Dr. Jeffrey Sonnenfeld of Yale – Is his ignorance symptomatic of Global Investors?

Editor’s Update- September 12, 2009 – The issues discussed in this article are now getting noticed by the global media. The New York Times recently wrote an article about the dispute over Tawang titled Uneasy Engagement – China and India Dispute Enclave on Edge of Tibet. We urge readers to read this detailed article to understand the seriousness of the China-India tensions. The article also states that the border dispute takes priority over the trade relations between China & India, a point we made in our article below.

During his interview by Erin Burnett of CNBC at his CEO Leadership Summit, Dr. Sonnenfeld began by saying “This is an incredibly historic moment for India and the rest of the world; it is roughly 40 years ago that high in the Himalayas…where India meets China, we had these two great superpowers locked in war and now we have this great economic contest….”.   He then went on to discuss points about Indian economy and development. 

Dr. Sonnenfeld  is the Senior Associate Dean for Executive Programs and the Lester Crown Professor in the Practice of Management at Yale. He is also the Founder, President and CEO of The Yale Chief Executive Leadership Institute.

This august resume makes Dr. Sonnenfeld’s lack of knowledge about current India-China relations so surprising and so dangerous from a global investor’s point of view. Dr. Sonnenfeld advises major corporations and his lack of knowledge might easily be transmitted to his corporate clients. CEOs and Investors do not like unpleasant surprises and when dealt such a surprise, both CEOs and Investors tend to act in haste.

Since “chance favors the prepared mind”, our objective in this article is simply to raise the level of consciousness of our readers about this issue of extreme importance.  

The reality is that today, India and China are closer to a military confrontation than at any time since 1962, the forty year ago period referenced by Dr. Sonnenfeld in his remarks. 

Tensions along the entire Indo-Chinese border have become elevated and the result is a military buildup on both sides of the border. For the past several years, India remained complacent about the Chinese military infrastructure build up along the Indo-Chinese line of control. India has now woken up to its weakness. Below is a short list of some recent steps by India.

  • On June 1, 2008, (4 days before Dr. Sonnenfeld’s remarks), India activated the Daulat Beg Oldi airbase, the world’s highest landing strip at 16,200 feet. As the map shows, this airbase is located 8 km from the India-Chinese-Pakistani line of control in Ladakh. This airbase, which was shut down in 1963, allows India to monitor the Karakoram Pass (see map), the sole road link between Chinese-occupied Aksai Chin and Pakistani-occupied Kashmir. India is also activating 2 more airbases in Ladakh at Chushul (shown in the map) and Fulche .  To see a video of this strip, click on http://www.hindustantimes.com/AudioVideo/AudioVideoPage.aspx?id=9fb70fcf-e15d-4489-ba26-8890f7b09420 and click on http://www.indianexpress.com/story/31463.html to read a detailed story. This story was also featured on Voice of America at http://www.voanews.com/english/2008-06-02-voa36.cfm

  • India has moved Sukhoi fighter squadrons to airbases in Arunachal Pradesh on the far eastern border with China. China claims all of Arunachal Pradesh as a part of Tibet which it claims as a province of China. The Dalai Lama, in his role as the Head of Tibet, has reaffirmed the 1916 Treaty with India which recognized Arunachal Pradesh as Indian Territory. China does not recognize Dalai Lama and China does not recognize the 1916 treaty.

  • India has moved 6 mountain divisions to the India-Bhutan-China line of control. China has claimed ownership of Tawang, the small but incredibly strategic portion near the Bhutan border. Tawang was the site of a major battle in the 1962 war. In the past two years, the Chinese Military has made over 100 incursions in to the Tawang area. This is eerily similar to the Chinese incursion – Indian retaliation sequence that led to the 1962 war.

                   (The famous Tawang Monastery)

  • Maoists, supported by China, have captured the majority of seats in Nepal’s recent election and have forced the resignation of Nepal’s Hindu King.  Nepal’s Maoists have been considered as a terrorist organization by the United States. Nepal has now become a major source of Indo-Chinese geo-political rivalry and a source of deep strategic vulnerability for India.
  • India has now embarked on an accelerated six-year development program to upgrade its military infrastructure along the entire Chinese border. 
  • Historical Note: For the past 5,000 years, Tibet served as a buffer between China and India. India stood in the way of both China and Russia in their quest for land access to the Persian Gulf. In 1948, in an incredibly stupid action, Prime Minister Nehru unilaterally withdrew the Indian Army from Tibet. Mr. Nehru wanted to reaffirm to the World that his India was not an imperialist power. A few years later, the Chinese Army moved in to Tibet. The Dalai Lama fled to India  where he now resides. The Himalayan buffer between China and India was gone. Nehru also allowed Pakistan to keep a part of Kashmir it occupied in the 1947 war with India. In the late 1950s, China annexed the Aksai Chin area from India and obtained a land route across the Karakoram Pass to Pakistani-occupied Kashmir and from there to the warm waters of the Persian Gulf. The map you see above and today’s conditions faced by India were self-inflicted due to the strategic myopia of its first prime minister.

This suggests a long period of cold-war between China and India despite the annual $40 billion of trade between these two countries. India has publicly warned China that border issues will take precedence over trade.

We are amazed that some one of Dr. Sonnenfeld’s stature is blissfully unaware of this reality. The global trade and development boom of the past 6 years has clearly obscured the rise in geo-political and geo-strategic tensions.  But thinkers, advisors and especially global investors cannot wear intellectual blinders. Myopia makes people ignorant of shifting conditions and when the realization finally hits, panic sets in. Recall that just a few months ago, analysts, thinkers and investors were so enamored of the global boom that they dismissed clear and then present danger signs of the housing contagion that eventually engulfed the entire credit space.

In the rest of the video, Dr. Sonnenfeld discussed his views about the unique challenges that Indian development faces. This is a subject in which he displays his celebrated insight and wisdom.  The video also presents views of Mr. Amit Mitra, secretary general for the Federation of Indian Chambers of Commerce & Industry. This excellent video can be seen at http://www.cnbc.com/id/15840232?video=762445093&play=1
On behalf of this blog, we extend an open invitation to Dr. Sonnenfeld to send his response. We will publish it verbatim. 

Readers who are interested in how China and India view their own strengths and weaknesses should read the last few chapters of the book “War at the Top of the World: The Struggle for Afghanistan, Kashmir and Tibet” by Eric Margolis. This book was first published in 1999 and the third paperback edition in 2002.  

To end on a happy note, we remind readers that Chinese immigrants moved in to India at the beginning of the 20th century. These immigrants combined Sichuan cuisine with Indian spices to create what we now call Indian-Chinese cuisine. This food needs to be tasted to be believed.

We also present below a famous song from the pre-1962 period, the period of Indo-Chinese friendship. Hopefully, our fears described above prove to be fanciful or temporary and these two nations become friends again. The song below is from the 1958 film “Howrah Bridge”.


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