Friday, October 31, 2014

Indian Foreign Policy Under Modi


    Prime Minister Narendra Modi has interacted with the leaders of four of the five countries/regions on the list of foreign policy priorities mentioned in the President’s address to the opening session of Parliament (SAARC, China, Japan, Russia, USA). He has also met leaders from several other countries. It is therefore an appropriate time to take stock.  In this note we focus on two questions: One, what are the underlying changes in the directions of India’s Foreign policy.  In other words, is PM Modi’s Foreign Policy likely to differ from that of Soni-Man Mohan Government‘s?  Two, what were the objectives of PM Modi’s foreign policy actions in first four months, to what extent have they been achieved and what remains to be done?  

Directional Change

     Every country’s foreign policy has, after a change of government, elements of continuity and change.  India under a Modi led BJP-NDA government is no different. What are these changes in direction and emphasis? These changes have not been explicitly articulated by the new government, but are implicit in their pragmatic actions and “view of the world.” There are five areas in which I see an emerging change in foreign policy: The centrality of economic & technological development, the integrations of domestic and foreign policy with respect to this objective, the emphasis on “national power” including “military power” and “Soft power” and a reduction in self-imposed constraints on actions that third counties may construe as inimical to their interests.

Economic Objectives

    The first change in foreign policy is a much greater attention to economic objectives. This is not merely a reiteration of the economic development objective that has been India’s mantra since independence, but a  recognition of the role of “technology” (broadly defined) in all aspects of economic development & economic power. This involves an implicit benchmarking of the technological capabilities of the Indian economy with respect to the global best practices and/or global technology frontier, a perception of large gaps across much of the economy and the goal of bridging these gaps through domestic and foreign economic policy.  How this is different from earlier regimes is reflected in two policy initiatives: The “Swach Bharat” campaign which doesn’t involve “high technology” but does reflect a huge gap in sanitation systems and practices between India and the developed countries and will require innovative technological, managerial, social and public solutions. The second is the “Digital India” campaign, which recognizes the gap between India and digitization frontier, but treats it as an opportunity to solve problems of governance and corruption as well as its innovative use for health education & training needs of a population four times the size of the largest developed country (leap frogging). It is probably the first time that an Indian PM elucidated India’s economic & technological objective abroad(“India First”),  identified  the specific role that each country could play in achieving these objective and made that the center piece of the discussion with that country!

Foreign-Domestic Policy Integration

    The second change is a much greater alignment of foreign policy with domestic objectives.  Though the talk about integrating national economic policies and foreign policies started in the 1990s, this has only been episodically reflected in domestic or foreign policy.  The Indian Prime Minister mentioned both the programs (“Swach Bharat”, Digital India/smart cities) in his public statements in the USA & Japan. In his meetings with leaders of advanced countries, he has been very explicit about Indian objectives with respect to economic development and technological catch up and in exploring how these countries can help India close these gaps. The message to all inside and outside the government is quite clear: Both domestic and international policy can/must/will be used to close the economic and technological gap with more advanced countries across the entire spectrum from basic sanitation to defense vehicles, aircraft & ships to the frontiers of cyber space & outer space.
  “India First” means that what India needs/wants from each economic & technology power will be expressed with greater clarity & specificity and these counties have to respond in the way think appropriate. India’s decisions will then be based on comparative benefit-cost ratio of dealing with different countries on a defined set of issues, not on philosophical and/or ideological consideration of (non-) alignment.

National Power

      The third change is a greater emphasis on overall national power, with a more realistic assessment of the appropriate role of military power. Economic power is the foundation of national power, but above it must be a solid block of military-strategic power, topped by a smaller cone of “soft power”.[i]  The Modi govt. has a clearer appreciation that economic power/economic relations cannot be a substitute for military power/international security relationships, in deterring the aggressive designs of ideologically driven foes. On the contrary economic concessions may be viewed by militaristic ideologues as a sign of weakness to be exploited and economic assistance as an expression of superiority to be resented. Economic relations can complement international security relationships by influencing the behavior of non-ideological, economically rational players in the global system,[ii] but only military strength can deter militaristic ideologues and ensure peace.

Unconventional Threats

      Operationally this has several implications. One is the increased focus on unconventional threats (cross-border terrorism, use of non-state actors, foreign ideologues-mercenaries). This requires a buildup of World class equipment and skills over a much wider spectrum of warfare & covert capabilities  and a willingness to boldly attack the aggressor in his safe havens. This is (in my judgment) already in the process of change, both in terms of capabilities in counter-terrorism and defense against non-state actors, but even more importantly in doctrines incorporating a willingness to take calculated risks in using asymmetric capabilities.  
     Deterrence is however only effective, if the adversary using these tactics is convinced that the new government will respond to asymmetric warfare with appropriate actions across a much broader menu of conventional & unconventional options.  As the diplomatic signals sent to our Western neighbor (e.g. through track 2 dialogues and cancellation of Secretary level talks) did not seem to be heard & understood by its “deep state”, it became necessary to signal the seriousness of the change in overall strategy, through a heightened (conventional) response to border firing/cease fire violations.[iii] Similarly unconventional psychological warfare & “creeping annexation” tactics on the northern border are being countered by bold new plans (e.g. the ‘McMohan highway’ along the LAC in Arunachal) that have both a conventional defensive and a signaling component.

