled manpower and two, that are the wages going to be so high that the product will be uncompetitive? I mean, for example, President Trump has told Apple, don’t manufacture in India, manufacture in USA.

USA. But how, I mean, you’re in Bangalore, your worker in Bangalore will be satisfied with X amount of money, which the worker in America will require 5 or 10X.

Siddhartha Ahluwalia 13:54

10X at least.

Rajiv Sikri 13:55

So, how does it make sense for Apple and the American consumer will have to pay so much more? Will he or she be willing to pay that? I doubt it.

Because don’t forget that America has been fed an opium of cheap prices. People are not going to be happy if the prices go up.

Siddhartha Ahluwalia 14:19

Yeah.

And the other thing that is going on is the Russia-Ukraine war is not stopping.

Rajiv Sikri 14:24

No.

Siddhartha Ahluwalia 14:24

And do you think it’s going to stop in the near future?

Rajiv Sikri 14:30

Not unless Ukraine changes its approach.

Siddhartha Ahluwalia 14:34

And what approach is required?

Rajiv Sikri 14:37

Well, basically, Russia is winning the war as far as I can see. And Russia has been fighting it for what, three and a half years now almost. They have also invested a lot of money, prestige, lives.

And they are unlikely to stop till they have achieved their minimum goals.

Siddhartha Ahluwalia 15:03

And what are these goals?

Rajiv Sikri 15:05

Well, they have been talking about, you know, the first element is the security aspect that Ukraine should not be a part of NATO or part of any Western military bloc.

Because Ukraine is, as a hostile, as a country in the hands of hostile powers, poses a security threat. To give you an example, it is like UP and Bihar. If, I mean, the border is like that, there’s no natural border.

So if Bihar were to host the foreign military presence, wouldn’t UP feel threatened? It is not tolerated. And the borders are so porous.

Oh, yeah, so porous. Or take what happened in the 1962 Cuban missile crisis, when the Russians put missiles in Cuba, which is only 90 miles from Florida, and the Americans were very upset. So how do you expect Russia to accept that the Americans or the Western powers can have military facilities in the Black Sea, which is where the port of Sevastopol is.

That is the only warm water port that they have. And that goes through the various straits, you know, in the Black Sea and the Straits of Sea of Marmara and so forth. So they will not accept it.

And the second aspect is that there are a lot of Russians in Ukraine. Let’s not forget that the borders between Russia and Ukraine were internal borders. And in Soviet times, it was quite arbitrary.

For example, Khrushchev gave Crimea to Ukraine, whereas Crimea has always been Russian. Or the Donetsk and Lugansk regions are all 90% Russian, Russian speaking. And the policies which Zelensky has been following are to prevent the use of Russian language and culture there.

So the Russian children cannot learn Russian in their schools. Everything has to be in Ukrainian. I mean, we are in a multilingual country.

You know what could happen in India if this were tried.

Siddhartha Ahluwalia 17:55

Like in UP you cannot learn any other language other than Hindi or in Maharashtra you cannot learn Hindi.

Rajiv Sikri 18:01

Yeah, so, you know, so these are very sensitive issues.

Siddhartha Ahluwalia 18:06

And these are historical issues. You can’t.

Rajiv Sikri 18:08

Yeah, I mean, for example, take Delhi.

Now, there is a large Purvanchi population here. So their language, culture, etc. have to be taken into account, everything.

You can’t sort of say, no, no, no. There’s going to be only, you know, Hindi or Punjabi or whatever it is. You have to speak Bhojpuri also.

So this is a problem.

Siddhartha Ahluwalia 18:37

And what end does, besides Ukraine not participating in NATO, what end does Russia want in the war? Now they are in a controlling position.

Rajiv Sikri 18:46

They want that the existing ground realities should be accepted. They have made four of the obelisks of what was Ukraine part of Russia. It’s now in their constitution.

These are Luzhansk, Donetsk, Zaporozhye and Kherson. They want that, as I said, the denazification of Ukraine because it is their assessment that there are a lot of Nazi elements who are very influential in Ukraine.

Siddhartha Ahluwalia 19:30

And Nazis are like a, now a 80 or 90 year old phenomena.

Rajiv Sikri 19:36

Yes, but it’s the mindset, no? And there were a lot of, in the Second World War, there were a lot of people in Ukraine who were collaborating.

