India is the success story of South Asia — that is a fact: David Miliband

This is the concluding part of The Hindu's wide-ranging interview with David Miliband, man of ideas, former U.K. Foreign Secretary, and a charismatic figure in the Labour Party who has chosen to stay outside the Shadow Cabinet. Mr. Miliband, 46, who was recently in Chennai to give a lecture on ‘The emerging new world order: economics and politics' at the invitation of Vijay and Preetha Reddy, was interviewed in the newspaper's offices in Chennai by an editorial team comprising N. Ram, Arvind Sivaramakrishnan, Nirupama Subramanian, and Raghuvir Srinivasan. Part I of the interview was published on Monday.

Do you think that Britain's stand of not joining the eurozone has been vindicated by the events of the last couple of years?

The short answer is yes. The flexibility to set your interest rates and to have exchange rate flexibility has undoubtedly cushioned what is nonetheless a pretty tough blow over the last three or four years of the economic situation. If we had been in the euro, it would have been much more difficult.

The one key point that I would put to you is…our argument in the Labour Party in the run-up to the decision not to join the euro in 2003 was: have we converged sufficiently with the European economy in order to join? Whereas the argument of those who created the euro and eventually allowed 17 countries to join was that membership of the euro would drive convergence. Now that latter claim has been shown not to be true, because relatively labour cost has become more imbalanced over the last ten years of the euro. The relative labour costs in Greece, Spain, and Portugal have grown relative to the Germans, because German wages have been held down while German productivity has gone up a lot. So far from driving convergence the eurozone, as someone once said, is a hard currency union with some countries behaving as if it were a soft currency union. And that's why you've got a problem.

I have one other point to make. The first people to break the Maastricht criteria well ahead of the Greeks, the Spaniards, and the Portuguese; they were the French and the Germans in 2003.

Any insights into the pre-eminence of Germany among the economies of Europe and indeed of the world?

Well, only the obvious. Which is that after 1990, Germany took on East Germany — a monumental project; it [Germany] has done it with compassion and solidarity and ingenuity, and some sacrifice, and it has come out stronger. It's the biggest country in Europe. It has held on to its historic economic strengths, you know, fantastic manufacturing capacity, the world's second biggest exporter now.

But what's interesting is that while they are a pre-eminent economic power, they're deeply conflicted about what it means for Germany to be a leading political power. Someone said to me in Berlin in June, ‘We want to be harmless,' which is sort of the German ethos. And given its history, you can understand that. But if you think of the decisions about nuclear power, in some ways on the euro, on Libya, Germany is conflicted about the political power that comes with its economic standing. One can understand that and respect it. The trouble is that if Germany doesn't lead, which it hasn't really done in the last 18 months on the euro crisis, the problems get worse.

Germany, regardless of the political complexion of the government, has stayed away from the troubles that have affected the United States, or the U.K., or France.

In economic terms, you mean?

No, politically. Isn't that an advantage?

Yeah, but I don't think there is any alternative to engagement in the modern world. It's a global village and you're affected whether you want to be involved or not.

What they have done is that the [Gerhard] Schroeder reforms undoubtedly helped the economy significantly. And one interesting thing is that the Social Democrats in Germany completely failed to take any credit for the Schroeder reforms — and in a way paid the price for that.

Maybe your decision to not join the eurozone was right, in retrospect. But you have still been affected by the economic events in Europe.

Absolutely.

Do you think you could have done better by joining the bandwagon and trying to work within the system?

Well, that's a very interesting way of putting it. I think the economic price would have been too high. People argued in 2003 that if we didn't join the euro, we would lose political influence. That didn't really happen because on energy, climate change, a whole set of issues, the Blair government said that we were going to put ourselves in a leading position in European affairs and that more or less happened. Being in the euro doesn't guarantee you a leading position; it wasn't a very good argument. I can see the point you are making but my experience is that other Europeans know that the European Union is much stronger for Britain playing a central role. So although we weren't into the euro, they wanted us to be engaged on foreign policy, defence policy. You can't have a European defence policy without U.K. really.

You were a vocal advocate of the war in Afghanistan, and considering there is now talk about talks with the Taliban, where are you on that? And looking back, could there have been talks back then, before the war began?

