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Chaturanga

~ statecraft, strategy, society, and Σοφíα

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Tag Archives: economy

What Does Donald Trump Mean For India?

10 Thu Nov 2016

Posted by Jaideep A. Prabhu in India, South Asia, United States

≈ Comments Off on What Does Donald Trump Mean For India?

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Donald Trump, economy, India, Japan, Pakistan, Russia, terrorism, United States

​Donald Trump’s victory in the US presidential elections came as a total surprise not just for his opponent, Hillary Clinton, but even many of his supporters. If rumours are to be believed, Trump himself was in a subdued mood the whole evening until Florida turned in his favour. News of his success has been met with what can only be described as a meltdown among his detractors across the political spectrum. To be fair, Trump is certainly not the first unqualified occupant of the Oval Office; he may not even be the least qualified. The reason we feel his victory to be an affront to civilisation is that he is boorish, insouciantly and publicly. Trump is an indication of all that is broken with America, not in just that people would vote for him but that they would be angry enough with the ‘establishment’ to even consider such an obviously unfit character.

Given the United States’ military and economic reach, Trump’s victory will undoubtedly affect the world but thankfully less so than ordinary Americans. The question in this part of the world is, how will a Trump presidency affect India?

With its quasi-pivot to Asia, the United States has been heavily involved with several countries in India’s vicinity. Washington’s ties with Delhi have also gone from strength to strength since the George W Bush administration. Despite ebbs and flows, an Indo-US partnership has become a bipartisan issue. Nonetheless, Delhi and Washington have had difficulty seeing eye-to-eye on several points of mutual interest due to differing priorities. There is room for cautious optimism that Indo-US goals will align further under President Trump.

Trump is probably the first tenant of the White House who has had no experience whatsoever in public office, be it as a small town mayor, in the military, or elsewhere. As such, he comes to office with no ideological baggage – one wonders if he has even seriously thought about some of America’s challenges to have definitive views on them. Even during the primaries and campaign, the then presidential candidate’s responses to questions could only be described as abstract expressionism. In such an environment, it is difficult to predict what policies Trump will pursue.

There have been, however, a couple of motifs that have been consistent in his messaging. For example, he has repeatedly hinted at mending relations with Russia. According to Trump, the United States has been fighting an old Cold War they understand rather than the new Cold War they are in with China on which they are yet to get a grip. This bodes well for Delhi because it stops Vladimir Putin from being nudged into the embrace of Xi Jinping. Additionally, it allows India greater room in proposing important projects like the International North-South Trade Corridor that need Moscow’s support. A less antagonised Russian bear may even prove to be a useful ally against the Taliban, the ISI, and ISIS in Afghanistan.

On Pakistan, Trump has promised a far tougher stand but he will be the first American president to deliver on such a promise. Despite several scholars disproving the mistaken American belief that the US ‘needs’ Pakistan in that region, influential elements in the US government have been reluctant to jettison Islamabad even after many provocations. While a realistic US appraisal of Pakistan is something to look forward to, its historical probability is low.

There is a concern that the United States will shun their alliance responsibilities under Trump. This has been the indication with not just NATO but also in East Asia. However, the president-elect called the South Korean premier soon after the election results were confirmed to assure her of America’s continued support. In all likelihood, Trump would just like to see America’s allies pull their weight a bit more. This is a complaint Washington has had for a long time, though what exactly pulling their weight would entail in terms of increased independence from alliance policies was never clear.

Trump’s hawkish views on China reinforce the belief that he will not abandon US allies in the region. Admittedly, he has veered away from the traditional US course of discouraging independent nuclear arsenals. Yet this would also require willingness from the other side to embark on such an ambitious and politically fraught programme, something both sides may be able to ultimately avoid.

The future of trade pacts such as the Trans Pacific Partnership and TPIP are also unsure. They have been on weak legs even before the US election season but the incoming president’s hostility to them is well known. He would either let negotiations lapse or at best reopen the technical aspects of the treaty for further discussions, thereby punting the TPP’s coming into force down a few years until the end of his term or into his second term. Either way, this is good tidings for India, who would lose billions standing outside the pact. It allows Delhi’s mandarins time to strategize a response, be it via joining the trade pact or bracing for the fallout by negotiating free trade agreements of its own.