Siddhartha Ahluwalia 19:52

With the Nazis.

Rajiv Sikri 19:54

Just bear in mind also that Ukraine is very distinctly divided into two regions.

One is the western part, where Lvov and so forth are, which has been part of, their history and culture is more that with Poland, Lithuania and so forth. And the eastern part, which is more with Russia, the only logical dividing line is the Dnieper River, which is a major geographical point. And basically, east of the Dnieper River is Russian-speaking or Russian-dominated.

And west of that, it gradually peters out into non-Russian or other languages. So that, I think, is the big divide in Ukraine.

Siddhartha Ahluwalia 20:53

I think one of the things is that all the capable men in Ukraine have went to war and millions of deaths have occurred. So is there anybody left in Ukraine to fight for Ukraine or call it their own country?

Rajiv Sikri 21:06

That’s a good question because one does see reports of young Ukrainian men, even teenagers being picked off the streets and forcibly sent to war. It’s a very tragic situation because a lot of the Ukrainians have fled Ukraine.

They’ve gone to European countries and it’s obviously not a popular war, but the regime wants them to continue fighting. So there is a real manpower problem that Ukraine has. And the other problem there is that so much weaponry has come there unaccounted for.

Where has it all gone? May have gone to terrorist groups and others scattered in Europe and elsewhere. It’s a very dangerous situation.

Siddhartha Ahluwalia 22:04

And the other allegations are that Ukrainian generals have mansions worth 5-10 million dollars in L.A. and Pasadena region.

Rajiv Sikri 22:15

It’s very likely because Ukraine always had a very dubious reputation of being one of the most corrupt countries in Europe. I don’t know if it’s true or not, but that was the reputation.

You know, in Russia also, after the Soviet Union broke up, you had a lot of these oligarchs who were there. But Putin reigned them in and exiled or eliminated politically so many of them. And they were told that, you know, okay, you can have your money, but don’t get involved in politics.

That did not happen in Ukraine. So the oligarchs are still controlling the politics of Ukraine.

Siddhartha Ahluwalia 23:13

And these oligarchs are what, businessmen?

Rajiv Sikri 23:14

Yeah, businessmen. You know, when the country broke up, a lot of the state assets were looted by people who had connections.

Siddhartha Ahluwalia 23:26

And how is now India’s relationship with Russia and Ukraine? How is India balancing?

Rajiv Sikri 23:32

Well, I think Russia is a much closer partner than Ukraine. We have a very close strategic partnership with them.

Special relationship, the regular exchanges at the heads of state and government level between Russia and India. We have trade, we are buying so much oil from them.

Siddhartha Ahluwalia 24:00

At 40% cheaper price.

Rajiv Sikri 24:01

They’ve helped us in the defense industries and so many other factors. With Ukraine, it’s much, much less. But Mr. Modi did visit Ukraine last year. I think it was in August he went there. And he has been meeting Mr. Zelensky at various international conferences. But the relationship with Russia is totally different and much higher level.

Siddhartha Ahluwalia 24:34

And you think it’s as good as it was in the past, or even better?

Rajiv Sikri 24:40

Look, there’s no room for sentimentalism in relationships. I think relationship today is not based on ideology, as it was in Soviet times. It is based on pragmatism and what serves each country’s national interest.

I think Russia would like India to be a stronger, more independent voice in the world. India also would want Russia to be an important player because this would balance, you know, the China factor and the US factor.

So, this is what brings us together. Then, of course, there is this mutuality of interest. After all, you know, when you’re buying 40 percent of our imported oil from there, it’s a lot.

You’re getting uranium and other things. But as a geopolitical level, we see a coincidence of interest. But Russia will not unthinkingly support India.

They also have their interest to look at whether it is vis-a-vis China, which is now increasingly influential on Russia or Pakistan, which remains, because of its geography, a very, very important country. So, we have to constantly look for areas of convergence and how to take the relationship forward.

Siddhartha Ahluwalia 26:24

And the whole world has been pushing India to break their ties with Russia. For example, Europe broke their ties with Russia and it hit them back severely. Like, energy prices became 2x or even 3x more higher for Europe.

And it’s an energy deficient place now.

Rajiv Sikri 26:41

I don’t know why the Europeans took this decision. They’re cutting their own feet. I don’t think that India was going to do that.

