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28 September 2014

Washington And The World Who’s Afraid of Narendra Modi? Why the Indian prime minister could be good news for Washington.

By ADAM B. LERNER September 26, 2014

Read more: http://www.politico.com/magazine/story/2014/09/whos-afraid-of-narendra-modi-111364.html#ixzz3EaQw9ASK

Before he even landed in New York Friday, Indian Prime Minister Narendra Modi’s celebrity had already touched down on American soil. Among the plans for his weeklong sojourn in New York and Washington, D.C., are a sold-out address to 30,000 people at Madison Square Garden, high-level diplomatic meetings (including with Israeli Prime Minister Netanyahu) and an official visit to the White House, where Modi will meet for the first time with President Obama. Making his trip a little complicated, Modi will be fasting the entire time for the Indian festival of Navaratri, consuming only liquids during his most high-profile foreign trip yet.

But all of this hubbub conceals the extent to which Modi’s election this spring in many ways caught American foreign policy elites with their pants down—and still appears to have them confused over how to approach the new leader of the world’s largest democracy. Hopes for closer U.S.-India haven’t materialized, and Modi’s first few enigmatic months in office have offered few clues to what kind of partner he can be for Washington. In a Wall Street Journal op-ed this week, Modi wrote vaguely of shared goals such as technological innovation, improved education and combatting terrorism. In an interview with Fareed Zakaria last Sunday, pressed on relations with the United States, Modi proposed no substantial policy initiatives, saying that “both Indians and Americans have coexistence in their natural temperament”—not exactly the rhetoric of a bold new alliance.

So how should the United States think of Narendra Modi? Among the Western pundit class, he has been painted as two divergent caricatures—the bold reformer in a rising economy or the bigoted oppressor holding his country back. Conservatives have celebrated Modi’s rise as the beginning of the end for India’s stagnation. In November, Goldman Sachs released an enthusiastic report, “Modi-fying Our View,” that endorsed Modi as an “agent of change” responsible for spurring double-digit economic growth in the state of Gujarat, where he was then chief minister. “India needs a jolt and Mr Modi looks like the man to provide it,” Gideon Rachman wrote in the Financial Times in April. On his visit to India this summer, Secretary of State John Kerry, too, applauded Modi’s “vision” for economic growth.

But despite his pragmatic pro-liberalization agenda, the devout Modi comes with significant Hindu-chauvinist baggage, including allegations of negligence in the 2002 Hindu-led riots in Gujarat while he was chief minister—clashes that left between 1,000 and 2,000 Muslims dead. Some of India’s most prominent intellectuals have taken to the pages of Western outlets to decry Modi in the harshest terms as, “unapologetically divisive and sectarian,” “a prisoner of the reactionary (not to say medievalist) mindset of the Hindu nationalists” and a harbinger of “arguably, the most sinister [phase] in the country’s young history.” Largely because of his alleged role in the Gujarat riots, the Bush administration refused to grant Modi a U.S. visa in 2005, ending relations with the then-chief minister until the U.S. ambassador to India visited Modi in Gujarat earlier this year. (Modi is traveling to the United States this time on an A1 visa, available only for heads of state and their families.)

This second portrayal of Modi has left the United States palpably uncomfortable with the new leader of more than one-sixth of the human population, and unsure of how to approach him. President Obama congratulated Modi on his election—the largest in the history of humanity—and top advisers have called the upcoming summit an opportunity to outline an “ambitious new agenda.” But Kerry declined to comment on the visa issue in March, and both the Modi and Obama administrations have purposefully neglected to readdress it. News of a U.S. Federal Court summons for Modi filed today likely won’t help either party put the visa issue or 2002 riots behind them.

The truth? Neither caricature fully captures the real Modi, and neither will help the United States if it hopes to enter a “new relationship” with India, as Kerry vowed before his visit there over the summer. For the United States to work well with India, it will need to mend fences—which means recognizing what Modi has to offer and embracing it. On the line, after all, is not only the future relationship of the world’s two largest democracies, but also many of the United States’ most important policy initiatives in its still inchoate “pivot” to Asia. In fact, on a range of key U.S. economic and foreign policy interests, Modi could turn out to be a tremendous boon to Washington, so long as the relationship doesn’t turn sour.

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First and foremost, there’s India’s massive economic potential. To expand opportunity for its 1.24 billion people, and in turn to pack any sort of punch in the international arena, India must rebound from the past few years of high inflation and slowed growth. Modi ran a campaign almost singularly focused on boosting economic progress, reforming India’s regulatory environment and improving infrastructure—even brushing aside his Hindu-centric roots with the sanitation-oriented catch-phrase “not temples, but toilets.”

