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Why France Has a Much Better India Strategy Than America

France’s state-centered development model is a natural fit for the Indo-Pacific.

French President Emmanuel Macron hugs Indian Prime Minister Narendra Modi before their meeting at the Chateau of Chantilly, near Paris, on Aug. 22, 2019.
French President Emmanuel Macron hugs Indian Prime Minister Narendra Modi before their meeting at the Chateau of Chantilly, near Paris, on Aug. 22, 2019. PASCAL ROSSIGNOL/AFP via Getty Images

France is famous for fashion, and not just the kind you wear. Intellectual fashions, too, seem to emanate from Paris. The French genius for fashion is now reshaping that geopolitical concept du jour, “the Indo-Pacific region.” For the United States, the Indo-Pacific is an extension of the Pacific Ocean area patrolled by its Japan-based 7th Fleet. For Japan and Australia, too, the Pacific comes first. But for France, the Indo-Pacific begins east of Africa and continues to the western American seaboard, mirroring India’s understanding of geography. While the United States and its Quadrilateral Security Dialogue partners Australia and Japan see Indo-Pacific strategy as a way to draw India into their geopolitical standoff with China, France has taken the term at face value and put India at its center.

That doesn’t mean that France’s Indo-Pacific strategy is just a seasonal fad. France’s official Indo-Pacific strategy document emphasizes the country’s role as a “mediating, inclusive and stabilizing power” in the region, and French President Emmanuel Macron speaks rousingly of answering the call of history to fulfill France’s Indo-Pacific “destiny.” Echoes of the colonial era aside, France has 8,000 troops in the region and a highly capable nuclear-powered aircraft carrier to back them up. That gives France a lot more skin in the game than, for example, its European partner and rival Germany, which instead of a true regional strategy makes do with a limp endorsement of Indo-Pacific multilateralism.

Behind the martial rhetoric, the reality of France’s military commitment to the Indo-Pacific is, above all, commercial: sales of advanced nuclear-capable Rafale fighters to India, conventional attack submarines to India and Australia, and naval missile system upgrades to Taiwan. France is also developing an Indo-Pacific footprint focused on India in big-ticket infrastructure projects and investments where state-to-state cooperation is indispensable, such as natural gas, solar energy, nuclear power, space exploration, and high-speed rail. The key to clinching all of these deals has been joint production leading to long-term technology transfer.

If that sounds familiar, it’s because China has imposed the same model on foreign investors for most of the last four decades. But many of the foreign firms that invested heavily in Chinese state-sponsored joint ventures found their intellectual property stolen by their Chinese partners—or even by the Chinese state itself. France can have more confidence in the legal systems of India and other democracies to protect French companies’ copyrights and trademarks, but investment deals requiring technology transfer can still seem inherently dubious. After all, why should countries or companies help aspiring competitors develop their own industries.
It might seem like India is repeating China’s trick with market access, and France is falling for it.

For those who invest in China, the answer has always been straightforward: They have no choice. If they want access to China’s increasingly prosperous market of 1.4 billion people, they have to play by Beijing’s rules. The fact that those rules stand in blatant violation of China’s own international commitments—to protect intellectual property, for example—is irrelevant. Absent an independent judiciary, the only promise of fair treatment is to stay useful to the Chinese Communist Party. Companies and countries alike have to make commercial and moral compromises if they want to do business in China.

India is now a rapidly developing country of nearly 1.4 billion people—and France is freely partnering with Indian companies in joint ventures, including those targeting technology transfer in such sensitive areas as defense procurement and nuclear power. Helping India climb up the development ladder is a precondition for these deals, which have received special attention as part of Indian Prime Minister Narendra Modi’s signature industrial upgrading initiative, Make in India. In exchange for foreign investment in the country’s long-term development, Modi is promising a “new mindset” in which the government will act as a facilitator, not a heavy-handed regulator as in the past.

It might seem like India is repeating China’s trick with market access, and France is falling for it. But there are two big differences between foreign investments in China and the more recent French ones in India. The first and obvious difference is that India has a robust court system that enforces contracts under the rule of law. For example, the Indian government has been roundly criticized for seeking to tax foreign firms retroactively in violation of fundamental legal principles, but it has fought—and lost—these cases in international tribunals and before its own Supreme Court. The rule of law may sometimes bend in India, but it has not broken.

The second, more subtle difference between technology transfer in India and China is that France is using India to give a second life to its own last-generation technologies. The Rafale jet fighters that France has sold to India were developed in the 1980s and 1990s, and although they are still used as front-line aircraft by the French Air Force, they no longer represent the technological cutting edge. By transferring not only production but also know-how to India, France’s Dassault Aviation is in effect establishing a new manufacturing base for a product that would otherwise become obsolete.
France’s state-led dirigiste development strategy has left it well placed to succeed in countries such as India.

Similarly, even though the EPR pressurized water reactor design that Électricité de France is providing for India’s planned Jaitapur nuclear power station is thoroughly modern, it represents a commercial dead end. New nuclear power development is no longer economical in Europe, where construction costs are high and electricity demand has been falling. If Électricité de France can nurture a domestic construction capability in India, it can hope to recoup at least some of the development costs of the EPR design. It can then work with its Indian partners to export reactors from India to other energy-hungry economies in South and Southeast Asia.

By contrast, many of the problems faced by foreign companies in China stem from their use of China as a manufacturing base for their own home markets, meaning that they often put their most advanced technologies at risk. The relatively short product development cycles for electronic components and auto parts, for example, mean that last-generation products manufactured in China are only a few years—or months—out of date. Chinese companies that copy or steal foreign technologies might not be able to out-innovate the market leaders, but they can undercut them with cheap prices on almost-current products.

France’s state-led dirigiste development strategy, with its focus on fostering big national champion engineering firms, has left it flat-footed in the race to innovate high-tech consumer electronics—and has kept it from competing at all in the topsy-turvy world of social media and mobile apps. But the state-led strategy has left France well placed to succeed in highly regulated sectors such as infrastructure, energy, and defense in countries such as India, where state support and centralized investment decisions still play an outsized role in economic development. And India is an ideal low-cost base from which to export to the rest of the emerging Indo-Pacific, as the region is understood by both India and France.

India is unlikely ever to export jet fighters or nuclear power plants to the rich countries of Europe, North America, or East Asia. But it could very well emerge as the Indo-Pacific joint-venture hub for French engineering and infrastructure companies. If it does, France’s Indo-Pacific strategy may prove more enduring than the China-containment strategies of the United States, Japan, and Australia. Indigenous capacity-building for manufacturing and trade is ultimately the surest guarantee of a free and open Indo-Pacific, and the French strategy is better suited than any of the others for helping the region’s countries help themselves.

Salvatore Babones is a Foreign Policy columnist and an adjunct scholar at the Centre for Independent Studies in Sydney. Twitter: @sbabones

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