Frankly, the European attitude surprises me, because they are de-industrializing. For 50-60 years, they have been dealing with Russia. They’ve benefited, particularly Germany has benefited from low energy prices, reliable energy supplies.

And yet, you know, they’re happy to do that. And now they want to spend more and more of their money to weaponize their economies. I mean, I don’t understand it.

There is this fear that Russia is going to invade Europe. I think this is complete nonsense.

Siddhartha Ahluwalia 27:34

Uncalled fear.

Rajiv Sikri 27:35

Uncalled. What does Russia have to gain from Europe? They can’t even take over Ukraine.

What are they going to do in Europe? Europe doesn’t have any resources. Why do they want to take over a population which is hostile to them?

I don’t understand it. Russia has got many other things to do. So the Russian strategy is a defensive one.

Whereas the Europeans, frankly, I don’t know what they’re doing, because they’re only hurting themselves. And I suspect there’s too much of a role of Brussels, you know, the European Commission in this, because this becomes an element of something which unites them.

Siddhartha Ahluwalia 28:25

It gives a common enemy.

Rajiv Sikri 28:27

Yeah, it gives a common enemy and I don’t know. And you know, just look at the Ukraine war, where the Americans are saying, you know, we must cut a deal. But the Europeans say, no, no, no, you cannot do it.

Siddhartha Ahluwalia 28:42

And surprisingly, Britain has also been supporting by pouring billions of dollars in Ukraine. And even their own economy is not stable right now.

Rajiv Sikri 28:53

Well, you know, Britain, I think still has delusions of being a great power, you know. And I think they have a particular rivalry or antipathy towards Russia. Let’s not forget the great game of the 19th century, when Tsarist Russia and British India were competing.

Siddhartha Ahluwalia 29:20

Yeah, but they won the World War Two together.

Rajiv Sikri 29:24

Yeah, but you know, Britain is a much diminished power today. And but maybe they’re not everyone there. I think the ordinary people probably have reconciled to what Britain is today.

But maybe the elite who runs a country still fancies themselves as a power that is going to shape the world as it did when they were the dominant global power. I don’t know.

Siddhartha Ahluwalia 29:58

And coming on to, you know, the next point, which is very important is that the recent war between India and Pakistan, there’s a theory that, you know, Chinese wanted to test their weapons against India. So they created this, you know, artificial war which lasted for a few days. And they wanted to test their, you know, blockers against Rafael, which they were successful to some certain extent.

But what’s your view on how China is shaping this part of the world?

Rajiv Sikri 30:30

I think one of the things that has emerged very clearly after Operation Sindoor is the open Chinese involvement in Pakistan’s military and offensive and defensive capabilities. And I think our Deputy Chief of Army Staff talked about it a few days ago also. Yes.

You see, the Chinese are playing a little crafty game that while not taking on India directly, where they will keep up the pressure on our borders, but maybe not an open conflict. They are using Pakistan by supplying it all kinds of weaponry, intelligence, satellite information so that it acts as a force multiplier. And Pakistan is fighting India.

Earlier we used to talk about two fronts. Now it’s just one coordinated front with Pakistan as the player. So this is something that we have to bear in mind.

Yes, they have seen how their weapons are faring against the Western weaponry that we have and against our indigenous weaponry and systems. They will also draw the lessons. We are also drawing the lessons on how effective they are.

One of the things which I think has emerged is that many of our indigenous systems prove very effective. And that I think is the success, reflects the success of the Atma Nirbharta and so forth. So we need to now focus a lot more on building our indigenous defense capabilities.

Because one thing is very clear, in a conflict situation, you cannot be dependent on other countries. They could deny you spare parts, they could deny you intelligence, they could lock up machines, all kinds of things. So we need to be more self-reliant.

And I hope that the government is thinking of taking steps in this direction.

Siddhartha Ahluwalia 33:08

But do you think this war was triggered by China from Pakistan then?

Rajiv Sikri 33:16

I don’t think so.

Siddhartha Ahluwalia 33:21

But there was a support that if Pakistan…

Rajiv Sikri 33:25

Support was there, but whether China actively asked Pakistan to do it, I don’t see any… I have not seen any evidence to this effect.

Siddhartha Ahluwalia 33:34

But if you see geographically now, China has landlocked India because they have some control over Bangladesh as well, control over Sri Lanka as well, and control over Pakistan and Southeast Asia.

