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Lens on Modi

Washington wants to know if he can fix structural flaws in India’s economy.

Written by Frederic Grare |
September 29, 2014 12:52:57 am
Modi arrives in Washington preceded by his reputation as chief minister of Gujarat. Modi arrives in Washington preceded by his reputation as chief minister of Gujarat.

Narendra Modi’s visit to the American capital has created high expectations. Despite the hope generated by the successful conclusion of the US-India civilian nuclear deal in 2008, India and the United States slowly drifted apart in the years that followed. The visit of the new Indian prime minister is, therefore, expected to mark the beginning of a revival of the US-India relationship.

Policy wishlists and suggestions of ways to reset relations between the two countries are, accordingly, the most widespread commodity around Washington think tanks these days.

Modi arrives in Washington preceded by his reputation as chief minister of Gujarat. During his tenure, he proved to be a remarkable manager, bringing economic success to the state and earning a reputation as a strong, decisive leader — a “doer”, with his past accomplishments inspiring confidence for the future.

The remarkable trust invested in the Indian leader is best shown in the rise his election inspired in the stock market, which has leapt since he assumed office. Similarly, India’s annual economic growth is expected to rebound to almost 6 per cent, after it had sagged to 4.5 per cent in 2012-13 following two years of high growth.

Such positivity in the investment and economic climate is largely attributable to increasing investor and economic confidence, not to any fundamental change in India’s economy. Modi’s hyperactive diplomacy has been described as muscular and imperious. He is indeed seen as the man of the moment, capable of fixing the many flaws and weaknesses of the Indian economic and political system and leading his country to new heights.

On the surface, the contrast with his predecessor could not be sharper. The cerebral, soft spoken Manmohan Singh — or the “accidental prime minister”, as commentator Sanjaya Baru recently called him — was politically dependent on the Congress party leadership, making him (unfairly) look weak and indecisive. In contrast, the man US President Barack Obama meets  is an Indian prime minister with the biggest electoral mandate in decades, having led his party to the first outright majority in 30 years.

The personal differences do not stop there. Singh was intimately convinced of the necessity of the American partnership, while Modi’s relationship with Washington is distant and instrumental. Ironically, however, the US-India relationship started drifting under Singh’s leadership, as both sides failed to sustain the momentum of the civilian nuclear deal, arguably the most important step in their effort to reconnect after decades of estrangement. Today, hopes to revive the relationship rest on a man who, until recently, Washington considered a pariah.

Despite differences of style and personality, Modi is closer to his predecessor than one might expect. While both men are firm believers in economic liberalism, the first significant foreign policy decision of the Modi administration was to refuse to sign the WTO’s Trade Facilitation Agreement for fear of having to stop India’s food procurement subsidies, a programme begun by Modi’s predecessor. Ironically, Manmohan Singh had negotiated the WTO agreement for India and would have signed it.

Further, despite all the hype in the Indian and international press, Modi’s foreign policy is largely a continuation of Manmohan Singh’s. The former’s much-trumpeted visit to Japan, for example, brought no qualitative change in the relationship. And if the government’s language towards China has moved from an assertive caution to a (very) cautious assertiveness, Beijing has quickly reminded the new prime minister of the true balance of power in Asia.

Chinese President Xi Jinping’s visit to India was marked by tensions over incursions, with Chinese forces retreating only after Xi had left India.
There is nothing intrinsically wrong or abnormal about the consistency between the Manmohan Singh and Modi administrations. It simply means that India has, so far, changed much less internally compared to the dramatic shifts in international perceptions of the country and its leaders. This is not unimportant — international politics, much like any other activity, is affected by perception.

Like Manmohan Singh before him, Modi has adroitly used the rivalry between China and its neighbours, particularly Japan, to get the most out of each of them. He will most likely try the same tactic with the US. His American visit, however, takes place in a different context, and he may find his strategy difficult to pursue.

Successive US administrations have gone a long way to accommodate India’s needs, but American politicians currently feel, correctly or incorrectly, that the US has been poorly rewarded for its efforts. In the hope of developing a real strategic partnership with India, the US reversed decades of a non-proliferation policy with the civil nuclear deal, only to see the relationship falter in subsequent years. True, self-interest also influenced the shifts in policy, as a strong India, able to hold its own on China’s southern border and capable of becoming a regional security provider, was considered to be in the US’s interest.

However, the business interests that supported the rapprochement with India, in the hopes of gaining access to domestic markets, have grown frustrated. Strategic considerations in the partnership have not disappeared but have been relegated to second rank priorities.

In this context, the US is banking on Modi to recreate the momentum that once existed in the relationship. The magnetic personality of the new prime minister seems to offer a promise. Modi undoubtedly generates curiosity, sometimes bordering on fascination, thanks to his reputation of efficiency but also to his controversial past. This makes for an interesting visit.

The visit will be a success if the two countries manage to re-establish the working relationship that existed in the past but has since disappeared. The new prime minister undeniably possesses the assets to achieve that much. But the future of US-India relations will ultimately depend on India’s capacity to reform itself, and therefore on the prime minister’s ability to deliver on his campaign promises to fix the structural weaknesses of his country’s economy. This, and this only, will be seen in Washington as the ultimate test of character.

The writer is senior associate director of the South Asia Programme at the Carnegie Endowment for International Peace.

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