Cover story: Modi in America


PR Ramesh is Managing Editor of Open
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Prime Minister Narendra Modi reaches America at a time when the relationship between Washington and Delhi is at a low ebb. Beyond the spectacle starring a man who loves performance lies a harder challenge: Can the enchanter redeem an alliance gone astray?
Narendra Modi wants to be no less than a rock star in the United States—and that too, a rock star of the likes of Elvis Presley, the King, and Michael Jackson, all of whom had performed at Madison Square Garden. Modi, used to larger crowds back home that easily outnumber those at any pop concert, would find the venue small enough to address his admirers in the US. But then that was the biggest spot available over this coming weekend which will see the Indian Prime Minister attend 50 meetings in the 100 hours he spends in the US. He is certainly a rock star politician, on a foreign stage, as his visit to Japan and other countries indicate. And for the first time in several decades, the visit by an Indian Prime Minister is the talk of the town in America, too. After all, Modi, with high popularity ratings back home and not saddled with a ghettoised Third Worldism, has taken to defining his country’s foreign policy in clear terms. Now, on his first visit to the country that had for long denied him a visa over protests staged by far-right Christian groups, Modi expects to reboot US-India relations that experts such as Ashley J Tellis, a senior associate at the Carnegie Endowment for International Peace, have described as ‘in a rut’.

Modi, who will address the United Nations General Assembly in New York on Saturday before speaking before a huge gathering at Madison Square Garden, is expected to attend a private White House dinner on Monday but may not eat anything since he is observing a daily fast for the nine-day period of Navratri.

Since Modi’s election in May, the US has taken many steps to redress perceived slights of the past and to demonstrate the importance of India to the US, notes Washington DC-based lawyer and India expert Robert Metzger. The recent visits to India by US Secretary of State John Kerry, Defense Secretary Chuck Hagel and Commerce Secretary Penny Pritzker all signal that India will receive enhanced attention from Washington DC, he adds, saying that by most reports, both sides saw these visits as successful.

Metzger, of course, has a word of caution for the US if it wants to ensure that both the world’s largest and biggest democracies become natural allies. “The US has work to do to earn and keep India’s trust. Apart from the appointment of a new ambassador—long overdue—the Obama administration needs to take positive measures to demonstrate to India that the US is a reliable partner in defence and other forms of trade. Most important, the US needs to articulate a vision for the India-US relationship that is more than ‘transactional’ or opportunistic. Dedicated efforts by US and Indian officials are needed to build a mutually beneficial relationship that strengthens India while respecting its autonomy,” Metzger says.

It was India’s first BJP Prime Minister, Atal Bihari Vajpayee, who described India and the USA as “natural allies” in early 2004, taking the premise of the thus far moribund relationship between the two great democracies to the next level. The Bush administration reciprocated by describing the US and India as “strategic allies”. That year, the two countries had announced the Next Steps in Strategic Partnership or NSSP, a defining period in Indo-US relations. It was a thaw six years after the nuclear tests at Pokhran conducted by the Vajpayee Government which apparently plunged Indo-US relations to a new nadir, that led to this agreement on sharing dual-use technologies in everything from defence to civil spheres to space.

Adding momentum to the increasing warmth between the two countries was the ‘special’ equation between President Bush and Prime Minister Vajpayee, as also India’s increasingly positive self image, a healthy economy and a heightening focus on trade and investment.

Anti-American sentiment was at its lowest ever in India, leading to observers guiltlessly batting in the mainstream—after close on 50 years—for India to find its own space in the post Cold War Pax Americana. Writing in Foreign Affairs at the time, Pratap Bhanu Mehta of the Centre for Policy Research, Delhi, pointed to a ‘profound change’ in India’s perception of national interest that the country had undergone in the closing decades of the 20th century: this involved prioritising economic interests, including trade and investment. As a natural corollary, this transformation widened India’s engagement in multiple sectors with the world. It also extricated India from the narrow lens of Pakistan relations, through which India had for long viewed the US. The US, too, stopped viewing India merely as a nuclear proliferation problem.

Despite the few vestigial problems that persisted, warm personal vibes between Prime Minister Manmohan Singh and President Bush added momentum to the Indo-US relationship that later resulted in the former’s push for the Indo-US Nuclear Deal, despite opposition within his own party. By the time the UPA won re-election in 2009, not long after Manmohan Singh risked losing a confidence vote in the Lok Sabha for the sake of that deal, Indo-US relations were on an even keel. India’s economy was doing well, and, while there were some hiccups over dour diplomats who mistreated their domestic helps and some sour Alphonso mangoes, nothing appeared amiss. That the nuclear agreement was complicated by India’s Nuclear Liability Bill that came later, of course, is another story.

