Modi’s foreign
policy Mantra, Geo economic, regional hegemony and global aspirations 19 Nov.
14
By FRIDE By Gauri Khandekar
Within just six months in power, Narendra Modi has managed to induce a dramatic overhaul
of India’s hitherto muffled and ill-defined foreign policy, and has dramatically
increased his country’s global profile. Successful summits with the BRICS
grouping (Brazil, Russia, India, China and South Africa), Japan, China, Nepal
and Bhutan were topped off with a high-profile visit to the United States (US)
from 27-30 September. Modi’s US visit was his most interesting foreign trip:
barred from entry to the US for nine years because of accusations over his role
in the Gujarat massacre of 2002, the red carpet to the White House was rolled
out. Modi received a ‘rockstar’ reception in the US, especially from Americans
of Indian origin, for example addressing 18,000 people at Madison Square
Gardens in New York.
Unlike his predecessors, Modi has
underscored foreign policy as a priority from the beginning alongside a strong
mandate to put India’s economy in order. Modi aspires to re-invigorate India’s
emerging power status, which suffered in recent years due to poor economic
growth. He has not only injected focus and ambition into India’s foreign
policy, but also linked it directly to his plan to transform India’s economy.
Launched in September 2014, ‘Make in India’ has become Narendra Modi’s
signature programme as he aspires to convert India into a global manufacturing
hub. His foreign policy mantra therefore is strongly driven by geo- economics –
especially attracting foreign direct investment (FDI) – and at the same time
seeks to consolidate India’s leadership role in South Asia.
While the previous Congress party-
led governments prioritised relations with the US and the European Union (EU)
(the Singh government negotiated the historic US-India nuclear energy agreement
from 2005-2008 and launched free trade talks with the EU in 2007), Modi is
shifting the focus to India’s immediate neighbourhood and other major Asian
countries like Japan, China and Australia, as well as the BRICS grouping.
Modi has a personal penchant for
foreign policy and, unusually, had undertaken numerous foreign visits
(especially to China and Japan) while Chief Minister of Gujarat, an Indian
state. Modi’s foreign policy mixes uber-pragmatism with business acumen. He has
managed to convince both China and Japan to invest heavily in India while
re-establishing India’s foothold in its precarious immediate neighbourhood.
Reaffirming India’s traditional non-aligned policy, Modi has employed a more
muscular approach to asserting his country’s independence while taking a very
selective approach to multilateral cooperation. For example, India singularly
vetoed the World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA)
in July (a draft already agreed by the WTO’s 160 members including the previous
Congress-led Indian government at the Bali Ministerial Conference in 2013) over
food security concerns. A breakthrough was reached in the fringes of the Asia
Pacific Economic Cooperation (APEC) Summit in November, when the US agreed not
to challenge India’s food security policies at the WTO, removing the main
impasse to the agreement. With the US, Modi has steered clear of joining any US
grand strategy on Asia or the Islamic State (IS) in Iraq and Syria, but spoke
during his visit there about trade, investment and bilateral security
cooperation.
IndIa’s ImmedIate NeIghbourhood
As an emerging power with global
aspirations, India must first befit a regional power. Modi’s first major
decision after securing power was to extend an unprecedented invitation to
South Asian Association for Regional Cooperation (SAARC) leaders for his
swearing-in ceremony, despite opposition in India from certain state leaders
and political party allies. Modi wishes to emphasise New Delhi’s role in
India’s immediate neighbourhood and to revive SAARC, a role long neglected by
New Delhi. This move not only confirmed India’s acceptance of its
responsibility as a regional leader, but was also the first sign of a shift in
Indian foreign policy.
On his first day in office, Narendra
Modi held successful bilateral talks with Pakistani Prime Minister (PM) Nawaz
Sharif. The last major breakthrough in Indo-Pak relations transpired under the
previous Vajpayee-led BJP coalition (1998-2004) with the Sharif government, a
development which Modi seeks to emulate. By initially holding out the olive
branch to Sharif, Modi not only coaxed the latter to reciprocate, but also set
Pakistan’s democratic apparatus against its anti-Indian military establishment
and intelligence agency who opposed Sharif’s trip to India. However, prior to
his election, Modi had promised to take a tough stand on Pakistan.