Rajiv Sikri 33:47

Well, no, they haven’t locked us in because don’t forget that the oceans are open and our relations with Sri Lanka and Maldives have mended. Yes, Bangladesh is a problem. Nepal is always a tricky neighbor.

Bhutan is okay, but they will keep the pressure on.

Siddhartha Ahluwalia 34:15

What is their intention to…

Rajiv Sikri 34:16

Oh, the intention is very simple and clear.

They don’t want India to develop because if the Chinese goal is to be number one in the world, to be a match to America or even surpass America, then the first thing they have to do is that they should be number one in Asia.

Siddhartha Ahluwalia 34:39

But they are already number one in Asia.

Rajiv Sikri 34:41

Yeah, but they don’t have control over Asia, in their immediate neighborhood, the east is Japan and Korea, which are partners and Philippines of NATO.

And in Asia, India is the largest country, with the only country which has the potential to match China. So, they want to keep in short that India remains bogged down in disputes and conflicts and its attention is to its South Asian sphere, not around the world. So, they will do everything to ensure.

Now take, for example, recently, you’ve seen they’ve been holding back on these rare earth magnets. They’re calling back their engineers and technicians who are working on iPhone production because India is emerging as an iPhone thing. There’s a problem on fertilizer, tunnel boring machines.

So, anything which keeps India down, which prevents India’s economy from developing. So, for India, the main priority has to be to ensure that our economy keeps growing. Because the more your economy develops, the larger your GDP, the more resources then you can put on defense and you’re getting more influential in the world.

I mean, if today India has been taken more seriously, it is because we are a 4 trillion dollar economy. And soon, we are now the fourth, I think, soon be the third. Now, nobody can ignore that, just as nobody can ignore China because it is way bigger than anyone else.

Siddhartha Ahluwalia 36:48

18 trillion dollars.

Rajiv Sikri 36:49

Yeah. So, if we keep on growing and if we become a 10 trillion dollar or whatever it is economy in the next few years, everyone doesn’t like it.

And you will see that all countries which are currently occupying the high table will make sure that India stays down. Nobody likes a rival. They’re sitting on the high table, they want to stay there.

That’s one thing I think we should remember, that as we grow, the pressures on India will also grow. And you have various kinds of pressure. We just talked about some from China.

You see what Trump is doing. You see all this nonsense about democracy deficit in India, human rights, religious freedom, complete nonsense. But it serves the narrative.

Why don’t they talk about democracy deficit in China or Pakistan or whatever? Why don’t they talk about human rights when Israel is bombing Gaza? Why don’t they talk about rules based order when Iran is attacked openly in violation of all commitments?

No, because it serves their interests. So, there is no morality in international affairs. Morality is only a veneer that masks your true intention.

It’s not a workable formula sadly in international affairs.

Siddhartha Ahluwalia 38:31

And we don’t see in the near time China slowing down on its attack against India in various forms.

Rajiv Sikri 38:39

There could be some tactical retreats because there are pressures on China. So, I think one of the main goals of China is to see how they can ensure that India and the United States drift apart a little.

Siddhartha Ahluwalia 38:59

Don’t work together.

Rajiv Sikri 39:03

Don’t work together. Now, I don’t see any change in the Chinese attitude. There may be tactical compromises and so forth.

But we have to be very alert about China and recognize that we are competitors. We may cooperate on some things but we are competitors.

Siddhartha Ahluwalia 39:30

Sir, specifically on the trade part like the Chinese for the longest period I think 20 years or 25 years have flooded Indian markets with cheap Chinese goods and have also replaced a lot of part of the India’s indigenous industries. So, where do you think this is headed now? Now, we are at loggerheads against China.

Rajiv Sikri 39:49

It’s a very difficult thing because one China has a domination in global manufacturing in many sectors. Take solar panels or batteries. The whole world depends on China.

If you take our pharmaceuticals, the active pharmaceutical ingredients come from China. We mentioned this tunnel boring machine. They are held back.

It’s a German company but it’s manufacturing in China. So, what do you do about that? Secondly, the Chinese over the years have co-opted a lot of our trading community.

Say, why are you manufacturing here? You manufacture in China, import from us and you will make more money.

Siddhartha Ahluwalia 40:46

You are Indian manufacturer, manufacturing in China?