To be fair to me, I've been a very vocal advocate of peace in Afghanistan. I was carrying the flag for a political settlement inside Afghanistan and a regional political settlement including India, practically the first person to argue for that. And I argued…

For the neutrality of Afghanistan?

…well, for the independence of Afghanistan. I argued very, very strongly that there was no military solution in Afghanistan, which other people then said [there was]. But the corollary of there being no military solution is that there has to be a political solution. And what I argued for was a two-track political solution: a political settlement inside Afghanistan that involved all the peoples — it's probably not right to call them tribes — all the peoples of Afghanistan, including the Pashtuns in the south.

And so of course I welcome the setting up of a Taliban office in Qatar. But I never fall into the trap of believing that there are only two sides to the Afghan conflict — Taliban and the central government, with the West looking on. Afghanistan is a multifaceted political entity, which I saw for myself when I went to the funeral of King Zahir Shah in July 2007. All the people were represented there. And you realised then that it's not just about pacifying the Taliban, you've got to recognise all the different peoples in the internal settlement. But there will never be an internal political settlement until there's a regional political concordat.

And I argued very strongly for that as being vital for any durable peace. That must be based on the recognition of the sovereignty of Afghanistan, the independence of Afghanistan — no one can have Afghanistan as a client state, any of its neighbours.

So I would argue I was a very strong proponent of peace in Afghanistan rather than war in Afghanistan.

The civilian toll in Afghanistan has been appalling.

Yes. Actually there, U.N. figures show 85 per cent civilian deaths as caused by the Taliban. So you've got to be careful — the Taliban putting people in, slaughtering people. The Western doctrine that was developed after 2007, which is you protect the people, was absolutely right. No one can win in military terms. But that is not the question; the question is whether or not you can get stability through a political settlement. I'm very concerned that there's an end date for Western engagement in Afghanistan, but no end game! And this end game has to be this twin-track political drive. I think India has a really important political role in that; always argued with the Pakistanis that they should be welcoming Indian engagement in a structured regional concordat.

How do you see the India-Pakistan relationship going? You have had discussions with leading political figures in both countries.

Well, India is the success story of South Asia — that is a fact. You can understand why there's huge frustration and pain associated with the way Pakistan has developed, and the sufferings being caused here from there. What I always say in Pakistan, very loudly, is that they have to deal with their own internal enemies, that the historic spectre that their enemy is their neighbour needs to be replaced by a recognition that their enemy is an internal one. And I always use every opportunity to say they still have responsibilities in respect of the Mumbai bombers [the terror attack of 26/11] and the prosecution of those associated with it.

I think from the outside, the recent Indian moves on trade and on support for Pakistan's place in the U.N. Security Council are extremely admirable and thoroughly to be commended. And it's precisely that kind of outreach that the region needs.

A few years ago, your remarks on Kashmir were not particularly welcomed by the Indian Foreign Ministry…

My remarks are always the same, which is that this is something that has to be resolved between the two countries. That's the truth of it.

The final question: you come here, you see, I suppose, two issues. One is you see high growth — and mass deprivation. You've been to some places — the real India — and witnessed it yourself. That's one issue. The other is the issue of corruption, which since your previous visit has assumed very major proportions. How do you react to this?

Anyone who comes to India sees a vibrant economy but also a vibrant political system. That is one of the great things about this country, that it has a vibrant political system, it's a standing testimony to the value that's placed on different opinions expressed often with great force and passion. Every democracy is trying to figure out, how to make its democracy work better. And it's interesting that every autocracy is having to recognise that the bar for accountable government is being raised. The taking into account of legitimate popular opinion is an increasingly important issue even in autocracies. But there are dysfunctions in all the democracies; we have to address them. In the Indian system, you've got your own debate about how best to do that; you don't want people coming from Britain to tell you how to do it!

But I think you probably do recognise that people from outside are passionate about the things written up in the Indian Constitution, such an inspiring document — which is about human rights, but it is about democracy, it is about pluralism, it is about the equal value of all of India's people. I'm sure it's right to take this corruption issue seriously, which obviously all the politicians are now doing. You'll have to figure out a way of doing it structurally — because if people lose faith in democracy, that's a very dangerous thing.