How can the U.S. respond to the pro-democracy demonstrations in Hong Kong without torching U.S. commercial interests in China? One path: reach out to India – a not-so-subtle reminder that Beijing may face restraints from both inside and outside forces. And, that India’s potential growth under its new government could mean that China is not the only game in town.
The visit by newly-elected Prime Minister Narendra Modi offers an unprecedented opportunity to beef up our alliance with a natural regional counterweight to Beijing. Mr. Modi’s landslide election last May allows him considerable latitude in forming new partnerships. Wasting no time, he has already met with most Asian leaders, including China’s Premier Xi Jinping and Japan’s Abe, and also held talks with Israel’s Netanyahu at the recent UN gathering. Clearly, the door is open to the U.S. as well. Will the Obama White House seize the moment?
Just as Modi was leaving India, the Senate Finance and House Ways and Means Committees ordered up a second investigation of Delhi’s trade policies by the U.S. International Trade Commission. Because of an earlier inquiry, a similar investigation is already underway. In other words, this one specifically targets the new Modi government. In addition, the U.S. Trade Representative has listed India on its Priority Watch List, along with China and eight other countries, citing slack enforcement of intellectual property rights.
Such moves prompted a recent Times of India editorial to note, “The economic side of [Obama’s] administration regards India as enemy No. 1.” This will probably not make the new Prime Minister, who for several years was denied entry to the U.S. because of charges that he failed to quell anti-Muslim violence in his home state, feel especially welcome.
The stakes are huge. As Modi pointed out to the tens of thousands gathered to hear him at Madison Square Garden, “India is not a country of snake charmers anymore.” Indeed, it is gunning to be the world’s third-largest economy by 2025. Analysts have described India as China fifteen years ago. The difference? It has a young and growing population (every month one million people come of age) that is online and optimistic, imbued with the same drive that has made Indians the highest-earning immigrant group in the U.S. It is also a democracy, which last spring gave Modi a stunning victory for a candidate promising change and a pro-business, pro-growth agenda.
Mr. Obama may struggle to connect. Mr. Modi is the Chris Christie of international leaders – described in the local press as an “abrasive Hindu nationalist” and “Thatcherite reformer” who is eager to streamline India’s suffocating red tape, pump up India’s international standing and restore its near-double-digit growth rate. It is clear from his initial prescriptions for his country that business comes first. Not, in short, a natural ally for Mr. Obama. What they do share is concern about climate change. However, Mr. Modi’s proposal of combatting carbon emissions through adopting a global Yoga Day may fall short of Mr. Obama’s aspirations.
In a 2012 interview with Fareed Zacharia, President Obama listed then-Prime Minister Manmohan Singh as one of his five closest friends among world leaders. That was before Mr. Singh’s Congress party was defeated in the largest and most one-sided vote in India’s history, delivering Modi’s BJP party the first Parliamentary majority since 1984. In this instance, it was Mr. Obama who was on the wrong side of (at least India’s) history.
Early in his presidency, Mr. Obama touted our relationship with India, describing it as the “defining partnership” of the 21st century. He made an official visit in 2010 – a three-day extravaganza that included the entire Obama family, 40 airplanes and 6 armored cars. During that trip, Obama made a wildly popular promise to support India’s bid for a permanent seat at the UN Security Council; like so many of the president’s promises, this one failed to materialize.
Still, the new government in Delhi invites a reset (excuse the expression) and it is an excellent time for the U.S. to insinuate itself between India and China. China is convulsed with protests, and struggling to grow. Moreover, India’s relations with China are shaky. Modi just recently hosted China’s Premier Xi Jinping. The sessions were widely hyped by the Chinese media, which forecast that Beijing would commit to invest $100 billion in India; ultimately, the Chinese leader pledged investments of only $20 billion over five years.
Moreover, the visit was overshadowed by ongoing incursions into disputed Indian territory by Chinese soldiers, reawakening old hostilities. At the conclusion of the sessions, Modi warned Xi that the border skirmish could damage their ties, saying “Even such small incidents can impact the biggest of relationships just as a little toothache can paralyze the entire body.”
U.S.-India trade jumped from $19 billion in 2000 to $95 billion in 2013. Still, India ranks only tenth among U.S. partners -- there is room to grow. There are, to be sure, serious obstacles, other than India’s legendary potholes and boundless red tape. Historically, India has restricted foreign ownership of local businesses, has adopted onerous rules requiring local sourcing, and has failed to honor intellectual property rights. These issues are on the table for Modi and Obama. But, with a guaranteed five year term ahead of him, and with a majority in parliament, Mr. Modi has opportunities to modernize and reboot his economy that Mr. Obama will envy.
The Obama administration has come up short on diplomatic wins; even Hillary Clinton, when pressed, could not identify a single breakthrough during her term as Secretary of State. The stars seem aligned to allow a robust alignment with India; let us hope the White House sees it through.
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