- - Thursday, May 23, 2019

NEW DELHI — Prime Minister Narendra Modi’s thumping reelection victory has put him in the unenviable position of having to rebuild India’s battered economy, key to the country’s emergence as a global power.

Mr. Modi’s Hindu nationalist Bharatiya Janata Party (BJP) swept the seven-week national election as the vote-counting began Thursday, winning over 300 of the 543 directly elected seats in the Indian Parliament. The tally betters the 282 that the party notched in the first Modi wave in 2014, a feat even more remarkable in a raucous democracy where people often vote against the ruling government.

In a sign of the scope of the BJP’s triumph, Rahul Gandhi, bearer of one of the most famous names in Indian politics and leader of the opposition Indian National Congress, lost his seat to a BJP rival in Amethi, a longtime Gandhi family bastion in the north Indian state of Uttar Pradesh. He will remain in Parliament because he contested and won another seat in the southern state of Kerala.

Outside the BJP’s headquarters in New Delhi, hundreds of party workers and supporters shouted party slogans, distributed sweets, set off fireworks, danced and waved BJP flags and cardboard cutouts of the faces of Mr. Modi and other party figures.

“This election was fought not by politicians but the people of this country — and it’s the people of this country who have emerged victorious,” Mr. Modi told supporters in New Delhi Thursday night. “We will never give up our ideals, our humility and our culture.”

Analysts said Mr. Modi’s populist touch and Hindu nationalist appeal overcame a mixed record on the economy and the anti-incumbent penchant of Indian voters. Mr. Trump and Chinese President Xi Jinping were among a stream of world leaders who congratulated Mr. Modi on his unexpectedly large mandate, which will likely cement his dominance of the Indian political scene.

“Great things are in store for the U.S.-India partnership with the return of PM Modi at the helm. I look forward to continuing our important work together!” Mr. Trump tweeted.

But beneath the surface of the apparent camaraderie, the relationship with Washington has come under major stress as Mr. Trump demands greater market access for American goods to close the $20 billion trade deficit with India, while pressuring the Modi government to curb a burgeoning economic relationship with Iran. Mr. Trump has also threatened to end the preferential treatment for many Indian products, which allows duty-free entry into the U.S. market from developing countries.

Mr. Modi overcame an economy that has yet to respond to reforms he has tried to pass, leaving India increasingly dependent on the U.S. for its defense and strategic requirements.

That economic weakness has aggravated India’s diplomatic vulnerabilities, analysts say, and will present a significant challenge for the government. The country is facing a slowing economy, a severe unemployment crisis, deepening agrarian distress as half of its districts face drought, shrinking industrial output, stagnant investments, tepid consumption, muted exports and persistently wide fiscal and trade deficits.

Mr. Gandhi and other opposition parties tried to focus on Mr. Modi’s lackluster economic record, once considered his strong point, but the prime minister fought his reelection campaign on the theme of muscular nationalism that drowned out the noise over the economy.

Mr. Modi responded to a terrorist strike on Indian soldiers in the restive Kashmir region in February just before the elections by ordering covert airstrikes on terrorist cells across the border in Pakistan. The success of what the Indian government termed “surgical strikes” built on Mr. Modi’s image of an uncompromising nationalist leader, which his party put to successful use in his campaign.

One more chance

Despite Mr. Modi’s failure on the economic front, the voters chose to give him one more chance. The more difficult task of living up to this trust begins now.

“It is only economic strength that can bring India power and real influence,” said Nirupama Rao, the country’s former top diplomat who also served as ambassador to the United States and China.

Mr. Modi should be India’s Deng Xiaoping, and his second term should be all about development,” said the former diplomat. “National security draws its sustenance from economic strength. This is still work in progress for India.”

Mr. Modi, 68, has also carved out a more prominent role in regional and international affairs than his predecessors, seeking to raise India’s global profile and clout in international institutions. He has undertaken 92 foreign trips to 57 countries since taking the helm, twice as many as Manmohan Singh during his five years in power.

Beyond the routine handshaking and starched meetings, he has often converted these trips into occasions for unconventional power projection. Months after becoming prime minister in 2014, he addressed 18,000 Indian Americans at New York’s Madison Square Garden in a glittering show befitting a rock star. The next year, he repeated the performance at London’s Wembley Stadium, in a 4½-hour show attended by 60,000 people.

“Every little foray beyond India that he undertakes is accompanied by the sound of trumpets and hosannas from his ever-enlarging domestic constituency. There is suspension of disbelief. So, his policy on the United States is seen as being in a good place, his relationship with President Trump is regarded as positive,” Ms. Rao said.