Another area of concern is Trump’s belief that Iran got off too lightly in the nuclear deal negotiated last year. He has done both, threatened to tear up the agreement and police it closely too. If Iran is baited out of the deal by an obstructionist Trump White House, it is not sure how much support from the world community further sanctions on Iran will have. This could get thorny for India but this is not a purely Trump problem – Republicans have been saying similar things ever since negotiations began. India will have to persuade its American partner of the wisdom of restraint and the favourable ripples it could have in other hotspots such as Syria.

The most visible feature of Indo-US relations – arms sales and joint military exercises – will most certainly not go wanting. Defence stocks are up in the United States after Trump’s victory as the budgetary cuts enacted by his predecessor are thought to be on the chopping block. Foreign sales will make domestic defence spending more affordable and India is keen to modernise its military. Beyond the monetary aspect, it also makes little sense for the United States to plan a more robust policy in East Asia while discouraging local partners to take a more proactive role in what will always primarily be their security. Washington’s most reliable partners will be those most concerned and powerless in the face of China’s rise, the states around the Indo-Pacific Ocean rim and warmer relations with Russia will not be of much use here.

Perhaps the greatest tussle will be over the economy, but that is also a mixed bag – while Trump has promised to curb immigration and slash the H1-B skilled worker visas, he has also called India a land of economic opportunity and even invested in some real estate in the country. Trump will, like previous administrations, pressure India on opening up its economy further and doing more to protect intellectual property. The question is how much effort he will put into this challenging aspect of Indo-US relations.

All this assumes, of course, a certain modicum of rationality, a desire to deliver on election promises made, and a sound staff probably taken from the Bush years. But Trump is a neophyte to this stage and all bets could be off – in which case much of this speculative exercise could be just gibberish and we are in for a very bumpy ride over the next four years.


This post appeared on FirstPost on November 14, 2016.

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730 Days…

26 Thu May 2016

Posted by Jaideep A. Prabhu in India, South Asia

≈ Comments Off on 730 Days…

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Afghanistan, ASEAN, Bangladesh, BBIN Initiative, Bhutan, Central Asia, China, Defence Technology and Trade Initiative, DTTI, economy, foreign policy, France, India, Indian Ocean Rim Association, International Solar Alliance, IORA, Japan, Middle East, Narendra Modi, Nepal, NSG, Nuclear Suppliers Group, Pakistan, SAARC, SCO, security, Shanghai Cooperation Organisation, United Nations Security Council, UNSC

When Narendra Modi swept to power in May 2014, nobody could have dreamed that he would mould India’s foreign policy so decisively. Observers foreign and domestic all opined that Modi would not focus on international affairs much, choosing to pay attention to the domestic Augean stables he inherited instead. The wisdom was that, at most, Modi’s India might modestly reach out in its own neighbourhood but anything beyond the region was going to be primarily to buttress the country’s faltering economy.

If one is looking for unqualified and substantial successes, there is little the Modi government can boast about. Yet this is not to say that there have been no successes – rather, India’s track record in translating words into deeds has been poor throughout its history and it would be foolhardy to bet on noises in the pipeline too soon.

The achievements of the Modi government are also weighed down by the burden of public expectations – the Indian media has published report cards on the government’s performance after its first 100 days in office, at the six month mark, the one year mark, and now at the end of the second year in office. No other administration has ever faced such close scrutiny. Furthermore, the gargantuan scale of what needs to be done to bring the country in line with the ambitions of the younger generation dwarfs into insignificance any accomplishment of the National Democratic Alliance.

The general tenor on Modi’s India has been positive. The optimism in the international mood can be gauged from the increase in the flow of foreign investments into India; Japan has made substantial investments in infrastructure, the most visible project being the high speed rail project connecting Bombay to Amdavad. Similarly, France is playing an active role in developing smart cities in India as more and more of the country urbanises over the next few decades. Saudi Arabia and the United Arab Emirates have also expressed interest in India’s road, maritime, and riverine infrastructure. All this is in line with expectations that Modi would focus on rebuilding India’s economy and developing the infrastructure needed for it to emerge as a regional power.

The past two years have also seen India take a greater interest in its backyard, Central and West Asia. Counter-terrorism and energy topped the agenda but Delhi’s pockets are not deep enough to spur breakneck development on visible markers of progress such as gas pipelines. India is also one of the largest investors in African countries. While previous administrations have also sought similar goals, the Modi government has brought an energy to the negotiations that leaves many observers cautiously optimistic of movement.