By and large, the two countries were rubbing along well. The fact that India’s economy was in relatively good shape in spite of a global downturn that turned into what was described as the ‘Great Recession’ had more than little to do with this. Despite all the gloom cast by pundits after Barack Obama’s arrival at the White House, based mostly on the premise that Republican establishments in Washington had consistently proven to be ‘better’ for Indian interests, relations stayed on course. In November 2010, US President Obama told the Indian Parliament, “India is not simply an economy that is emerging, it is one that has already emerged.” Nothing, it appeared, could go wrong with the country’s growth story, the principal driver of bonhomie between the two democracies. But it did.

Just two years after its 2010 drafting, the Indo-US strategic framework got stymied by global events and lack of stamina on Washington’s part to stay engaged. The policy paralysis in India also resulted in the loss of support of one important component that ensured healthy relations—American business. For US corporations, doing business in India was turning rapidly into an exercise in frustration. By then, India’s economy was clearly in trouble. The fiscal deficit ballooned, inflation soared, food prices in particular skyrocketed and the boom met an abrupt end, resulting in a noticeable slack in Indo-US relations.

Through all of this, however, there persisted an unmistakable drone of caution in the background from select quarters urging India to push for a sustained, long-term and strategic convergence of worldviews, rather just a selective, short-term and tactical partnership of economic interests.

While the US was engaged in trying to extricate its own economy from a severe slowdown, however, it appeared to have little time for India anymore. Also, the Obama administration’s increasing engagement in West Asia and Africa began to push India to the margins of Washington’s concerns, even as corruption scandals rocked the Manmohan Singh Government, which had acquired a reputation for misgovernance and inertia. No short-term fix for the economy seemed plausible.

India’s stalled economy and the UPA II’s refusal to clean up its policy mess put off those who were championing India’s rise—so much so that the US Congress asked the US International Trade Commission (USITC) to investigate India’s trade practices, focusing on Intellectual Property Rights. The US pharma industry alleged that though the US had an open door to the India’s pharma industry, India was closing doors to them. Around 45 per cent of all US Food & Drug Administration (USFDA) approvals for generic drugs had been awarded to Indian companies. On the other hand, the US industry complained that India had put 45 drugs under compulsory licences, thereby denying IPR protection to US companies that had developed these drugs. The USITC team had wanted to visit India just before the Lok Sabha polls, but the UPA regime managed to thwart it.

Prime Minister Modi will have to address the US’s unnatural fear of outsourcing, as a strong anti- immigration mood in America has held this relationship back in many ways. Sending Indian programmers and engineers to the US for short-term assignments helps both countries, but American restrictions on H-1B visas come in the way of increasing trade volumes.

Short-term Indian workers, by far the largest group of such workers in the US, have to make social security contributions, though they would never be eligible for its benefits since they actually reside in India. Over the years, the figures have been quite significant, and these sums are in effect net transfers from India to the US. This has to be stopped and reversed.

Michael Kugelman, a senior program associate for South and Southeast Asia at the Woodrow Wilson International Center for Scholars, US, is of the view that with a moderniser like Modi at India’s helm, both sides need to facilitate the ability of people and products to access each other’s markets. “There needs to be work done on the US side to make it easier for Indians to get work visas to come to the US. And there must be work done on the Indian side to provide a more conducive environment for US investors and American exports. If you don’t allow for the smoother flow of people and products, your trade won't truly take off,” he points out.

He hopes that the two sides will likely shy away from the irritants, in order not to slow the momentum that is allowing the relationship to regain traction. “But they would do well to tackle a variety of tensions—and especially the protectionist policies that both often impose on the other. The health of the US-India relationship will always hinge on the economic partnership, and if the trade-related tensions are not addressed, bilateral ties will always face constraints,” he says.

There have been a few irritants of late, among them India’s blocking of a World Trade Organisation (WTO) deal that took 12 years to negotiate. This July-end, New Delhi rejected a trade facilitation agreement (TFA) signed last December at Bali. Envisaged to cut red tape and relax customs rules, it would have been the largest multilateral trade agreement since the GATT Uruguay Round accord of 1994. The US was shocked at India’s stance, and globalisation buffs and the Western media vilified Modi for his alleged obstinacy. Some of them even described the move as India’s ‘WTO antics’ driven by domestic politics. Lisa Curtis and William T Wilson of The Heritage Foundation questioned Modi’s business- friendly image, asking why he, a leader ‘who was elected in an electoral landslide on a platform promising economic reform’ had to pull the plug.