Rajiv Sikri 40:48

Yes. The other day I bought something. It was Bajaj made in China.

So, what do you do with that? So, unless your industry says, no, we are not going to do it, unless your consumer says, I’m not going to buy Chinese product, it’s going to be very difficult. Now, we are trying to diversify.

For example, now on rare earths, we’re trying to build up our own resources. We’re trying to see whether we can get it from other countries, not China. But this is not a problem that is peculiar to India.

It is peculiar to all countries.

Siddhartha Ahluwalia 41:33

But China is not against all the countries, specifically against India.

Rajiv Sikri 41:37

No. You see, most countries have a trade deficit with China because they are more exporting. No.

India’s problem is that when we are so dependent on China, the Chinese can control the flow to hurt our economy for political reasons. I just told you this tunnel boring machine. You want to build tunnels.

There’s a German company that’s manufacturing in China and they are delaying the whole process. What do you do about that?

Siddhartha Ahluwalia 42:21

That’s delaying a project, key projects, even military projects by many.

Rajiv Sikri 42:25

Yeah. So, getting out of this dependency with other countries, there’s no political or strategic objective. Now, we could take the line that, look, it doesn’t matter because if we are going to import, whether we import from China or some other country, it’s the same thing.

Our deficit is, global deficit will not change. But the problem is that with China, the Chinese can weaponize it for political and strategic reasons.

Siddhartha Ahluwalia 43:05

To destabilize the economy.

Rajiv Sikri 43:07

Yeah. Or to slow down India’s growth. Because they also realize that the stronger the Indian economy gets, the more independent we become.

Siddhartha Ahluwalia 43:19

And then they have less levers and less leverage to slow down India.

Rajiv Sikri 43:22

Yeah. So, that’s the game.

Siddhartha Ahluwalia 43:27

And that’s why so much focus today on Atmirbhar Bharat.

Rajiv Sikri 43:31

I think it’s a very good policy. And as we just discussed, it has shown its positive results in defense sector, where we have been going about quite systematically. We need to do it in all other sectors.

And this is where it’s important to get the talent and the money from overseas, the kind of work that you’re doing, trying to encourage startups, so they invest in India. You know, people must believe in India. Money will then come.

And if there’s money to be made, if there’s a stable environment, good policies, predictable, repatriation of profits and so forth, people will come.

Siddhartha Ahluwalia 44:20

But let’s say if this podcast is listened by foreign investors right now, what reasons you would give, three reasons why they should invest in India right now?

Rajiv Sikri 44:31

Because we have a market for investing, because we have the talent. You know, so many of our people are going abroad and working there. Now, if you could just ensure that these people who are flocking American, Canadian, British, Australian, New Zealand universities could study in India, if you could create the conditions where they would get professional satisfaction and adequate or comparable monetary compensation, everyone would stay in India.

But because you don’t, you can’t get admissions in colleges here. The people go, we are contributing 43, 44 billion dollars to the US economy every year to student education.

Siddhartha Ahluwalia 45:34

If we invest that 44 billion dollars to build new universities or equip existing ones.

Rajiv Sikri 45:40

Yes. So, this is a long-term thing. And, I mean, there are many people I know, I’m sure you know many more, who have lived in the United States or elsewhere and are coming back to India.

And many of them, I know personally, will say, we’re very happy to be in India, but we need a proper environment, we need proper education for our children, we need proper healthcare facilities, we need proper civic infrastructure, you know. If we can ensure all this, why would people go abroad? So, this is a larger national issue that we need to address.

I’m not happy that, you know, in the past, maybe not now, we have been, you know, one of the talking points we have with America is give us more H1B visas. Hello, why? If somebody wants to go, fine, but we don’t have to encourage our talent to go abroad.

And our people are very, very talented. I mean, it’s not for nothing that so many of the global companies are headed by Indian origin people.

Siddhartha Ahluwalia 46:52

And US is not doing any favor by giving us more H1B, they require more workers.

Rajiv Sikri 46:55

They will get it, yes. So, I don’t understand it. We don’t have enough medical colleges, many of them are very dodgy.

So, all these things need to, so this is a national enterprise. And I really wish that the government would pay a lot more attention to issues of education, health, and a proper environment for living. Now, you were talking about Bangalore.