His economic record in Gujarat is also a testament to his business-friendly approach. During his nearly 13-year tenure as chief minister, as Modi wooed foreign investment by hosting investor summits, clearing red tape and spending on public infrastructure, the state’s compounded average growth rate was a whopping 13.4 percent, well above the national average of 7.8 percent. Although Modi—despite pressure from the United States—vetoed a recent WTO agreement that would reduce trade barriers, many analysts are still optimistic about hislonger-term potential as a reformer; he has already impressed business interests by moving to update some of India’s oldest labor laws at the end of July and streamlining the government’s clearance-granting processes for business.

All this is good news for the United States. As of May, the U.S. Census Bureau ranked India the 13th largest U.S. trading partner, with bilateral trade amounting to $27 billion last year. One of the major U.S. complaints under India’s previous prime minister, Manmohan Singh, was that Indian law put strict limits on foreign business ownership and investment in India, making it very difficult for American companies to start and run businesses there. Last fall, for instance, Wal-Mart, citing burdensome regulatory constraints, terminated its partnership with an Indian company that had given it market access; the American retailer significantly downsized its presence in India to only 20 cash-and-carry retail stores, though it plans to add some 50 more. Many analysts, bolstered by the modest reforms already present in Modi’s recent budget, hope he will remove these barriers over time.

In a country long plagued by an expansive and corrupt bureaucracy and by ineffective socialist policies, Modi represents a contrast. Although fully privatizing public industries and economic reform could take a few years, Manoj Joshi, a distinguished fellow at the Delhi-based think-tank the Observer Research Foundation, says he expects Modi’s initial efforts will all be geared toward making India a more attractive place for investment—beginning with “getting the bureaucracy off its butt.” “The Congress was a pretty shoddy government—a lot of corruption, a lot of indifference, a lot of cynicism on its part,” Joshi says. “There are bridges to be built, there are roads to be built, there are railway systems to be upgraded.”

In his Independence Day speech in Delhi last month, Modi gave a resoundingly pro-growth speech, urging businesses to “Come, make in India. Sell anywhere, but manufacture here.” Already, Modi’s business-focused campaign has helped the Bombay stock-exchange’s SENSEX index gain almost 20 percent since April , and Fitch Ratings, citing Modi’s pro-reform agenda, recently accelerated India’s growth projections for fiscal year 2016 from 6 to 6.5 percent. Should Modi follow through with this agenda, American investors and companies with ties to India will reap tremendous gains from sustainable Indian growth.

Closer ties with India could be a blessing in disguise not just economically but also for U.S. foreign policy in the region. Under previous administrations, Indian foreign policy has slowly promulgated a “Look East” strategy, to engage with not only with China but also Japan, South Korea and Southeast Asia in India’s quest to transition from a regional power into a world power. Modi’s administration, with a recent visit from Chinese President Xi Jinping, a trip to Tokyo in July and Kerry’s visit, has shown that he is ready to revamp this decades-old initiative and assert India as a major force on the continent.

This strategy may have an element of distancing India from the West, but it’s also a sign that India wants to become an exporting manufacturing power like an East Asian tiger economy. That means the United States could soon find in India a powerful economic “balancer” to China, Joshi says. “India is in a sweet spot right now,” he explains. “In terms of its size, in terms of its economy, in terms of its location, India may not have the huge heft of China, but it’s more than what anyone else can have.” Until recently, India has simply been too weak, too poor and too mired in regional and internal conflict to spread its democratic, secular values across Asia. But Modi’s new government has said it is ready to put economic growth at the forefront of its foreign relations and set pettier diplomatic disputes aside. Modi’s recent budget, for instance, sets an explicit aim of 7-8 percent growth for the next three to four years and partially liberalizes two major sectors of the economy, defense and insurance, for foreign investment.

For nearby countries such as Cambodia, Myanmar and Thailand, which waver between democracy and more authoritarian tendencies, “It’s important for them to have a model of strong growth that’s, frankly, different than the Chinese model,” says Anish Goel, a former senior director for South Asia on the National Security Council and now a senior fellow at the New America Foundation. To become this viable alternative, India will have to grow if not as quickly as China, then more equally, more sustainably and perhaps more innovatively. To the extent that the United States favors strong advocates of democracy in any region, as well as economic and political stability specifically in East Asia, India’s empowerment is squarely in American interests.

India’s consistent border disputes with China, which in the past have boiled over into full-scale war, could also convince the Modi government to enhance its military capabilities on the border—a check on Chinese military expansion that would be welcomed by not only the United States, but also various regional players like Vietnam, the Philippines and Japan that are frequently bullied by uncontested Chinese belligerence. In the Bay of Bengal, India hosts naval bases on the Andaman and Nicobar islands, just north of the all-important Malacca Strait, through which China receives between 70 and 85 percent of its oil—and through which approximately 40 percent of total global seaborne trade passes. If India continues to expand its military presence in and around the Malacca Strait, it could become a further check to traditional Chinese hegemony through Southeast Asia.

Modi has suggested he will move India toward a more aggressive foreign policy. “There should be a strong government in Delhi so that the world doesn’t stare us down,” he said during the campaign. And while India still remains hesitant to actually provoke the Chinese, Modi’s more hawkish tendencies could be seen as a public good to protect the sovereignty of smaller players in the region, as well as working in America’s favor, so long as they are held in check by economic and ethical considerations and do not spill over into armed conflict.

