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An Indian defence procurement deal is currently in the international media. The Italian helicopter producer Agusta/Westland is being investigated about alleged bribes for obtaining the order to supply the Indian Government with 12 VIP transport helicopters. Indian investigation authorities are examining corruption allegations. Meanwhile, the Indian Defence Minister is said to be considering barring the Italian firm from bidding again in Indian procurement tenders. Such a decision would have a strategic dimension which would by far out-weigh the commercial aspect of the deal. Therefore, the Minister would have to seek approval by a cabinet committee composed of the Prime Minister, the Finance Minister and the External Affairs Minister. The Indian Government is placed in front of a dilemma. Barring a foreign bidder on the basis of corruption allegations would send out a strong warning to foreign suppliers who consider bribing Indian authorities. At the same time, however, the Government would forego an essential supplier in its own strategic race against China’s drive to regional military supremacy. Barring a future procurement supplier like Agusta/Westland could prove to be hurting Indian interests first. The apparent conflict between sending out a strong message against corruption and hurting national strategic interests calls for a specification. By sanctioning one possibly corrupt foreign bidder, India takes on the wrong target. The foreign briber is not the primary cause of the attempt to bribe; the driving force behind corruption are demands by people in charge of organising tenders. Foreign bidders who bribe do so because they see no legal commercial way of winning over the bid otherwise. Indian authorities cannot dream of substantially confining domestic corruption, let alone eradicating it, by just sanctioning foreign bidders or suppliers. And there is more to the case. It has a dimension of strategic relevance. According to most recent statistics, India has become a top purchaser on the global procurement market. It is today, next to Saudi Arabia, the world’s biggest buyer of military goods. These are needed for the modernisation of India’s military in order to maintain superiority over Pakistan, the one strategic challenge, and to match Chinese regional domination, perceived as the ultimate challenge to India’s global ambitions. The figures indicate India’s determination to catch up with its regional power competitor China. Reading the same statistics, China has moved farther on its drive to strategic dominance; it is no longer heading the charts as a buyer of military goods. It has become one of the world’s top suppliers (!), which is the ultimate indicator of a country’s strategic weight on the global level. Thus, India’s reaction directed towards the Italian bidder for alleged bribes would conceal the underlying cause for acts of corruption committed by outside bidders. The primary cause is the comprehensive structural corruption on the domestic side. Therefore, the Indian government, by tackling domestic corruption, would not only proceed in the logic of cause and effect, but would, at the same time, avoid hurting its own strategic interests by excluding state-of-the-art producers of strategic goods from the Indian procurement market. Corrupt practices in the commercial field do bias price structures of goods, do hurt State finances and eventually do violate the market economy’s claim to transparency and fairness. With regard to strategic goods, corruption can even damage the Government’s exclusive responsibility to succeed in global power politics. The Indian Government would be, therefore, ill-advised to punish an individual foreign supplier for actual or alleged bribes before trying to eradicate home-made corruption. Globalising world expects India to successfully play its role in international affairs when it comes to the confrontation between the concept of free society and the legacy of command societies. For this purpose, India needs strategic goods of top quality.

29^th March 2013  /  Philippe Welti

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