I mean, you’ve got so much talent there, but why can’t we have a civic infrastructure, which matches that? Why do we get into stupid controversies of whether billboard should be in Kannada or English or 50% or 60%?

Siddhartha Ahluwalia 47:38

I mean, this is complete nonsense. And why debate about who is developing the physical infrastructure or the road infrastructure, whether center or the state, these kind of things.

Rajiv Sikri 47:51

This is where the politics comes in. And, you know, parties which are at odds with the ruling coalition, they will always find something to put down the government. Sadly, there are too many people in our own system, in our country, whether it is the political class, whether it is the intellectuals, the academics, others, you know, who are constantly running down India.

I mean, this stupid controversy, oh, Mr. Trump has said he negotiated this deal. You want to believe Mr. Trump, whom no one believes because he changes his mind every day. And he makes all kinds of outlandish claims.

But you will not believe your own minister and prime minister. What kind of an attitude is this? This is one of our biggest weaknesses.

I’m sorry.

Siddhartha Ahluwalia 49:00

And how could he sitting thousands of kilometers away could have stopped the India Pakistan war? It doesn’t look practical.

Rajiv Sikri 49:12

Mr. Trump makes all kinds of outlandish claims. He claims to have stopped every war.

Siddhartha Ahluwalia 49:23

And what do you think about, let’s say, we discuss about India-China relationships and it’s going to get not easy for India, as India aspires to become a 10 trillion dollar economy to face all kinds of headwinds from everyone. What do you think about right now about the situation in Israel, Gaza, and Israel-Iran? Israel got an attack from Hamas and they took the revenge.

Rajiv Sikri 49:49

It’s more than revenge. They’re having a genocide in Gaza.

Siddhartha Ahluwalia 49:55

How do they justify this?

Rajiv Sikri 49:57

Nothing. They just say that we want to eliminate Hamas as if all those thousands of children and women are Hamas supporters. They just want to clean up Gaza and take the territory.

Siddhartha Ahluwalia 50:10

That’s their objective. And then why the sudden attack on Iran?

Rajiv Sikri 50:16

Because this is something which has been talked about for many decades, specifically by Netanyahu for 30 years at least. Because Iran is supposed to be the main backer of the Hezbollah, the Hamas and the Houthis in Yemen, who are seen as the proxies of Iran against Israel. And they’ve been attacking.

Then the Syrian regime, Assad’s regime was also allied to Iran. So, the Israelis knocked out each of these. Gaza was the pretext to knock out all these people and then eventually take on Iran itself.

But Iran is a different cup of tea. And I’m sure that there is some rethinking in Israel because for the first time ever, Israeli cities were bombed. Otherwise, the Israeli population was secure.

Nothing’s going to happen to us. We have this Iron Dome. Fine.

But when this happens, then public opinion also starts thinking. And there are many sensible Israelis who say what Netanyahu is doing is suicidal. Because they’ve lost a lot of support globally.

And I don’t think that they can defeat Iran. Because given the size of Iran, the population of Iran compared to that of these days.

Siddhartha Ahluwalia 51:59

And geographical protection.

Rajiv Sikri 52:00

Geographical. So many things that Iran could do. Of course, Iran doesn’t want to do it because their main objective right now was regime survival.

But by hitting the American base in Qatar, they showed that even the Americans can be hit. Now, if a few hundred or thousand Americans die, there will be a global war.

Siddhartha Ahluwalia 52:27

We are already at all that. We have all the global trigger points right now to cause a World War III.

Rajiv Sikri 52:34

Yeah. I mean, look, the earlier wars were really European wars which spread elsewhere. And here also Europe is at war with Russia.

Yeah. It’s called the Ukraine-Russia war, but it’s actually a West versus Russia.

Siddhartha Ahluwalia 52:57

Europe versus Russia war.

Rajiv Sikri 52:58

You have a conflict between China and America, which is not a hot war, but certainly a cold war situation. You’ve got Iran, Israel, Yemen there. You’ve got Pakistan, India.

The whole world is actually in turmoil.

Siddhartha Ahluwalia 53:21

So, how would you define a World War III, when it were to happen?

Rajiv Sikri 53:26

You know, these are just appellations. World War means that every country is involved. Now, I don’t think that Latin America or Africa will get involved, except the Mediterranean.

