Modi 2.0: Foreign Policy challenges for Indian PM in his second term

Modi 2.0: Foreign Policy challenges for Indian PM in his second term

With just under two-thirds of the parliamentary seats in India’s lower house declared in its favour, Prime Minister Narendra Modi’s coalition is back in power with an even stronger mandate than in 2014. Domestically, this means complete power to continue his policies from his first tenure on every front: from building the economy to attempting a balance between his majoritarian votebank and his stated commitment to “Inclusion and Development for all, with everyone’s trust (Sabka saath, sabka vikas, sabka vishwas). On the global front, however, the challenges are starkly different from five years ago, and new geopolitical contestations will decide Mr. Modi’s next tenure in foreign policy terms.

Consider the unimaginable shifts from 2014: President Obama’s accommodative America has been replaced by President Trump’s focus on “Making America Great Again” by taking on the rest of the world. Within hours of being sworn in as Prime Minister again, Mr. Modi received an unpleasant missive from Mr. Trump: the US had rescinded India’s 45 year old trade preference GSP status, as a penalty for what it called India’s protectionist moves. While the Indo-US strategic partnership has gone from strength to strength in the past few years particularly with the revival of the Indo-Pacific “Quad” with Japan and Australia, its trade relationship has gone sour. Despite growing imports and exports, India has been slapped with a slew of WTO complaints and raised tariffs from the US. Trade issues will also dominate Mr. Modi’s engagements with the West and the East: negotiations on the India-EU Bilateral Trade and Investment Agreement (BTIA) as well as India’s decision on joining the Regional Comprehensive Economic Partnership which includes all ASEAN countries, China, Japan, Australia and New Zealand are both in suspension at present.

New, unexpected challenges have presented themselves: Washington has now ensured that India falls in line with sanctions on Iranian oil, that constituted more than 10% of India’s intake, and even India’s investment in the Iranian port of Chabahar may be rendered useless, if the US sanctions continue to prevent trade being financed through Iran. Meanwhile after years of cajoling India to look away from its traditional partner Russia and to buy US military hardware instead, the Trump administration is taking a hardline: decreeing that India’s purchase of hardware including the S-400 Triumf anti missile system will be sanctioned under the new CAATSA law. How India manages the S-400 deal despite the American threats will define Mr. Modi’s ability to manage ties with Mr. Trump and the US administration in the future. Another significant marker will be India’s moves on Chinese telecom major Huawei: The US has urged New Delhi to drop Huawei from its 5G plans, in the same way US officials have told Germany that signing up with Huawei could hinder intelligence sharing with Washington.

The other big shift on Mr. Modi’s horizon is China’s Belt and Road Initiative, and the growing China-Russia axis, both of which were in nascent stages 5 years ago. Since then, China has signed major infrastructure projects with all of India’s neighbours (minus Bhutan) even as India refused to join the BRI. An increasingly assertive People’s Liberation Army sparked off a near conflict with Indian troops in the Doklam trijunction area in 2017, although PM Modi’s meeting with President Xi at Wuhan last year has dismantled the tensions between the two countries considerably. Going forward, Mr. Modi’s eye is on balancing trade with China and on making progress on the India-China boundary dispute that runs the length of their 3,000 km frontier, even as he romances the neighbourhood (minus Pakistan) away from controlling Chinese influence. Meanwhile, the US President’s moves to withdraw from Afghanistan, even if it means cutting a deal with the Taliban backed by Pakistan, will roil India’s neighbourhood as well.

Much of Mr. Modi’s second tenure, in fact, will predicate on protecting Indian interests, while managing these great power relationships. 

In order to do this, one of Mr. Modi’s first steps was to drop his Foreign (External Affairs) Minister Sushma Swaraj, known for her soft style, and bringing in former Foreign Secretary Dr. S. Jaishankar in her place, known for both his ability to talk tough as well as his belief in realpolitik more than sticking to past ideals in India. 

“In every clash there is an opportunity and there is risk. My job is to manage the risk and maximise opportunity,” Mr. Jaishankar, who spent the past year doing corporate strategies for the TATA group, said shortly after assuming office. “Today, diplomacy is at multiple levels. Looking out for yourself is not incompatible with doing global good or supporting a global order. We all do look out for ourselves,” he added.

Mr. Modi’s engagements in the first month of office alone reflect his desire to engage immediately with the challenges of opportunity and risks that he faces, beginning with the neighbourhood. At his swearing in ceremony on May 30th, Prime Minister Modi invited leaders of the 7-nation BIMSTEC grouping comprising Bangladesh, Bhutan, Myanmar, Sri Lanka and Thailand. He took his first trip abroad to Maldives and Sri Lanka (June 8-9), focusing on development partnerships, joint maritime management and counter-terrorism cooperation in both countries. Next, he headed to the Kyrgyz capital of Bishkek to attend the Shanghai Cooperation Organisation along with leaders of Pakistan, Afghanistan and Central Asian states (June 13-14). And at the end of June, he flew to Osaka, Japan for the G-20 summit, where he met US President Donald Trump among other leaders of major economies (June 28-29). 

As he wades into all these relationships, strong partnerships that Mr. Modi has built or taken to new heights in his first tenure, most notably with Japan, Israel, Germany, France and UAE will hold him in good stead. In a world where friendships and alliances of the past have been replaced with multi-alignment and issue-based, transactional partnerships, Mr. Modi will approach his second tenure in foreign policy with a new set of rules.

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