Frequent visits to the country by US defence officials also indicates the initial flowering of a mature security relationship that will have consequences for the entire greater Indian Ocean region. The US-India relationship that had been reincarnated by the George W Bush White House and stagnated since received new impetus once Modi took office. The Defence Technology and Trade Initiative has moved forward as Washington has been keen to help India build better aircraft carriers and talks have been going on to manufacture the M777 ultralight-weight howitzer in India under the Make-in-India scheme. Recently, there has even been talk of Boeing establishing a manufacturing line for its F-16s and F-18s in India and offering the F-35 to Delhi.

In the last two years, India has lost some of its timidity in participating in the Malabar naval exercises with the United States and Japan. Delhi is close to concluding a military logistics agreement with the United States that could significantly expand its influence over the Indian Ocean region. The Indian Navy – in the midst of a massive expansion and modernisation programme – may well evolve as the face of Indian soft power and diplomacy in the region as its augmented capabilities allow it to provide services such as security, search & rescue, and humanitarian relief for the regional commons. This will integrate India more closely with the ASEAN and SAARC nations who will become accustomed to seeing Indian power as a benign force.

In the neighbourhood, the Modi government can certainly report Bangladesh and Bhutan as success stories of its foreign policy. The border agreement and several agreements on energy, infrastructure, transportation, trade, and nuclear cooperation have made Bangladesh more comfortable with its parent state. However, things have been a mixed bag in Sri Lanka and disappointing in the Maldives and Nepal. These are difficult customers, trying to profit from playing India off against China as India tried – and failed – to do with the US and USSR during the Cold War. Without significant economic leverage, these states will continue to be a nuisance to Delhi.

Modi’s greatest diplomatic failure is alleged to have happened with Pakistan and China. Nothing could be further from the truth: while Pakistan sees India as an existential threat, China views its southern neighbour as eventually capable of sabotaging its rise and competition with the United States. The incursion by Chinese troops into Indian territory during a state visit by Xi Jinping to Delhi, not to mention Bejing’s obstructin of Indian accession to the Nuclear Suppliers Group and the UN Security Council as a permanent member, indicates that the Middle Kingdom is content to allow relations to simmer for now. The overtures to Islamabad, unequivocally rebuffed at Pathankot, suggests an ugly truth that Modi – and perhaps South Block – cannot admit publicly: that Pakistan is not a problem that can be solved with patient diplomacy. It is naïve to expect any improvement of relations with either of these two neighbours.

The Modi administration has done well in showcasing India economically and has also achieved a modicum of success on security matters given the options available to it. Afghanistan is an illuminating example: it can hardly be denied that it is in India’s interests that the war against Islamists, be they al Qa’ida, ISIS, or a Pakistani proxy, is best fought with Afghan sinew. Yet Delhi has been reticent to generously supply Kabul with training and material because of its own shortcomings. After decades of material and intellectual neglect, it would not be surprising if India’s armed forces find themselves shackled more by their own politicians than by the enemy.

Modi’s foreign policy has not stopped with nation-states – he has reached out to the Indian diaspora, multinational corporations, and potential technology disruptors to accelerate India’s growth. At the United Nations Framework Convention on Climate Change in Paris in December 2015, India played a key role in promoting solar energy as an alternative to fossil fuels by committing to expand solar energy to 100 GW (installed capacity) by 2022. The International Solar Alliance, launched by the prime minister, will keep the country at the centre of innovation and regulations concerning solar energy.

While India has been content to involve itself in international and regional groups such as the G-20, BRICS, ASEAN, SAARC, and the Shanghai Cooperation Organisation until now, the Modi government has taken the policy one step further and started to nurture groups in which it could assume leadership roles such as the 1997-established Indian Ocean Rim Association and the Bhutan Bangladesh India Nepal . Delhi has also started to bypass Pakistan in SAARC via multilateral treaties with other neighbouring states such as the connectivity project between Bhutan, Bangladesh, Nepal, and itself which Modi revived in November 2014; the BBIN Initiative was established in 1997 as the South Asian Growth Quadrangle but little had been accomplished since.

In the two years of the Modi government, Delhi has strengthened its foreign policy along all axes – economic, security, and diplomatic leadership. While it is easy to be impatient with the rate of progress, the limitations on India’s economic, military, and diplomatic power also ought to be borne in mind. With continued progress, the several frustrations observers feel with the elephant will gradually dissipate.