But the Madison Square Garden celebration was held during the Obama presidency, when India was an important component of America’s “Pivot to Asia” strategy. That focus has been receding since Mr. Trump’s election in 2016.

India and the U.S. have for two decades been edging closer as a hedge against a rising China. The U.S. sees in India a democratic Asian power with a growing economy that can help contain China. India, on the other hand, seeks American partnership to fend off the superpower next door.

But Mr. Trump is testing the cozy relationship. Even though India and the U.S. have moved strategically closer with major defense agreements under Mr. Trump and Mr. Modi, the U.S. president has been demanding that India bring more to the table.

“Recent years have seen unusual pressure on India to conform to erratic U.S. foreign policies that run contrary to India’s long-term interests, particularly on questions such as India’s relations with Iran, China and Russia as well as India’s broader trade policies,” said Zorawar Daulet Singh, author of “Power and Diplomacy: Indian Foreign Policies During the Cold War,” and a fellow at India’s Center for Policy Research.

Apart from Iranian oil, Mr. Trump recently warned India of sanctions if it bought an S-400 air defense missile system from Russia, a demand that India ignored.

“It’s more like an unequal relationship where India offers concessions simply to maintain positive ties with the U.S. What India should strive for is a modest strategic partnership that doesn’t entangle India in U.S. Cold War style policies,” Mr. Daulet Singh said. “The key challenge for Mr. Modi’s second term is to resist U.S. pursuit of an overly transactional relationship with India. A popular national mandate should provide New Delhi with the political will to hold its ground.”

Tension over Iran

The Trump administration’s tightening sanctions on Iranian oil is the latest irritant between the two sides.

Washington’s imposition of harsh sanctions on Iranian crude exports went into effect in November, but the sanctions were waived for eight countries, including India, China, Turkey and Japan. On April 22, Washington announced that the waivers would be revoked effective May 1. India, in the middle of an election campaign, appealed for an extension, which was not granted.

Kicking off a new term, Mr. Modi will have to tackle this demand, which comes as a major shock to India. The country imports 80% of its crude, and Iran is its third-biggest supplier. Many Indian oil refineries are also designed to process Iranian crude. Any change of the source will require a costly recalibration of the refineries.

Iran is also one of India’s valued strategic partners. India has spent millions of dollars building a port in Iran to bypass archrival Pakistan, which now controls all major supply routes to landlocked Afghanistan.

Neelam Deo, a former ambassador and the director of Indian foreign policy think tank Gateway House, sees Mr. Modi’s victory leading to a deepening of the relationship with the U.S. in defense and technology transfer but said the trade relationship remains “difficult and troubled.”

“The Iran sanctions are particularly difficult,” she said, adding that it may lead to a closing of ranks between India and China.

“There is definitely more scope for coordination between India and China as a group of Iranian oil buyers, though we will have to take into account the reaction of the U.S. when dealing with China,” she said.

China’s state-run media have hinted that Beijing might be open to working with India to take on Mr. Trump’s Iran gambit.

“China should oppose the hegemonic approach of the U.S., but it can’t take the lead in confronting the U.S. on issues involving Iran. Beijing needs to coordinate with other major powers to respond to U.S. sanctions against Iran,” said a Global Times opinion piece published last month.

Mr. Xi is expected to visit India soon as a follow-up of a high-level “informal summit” last year between him and Mr. Modi in the Chinese city of Wuhan. The two leaders were making a major course correction after a two-month military standoff in 2017 in the Doklam area on the Sikkim-Bhutan-Tibet border. After relations between the two Asian giants reached the nadir, they have been recalibrating their positions to deepen trade ties as a response to Mr. Trump’s offensives.

Mr. Modi’s crushing election victory and the virtual decimation of the opposition now allow him bold policy initiatives such as closer ties with China and take the thaw in relations with China to the next level.

Jabin Jacob, an associate professor at the Shiv Nadar University in Delhi, sees greater alignment between Indian and Chinese positions in certain areas, such as Iranian oil and the Chinese tech giant Huawei, facing severe U.S. sanctions over its closeness to the government in Beijing. But he is skeptical of an overhaul in India’s relations with China after Mr. Modi’s victory because of their fundamental power asymmetry. Though China and India are often seen as rivals, the Chinese economy is five times the size of India‘s.

“In our relationship with China, they have options as they have greater state capacity and diplomatic muscle,” said Mr. Jacob. “We need to first fix our internal issues — essentially the economy. We have to generate jobs, improve the quality of manufacturing and revitalize agriculture. We have to go back to the basics.”

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