Donald Trump is not helping Prime Minister Narendra Modi’s effort to call time on crony capitalism. The US president-elect met with Indian business developers of Trump Towers Pune in New York last week. Discussions followed with members of the Trump family about possible deals in a market where the Trump Organization has projects worth $1.5 billion, local newspapers reported.
If Trump is using the presidency to further his business interests, that’s an unwelcome endorsement of a corrupt past India is trying to leave behind; it also undoes decades of work by US officials trying to raise the global governance bar. Modi has been trying to stamp out corrosive self-dealing practices in India since coming to power in 2014. Cozy ties between politicians and tycoons were at the heart of scandals that turned voters against the previous administration led by the Nationalist Congress Party. In fact, the Congress party head Sharad Pawar has close ties to the Chordia family, members of which met with Trump.
Against tall odds, Modi has made progress. Tycoons find it harder to win special dispensation from New Delhi, and transparent auctions have replaced the discretionary approach to awarding licences for telecoms and coal. Modi is also turning the screws on indebted state lenders, forcing them to pressure powerful business groups to sell off assets to pay down overdue loans. Two weeks ago, Modi took the extraordinary step of outlawing 86 percent of banknotes in circulation to clean up illicit money flows.
India is hardly alone in being caught off guard by Trump. America’s president in-waiting is blurring lines around the world. His daughter Ivanka and her husband Jared Kushner sat in on a recent meeting with Shinzo Abe, the Japanese prime minister. Foreign diplomats were gathered at Trump International Hotel in Washington DC last week to hear a sales pitch, the Washington Post reported on November 18.
Vice President-elect Mike Pence says Trump will work to ensure “proper separation” between business and politics. That is necessary given the Trump Organization has interests in many other countries struggling with transparency issues, including Panama, Turkey, Uruguay, and the Philippines.
For now, everything is muddy. The only clear thing that is emerging market countries will be ill-advised to continue to look to the US leadership to model good governance.