This post appeared on FirstPost on May 27, 2016.

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Namaskar, Abe-san!

11 Fri Dec 2015

Posted by Jaideep A. Prabhu in India, South Asia

≈ Comments Off on Namaskar, Abe-san!

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bullet train, CEPA, Comprehensive Economic Partnership Agreement, defence, economy, India, infrastructure, Japan, Narendra Modi, nuclear, Shinkansen, Shinzo Abe, US-2 ShinMaywa

Japan’s Shinzo Abe is in India for his third prime ministerial visit and it has the feeling of a meeting between friends rather than between the leaders of two major states. On the morning of his arrival, the Times of India ran an article by the Japanese prime minister in which he briefly outlined the history of India-Japan relations. Calling India a key international player and a natural partner who shared Japan’s values, Abe stated his belief that the two countries held the greatest potential of any bilateral relationship in the 21st century and declared his intention of “dramatically developing” the bonds between India and Japan. Not to be outdone in a show of warmth, the Indian prime minister tweeted, “India is all set to welcome its great friend & a phenomenal leader, PM @AbeShinzo. His visit will further deepen India-Japan relations.”

The rise of Abe in Japan and of Narendra Modi in India tells an interesting tale. Both men are nationalists leading nations that had retreated from the international spotlight during the Cold War, Japan via its pacifism and India through its non-alignment. Both nations have seen a generation pass and the younger crowd does not share the sentimentality of the old, though vast numbers yet remain unsure whether the risks of a more dominant global role are worth taking. Both leaders seek to remake their countries but face substantial opposition at home.

Relations between the two prime ministers go back to Modi’s chief ministerial days. This is the fifth meeting between the two men, the initial one being in 2007 when Abe was in his first term as prime minister. Modi and Abe connected well, or at least understood that they needed each other as the post-Cold War honeymoon drew to a close. Their personal chemistry has certainly helped Modi domestically: at a time when the West was trying to isolate him over the 2002 Godhra riots, Japanese firms made major investments in Gujarat’s infrastructure and industry. It is partly the successful outcome of these projects that propelled Modi to the top position in the country in May 2014.

Abe is in India for three days to attend the ninth annual India-Japan Summit talks. These talks broadly encompass three shared strategic interests: Indian infrastructural and economic development, civil nuclear cooperation, and defence ties. Expectations of the summit are big this year, something to top Japan’s promise in August 2014 to invest $34 billion in the Indian economy over five years. And Abe might deliver – it has been reported that the summit will likely see India and Japan seal an agreement for the latter to provide the former $15 billion at 0.5 per cent interest over 50 years to construct India’s first high speed rail line connecting Bombay to Amdavad. India is expected to adopt Japan’s Shinkansen technology and invest at least 30 per cent of the soft loan back into the Japanese economy. Construction is expected to start in 2017 and service by 2024; it has even been suggested that the line might, at a later date, be extended to Delhi as part of India’s Diamond Quadrilateral scheme to link its four metropoles with 10,000 kms of track. Besides this big ticket item, Japan has taken a role in developing the Amdavad and Madras metro projects and is negotiating its involvement in several highway undertakings, airport construction, industrial townships in Tumkur, Ghilot, Mandal, and Supa, and other infrastructural ventures.

An issue that has received less attention in the press is the Comprehensive Economic Partnership Agreement (CEPA) between the two nations. For several reasons, the full potential of this agreement has not been realised and the Indian and Japanese delegations would do well to ponder this. India is eager to enter the services sector in Japan, not just in information technology; meanwhile, it wishes Japan to give Indian Small and Medium Enterprises a closer look. The individual transactions may not be as headline worthy as nuclear cooperation or bullet trains but the impact over the entire economy will be greater. As India continues to grow and develop into a manufacturing hub as well, its markets promise to revitalise a flagging Japanese economic story.

While there are few hurdles on the economic front, civil nuclear cooperation is much more complicated. The Indo-US nuclear deal in 2008 readmitted India to international nuclear trade circles after four decades of nuclear apartheid and the South Asian country has since concluded several agreements for supplies of uranium for its small fleet of nuclear reactors. It had been hoped that Japan would also promptly begin to engage in nuclear commerce with India but that has not been the case. Tokyo has strict policies governing nuclear commerce, and one of them prohibits any such relations with a country that is not a member of the Non-Proliferation Treaty. Delhi will not sign the NPT as a non-nuclear weapons state and allowing it to join as a nuclear weapons state will in all likelihood mean the collapse of the international non-proliferation regime. Over the years, India has worked to persuade Japan of its trustworthiness and it is rumoured that Abe is closer to accepting the Indian view.