Defense Production Capability

The second implication is a much greater focus on national capability to produce a broad range of defense equipment in India (though actual production of any specific item will be influenced by financial benefit-cost). “Self-sufficiency” has been a slogan from the days of “Nehruvian Socialism,” as it played second fiddle to the ideological goal of preserving a Public sector monopoly over the means of (defense) production and discouraging foreign participation in Indian JVs.  This defense public sector veto over use of private domestic & foreign capabilities for defense production within India is being decisively broken by the new government, to give primacy to defense self-sufficiency. The ability and willingness to transfer technology and help build skills & research capabilities at lower cost, will consequently play a much more important role in relations with Japan, Russia, USA and EU countries.  The reinvigorated approach to national security is likely to manifest itself in a reversal (over the next five years) of the trend decline in ratio of defense expenditures to GDP (since the BOP crises of 1991).

Soft Power

   The fourth change is a greater emphasis on global socio-politics and “soft power”, the third dimension of national power.  This includes the expansion of common ground based on religious and cultural heritage & history of India (e.g. Hinduism viz. Nepal, Buddhism viz. E & SE Asia, Yoga viz. West, modern Islam viz Indonesia, democracy viz Australia, Canada), as well as the Indian diaspora across the World. PM Modi’s speech to the Indian diaspora in New York, USA, was a very successful attempt to inspire the diaspora to contribute to the economic & technological development of India, either directly or indirectly through political participation in their country of citizenship.

Confident Pragmatism

   The fifth change is a freeing up of self-imposed, historical and mental, constraints on developing the full potential of economic or security relations with any country.  Thus India’s economic relationships with potential adversaries can be pursued relatively independently from the security relationship, without one constraining the other or being completely parallel.  This is most clearly apparent from the meetings PM Modi held with President Xi Jinping of China, the economic agreements reached and the formation of the BRICs Bank and AIB (Asian Infrastructure Bank). Further neither the economic nor the security relationship with one country (friend or foe) will constrain the economic or security relationship with any other country (e.g. economic & security co-operation with Japan).  Both will be evaluated in terms of India’s primary objectives of closing the economic and technological gap and building national power, in a pragmatic forward looking manner jettisoning ideological blinkers and minimizing historical baggage.

India Back On World Stage

     Short Term/Immediate goals of PM Modi’s foreign policy initiatives from the day he took the oath of office seemed to be three (partly) overlapping ones:  One goal was to establish Mr Modi’s credentials as a National and International leader.  During the general election campaign most political analysts had predicted that Shri Modi, a State leader with no Central govt experience, wouldn’t be able to rise above his regional origins and limitations.  Mr. Modi wanted to lay this specter to rest quickly & decisively so he could focus on achieving his development objectives.  The second goal was to put India back on the global stage, from which it had fallen off during the last 3-4 years, according to all objective analysts and observers. In this he was backed/supported by advise from virtually all international relations experts inside & outside the government.  In this process he also wanted to convey to the World, the change in foreign-domestic policy emphasis of his government along the lines elucidated above.  The dramatic outreach to SAARC countries, the meetings with leaders of Japan, China and USA, and a flurry of meetings with other countries (eg Australia, UK, France), complemented by a number of foreign trips by the President and the EAM, have achieved both these goals.

Confidence and Trust (B2G)

    The third goal was to re-establish international investor confidence in Indian economy and polity.  The results of the general election, in which the BJP and its allies won a decisive majority in the Lok Sabha, had already opened the flood gates of capital inflows into India, before Shri Modi was sworn in as Prime Minister.  However, this expression of confidence by foreign finance capital, had not been reflected in a similar increase in gross fixed capital formation (GFCF).  It was therefore felt necessary to communicate directly with the largest foreign direct investors (FDI). The PMs goal was to gain their trust & understanding of his seriousness in reversing the effects of obstructive policies & procedures that resulted in the collapse in growth of GFCF and removing bottlenecks in investment in infrastructure, manufacturing etc.  The US private sector is the most important source of technology and foreign investment across a broad spectrum of industries. The PM was largely successful in establishing trust. However, given that foreign direct investment usually follows domestic investment and both were waiting to see action on certain known policy & regulatory problems, full restoration awaits action on the domestic policy & regulatory front. Now that two important State elections are over and the government has re-started the reform process, we will soon be able to judge whether enough has been done to revive GFCF from the second half of 2014-15. I expect the legacy problems for foreign private sector operations (B2G) and general bottlenecks facing all direct investment (domestic & foreign) in India to be sorted out within a year, restoring a flourishing Business to Business (B2B) relationship.