When Pakistani High Commissioner to
India, Abdul Basit, met Kashmiri separatists in August (a policy tolerated by
previous Congress-party governments in India), India called off scheduled
foreign secretary talks a week before they were to take place. Modi drew his
first red line on Pakistan. Bilateral talks were also held with all other SAARC
leaders. Symbolically, Modi’s first foreign visit was to neighbouring Bhutan in
June, and in August he became the first Indian PM to visit Nepal in 17 years,
where he offered a $1 billion line of credit for infra- structure development
and energy projects. In June, Foreign Minister Sushma Swaraj travelled to
Dhaka. Bangladesh is a key neighbour that can help India to better connect with
its geographically isolated north-eastern territories, curb India-focused
Islamic terrorism, and counter China’s growing influence in the Bay of Bengal.
The drawdown of US and NATO troops
from Afghanistan will leave behind a major regional power vacuum which Modi
seeks to fill. By taking a lead as the largest country in SAARC, India is
looking to set the rules for the region, which is home to nuclear-armed arch
rival Pakistan, and is increasingly susceptible to Chinese influence. In recent
years, the Chinese strategic footprint in India’s neighbourhood has deepened,
in particular via investments in commercial ports in Pakistan, Sri Lanka,
Bangladesh, and Burma/Myanmar. These are, however, perceived suspiciously by
Indian hawks as a ‘string of pearls’ aimed at encircling India and containing
its expansion, whilst also monitoring India’s naval activities. While these ports
remain commercial for the moment, China’s deepening of relations with India’s
neighbours through military and economic assistance and high-profile
infrastructure projects is the real concern. For example, some three-quarters
of China’s arms exports are sold to three of India’s South Asian neighbours:
Bangladesh, Burma/Myanmar and Pakistan.
EngagIng East AsIa
The centrepiece of Modi’s East Asia
manoeuvrings is his China-Japan waltz. Modi shares a personal bond with both
Japan and Japanese PM Shinzo Abe. Modi travelled twice to Japan as Chief
Minister of Gujarat – Japan did not follow the US and Europe with travel bans
on Modi following accusations over his role in the 2002 Gujarat massacre. Modi
is one of only four people that Abe follows on twitter (in addition to Indian
Home Minister Rajnath Singh), and during Modi’s five-day visit to Japan in
August-September, he was received in Kyoto with a bear hug from the usually
stiff Japanese PM. During that visit, Japan elevated its relationship with
India to a ‘special global strategic partnership’ and pledged $35 billion in
investments in Indian infrastructure and energy development, be- sides doubling
its FDI over the next five years.
A bullet train or Shinkansen project
worth $10 billion and an agreement on joint production of rare earths were also
announced (India holds around 2.2 per cent of the world’s rare earth reserves).
Although a much-anticipated nuclear energy agreement was not signed, energy
cooperation and military ties were significantly strengthened. Both countries
also agreed to establish a ‘two-plus-two’ security arrangement bringing
together foreign and defence ministers, hold regular maritime exercises, and
that Japan would continue to participate in Indo-US military drills. In Tokyo,
Modi also condemned the ‘vistar vaad’ or expansionist tendencies of ‘some
countries’ who ‘engage in encroachments and enter seas of others’ – a veiled
reference to Chinese territorial expansionism.
Although India has its own border
dispute with China, Modi is not anti-Chinese. He travelled to China four times
before becoming PM to woo investments into Gujarat. There too, like Japan, he
was received with the honours proffered to a head of state. Modi is an admirer
of Chinese development and feels at ease amongst Beijing technocrats. On one of
his visits, he not only carried red business cards printed in Mandarin but
declared that ‘China and its people have a special place in my heart’. Chinese
Foreign Minister Wang Yi travelled to India soon after Modi’s election while
Modi met Chinese President Xi Jinping at the BRICS Summit held in Brazil from
14- 16 June 2014.
Xi Jinping concluded a three-day
visit to India landing in Ahmedabad (Modi’s hometown) on 17 September, Modi’s
64th birthday. The visit was highly symbolic and marks the beginning of greater
Chinese investments in India – China has invested only $400 million in India in
the last decade, compared to the €26.8 billion FDI stock
Beijing held in the EU by the end of 2012 according to the European Commission. Xi is the first Chinese president to visit India in eight years and brought along a delegation that included around 135 Chinese business leaders. Twelve agreements were signed in all.
Beijing held in the EU by the end of 2012 according to the European Commission. Xi is the first Chinese president to visit India in eight years and brought along a delegation that included around 135 Chinese business leaders. Twelve agreements were signed in all.