Truth be told, the value of a nuclear agreement between the two countries has been blown out of proportion. This is entirely because of the symbolic significance India has placed on international recognition of its nuclear credentials as a safe and reliable state. However, even if Abe and Modi were to be able to come to an agreement on this issue, it is unlikely that India will gain anything owing to its unique interpretation of nuclear liability. Japan has become an important manufacturing node in the international nuclear supply chain with major nuclear vendors in France and the United States depending upon vital components from the island. Yet the Civil Liability for Nuclear Damage Act (CLNDA) has brought India’s nuclear renaissance to a screeching halt and GE has refused to enter the country’s nuclear sector. Westinghouse has been silent too and Areva has slowed down its activities in Jaitapur, awaiting clarification on some of the problematic clauses of the CLNDA. If Modi successfully closes a nuclear deal with Abe, the only possible benefit to India in the near future is access to the high quality forging of reactor pressure vessels by Japan Steel Works. This will not bring back the foreign vendors but will at least indigenous nuclear industry the option to accelerate its expansion.

The third leg of the India-Japan relations triad is defence ties. This is a difficult subject for Japan: since World War II, the country has been avowedly pacifist – albeit under a US nuclear umbrella – and has abjured from any military activity outside Japan’s boundaries. Tokyo also forbade itself from selling defence equipment to other countries, even allies. It is only recently that there has been a thaw in this position: in 2011, Abe managed to pass several amendments to Japanese law that now allow him to engage in defence trade. This allowed Japan’s ShinMaywa to respond to Delhi’s Request For Information for nine amphibious aircraft capable of search and rescue operations, radar surveillance, and transportation of cargo. India and Japan set up a Joint Working Group in 2013 to explore the possibility of manufacturing the US-2 ShinMaywa together. Though a new era has begun for the Japanese defence industry, it is still early days and Abe faces strong domestic opposition to his reforms. Even an agreement on joint manufacture of the US-2 will not herald a rapid expansion of Indo-Japanese defence trade in the near future. However, such a deal is to be welcomed as a step in the right direction.

It cannot be ignored that the urgency motivating closer relations between two of Asia’s largest economies is the mutual perception of the threat of a more powerful and assertive China. Both Delhi and Tokyo have looked on with concern as Beijing strengthened its military on the back of a booming economy over the last two decades. China’s show of muscle in the South China Sea, its noxious relations with Pakistan, the quest for assets around the Indian Ocean, and the rapid modernisation and expansion of its military have not only pushed the nations of Southeast Asia together but also raised warning flags for the United States. However, neither Delhi nor Tokyo wish to antagonise Beijing too much just yet for both have substantial economic relations with their troublesome neighbour. An open and aggressive alliance is to neither country’s benefit, at least just yet, and both India and Japan hold out hope that their blossoming security relations will dampen the Middle Kingdom’s impetus for expansionism.

The silent partner in Indo-Japanese security relations is the United States. Washington indicated its willingness to pivot to Asia in 2011 but found little local support for it for no South, East, or Southeast Asian mouse wanted to bell the Chinese cat. Robust ties between Delhi and Tokyo offer the most viable foundation for a quiet US pivot to Asia and the several recent naval exercises between these three nations indicates the substance of this invisible partnership. Australia has been another quiet comrade, making the troika into a quartet. Before the guns start roaring, however, Modi and Abe have astutely chosen to strengthen economic and military ties, coordinate policies, and support regional security architecture as a hint to Beijing to desist from its threatening behaviour.

The outcome of this summit appears positive on the economic front, cautiously optimistic in the security arena, and uncertain in the nuclear field. Yet what still makes it pleasing for Modi to engage with Abe is the shared values and intellectual framework between Indians and Japanese. As the inheritors of a similar set of ancient Asian cultural values, the two countries make ready partners in an Asian century. Mutual security concerns and economic complementarities only further highlight the logic of a close relationship between India and Japan, even if this summit does not deliver all that observers expect of it. There may be no permanent friends in international affairs, but Shnizo Abe and Japan are probably as close to it as India can get in the short and medium term.

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