Tuesday, Sep 30, 2014

Rural votes, old traumas drive India’s WTO brinkmanship

wto1-480 Over 2/3rd of India's population live in rural areas and Narendra Modi's party, traditionally stronger in cities, needs to secure more farmers' votes to consolidate its power. (Reuters)
Reuters | New Delhi | Posted: July 30, 2014 9:58 am

With grain silos spilling over, exports on the rise and an avowed market champion for prime minister, India’s threat to trash a global trade deal in the name of food security appears puzzling.

But government officials say Prime Minister Narendra Modi is prepared to brazen out global outrage to seize a historic chance to build a rural power base with his defence of farm subsidies and to banish memories of humiliating national food shortages.

Modi triumphed in a general election only two months ago, but polls are never far away in the world’s largest democracy and his Bharatiya Janata Party has its eyes already on new campaigns in the breadbowl states of Haryana and Maharashtra.

More than two-thirds of India’s 1.26 billion people live in rural areas and Modi’s party, traditionally stronger in cities, needs to secure more farmers’ votes to consolidate its power.

Party officials are confident New Delhi’s tough line at World Trade Organization talks in Geneva will accomplish that.

“A strong stance in Geneva sends a message to the farmers and poor people that unlike the (last government), Modi can take on the global powers to safeguard the interests of rural India,” said a party lawmaker, who declined to be named.

Modi’s government demanded a halt to a globally agreed timetable on new customs rules and said a permanent agreement on food stockpiling and subsidies must be in place at the same time, well ahead of a 2017 target agreed last December in Bali.

Critics say the brinkmanship threatens a deal that could add a trillion dollars to global wealth and create 21 million jobs.

With a key deadline on Thursday looking increasingly tricky, Modi risks alienating allies including the United States, whose top diplomat John Kerry is due in New Delhi on Wednesday for talks that will be held in the shadow of the dispute.

“We understand that a new government in office for fewer than 100 days is eager to evaluate any previous agreement and assure their electorate they are doing the right thing,” Diane Farrell, acting president of the U.S.-India Business Council told Reuters.

“At the same time, we have a high degree of hope that they will work with the WTO to find the appropriate accommodations  in order to sign on an agreement to the treaty,” she said.

ASSERTIVE INDIA

If India goes through with its threatened veto, critics say it would cripple WTO talks, hasten trade negotiations elsewhere – something that India opposes – and swiftly trigger trade disputes challenging India’s stockpiling policy.

But the gambit is paying off at home, where the opposition, industry chambers and many economists have welcomed India asserting itself more on the international stage.

“Modi, like any good strong leader, is committed to ‘India first’, that was his campaign,” said Samir Saran of the Observer Research Foundation think-tank.

India rejects international criticism continued…

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