China pledged to invest $20 billion
in Indian infrastructure and manufacturing sectors, agreed to build high-speed
rail links and construct two industrial parks in the Indian states of Gujarat
and Maharashtra. The visit also saw the twinning of commercial capitals Mumbai
and Shanghai as well as Ahmedabad with Guangzhou. In addition, a five-year
economic and trade development plan was agreed, and greatly welcomed in New
Delhi given India’s large trade deficit with China (some $36.2 billion of a
total trade of $66 billion in 2013).
One hallmark of Modi’s nascent
foreign policy has been his ability to attract both China and Japan to invest
in India without agitating either. However, Modi is also wary of China in some
respects. To counter China’s new ‘Maritime Silk Route’ which would link Europe
to China via the Indian Ocean, Modi will soon launch a new foreign policy
initiative, ‘Project Mausam’. Following the pattern of seasonal monsoons used
by ancient Indian sailors, Mausam will stretch from East Africa to Indonesia,
proffering India robust control over the Indian Ocean by deepening links with
littoral states. For example, India has recently stepped up defence cooperation
with the Maldives and Sri Lanka (following Xi’s visit to these countries before
travelling to India), while four Indian warships are currently stationed on a
two-month term off the coast of East Africa and the Southern Indian Ocean.
ince 2008, India hosts an Indian
Ocean Naval Symposium (IONs) every two years, with the aim of enhancing naval
cooperation among 35 Indian Ocean littoral states, and this Symposium can be
expected to be further developed under Modi.
Furthermore, Modi will not shy from
potential disputes with China. During Xi’s India visit, Indian President Pranab
Mukherjee purchased seven new oil and gas blocks from Vietnam in an area of the
South China Sea disputed by both China and Vietnam. India has also offered
Vietnam a $100 million line of credit to buy patrol boats. Foreign Minister
Swaraj has stated that if India should recognise the One-China policy, China
should also recognise the One-India policy, referring to the territories of
Aksai Chin, Arunachal Pradesh and Trans-Karakoram Tract disputed by India and
China.
Modi’s India has pursued a renewed
engagement in the rest of Asia too. Swaraj has travelled to ASEAN (Association
of South- east Asian Nations) countries to boost India’s profile there, while
in the Middle East (where roughly 7 million Indians live) she oversaw the
return of 46 Indian expats kidnapped by the Islamic State in Iraq. In
September, Modi and Australian Prime Minister Tony Abbot signed a landmark
civil nuclear energy deal to enable Australian uranium sales to India in a
major boost to strategic bilateral ties. In November, Modi visited Australia –
the first visit from an Indian Prime Minister in 28 years. Australia and India
will also hold their first joint naval exercise in 2015.
Furthermore, an India-Russia annual
summit scheduled for December 2014 in India presumes a renewal of Indo-Russian
ties. Russia, which is India’s second-largest arms supplier and a major nuclear
fuel supplier, is also looking to build a $40 billion gas pipe- line to India.
Russia is also eager to divert some of its funds from Europe to infrastructure
in India. In March, India abstained along with rest of the BRICS countries from
voting on a UN Resolution on the territo- rial integrity of Ukraine, and
objected to the suggestion of Australia, Chair of the G20, to disinvite Russia
from the G20 November 2014 Summit.
WhIther the West?
Modi has had a relatively colder
relationship with the West, soured mainly because of his ostracism by the US
and European governments following the Gujarat massacre in 2002. His recent
visit to the US therefore was more a personal victory lap for him than a
revolutionary moment for the Indo-US relationship. At the White House, Modi and
Obama discussed ways the US and India could repair their rocky relations. The
landmark Indo-US nuclear agreement inked during the Bush administration in 2005
has been held back by Obama. Furthermore, Obama also pushed India to speak with
Pakistan to resolve the Kashmir issue during his trip to India in 2010, a
suggestion not appreciated by many Indians – especially at a time when India
was waiting for Pakistan to persecute perpetrators of the Mumbai 2008 attacks.
The ‘defining relationship of the 21st century’ that President Obama spoke of
during the same visit has not yet happened.
