American lens on Modi

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Experts in the U.S. share their views with News India Times Editor Ela Dutt, on the U.S.-India bilateral relationship in the wake of Modi’s big electoral victories and two months into the Trump administration

Counterterrorism and economic deals would be the cornerstones of the relationship between the Trump and Modi administrations going forward, as both leaders strengthen their positions domestically, and Washington puts its diplomatic ducks in a row for dealing with the subcontinent.

American experts on South Asia also say Washington’s policy toward Pakistan could well harden as the counterterrorism strategy of the new administration widens its focus beyond Syria to Afghanistan.

It’s still early days for the Trump administration which has yet to put someone in charge of the South Asia portfolio in the State Department with the departure of Nisha Desai Biswal, Obama’s assistant secretary for South and Central Asia; an Ambassador for India has to fill the shoes of Richard Verma, the first Indian-American to hold that position in the former administration. It will happen soon as Modi is expected to visit the White House around the end of spring or summer, analysts predict.

While some early tests have emerged for the Trump administration on the U.S.- India front, such as H1-B visa, and concern over hate crimes against Indians, so far there’s been a “very positive response” to the bilateral partnership, says these experts.

The Strongman Effect

Prime Minister Narendra Modi’s recent victory in state elections, especially in Uttar Pradesh, could bolster that positive relationship. It strengthens the charismatic Indian leader’s hands to push through possible business and trade related reforms.

Support for those reforms would be solidified and easier to get through the Indian parliament within a year during which 58 Rajya Sabha seats have to be filled, and Modi’s Bharatiya Janata Party is expected to secure a comfortable majority in the upper house.

Prime Minister Modi has the cushion to make bold moves if he chooses, which includes deals that accommodates President Trump’s vow to protect American jobs. Prof. Lisa Curtis, South Asia expert at The Heritage Foundation quotes the example of moving the F-16 jet-fighter’s production line to India, which while satisfying Modi’s ‘Make in India’, would save some American jobs.

Plus, the demonetizing program that most Western analysts misread as the death knell for Modi in the state elections, actually paid off in political capital. Through all this, India remains the fastest growing large economy.

“Modi’s surprise demonetization gamble certainly paid off,” Prof. Curtis noted, which shows he has the wherewithal to drive change. “And that has implications for domestic and foreign policy,” Curtis contends.

The image of a strong leader is one that resonates in both countries. “The sense prevailing among the young aspirational voters is that Modi can bring jobs and improve the economy,” said Walter Andersen, head of the South Asia Program at the John’s Hopkins School of Advanced International Studies. “The Indian voter has always looked for the strong ruler who looks like he’s doing something,” Andersen added.

And there’s concrete proof of that, according to some observers in India. Since 2014 when Modi came to power, visible gains are seen in day-to-day life – for the poor, for the first time, there are bank accounts, access to loans to start a business at nominal rates of interest, gas connections across the country; a national pension scheme at affordable rates; end to subsidies for the rich, and cutting out middlemen through programs like Adhaar and digitalization.

The Pakistan Factor

Andersen sees four underlying determinants of Trump’s foreign policy approach – transactional rather than big-picture, bilateral over multilateral, mercantilist (emphasis on selling than buying), and militarist (big-stick approach). While South Asia is yet to be part of any regional focus, on strategic issues, there have been occasional references to Taliban assertiveness in Afghanistan “and instances of terrorist violence in the region, with focus being the violence in Pakistan,” Andersen says.

Certainly the Trump administration has prioritized counterterrorism, and that should drive their policy toward Pakistan, some analysts say.

It’s only a matter of time that the current focus from Syria and Iraq, will widen to involve developments in Afghanistan, Curtis said. “If they remain committed to Afghanistan, then the Trump administration will have to adopt a tougher policy toward Pakistan,” she said, especially as it applies to providing sanctuary to terrorists, some of whom attack India.

“They will have to toughen the demand that Pakistan crack down on terrorists,” Curtis insists. “Pakistan is part of the global terrorism problem,” she said.

The current Defense Secretary James Mattis is very familiar with South Asia. As head of Central Command in 2012, he was sent to Pakistan by President Obama to smooth the prickly relationship. Curtis says Mattis and the current CENTCOM head Gen. Joseph Votel, have both indicated the relationship with Pakistan will continue as is. There is little chance of following up on a demand by a few U.S. lawmakers that Pakistan be listed as a “state sponsor of terrorism.”

Business & Trade

Trade and foreign investment continue at “lower levels” between the two democracies, notes Schaffer. Trump’s transactional, and mercantilist approaches may yet work in India’s favor, though India is more hesitant about Trump’s preference for bilateral trade agreements over multilateral ones, she said. Despite Modi’s “big win” she believes, like most other governments in India, Modi will be cautious about the fallout from agreements that are not unconditionally in India’s favor.

Apart from trouble spots such as the H1-B skilled worker visas, and the hot-button immigration issue, plus recent violent attacks on Indians in America, the Trump administration has taken a “sharp turn” on trade, Schaffer says.

Top people (in the Trump administration) are revisiting agreements with China and Mexico at the moment. “Trump does not like multilateral agreements, while India likes others in the room,” Schaffer said.

However, U.S. exporters, importers and the business community are in a hurry to negotiate with India, she said especially if Modi goes forward with reforms and is able to implements GST regulations which would help foreign investors.

For India, H1-B is an issue which the Modi administration has said it can handle. There is the related “big issue” of a “Totalization Agreement” India has been pitching since 2014, at the U.S.-India Trade Policy Forum which has yet to yield results. It relates to the ability of Indian workers in Silicon Valley and elsewhere to repatriate their payments into Social Security taxes.

An Aug. 26, 2016 report in the Harvard Journal of Legislation estimates that in the decade preceding 2016, Indians working in the U.S. have contributed more than $27.6 billion to the U.S. Social Security system. Washington has Totalization Agreements with at least 25 countries to date.