Amid US-China Trade War, Can Narendra Modi Steer India's Interest In A Turbulent Global Economy?

As Narendra Modi starts a new term  as prime minister, he will be confronted with a world sharply polarised on virtually all matters of global importa­nce—trade, immigration, ter­r­­­­o­rism, a divisive West Asia. But finding the required strategic space to saf­eguard India’s own inte­r­ests in a world where the US and China are eng­aged in a struggle for domination will be the biggest challenge for him.

The ongoing, and quickening, rivalry is dividing and forcing nations to choose sides. The Sino-American trade war is part of this. But under the unpredictable US President Don­ald Trump, whose assertive policies have found an equal match in his Chinese counterpart Xi Jinping; the rivalry could spill beyond trade.

The global economy, which has still not fully recovered from the 2008 crisis, is likely to be affected further if the US-China trade war int­­ensifies. But its effect on development and political stability across the world is a serious cause for concern, with many observers predicting the onset of a new ‘cold war’.

India has often been seen as a bellwether state whose opting in favour of one of the two contesting hegemons could influence other countries.  However, policy-planners differ over whether being tagged as such an influence is good for the country. A section in the foreign policy establishment sees this as something that elevates India’s status where it is wooed and sought after by other big players. Those with a contrary view argue this shrinks India’s strategic space and sooner than later, it will force the country to align with either of the two contestants, cramping its independent foreign policy.

Two multilateral events in June will ind­icate how India is likely to approach the ensuing challenge. The first is the Sha­­ng­hai Cooperation Organisation (SCO) Sum­­mit in Kyrg­yzstan’s Bishkek from June 13-14. The 10-member regional gro­u­­ping, dominated by China and Russia along with the five Central Asian Rep­u­blics, also has India, Pakistan and Iran as members. The second will be the G20 Summit in Tokyo, attended by leading world economies. It allows mem­bers to discuss and formulate polic­ies that might help tackle the most intra­ctable challenges affecting the global economy.

The SCO Summit is regarded by many as an anti-American forum to keep the US away from Central Asia and limit Was­hi­ngton’s choices towards success in war-torn Afghanistan. Though India doesn’t share the strong anti-American sentiments of some SCO members, its engagement in the deliberations at the Summit and other meetings of the grouping help it keep abreast of various security-related developments. It allows the Indian leadership to keep itself alive as a legitimate option in Central Asia and also be party to developments in Afghanistan. Moreover, being party to the infrastructural development of the region furthers India’s own commercial and security interests. The common position members arrive at in the SCO on infrastructure, security and Afghanistan will be of India’s interest.

While a meeting between the Ind­ian PM and the Chinese and Russian presidents are on the cards, there will also be meetings with leaders of some Central Asian countries. Two such meetings will be keenly wat­ched. The Summit is likely to be attended by the Pakistani PM Imran Khan. It might provide him an opportunity to engage with the leader of the new Indian government to restart the stalled India-Pakistan dialogue.

The other possible meeting is with Iranian president Hassan Rouhani. The angry clouds gathering over Iran in the wake of the military build-up in the Per­sian Gulf by US war ships had raised serious concerns. President Trump rec­ently commented that he is in no mood to go to war with Iran. But the situation in the Gulf—a region of vital importance to India—remains tense. It is the country’s main energy source, where over six million Indians earn a livelihood. Every year they send back remittance worth over $30 billion, and the Gulf is also becoming a favourite destination for Indian investments and a source of investments to the country.

With India already foreseeing difficulties after US sanctions on buying Iran­ian oil, a conflict and its effect on the entire region, would not only disrupt India’s energy supply but also result in calls for evacuating millions of Indians. It would be a night­marish situation for any administration.

Iran, moreover, is a collaborator of Indian efforts to reach goods to Afg­hanistan through its ports and roads and to the Central Asian region bey­ond. The  Indian PM has a lot of vital issues to discuss with Rouhani.

The June-end G20 Tokyo Summit, however, is even more important. Most countries would like to find out the fut­ure contours of the Sino-US trade war and the extent of damage it is likely to leave behind. Attempts could also be made by US allies to question, and raise concerns about, the logic and motive behind China’s BRI that is feverishly trying to recruit so many countries. Leading economies could therefore, stress on more transparency in the Chinese BRI projects. But at the same time, the protectionist policies of President Trump that is causing ser­ious disruption in the global economy and world’s supply chains can also be harshly criticised.

How the Indian PM articulates his concerns at the G20, especially since it would take place a few weeks after his meeting with President Xi on the SCO sidelines—where they will have spoken about ways to take forward the ‘Wuhan spirit’—would be interesting to watch.

Another key challenge for the new government is to manage the immediate neighbourhood to ensure stability in South Asia. There are talks that after assuming office, the premier could visit Maldives as his first bilateral visit to send out a strong signal of stability not only to the leadership in Male but also to others.

Significantly, China’s Belt Road Init­ia­tive (BRI) is drawing most South Asian nations into its ever-exp­anding network, causing serious misgiving among Indian strategists. The proposed Mal­di­ves visit will reaffirm not only the great importance India accords to South Asia but indicate that New Delhi rem­a­INS a major player in its neighbourhood.

Though the PM’s foreign policy will depend largely on the key members of his team, there is no doubt that the emerging challenges in the region and beyond will keep him on his toes in the next five years.