What does the giggly monk have to do with economics?

More than you might think. The spiritual head of the Tibetan Buddhists, who is in exile in India, may represent the epitome of pacifism, but China — which claims sovereignty over Tibet and brands the Dalai Lama a “splittist” — has, in its attempt to undermine his authority and the goodwill that he enjoys internationally, been known to marshal both its economic clout and its considerable hard power. What’s happening in India right now is a manifestation of that.

What’s happening in India?

It seems Cabinet Secretary PK Sinha issued a note saying it was “not desirable” for Indian government functionaries and “senior leaders” at the Centre and in the States to participate in events and activities of the Tibetan leadership in exile. This includes the year-long events from April 1 until 2019 to mark the Dalai Lama’s 60 years in exile.

What’s the backstory to this?

In his note, Sinha said that governmental participation in the Tibetan events “should be discouraged”, given that this was a “sensitive time” in Sino-Indian relations. Sinha’s ‘advisory directive’ came barely days after Foreign Secretary Vijay Gokhale sent a note to the Cabinet Secretary seeking such a circular.

What’s the significance of this?

It symbolises that the Narendra Modi government is walking on eggshells to avoid offending Chinese authorities’ sensibilities over Tibet, which has long been a source of friction in bilateral relations.

Isn’t it just diplomacy?

Of course; it’s striking only because it contrasts with the Government’s muscular stand during the recent stand-off with China in Doklam, the border trijunction along with neighbouring Bhutan. At that time, the Government was pushing the narrative that its ‘hard power’ projection had compelled Chinese troops to stand down.

Okay, but what’s the economic angle to the Dalai Lama?

Curiously, in matters of international trade, there is something called the ‘Dalai Lama effect’. That phrase was coined by Andreas Fuchs and Nils-Hendrik Klann, research scholars at the University of Goettingen.

What’s the ‘Dalai Lama effect’?

Fuchs and Klann published a 2013 research paper, ‘Paying a visit: The Dalai Lama effect on international trade’, and studied China’s trade relations with 159 countries. They define the ‘Dalai Lama effect’ as the negative effect on exports to China that a country experiences if its political leaders receive the Dalai Lama in the current or the previous year.

Is there a negative effect?

Fuchs and Klann observed that typically, such countries experience a contraction of exports to China because China punishes countries that receive the Dalai Lama at a political level. The extent of this export contraction varies between 8.1 per cent and 16.9 per cent, depending on the level of importance of the foreign dignitary who meets the Dalai Lama: the more important the dignitary, the more pronounced the effect.

In other words, China wields geo-economic clout?

Yes. The ‘Dalai Lama effect’, which works with karmic certainty, is an index of how China leverages its trade ties to advance a foreign policy tool.


With its recent action, India is signalling a keenness to avert a ‘Dalai Lama effect’ in relations with China. Discretion is evidently the better part of 56-inch valour.

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