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Martin Feldstein: Mr Obama's passage to India

The United States president's visit should help in cultivating India as a reliable partner in international affairs

Martin Feldstein 

Martin Feldstein

Indian Prime Minister Narendra Modi's vigorous foreign policy in the seven months since he took office has surprised observers. After inviting the leaders of Pakistan and other neighbouring countries to his inauguration, he embarked on trips to China, Australia, and the United States. More recently, he welcomed Russian President Vladimir Putin to New Delhi and signed a large number of trade deals and orders to import Russian nuclear reactors. India, Mr Modi is telling his fellow citizens, is strong and well regarded around the world.

Next month, United States President Barack Obama will travel to New Delhi as Mr Modi's special guest at events commemorating Republic Day, India's national holiday - just three months after the two leaders held substantive talks in Washington, D C. The visit should, thus, be regarded as a clear signal of Mr Obama's desire, no less than Mr Modi's, to strengthen United States-India relations.

So what is likely to be on Mr Obama's mind when he meets his Indian counterpart again, and what does he think can be done to cement bilateral ties? Three issues stand out - beginning with trade, which is as important politically as it is economically.

Mr Obama hopes that the Trans-Pacific Partnership (TPP) will be concluded in 2015 and ratified by the United States Senate. The TPP will not be as powerful a free-trade agreement as originally intended, owing to exclusions and a very long phase-in period. But it will tie the United States and 11 other Pacific Rim countries (including Japan but excluding China) together in a new economic bloc. Mr Obama should be eager to stress that India's exclusion from the TPP is a matter solely of geography - India does not abut the Pacific - and that the United States wants to increase bilateral trade and direct investment by American firms.

The second issue is terrorism. The United States authorities are worried that American citizens who have been fighting with the Islamic State and Al-Qaeda in West Asia will return home to commit terrorist acts. India has experienced horrific acts of terrorism on its own territory. Continued cooperation between the American and Indian intelligence agencies can help both countries prevent future incidents.

Terrorism includes not just physical violence, but also assaults in cyberspace. China, Russia and Iran have been the source of frequent cyber attacks on banks, companies and government agencies; North Korea, the United States alleges, was behind the recent breach of Sony Pictures' computers. Though Mr Obama presented evidence to Chinese President Xi Jinping of technology theft by hackers based in China, the Chinese authorities continue to deny it. More recently, Russia and others have been planting malware in the control systems of the United States power grid and other sensitive networks.

Looking ahead, the United States worries about cyber attacks by non-state actors like the Islamic State and Al-Qaeda. Although these groups' members may lack the sophistication to commit such acts, they may try to hire individuals with the necessary skills. India has a large number of talented computer engineers, including some who might be sympathetic to the Islamist cause. The United States and India could both benefit from cooperating to prevent and disrupt such recruitment efforts.

The third issue on Mr Obama's mind is bound to be China's asserted goal of dominating Asia and excluding the United States from the region. Chinese hegemonic ambition runs counter to India's strategic interests as well - reason enough for Mr Modi's eagerness to strengthen his country's relations with its neighbours as well as with the United States. Mr Obama has already made it clear that the United States understands that Mr Modi's willingness to cooperate with Russia, despite Western sanctions imposed on the country, stems from India's desire to discourage a Sino-Russian alliance against it.

Mr Modi won a landslide victory in an election that reflected the Indian public's disappointment with the policies and performance of the previous government, led by the Indian National Congress. Though India had experienced annual real gross domestic product growth of more than eight per cent for several years, growth has slowed since 2010, to less than five per cent in 2013, owing to a populist shift in policies dictated by Congress party leader Sonia Gandhi.

By contrast, the Modi government plans to pursue a pro-growth agenda that includes reducing bureaucratic delays, increasing infrastructure investment, stimulating manufacturing activity and shifting to a simpler unified tax system. Mr Modi's agenda also evidently includes an active foreign policy - as it should.

Cultivating India as a reliable partner in the global economy and in international affairs is a high priority for the United States as well. Mr Obama's visit to India can help to realise that relationship's potential.


The writer is an emeritus professor of economics at Harvard
Copyright: Project Syndicate 2014

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First Published: Thu, January 08 2015. 21:49 IST
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