From a national perspective, Modi was not wrong in insisting that the WTO alter its rules to allow countries such as India to expand food subsidies for the poor. If India had signed the TFA, it would have violated WTO obligations that say the value of subsidies India gives its farmers on agricultural products must be limited to 10 per cent of the total value of a product’s output at its market price. Columbia University Professor Arvind Panagariya argues that Modi’s problem with such an accord was that the WTO-mandated method of making those calculations is so flawed that India’s subsidy bill would end up violating the trade body’s guidelines. Besides, agriculture is India’s mainstay and employs more than half of the country’s workforce.

On the political front, India is on the periphery of America’s focal zone. According to Tellis, ‘The US is consumed by managing disorder in Eurasia, the Middle East, and East Asia. India is marginal to resolving these crises, even though it could be far more significant if it chose to. On issues closer to home—Pakistan and Afghanistan—India is rightly fearful about US policies, and on critical initiatives farther afield—the US rebalance to Asia—India is understandably ambivalent. Further complicating matters, bilateral relations have deteriorated in recent years because of poor policy choices in India on nuclear liability, taxation, and trade.’ India’s economic downturn and America’s pursuit of narrow ‘sectoral interests’ under Obama, instead of a broader strategic alliance, have only worsened the state of affairs.

President Obama himself is not politically strong enough at this juncture to ink a long-term deal of strategic engagement with India. Not only is his popularity at its lowest ebb, but a presidential election is just two years away. Obama is grappling with a Congress dominated by Republicans and had to face stiff criticism even over funds for fighting the Islamic State (IS).

For his part, Prime Minister Modi’s strategy is focused on surmounting the negatives and leveraging the positives of Indo-US relations, senior government officials say. “He takes lessons from the past; so the engagement will be multi-pronged—on the economic side with global corporate CEOs, mainly for investment, and on the strategic side with the US Secretary of State and Secretary of Defense,” says a BJP minister. “For mass communication of the Modi regime’s vision for India, [he will address] the Indian diaspora. Even if there is intense business interest in investment here, it is held back by an apolitical lack of interest in India. That was aggravated during the terminal inertia that affected policy implementation in the latter part of the Manmohan Singh regime. Without a decisive political leadership that signals its determination to come up with conducive policies and implement them smoothly, political interest in the US for India had waned. That story is likely to change now, given the decisive mandate handed to PM Modi. When he meets policymakers in the US, the Prime Minister’s priority will be to give them a clear idea of what plans he has for India in the next five years, and where it is headed.”

That ‘clear idea’ of Modi’s roadmap for economic rejuvenation and creation of an investment-friendly climate would also be spelt out by him to a select group of top American business honchos, including CEOs of top Fortune 500 companies such as Google, Boeing, MasterCard, Pepsi, IBM, the Cargill Group, Citigroup, Merck, Warburg Pincus, the Carlyle Group and Hospira, according to the Ministry of External Affairs. Six of the 17 heads of large global corporations are scheduled to meet Modi one-on-one.

So how big, really, is Modi’s visit to the US? It is very high on optics, at any rate. “The bigger picture has to guide us and the endgame has to guide us,” Kerry said of Indo-US relations at the Center for American Progress. Kerry’s recent visit to India was hailed as the beginning of a ‘new and ambitious course’ in Washington’s view of what it regards as an ‘emerging powerhouse regionally’. Kerry and Commerce Secretary Penny Pritzker later maintained—somewhat rhetorically—in an article that the Indo-US relationship is on the ‘cusp of a historic transformation’. But years after the NSSP was announced, critics say that Kerry’s idea of what it took to be a full partner looked more like a shopping list for the US. And Modi, says the BJP minister, will not compromise India’s interest and concerns.

The rock star event is the public address in Hindi at the historic Madison Square Garden in Manhattan, organised at the initiative of Americans of Indian origin. Over the decades, this 20,000-seat venue has hosted sold-out concerts by several cultural icons, including Aretha Franklin and Janis Joplin, Elton John, India’s own Freddie ‘Balsara’ Mercury of Queen, Jim Morrison, Billy Joel and more recently, Justin Bieber and Linkin Park. It was here that Marilyn Monroe sang a Happy Birthday number for President John F Kennedy.

In other words, the Indian rock star has a tradition to live up to. For the 3.2 million strong Indian diaspora, that will be a proud moment of nationalism played out by one of the country’s most popular politicians ever. The money collected from the gala dinner’s tickets will go to a chartity. To keep up the glam quotient, the show will have former Miss America Nina Davuluri as its compere. The billboards and massive cutouts will keep those familiar Modi masks company. All said, the Prime Minister is certain to be at home in a country that celebrates alpha performers.