The US has also been critical of India’s
stalling of the WTO’s TFA in July. The TFA would drop trade barriers and import
duties across its membership, adding an estimated $1 trillion to global Gross
Domestic Product (GDP). Modi is certainly keen on economic growth, but was
concerned about India’s ability to provide subsidized staple food for its poor
(this US-India impasse was overcome at the APEC Summit in November). Discussing
a host of prickly issues, both leaders agreed to renew their defence
cooperation for 10 years and spoke of trade and investment especially in
India’s defence sector. The US has recently become the top arms exporter to
India.
Europe has so far been ignored in
Modi’s foreign travel itinerary. Many European leaders including the UK deputy
prime minister and the French and German foreign ministers have visited Modi in
India this year with billions of dollars’ worth of deals in tow. Already France
is India’s third-largest arms supplier, Germany is India’s top trading partner
in the EU and the UK and India are negotiating a civil nuclear cooperation
agreement. But Modi’s reciprocity has been lukewarm. No visit was scheduled in
2014 to Europe although a trip to Germany is now on the agenda for early 2015.
Visits to the UK, France or the Nordic countries, may also be likely during
2015 (Sweden and Denmark were the first countries to reach out to Modi in 2008
when their Ambassadors met him in Gujarat, while the UK hosts a huge Indian
diaspora). If anything, Modi can be expected to strike interest-based
partnerships with European countries rather than pursue high-profile ties like
the previous government. In October, for instance, Indian President Pranab
Mukherjee travelled to Finland to sign a key nuclear cooperation pact.
Relations with the EU, however, are
likely to further deteriorate as Modi may prefer to engage individual EU member
states than the EU institutions. EU-India relations have remained dormant for
some time now due to low levels of engagement. Bilateral visits from the EU
remain limited and the annual EU-India Summit has not been held in 2014 (or
2013) despite ten years of the EU-India strategic partnership (signed in 2004)
and the golden jubilee of relations (established in 1964). Modi also did not
attend the biennial Asia-Europe Meeting (ASEM) Summit held in October in Milan.
The EU-India FTA under negotiation since 2007 is nowhere in sight, and the Modi
government is likely to renegotiate parts of the FTA or lower its overall
ambition. In September, Commerce and Industry Minister Nirmala Sitharam stated
that ‘the government wants to enter into such deals on its terms and if
necessary, start all over again’.
EU-India engagement on foreign policy
remains a blind alley. Cooperation on civil nuclear energy at EU level has been
limited due to a lack of consensus among EU governments. On the research side,
however, India and EURATOM have entered an agreement on fusion energy research
in 2009 and an agreement on civilian nuclear energy research is under
negotiation and may be signed next year. In all of this, cooperation on urbanisation
seems a particularly promising avenue for engagement. The EU remains relatively
absent from India’s infrastructure sector, a top priority for Modi, but could
become the entry platform for its 28 member countries to the vast Indian
infrastructure market. The EU already has a pre-existing model for co-
operation on sustainable urbanisation with China that promotes exchanges and
cooperation between a large number of European and Chinese stakeholders.
Launched in September, Modi’s signature project ‘Make in India’ aims to
transform India into a manufacturing hub and could well accommodate European
high-speed railways, world-class infrastructure and technology which all have a
large potential market in India. By tapping into Modi’s ‘Make in India’ project,
an EU- India urbanisation partnership could help re-launch a wilting strategic
partnership.
ConclusIon
India is recalculating its
geostrategic approach. Relations with Japan, China, Russia and Australia are
gaining importance in relation to those with the US and the EU, traditionally
considered priority strategic partners. Asia, beginning from the immediate
neighbourhood out, is likely to be the main geographic focus of Modi’s foreign
policy. Without a restructuring of the international economic architecture to
reflect contemporary realities, India will aggressively pursue multilateralism
through alternative platforms like the BRICS.
The EU needs to factor Modi’s
priorities into reshaping its engagement to India, such as foreign direct
investment and infrastructure, or else it is likely to be overlooked in New
Delhi. As for the US, India will reject any ‘American-led alliances’, be it in
the Middle East against Islamic terrorism or in Asia against China. Modi may
push at the boundaries of India’s long-held non-aligned policy, but the
defining framework of his foreign policy will be corporate-style geo-economics.
Modi believes that India is an emerging global power, and therefore first needs
a solid economic base. Economic remodelling at home will govern India’s foreign
policy leaning, and those with dispensable cash will be prioritised.
About the author:
Gauri Khandekar is head
of the Agora Asia-Europe Programme at FRIDE.
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