Trade diplomacy is a game of chess. The real world of trade negotiations rarely conforms to David Ricardo’s theory of comparative advantage where the French sell their wine to England and the British sell their cloth to France. Trade negotiations are also about asserting national power and security. The Nobel Prize-winning economist Thomas Schelling famously told the United States Congress a half-century ago, “trade policy is national security policy”.
In matters pertaining to national security, a government should not only be doing the right thing, but should also be seen to be doing the right thing. Mere assertion and ham-handed messaging cannot substitute for clear statements of intent and purpose. Since Parliament is in session, Prime Minister Narendra Modi ought to have made a statement in the Lok Sabha rather than allow a Tweedledum-Tweedledee buck-passing performance by the ministers of commerce and external affairs. On matters of international relations, economic or political, the buck stops with the PM.
Returning from his visit to Washington, DC in July 2005 Prime Minister Manmohan Singh chose to address Parliament, offering a detailed account of his discussions with President George Bush. On the matter of energy security, the core of the US-India civil nuclear energy agreement, Prime Minister Singh told Parliament: “That India’s quest for energy security is an essential component of our vision for our development was a significant theme of my talks. I elaborated the imperative need for India to have unhindered access to all sources of energy, including nuclear energy, if we are to maintain and accelerate our rate of economic growth. I am pleased to state that the US understood our position in regard to our securing adequate and affordable energy supplies, from all sources.”
For three years, Parliament was allowed to discuss in minute detail all aspects of the nuclear deal. Despite that, opposition political parties, including the Bharatiya Janata Party, voted against the deal. Many even in the Congress party were unhappy with the deal. It was Singh’s transparency that earned him the trust of the Indian electorate and secured him a second term in office in 2009.
It is most unfortunate that the Modi government has fudged the issue on the final agreement with the US, with Trump making claims about a Russian oil conditionality that India has neither rejected nor accepted. It was left to the foreign secretary, Vikram Misri, to make a typically diplomatic statement that can be interpreted in various ways. Some have claimed that this was Indian tact and cleverness in the face of Trump’s cowboy bravado. Unfortunately, it has come across as Indian duplicity and sophistry masquerading as Chanakyan cleverness.
Rather than celebrate the trade deal as a great achievement, the Modi government ought to have stated honestly that this was the best it could do under the circumstances to safeguard livelihoods in export-oriented sectors. India walked out of the Regional Comprehensive Economic Partnership (RCEP) using the language of national interest when, in fact, it was defending livelihoods in sectors that were unwilling to expose themselves to global competition.
The same motivation shaped the trade deal with Trump. It is a different matter that the Modi government did not think about the livelihood of Punjab’s farmers, small and medium enterprises and traders when it closed the gates on trade with Pakistan. But then, the merchants of Surat and the shrimp farmers of the Coromandel Coast seem to have more clout.
The India-US trade deal may be the best under the circumstances, but it is not a favour done to India. It is a price India has agreed to pay to keep the US on its side. That is how the world will view the deal. This is not the first time that India has had to bend under pressure from Big Powers. But this is the first time such bending is being portrayed as a great achievement.
What Trump has delivered to India is a reality check. After humiliating Indian political leadership with jokes and jibes and what seemed like veiled threats — “I don’t want to end his (Modi’s) political career” —Trump has deliberately interpreted the trade deal as Indian capitulation by explicitly linking it to ending Indian purchase of Russian oil.
That the government has been able to orchestrate support from courtiers in the think-tank and diplomatic community is understandable. Mea culpa. I too have had to conduct that orchestration in my time in government. However, never during the negotiation of the civil nuclear deal did American leadership mock Indian leadership. Even when India temporarily turned off the taps on Iranian oil imports to please the American Jewish lobby, it was done voluntarily and was a temporary gesture aimed at securing a permanent benefit – the recognition of India as a nuclear weapons state.
Today there is no clarity on the longevity of the trade deal. Other countries, too, have been held on a short leash with uncertainty about the near future. Will Indian support to the US on various fronts and various causes be tested on a daily basis? If there is a war in the Gulf following an attack on Iran and if that disrupts oil supply to India from the Gulf, would India still be punished for accessing Russian oil?
There are still far too many questions about the deal and the government has understandably called it a “Framework for an Interim Agreement”. It is best that the Prime Minister comes clean and offers his understanding of where India stands on its external economic policies vis-à-vis the US and BRICS countries rather than fudge issues and pretend to be Chanakyan.
Baru is a writer and former editor, The Financial Express
The deal may be the best under the circumstances, but it is not a favour to India. 
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