Time for an ideological reset
Placating Trump would have required opening up India’s agriculture and dairy sectors and buying significantly expensive military hardware from US companies
NEW DELHI: This past week has seen a tectonic shift in Indo-US relations. Donald Trump first slapped a 25% tariff on Indian exports to the US and then topped it up with another 25% as a penalty for India buying Russian crude oil. While the first was shocking to a lot of people, the second is blatantly unfair. China buys more Russian crude than India, but Trump has not slapped any such penalty on China. As of now, tariffs on Indian exports to the US are 20 percentage points higher than on China’s.
Where does this leave India and Indo-US relations? Are there larger lessons to be learnt? Answering this question requires an ideological clarity over and above merchandise trade. Here are three things which should matter.
Enemy’s enemy in cultural or superstructural wars is not your friend
Shrill attacks on the American and the larger western woke ecosystem, have been an integral part of Trump’s political rhetoric. Because this ecosystem has also been extremely critical of the BJP, Modi and the larger Hindutva framework, many on the Hindu right celebrated Trump’s attacks on it. Many right wing influencers waxed eloquent on how Trump was good for India. What they did not understand then was that this did not necessarily mean a support from Trump for India’s larger interests. These cheerleaders are having to eat crow today.
Having said this, how best to position Indian politics vis-à-vis rising right-wing nativism in the advanced capitalist world – Trump is the most important and successful strain of this current – is a larger question to which there are no easy answers. But it is better to be unsure than be ecstatic and then be completely wrong.
Foreign policy is driven by material realities, not personal equations
Trump’s abrasive stance against India is among the biggest foreign policy indictments of the Narendra Modi government. It is all the more damning because it does not look like the Indian government saw this coming. The biggest lesson to be learnt from this is simple. Foreign policy cannot be conducted on the basis of personal chemistry or friendships between leaders of two countries.
It is hard material realities which shape their conduct. Trump is only messing with India because he can afford to do it without causing a major turmoil in the larger strategic and economic calculus of the US. This is also the reason why Trump is pussyfooting around China — the country with which the US has the biggest trade deficit and which is the biggest challenger to US’s dominant status in the world.
However, the same material realities also mean that India cannot reciprocate. Indian service sector companies, especially in the IT sector; the limited exemptions India still enjoys on exports to the US; and the remittances Indian Americans send back home, are still important interests which have to be preserved and for which there are no readily available substitutes in the world. Obviously, India must try to get these tariffs reversed. It is time to swallow hubris or overcome the shock and get to work.
Russia can sell us cheaper crude and air defence systems, but it cannot compensate for the loss of an economic partnership with the US.
There are no free lunches in the world
There are many who believe that protecting India’s strategic interests is as simple as joining one bandwagon or another. This choice was posed as Soviet Union versus US in the Cold War days and is often presented as Multilateralism (with Chinese characteristics) versus being an American satellite today. Neither of these choices is as simple and costless as it sounds. Placating Trump would have required opening up India’s agriculture and dairy sectors to heavily subsidised American exports and buying significantly more expensive military hardware from American companies. Aligning firmly with China, on the other hand, would have entailed becoming a part of things such as One-Belt-One-Road initiative and signing off on a pre-ordained euthanasia of India’s manufacturing prospects. This is one of the reasons India walked away from the RCEP trade agreement.
Being the diverse, unequal and large economy that India is, there are a lot of influential players who would stand to gain from any of these overall sub-optimal choices. Even the muddled status quo – Trump’s tariffs have ended it now – where India has been neither here nor there in the last couple of decades has created enough vested interests who have made significant gains while feeding off the natural economic momentum of the economy most of which comes from its 1.4 billion strong population.
What is to be done?
Patience is key. India must undertake a comprehensive appraisal of its strategic and economic abilities and decide on measures which can help it come to terms with what is likely to be the new global economic order: an increasingly protectionist and abrasive West and an even more dominant China in the manufacturing sector to the extent than it can cripple other countries’ production lines in critical sectors. The illusion of some golden parachute of China+1 ensuring a smooth landing of India’s economic transformation challenge should be dispensed with for good.
This will not happen through some clichéd reforms to-do list which many economic commentators parrot. What it needs is a thorough overhaul of the contract between politics and capital which produces not inefficient national champions that draw their raison d’état from providing political finance but efficient ones that actually provide the much-needed edge to the country’s geo-economic abilities. This will entail a major disruption in the status quo, but the only other option is outright humiliation and economic death by a thousand cuts.