So, this is basically a conflict in the Northern Hemisphere centred around the Eurasian landmass from the Atlantic to the Pacific. So, this encompasses all the countries there. And you can call it a World War or not.

It’s not a World War in the sense that in that they were very clearly defined sets of adversaries, you know, the Axis power, Germany and Japan versus the Allied powers. But here the antagonists change. However, there is a general grouping of the West, which is engaged in a conflict with the rest, the West versus the rest. Why?

Because the West has dominated the world for 500 years. That domination is now under stress, under threat and they are fighting to retain that.

Siddhartha Ahluwalia 55:14

And some parts of West have become weaker like Europe.

Rajiv Sikri 55:17

Yeah, they have become weaker. But there are intra-West conflicts also. When President Trump says he wants to take over Greenland and Canada should be a part of that and he wants Panama Canal.

This is old-fashioned imperialism. Nothing else. So everyone is doing that thing.

The Americans want to control that continent. The Europeans are engaged with Russia. The Americans and the Chinese are engaged in the Pacific theater.

And you’ve got the allies like South Korea, Japan, Philippines, etc. are part of the West and Australia which are part of the West. So there is this conflict that is there.

Siddhartha Ahluwalia 56:11

We cannot term it the World War because there is no active, let’s say, physical war between the two largest powers which are US and China.

Rajiv Sikri 56:22

Yeah, or US and Russia, though there is an indirect thing which is there.

Siddhartha Ahluwalia 56:27

But there is definitely a Cold War between all these three.

Rajiv Sikri 56:30

Well, there is more than a Cold War but then you have India which is there.

See, one of the things which has happened now is that power is more diffused. In 1940s, most of Asia, Africa, Latin America were colonial countries. Today, that has changed.

So they are exerting their clout. Even Africa is exerting a lot more clout. You can’t ignore them.

And so on the one hand, you see the Western bloc, the G7 is cracking up. There are differences. And you have the non-Western countries coming together in blocs like the BRICS which may not be able to do much collectively.

The summit has just ended. But it represents an aspiration of the significant non-West powers. It’s a grouping of the significant non-West powers to see how they can cooperate economically.

There are still many differences among them. But the fact that so many countries want to join the BRICS means that there is a yearning, a striving for something other than an organization that is dominated by the West. Now, you see, the original BRICS countries are all significant players in their own right.

Brazil, Russia, India, China, South Africa, medium or larger sized powers. And those who have joined, there are so many countries which are centered around the West Asia, Egypt, UAE, Saudi Arabia, Iran, Ethiopia, all in that little cluster. And the largest country in Southeast Asia, Indonesia.

Now, collectively, it matters a lot. But there are so many differences among them. And I think the fact that many of these countries are also having good ties with the West doesn’t prevent them from becoming members of BRICS.

For example, take countries like Qatar, like UAE, Saudi Arabia, very good relations with USA. Trump went there recently. But at the same time, they want to be part of this.

Because they see the future also. They don’t want to put all their eggs in that one basket. This is a very interesting world that is evolving.

Where it will settle down, if at all, I don’t know. But India has to be very alert and nimble and see how to protect our interests. I think we have to be quite cold blooded about this.

Do what our national interests dictate, not because of any morality or, you know, fellow feeling and so forth. Now, we have been very particular about, for example, the SCO summit, which the defense ministers were there. We did not endorse the Iran, their statement on Iran being attacked by Israel.

Because they did not endorse Pahalgam. And we did not sign on to the SCO defense minister because Pahalgam was not mentioned. So, you’re not supporting us on things which matter to us.

Why should we support you? On the other hand, if you’ve noticed that the BRICS summit, which has just ended, we have talked about Iran, we’ve talked about Gaza. Why?

Because they mentioned Pahalgam and cross-border terrorism. So, this kind of, you know, quid pro quo is something that we are, I think, now working at.

Siddhartha Ahluwalia 1:01:13

Do you think whatever global steps we are taking are in the right direction?

Rajiv Sikri 1:01:20

I think generally, yes. I was a little disturbed that we had been so pro-Israel in our orientation. But I think the BRICS statement has mellowed it down.

At the same time, I think we also need to bear in mind what I said that, you know, interest. But while at a moral level, we may be outraged, but practically Israel supported us on Pahalgam. Israel has always been with us, sharing intelligence, Kargil war, weaponry, you know, everything.