“The Indians are eager to develop military capabilities that will allow them to deal on their own terms with the Chinese,” says Daniel Markey, a senior fellow at the Council on Foreign Relations, who notes that India’s desire for American defense technologies and weaponry could give the United States leverage to influence India’s actions. “Strengthening them doesn’t hurt us much, does help them and serves our interests.”

It’s not just East Asia where India’s growth could work in America’s favor. As the United States plans to withdraw its troops from Afghanistan at the end of this year, President Obama could find American policy bolstered by India’s similar goals in the country. This is an area, Markey says, “where the two sides basically want almost the exact same thing.”

Like the United States, India is deeply invested in preventing Afghanistan from becoming a failed state and a launching pad for terrorism in the neighborhood. Given that many of the largest attacks that have hit Indian soil were planned and abetted by the Pakistani government next door, India has invested tens of billions of dollars in Afghanistan, becoming its largest regional aid donor, accounting for 20 percent of Afghan exports in 2013 and overseeing Afghanistan’s entry into the South Asian Association for Regional Cooperation, a regional economic group, in 2007. Former Indian Foreign Minister Jaswant Singh even suggested sending troops to help with the war effort in 2001, but the idea was nixed by then-Prime Minister Atal Bihari Vajpayee, and India is currently training Afghan special forces in anticipation of NATO’s withdrawal later this year.

The main deterrent for further Indian involvement with Afghanistan is the country’s rocky relationship with Pakistan. “Every time the Indians breathe the word ‘Afghanistan,’ Pakistan gets very nervous,” Goel says. Pakistan is deeply wary of any Indian security presence on its northern border and the prospect of Afghan dependency on India, its traditional rival. Pakistan hasn’t given any indication it’s ceding ground now, but a more interventionist role in Afghanistan would be in line with Modi’s hawkishness. Although Modi’s strident Hinduism and occasionally anti-Muslim tendencies have darkened his past record, if they lead him to disregard Pakistan’s obstructionism and push for a stable Afghanistan free of jihadists that could harm India, his actions would line up perfectly with American ends.

Here, and on a number of other foreign policy issues, Modi’s unilateral leadership style could come into play. Indian foreign policy initiatives are often plagued by indecision and stagnation among the Indian diplomatic core. In a Foreign Affairs article last year, Manjari Chatterjee Miller, a professor of international relations at Boston University, argued that because of the autonomy the Indian government traditionally gives to individual civil service officers, “there are few, if any, top-down guidelines for crafting Indian foreign policy,” and bureaucrats often engage in counterproductive behavior. Modi’s previous moves to streamline bureaucracy indicate he will likely have little patience for indecision or mixed messages. As Markey notes, Modi has shown himself “certainly willing to stand up to those in his party,” let alone disloyal bureaucrats. (After the blight of the 2002 riots in Gujarat, for instance, he jettisoned a cabinet minister and a longtime adviser, both ultra-conservatives.) If Modi wrangles his unruly diplomats, he could have a far easier time accomplishing his foreign policy goals, making Indian foreign policy more coherent and less unpredictable for potential American partners.

The biggest question mark looming over Modi’s foreign policy agenda remains Pakistan, India’s longtime foe and a consistent thorn in America’s side. To a large extent, Modi’s take on the pivotal Indo-Pakistan relationship has yet to be determined. His early meeting with the Pakistani Prime Minister Nawaz Sharif, who was present at Modi’s inauguration, hinted that the two countries could be warming to one another, though the most antagonistic forces within Pakistan, including terrorist organizations and rivals within the intelligence community, military and the Pakistani government itself, are not seen as directly under Sharif’s purview. Modi’s aggressive tendencies could spark further skirmishes—or convince Pakistani leaders to avoid escalated confrontation. The Obama administration will almost certainly seek to bolster India’s hand covertly, while trying to keep relations with Pakistan stable.

Should India emerge from the inflation and slowed growth of the past few years and become an Asian dynamo, its success will inherently promote the oft-stated American goal of a vibrant, growing and democratic continent. In the long run, the biggest threat to unfriendly regimes in the region is not the U.S. military—it is a democratic, secular and growing India, embodying fully the ideals that framed the country’s independence in 1947. Modi provides a fresh start for Indians after the last administration’s corruption and indecision. So long as he avoids the sort of counterproductive Hindu nationalism that many fear is in his bones, there is reason to be optimistic that Modi could help fulfill this promise. The United States should do its best to make sure that he does.

Adam B. Lerner, a researcher at Politico Magazine, was a 2013-2014 Henry Luce Scholar at the Caravan in Delhi.
Read more: http://www.politico.com/magazine/story/2014/09/whos-afraid-of-narendra-modi-111364.html#ixzz3EaQpx7aR

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