Context

As Prime Minister Narendra Modi begins his second term, the world looks more disorderly in 2019 than was the case five years ago.

Disruptive global Conditions

• U.S. President Donald Trump’s election and the new dose of unpredictability in U.S. policy pronouncements;

• The trade war between the U.S. and China which is becoming a technology war;

• Brexit and the European Union’s internal preoccupations;

• Erosion of U.S.-Russia arms control agreements and the likelihood of a new arms race covering nuclear, space and cyber domains;

• The U.S.’s withdrawal from the Iran nuclear deal and growing tensions between Saudi Arabia and Iran are some of the developments that add to the complexity of India’s principal foreign policy challenge of dealing with the rise of China.

Redefining neighbourhood

New neighbourhood emphasis –  Since an invitation to Pakistan was out of the question, leaders from the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) countries (Bangladesh, Bhutan, Nepal, Sri Lanka, Myanmar and Thailand) with Kyrgyzstan, added as current Shanghai Cooperation Organisation chair, highlighted a new neighbourhood emphasis.

Ways to develop prosperous neighbourhood

• Multi-pronged diplomatic efforts and being generous as the larger economy.

• It also needs a more confident and coordinated approach in handling neighbourhood organisations — SAARC, BIMSTEC, the Bangladesh, the Bhutan, India, Nepal Initiative, the Bangladesh-China-India-Myanmar Forum for Regional Cooperation, the Indian Ocean Rim Association.

• This should be preferably in tandem with bilateralism because our bilateral relations provide us with significant advantages.

• With all our neighbours, ties of kinship, culture and language among the people straddle boundaries, making the role of governments in States bordering neighbours vital in fostering closer linkages.

• This means investing attention in State governments, both at the political and bureaucratic levels.

Managing China and the U.S.

India and China

• The informal summit in Wuhan restored a semblance of calm but does not address the long-term implications of the growing gap between the two countries.

• Meanwhile, there is the growing strategic rivalry between the U.S. and China unfolding on our doorstep. We no longer have the luxury of distance to be non-aligned.

India and USA

 Crude oil – As part of its policy on tightening sanctions pressure on Iran, the U.S. has terminated the sanctions waiver that had enabled India to import limited quantities of Iranian crude till last month.

GSP – The Generalised System of Preferences scheme has been withdrawn, adversely impacting about 12% of India’s exports to the U.S., as a sign of growing impatience with India’s inability to address the U.S.’s concerns regarding market access, tariff lines and recent changes in the e-commerce policy.

Sanctions under CAATSA – A third looming issue, perhaps the most critical, is the threat of sanctions under the Countering American Adversaries Through Sanctions Act (CAATSA), were India to proceed with the purchase of the S-400 air and missile defence system from Russia.

Huawei – Other potential tricky issues could relate to whether Huawei, which is currently the prime target in the U.S.-China technology war, is allowed to participate in the 5G trials (telecom) in India.

Afghanistan – The reconciliation talks between the U.S. and the Taliban as the U.S. negotiates its exit from Afghanistan raise New Delhi’s apprehensions about the Taliban’s return, constituting another potential irritant.

Way Ahead

Resource limitations – In a post-ideology age of promiscuity with rivalries unfolding around us, the harsh reality is that India lacks the ability to shape events around it on account of resource limitations.

Seasoned professional – These require domestic decisions in terms of expanding the foreign policy establishment though having a seasoned professional at the top does help.

Coordination among the different ministries and agencies – We need to ensure far more coordination among the different ministries and agencies than has been the case so far. Our record in implementation projects is patchy at best and needs urgent attention.

Focus on the neighbourhood – The focus on the neighbourhood is certainly desirable, for only if we can shape events here can we look beyond. However, the fact that China too is part of the neighbourhood compounds Mr. Modi’s foreign policy challenges in his second term.

External balancing – Employing external balancing to create a conducive regional environment is a new game that will also require building a new consensus at home.