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Prime Minister Modi has shown remarkable innovativeness in foreign policy arena recently. This shows that he is cognisant of the challenges for India that are looming ahead.

The ‘informal summit’ with Xi Jinping in April 2018 was an attempt to arrest the slide in Sino-Indian relations which had manifested in the 2017 Doklam stand-off between the Indian Army and the People’s Liberation Army (PLA). Prime Minister Modi held yet another ‘informal summit’ with Russian President Putin in Sochi in May to keep the Indo-Russian relations on the positive trajectory. Russia has been concerned about India’s tilt towards the Americans particularly after the revival of the Quadrilateral Grouping, or the ‘QUAD’. He visited Nepal within a month of the visit of Nepalese Prime Minister Oli to India. The meeting between the two prime ministers was to put Indo-Nepal relations back on the rails after the knocks that they took during Prime Minister Oli’s earlier tenure.

Challenges Ahead

US Sanctions: While these initiatives are welcome and needed, Indian foreign policy is likely to face major difficulties in the months to come. One challenge pertains to the impact of the withdrawal of the US from the Iran nuclear deal on India. The US is likely to impose sanctions on Iran and on companies dealing with Iran. This could have an adverse impact on Chabhahar and other Indian projects in Iran. India’s desire to provide an alternate connectivity to Afghanistan via Iran and to link up with Central Asia and the Commonwealth of Independent States (CIS) countries will suffer. Although, the European Union and other members of the Iran nuclear agreement have expressed their determination to continue abiding by the Iran nuclear deal, the situation might change once the US sanctions kick in.

Many Western companies, particularly from Japan, France, Germany, UK, Italy etc. are investing big sums in Iran. This explains why the European Union is not willing to toe the US line. This opens an opportunity that Indian companies need, may be able to do business in Iran via European banks. However, uncertainty about doing business in Iran has been created. Indian companies, which have substantial businesses in the US, may not like to take the risk and anger the US and face the wrath of US President. Indian companies should show boldness and take advantage of the US withdrawal from Iran deal, and not be intimidated by it.

Russia: India will have to be careful about the deteriorating relationship between the US and Russia. The Russian factor in US presidential elections has left a trail of suspicion and recrimination between the two. The US National Security Strategy has also singled out Russia as a national security challenge. There is a likelihood of US imposing sanctions on Russia as well. If that happens, India’s economic relations with Russia may also be affected. This will also have an impact on the political relationship between India and Russia. India will have to find a way of isolating Indo-Russian relations from the negativity of US-Russia relationship. This may not be easy.

North Korea:Minister of State Gen VK Singh recently paid a visit to North Korea. The visit should have taken place much earlier when in 2015 the North Korean Foreign Minister visited India. However, India chose to play safe and did not respond in equal measure to the North Korean initiative. However, the situation has changed significantly. A summit meeting between the North and the South Korean leaders has already been held and a summit between President Trump and Kim Jong-un is scheduled to be held in June. There is no guarantee that the summit will actually be held or it will be a successful summit. Nevertheless, the atmosphere in East Asia has changed quite dramatically. India will have to take a call whether it would play an active role in the de-nuclearisation process that has unfolded in East Asia. This may not be easy because India has isolated itself from the region by being extremely cautious and leaving the field open to other countries. However, with the emergence of the concept of free and open Indo-Pacific in which India wants to play a role, it is but natural that India cannot remain immune or isolated from the de-nuclearisation process going on in the Korean Peninsula. Perhaps, VK Singh’s visit to North Korea is an indication of India’s desire to play a greater role in the region. However, it must have some positive ideas and a level of deeper engagement with North Korea. India will have to figure out how to play a greater role and yet not tread on China’s toes. The alternative of course is to do nothing and watch the situation from the sidelines.

Quad: The idea of US-India-Japan-Australia quadrilateral, the Quad, which was relaunched in November 2017, seems to be for the moment on the backburner of the member countries. Not much has as happened by way of developing the Quad idea. While there is an urgent need for an overarching security structure for the Indo-Pacific, the Quad member countries do not quite agree on the details. The other countries in the region who are watching the Quad with interest seem to have concluded that the Quad idea is not taking off - at least not as yet. The Chinese leader described the Quad as “froth on the sea” which will eventually disappear. India has the task of ensuring that the Quad idea does not dissipate. India should give a vision and structure to the Quad.

Afghanistan: While the security situation in Afghanistan continues to deteriorate, India and China have agreed to do a joint project in the country. While this has been hailed as a positive idea, India will have to ensure that by jointly working with China, its influence in Afghanistan is not diminished. The Chinese agenda in Afghanistan is different from that of India’s because of the Pakistani factor. China relies on Pakistan for bringing stability in Afghanistan, while India is deeply skeptical of Pakistan’s negative role.

Shanghai Cooperation Organisation (SCO): Soon, the SCO summit will be held in Beijing. Prime Minister Modi will attend the summit for the first time after India’s formal membership. India must come up with a positive agenda at the SCO ensuring that it has a greater role in shaping the region. China can be expected to put pressure on India to accept the idea of Belt and Road Initiative (BRI). All countries in the SCO accept the BRI. India will have to ensure that its principal position on the BRI does not get diluted simply because it is now a member of the SCO. To do so, it must come out with a positive and alternate agenda for the region. Cooperation in the field of counter-terrorism and capacity building are two ideas which India can propose at the SCO summit.

Oil Prices: Shooting oil prices mean trouble ahead for the Indian economy. India must try and reduce its dependence on oil imports by giving impetus to renewables as well as nuclear energy. While the renewable energy program is proceeding sufficiently well, the nuclear program needs greater attention. Further, the challenge of integrating solar energy into the power grid without harming the latter is yet to be overcome. Nuclear energy is useful as a base energy for the grid.

Conclusion

In dealing with the above challenges, India must play to its strengths. These lie in India’s idea of comprehensive engagement with other countries including capacity building. India can also project non-traditional security issues as areas of cooperation. In North Korea, India can offer technical and capacity building assistance on the model of what has been offered to Afghanistan. On the diplomatic front, India will need to negotiate with the US on getting appropriate waivers from sanctions on Iran and Russia so that Indian interests in the region or not adversely impacted by US actions.

Arvind Gupta, Director - VIF
29 May 2018

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