Strategic Partnership

     The US is still the sole super power and likely to remain so for at least a decade and stands head and shoulders above others in the depth and breadth of strategic and defense technology.  Thus Indo-US relations have a special salience and it was particularly important to restore them to the level before the global financial crisis and the series of policy missteps since then. It was therefore important for PM Modi to convey the changes in the new Govt.’s approach to foreign policy and for US President to understand these at first hand. 

Geo-economic Constraints

        Despite the considerable overlap in the long term strategic interests of US and India in Asia, it is unclear how quickly a genuine strategic partnership will develop given the inherent differences in economic perspective between a rich global power and a poor regional one.  The USA, like many rich countries is a net exporter of technology with high per capita but low incremental pollution while India is a net technology importer with low per capita but high incremental pollution.  These differences need to be recognized and dealt with objectively & fairly.[iv] There is also a conflict of interest between the profitable capital-intensive, export competitive US agriculture sector and India’s labor-intensive, low productivity, subsistence agriculture with 66% of population dependent on it. These gaps will narrow over the next decade or so, along with the gap in per capita income.  In the meanwhile, a pragmatic approach is needed to resolve these differences and/or minimize the negative fallout of unresolved differences. There are indications in the joint statement, of the beginning of such an approach. 

Strategic Opportunities

     There are also some differences arising from the historical interests, commitments and actions of a long term “Super Power,” and an India two decades from becoming a “Great Power,” whose regional security suffers collateral damage from Super powered actions.[v]  However, the reasonably high convergence of interests on Terrorism and on maritime security in the Indian Ocean and Indo-Pacific, can form the core of a strategic understanding, while pragmatically allowing for greater differentiation in the respective approaches to individual countries in West Asia.[vi]  The outcome of PM Modi’s discussions with President Obama appears to be a deeper understanding on and heightened co-operation in, counter-terrorism (safe havens, “financial and tactical support for networks such as Al Qaeda, Lashkar-e Taiba, Jaish-e-Mohammad, the D-Company, and  Haqqanis”).  There are also hints of enhanced cooperation in Defense procurement, production and technology development and on Maritime Security in the Indian Ocean and Indo-Pacific Region. The former includes (a) An extension of the Framework for US-India Defense Relationship(2005) and a Reinvigoration & expansion of Political-Military Dialogue. (b)The setting up of Task Force under Defense Trade & Technology Initiative, whose first meeting was in Sept 2014, to decide on specific projects & technologies. Maritime security is to be enhanced through likely technology transfers to the Indian Navy (e.g. the magnetic catapult for Indian aircraft carrier) and an expansion of Malabar exercises. Thus the outlook for further development of Indo-US strategic partnership is cautiously optimistic at this point.


    The PM Modi led Indian government is changing the emphasis of India’s Foreign and National security policies. Elements of this change in approach are already visible. These involve a clearer definition of Indian interests (“India First”) in terms of economic and technological development, a greater focus on these goals in foreign policy and a consequent integration of domestic and foreign policies. Other changes involve a greater focus on development of national power, in particular an enhancement of the somewhat neglected element of military power, its broader definition to include asymmetric warfare of which State financed-directed non-state actors are a dangerous part, and a jettisoning of self-imposed constraints of ideology and misplaced fear of offending other countries who display no such squeamishness in their behavior.[vii]   Overall a much more confident, credible and effective national security-foreign policy is predicted to emerge over the next five years.
A shorter version of this article appeared  on the Op Ed page of The Hindu, on 1st November, 2014 under the banner, “Recalibrating India’s Foreign Policy “, .

[ii] The economic collapse of the USSR and changes in China’s behavior after the global financial crisis, are instructive in this regard. China shifted from export-investment led growth to aggressive geo-economic (IPR, espionage) & geopolitical behavior (Arunachal. E & S China Seas).
[iii] Cross-border terrorism in J&K (as measured by no of deaths) increased from 1993 to 2001 and declined after 9/11 because of the deal reached between US-Pakistan. In response Pakistan changed its Jehadi tactics by using Nepal as a conduit and Bangladesh as a base for terrorism. It also gradually started recruiting and training Indian Muslims as terrorists(IM).
[iv] A (national) patent is a monopoly right conferred on the inventor in the interests of the nation as a whole. Thus, for instance, the optimal length of the patent is likely to be shorter in a poor country than in a rich country. A bilateral/multilateral agreement has to be a compromise between the rich country/countries and the poor country/countries. There is no inherently right length!
[vi] US analysts should remember that in the US scheme of geographical divisions, India is included in the “Pacific command(USPACOM)” and not in the “Central Command (USCENTCOM)” covering West and Central Asia.
[vii]  One must, however warn against the unfortunate tendency of some prominent Indians toward bombast & hyperbole. Those who accuse PM Nehru of publicly making tall claims and assertive statements viz China, after denuding & hollowing out the armed forces through neglect & resource starvation, should be very careful about chest thumping based on hypothetical (future) capabilities that will take decades to build.

No comments: