Indian foreign policy is likely to face several challenges in 2012 arising out of a swiftly changing global security environment, the global economic slowdown and an unpredictable neighbourhood. Dealing with them will become that much more difficult against the backdrop of India's own economic slowdown.

The year 2011 had many surprises. The much hailed "Arab Spring" turned into Arab turmoil. Violence seems to have become the norm in the Arab world. The future of democracy remains uncertain. Islamist Parties have registered major gains in Tunisia and Egypt. Sectarian conflict has intensified in Iraq as the US withdrew its troops from there. The Gulf countries and Israel are exceedingly worried about Iran's nuclear programme and its rising influence in the region. Israel has hinted at military action against Iran while some Gulf countries are whispering about going nuclear if Iran goes nuclear. The Israeli-Palestinian peace process is comatose. Change of regimes took place in Morocco, Tunisia, Egypt and Libya. Syria is witnessing a bloody civil war. These trends are likely to continue in the foreseeable future. India's energy interests and the presence of nearly six million Indians will shape the Indian response to developments in the region. India will be compelled to take a cautious approach to developments in the region.

China's rising assertiveness on its "core" interests has created anxieties across the region. The US, on the backfoot in West Asia, is shifting attention to the Asia-Pacific by announcing the deployment of 2500 marines in Australia and launching the Trans-Pacific Partnership which excludes China. In a significant development, Russia and US joined the East Asia Summit thereby changing the dynamics of Asian security architecture. China is anxiously watching US moves in the Asia-Pacific. The death of Kim Il Jong has created uncertainties about the power transition in North Korea and raised apprehensions about fresh instability in the region. China will have a major role to play in containing potential tensions in the region.

China is also preparing itself for change of the Party and government leadership in 2012. While the handing over of power from Hu Jintao to Xi Jinping, the chosen successor, is expected to be smooth, the country's domestic and foreign policies may undergo changes in the coming years as the new leadership consolidates itself. The political transition in China takes place against the backdrop of the impending slowdown of the Chinese economy and increasing social unrest. It remains to be seen whether the Chinese economy will face a hard or soft landing.

Pakistan continues to lurch from one crisis to another against the backdrop of a worsening economic situation. The death of Osama bin Laden in a clandestine American raid triggered major tensions in US–Pak relations, which further escalated when NATO helicopter gunship attacked a Pakistani military check post. Such tensions are likely to continue even as relations between the civilian government and the military have deteriorated rapidly in the wake of the "memogate" episode. The rise of Imran Khan and his Tehrik-e-Insaf Party has changed the political dynamics in the country significantly. India should be prepared for a possible terrorist backlash from an unstable Pakistan.

The US has begun the withdrawal of its troops from Afghanistan and announced the handing over of security duties to Afghan security forces by 2014. A series of international conferences have been held even as the security situation in Afghanistan remains precarious and concerns persist about Afghanistan's future. India has signed a Strategic Partnership with Afghanistan but the continuing instability there may constrain its options there.

The West is in crisis as its power and political influence begin to decline. 2012 will be election year in the US with no guarantee that President Obama will win a second term. The US government is experiencing a degree of disfunctionality due to the sharp differences between Republicans and Democrats on a host of key domestic and foreign policy issues. The $14 trillion fiscal deficit threatens public spending and is a big worry. The US economy is stagnant with unemployment rate of about nine per cent persisting stubbornly. Europe is also in a deep financial crisis situation due to the unprecedented sovereign debt crisis, which has put the integrity of the Eurozone countries in doubt. The collapse of the Eurozone could trigger a global financial crisis.

Challenges Before Indian foreign policy

The success of Indian foreign policy is clearly linked with continuing high economic growth. India is also currently facing the prospects of an economic slowdown. A slowdown in economic growth could have an impact on India's standing abroad. The lack of resources could also constrain spending in the defence sector.

Domestic factors are becoming increasingly important in India's foreign policy. For example, the government was unable to sign the Teesta water-sharing agreement with Bangladesh because of domestic factors. The decision to permit FDI in the retail sector had to be reversed due to the lack of domestic political consensus. There are also doubts whether foreign investment in the nuclear energy sector would materialize on account of protests against nuclear energy. India may face serious power shortages in the near future. This will further impact the economy.

New challenges are arising on the global governance front. India played an active role in the UN Security Council during 2011. It is under pressure from Western countries to align its positions on critical global issues with theirs. The Durban conference on Climate Change concluded with mixed results. A notable development at Durban was that parties to the UNFCC have agreed to negotiate a legally-binding emissions reduction agreement by 2017. India may be compelled to show flexibility in its negotiating stance at the Durban platform on climate change negotiations.

Against the above geopolitical backdrop, Indian foreign and security policies will face several challenges. Foremost among them would be managing relations with an assertive China; safeguarding national security against a backlash from an unstable Pakistan; calibrating policies towards a restive West Asia; rejuvenating Indo-US relations; stepping up engagement with ASEAN, Japan, South Korea, and Australia; and playing an effective and constructive role at multilateral fora on issues of global governance. While India's ability to handle the challenges may be constrained by a slowing economy, it would need to manage them through requisite diplomatic skill and finesse.

The author holds the Lal Bahadur Shastri Chair at IDSA. The views expressed here are personal.

Twitter: @ihavenet

- Provided by IDSA