Narendra Modi has wisely gone to the strategic Maldives on his first overseas trip after re-election. It speaks for itself that the leader of the world’s largest democracy has begun his new term by visiting the world’s smallest Muslim nation — in population and area. Generous Indian financial assistance, including $1.4 billion in aid, has helped president Ibrahim Solih escape a Chinese debt trap and enabled his Maldivian Democratic Party to sweep the April parliamentary elections.
Modi also shrewdly kept out troublesome Pakistan from his inauguration by inviting leaders from the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec) grouping. While the moribund South Asian Association for Regional Cooperation (Saarc) boxes India in a narrow, artificial framework limited to the Indian subcontinent, the east-oriented Bimstec seeks to realign India along its historical axis. India’s main trading and cultural partners in history were the countries to its east. From the west, India experienced mainly invaders or plunderers.
Indeed, Pakistan greeted Modi’s re-election in North Korean style — by firing the nuclear-capable, Chinese-designed Shaheen II ballistic missile. Its intelligence then harassed and turned away guests invited to the Indian High Commission’s iftar reception in Islamabad. All this is a reminder that Pakistan must be kept in the diplomatic doghouse.
Modi has had little time to savour his landslide win. His second term, paradoxically, has started with troubles caused by India’s close friend — a superpower that regards India as the fulcrum of its Asia strategy. Despite an unmistakably US-friendly Indian foreign policy, US president Donald Trump’s administration has mounted pressure on India on multiple flanks — trade, oil and defence. Through its actions, Washington is presenting the US as anything but a reliable partner and unwittingly encouraging India to hedge its bets.
India is the new target in Trump’s trade wars. It was not a coincidence that on the first day of Modi’s second term, Trump announced the termination of India’s preferential access to the US market. Expelling India from the US Generalized System of Preferences (GSP) was intended to drive home the message that the choice before Modi is to yield to US demands or face increasing costs. America’s array of demands ranges from lifting price controls on heart stents, knee implants and other medical devices to relaxing e-commerce rules, even though Amazon and Walmart have been allowed to establish a virtual duopoly on India’s e-commerce. Would the US permit two foreign companies to control its e-commerce?
The latest US action exacerbates Modi’s challenges just when India’s economy is growing at the slowest rate in five years and unemployment is at a 45-year high. Washington’s heavy-handed tactics have also driven up India’s oil import bill by stopping it from buying at concessional rates from next-door Iran or Venezuela. The US is attempting to undermine India’s relationship with Tehran, which is more than just about oil, as underscored by the Pakistan-bypassing transportation corridor to Afghanistan that India is building via Iran.
The US is similarly trying to stop India from buying major Russian weapons, not just the S-400 system. Moscow’s transfer of offensive weapons that the US will not export, such as a nuclear-powered submarine and an aircraft carrier, explains why Russia remains important for India’s defence, even though Indo-Russian trade has shrunk. Simply put, the US — not content with emerging as the largest seller of arms to India, including bagging several multibillion dollar contracts — is seeking to lock India as its exclusive arms client by torpedoing the Indian diversification strategy, which aims to import the most potent available systems.
The Trump administration’s arbitrariness and assertiveness have imposed rising costs on India, as highlighted by the GSP-related termination of India’s designation since 1975 as a developing nation. US businesses, rather than paying new tariffs on the $5.7 billion worth of Indian products they were importing duty free, would likely seek to source those goods from GSP-beneficiary countries, thus dimming India’s export outlook.
Trump may not stop with GSP withdrawal. Yet India responded meekly to his action by pledging to “continue to build on our strong ties with the US”. Likewise, there has been no Indian retaliation to Trump’s March 2018 steel and aluminium tariffs, with India repeatedly postponing new duties. In diplomacy, counteraction is often necessary to build bargaining leverage and to deter further bullying.
Multi-alignment has been the leitmotif of Modi’s foreign policy. As opposed to the passive approach of non-alignment — a Cold War-era concept — multi-alignment seeks to proactively build close partnerships with different powers, while shoring up India’s strategic autonomy.
In this larger strategy, a robust relationship with the US is central for India. But it cannot be at the expense of India’s own interests. US actions, including sanctions against Russia and Iran, have accentuated India’s challenge in balancing its relationships. Indeed, through its actions, Washington is calculatedly seeking to compel India to become more closely aligned with it. Is it overplaying its hand? Or will it succeed in Modi’s second term? Only time will tell.
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