They’ve been very, very reliable strategic partners. So, we have to respect that. Now, recently, you know, Turkey was involved with Pakistan in the Operation Sindoor.

So, we’re building up our ties with Greece. You know, okay, there’ll be a price for Turkey to pay for that. And I just read a report that the Turks are very upset that we’re giving some defense equipment to Greece, missiles and so forth.

I don’t know if it’s true or not. But I think this shows that we are being very pragmatic and in a sense transactional about this. This is how it should be.

The whole world is transactional. So, we cannot have this morality turn the other cheek and so forth. That is no longer something.

I support that approach.

Siddhartha Ahluwalia 1:03:00

And the global wars are not getting fought on morality. Like Ukraine killing its own citizens by putting them in war is not morality. Israel attack on Hamas and destroying millions of lives in Gaza.

Rajiv Sikri 1:03:13

I mean, what morality? You talk about, oh, this is freedom, democracy, free world, etc. And here President Trump hosts this self-appointed field marshal for a lunch at the White House.

Is Pakistan a democracy? Imran Khan is in jail. And the army is running the country.

The politicians are basically at the beck and call of the army. But it’s their national interest.

Siddhartha Ahluwalia 1:03:49

So, there’s a recent movie called Diplomat, which for the first time, masses came to know about how diplomats function.

Rajiv Sikri 1:03:56

I haven’t seen it.

Siddhartha Ahluwalia 1:03:57

It highlighted the role of Shri Sushma Swaraj during the tenure, how she rescued an Indian citizen stuck in Taliban. Do you have some stories from your era or from some other stories like how diplomats have taken certain very strong decisions and how they worked out?

Rajiv Sikri 1:04:20

Well, you know, I mean, rescuing our citizens is obviously a very important issue. We have to look after the interests of our people. And I remember when I was a secretary, there was the four Indian truck drivers had been kidnapped in Iraq.

And it required a lot of negotiations to get them back. We used all our contacts with the Arab countries. We had a minister at that time, late minister who was Muslim and he addressed the people of Iraq and so forth.

So, sometimes you have to follow different techniques. Then we had the other thing of the evacuation of our citizens from Lebanon, when the war broke out in 2006. And yeah, we sent our Navy there.

I remember calling up the defense ministry and said, look, we may have to do something. So, they had a fleet of ships, which was in the Mediterranean and they’re half ways from the Suez Canal and they turned back and so forth, evacuated our people from there via Cyprus and so forth. So, we’ve had these things from time to time.

I think as the world has become more unstable, unfortunately, these incidents have increased in number. You have to have evacuation. We had the Kuwait evacuation in 1991, first Gulf War.

But then, you know, subsequently we had Libya, Sudan, I think, and Yemen and so forth. And one of the good things that we have been doing is to also rescue the citizens of our neighboring countries, Nepali, Sri Lankan, Bangladeshi, etc., who were involved there. This is something which has been appreciated.

I think that diplomacy has to be people-centered. There’s national interest, but unless you have the public which is with you, and ultimately, you know, in today’s world where everyone is so much aware, proper messaging is important. Sometimes you’ve done the messaging properly, sometimes the scope for improvement, but nowadays people expect a response instantly.

And that is sometimes a problem because you can take decisions under pressure. So, that’s one of the downsides of it. But on the other side, you know, the public is now much more invested in foreign policy issues than it used to be when I was there.

Because, you know, as our economy has grown, as we are more globalized, everyone has a stake in what’s happening in the world. Your personal stake, whether it is students or tourists or workers or whatever, you know, or whether it is inputs coming from abroad, imports, exports, markets, we are more connected with the world. And therefore, it’s very important that our people should be well informed about international affairs.

Siddhartha Ahluwalia 1:08:12

Thank you so much, sir. It’s been again a great conversation. Thank you.

You are able to touch so many topics and the goal of a conversation like this, a podcast like this is to bring more awareness, you know, in our listeners of what’s happening and how is it impacting them.

Rajiv Sikri 1:08:29

Well, thank you. I wish you good luck in your continued endeavors in this direction. I think you’re doing a good job in educating members, the intelligent Indians, so I speak, to understand foreign affairs a little better.

My book, which you just mentioned is also an effort in this direction to demystify foreign policy. So, thank you very much.

Siddhartha Ahluwalia 1:08:54

Thank you so much again, sir.