June 04, 2018

Indialogue: Weekly Newsletter by Aman Thakker

Hi,

This week’s brief is looks at Prime Minister Modi’s visit to Indonesia and Singapore as part of his “Act East” policy, as well as the announcement by the Indian and Pakistani armies to implement a 2003 ceasefire along the border. On domestic side of events, I look at the results of the Lok Sabha by-polls from Kairana in Uttar Pradesh and the government’s major setback in privatizing Air India.

- Aman

In a Boost to "Act East," PM Modi Visits Indonesia and Singapore

Prime Minister Modi was in Indonesia and Singapore this past week from May 20 to June 2 as part of a boost to India’s “Act East” policy. The focus of the visits,according to Priti Saran, Secretary (East) in the Ministry of External Affairs, was “on agreements in defence, skill development and connectivity.”

In Indonesia, the focus of the meetings between Prime Minister Modi and President Joko Widodo was maritime cooperation. Indeed, in advance of the visit, Indonesia offered India access to its Sabang port for the development of the port and an economic zone. The port is “located at the mouth of the strategically important Strait of Malacca” and “is only 100 nautical miles from the southern tip of the Andaman and Nicobar Islands.” This development comes at a time when India and Indonesia have increased their defense interaction at the same time as China has been expanding its activity and footprint in the Indian Ocean region shared by both countries’ maritime borders.

Prime Minister Modi with President Joko Widodo of Indonesia (left) and Prime Minister Modi at the Shangri-La Dialogue (right)

Prime Minister Modi then visited Singapore on June 1, where he delivered the keynote address at the Shangri-La Dialogue, a “Track-One” intergovernmental security forum held by the International Institute for Security Studies. The speech was an opportunity for PM Modi to lay out his vision for India as a leader, not just in the region, but in the world. In a continuation of the message he laid out in his speech at the World Economic Forum, where India would play a role in protecting and defending the liberal economic order. As to how the speech was received, I think Dhruva Jaishankar summed it up best in his tweet:

Expert Round-up

Prof Harsh V. Pant and Tuneer Mukherjee (a friend and anIndialogue subscriber) write “At a time when countries are realigning themselves to accommodate the growing consensus around an Indo-Pacific strategic framework, India and Indonesia, as members of the Indian Ocean Rim Association, need to complement each other’s vision of a regional order.”

Alyssa Ayres notes “For me, the big-picture takeaway from this speech lies in Modi’s apparent desire to position India as a champion of the liberal international order. Observers of the region and of Indo-Pacific geopolitics will be looking for more.”

Atman Trivedi and Amy Searightargue “Asia’s uncertain political and economic climate presents an opportunity for Modi. U.S. President Donald Trump’s policies, including the withdrawal from the Trans-Pacific Partnership trade agreement and a purely transactional approach to longtime alliances, have contributed to strategic drift in the region as China grows assertive and authoritarian. The situation calls for steady leadership — and the United States and its Pacific allies better hope that New Delhi can deliver.”

Diplomatic Misunderstanding

Devirupa Mitra reports “About three weeks before Indian and Indonesian leaders sat down for talks in Jakarta on Tuesday, Indonesian experts had explained to their Indian counterparts that New Delhi’s quest to join the Malacca Strait Patrol (MSP) was “not feasible”

“A highly-placed diplomatic source said that whenever India had brought up the issue of joining the MSP with Indonesia in the past, Jakarta had stated New Delhi did not either understand or delineate its role clearly.”

“Constructed as a “loose mechanism”, MSP members do not even conduct joint patrols. Instead, they take part in “coordinated patrols”, with each country staying in their own territorial waters. When the Indian experts indicated that the Indian Navy expected to hold patrols inside the straits, the Indonesians pointed out that they never ventured into Malaysian or Singaporean waters.”

“At the end of the meeting, the Indian experts had both a better understanding of the MSP mechanism and the realisation that becoming a full member was probably a impossible dream.”

BJP’s Losses in By-Polls Continue as Opposition Unites in Kairana

In the latest by-polls held in Uttar Pradesh, the candidate backed by the united coalition of the Samajwadi Party, Bahujan Samaj Party, Indian National Congress, and Rashtriya Lok Dal beat out the BJP’s candidate in Kairana. This is the third by-poll in the state where the BJP has lost out to a united coalition of opposition parties, losing earlier in Gorakhpur and Phulpur.

Background: In 2013, riots broke out in the Muzaffarnagar district of Uttar Pradesh as members of the Hindu Jat and Muslim communities clashed violently, resulting in the deaths of 62 people, including 42 Muslims and 20 Hindus. The riot, which has been described as "the worst violence in Uttar Pradesh in recent history" became a centerpiece of the BJP’s campaign in Western Uttar Pradesh, including in Kairana. Indeed, “Kairana, where in 2014, the BJP’s Hukum Singh had won by a massive margin of over two lakh votes, has been the saffron party’s Hindutva laboratory in western UP. The party has used the Jat-Muslim Muzaffarnagar riots and the so-called exodus of Hindus from Kairana due to ‘threat from Muslim gangsters’ in an attempt to consolidate Hindu voters in the region.”

Tabassum Hasan, the RLD candidate backed by the INC, BSP, and SP

The Campaign: The RLD has traditionally been a predominantly Jat party which relied on a coalition of Jats and Muslims to support its candidates. However, following the riots, such a coalitionseemed impossible as the Jats switched to supporting the BJP. However, in these elections, the RLD, joined by the BSP, INC, and SP, announced a Muslim candidate, Tabassum Hasan, as the other parties offered their support and declined to field their own candidates. In the end, Hasan ended up beating Mriganka Singh, the BJP candidate, and the daughter of MP Hukum Singh, who had passed away, thereby necessitating the by-poll.

Bigger Picture:  While a number of political analysts have looked to the successes of such campaigns, where opposition parties unite together in an anti-BJP coalition, as a recipe for success for the 2019 elections, such an alliance remains far away. Indeed, while it is easier it organize such a coalition for a one-off election, stitching together a nationwide coalition of multiple regional and national parties will be incredibly complex. It would also require the Congress party, which has been used to calling the shots, to take a step back and allow others to lead in certain states or races, as it did in Kairana. Both these conditions seem far fetched, but if achieved, it could spell danger for the BJP.

Indian and Pakistani Armies Agree to Ceasefire in Kashmir

The Indian and Pakistani armies announced last week that both countries had agreed to “fully implement the 2003 ceasefire agreement in “letter and spirit” with immediate effect to stop cross-border firings in Jammu and Kashmir.” This result comes as last year was noted as the most violent since 2003, the very year that the ceasefire was negotiated. Indeed, according to the Indo-Pak Conflict Monitor, Pakistan reported 1,970 cease-fire violations while India reported 971. Moreover, so far in 2018, there have been over 1,000 violations already reported, suggesting that, without this ceasefire, 2018 may be even more violent.

However, in less than a week, the results have not been good. Happymon Jacob, a leading expert on India-Pakistan relations, tweeted “Within a week the "new" ceasefire on the LoC/IB seems 2 b under stress ("Two BSF personnel killed in ceasefire violation by Pakistan Rangers in Akhnoor sector"-IE).” He went on to tell The New York Times “The only reason that 2003 cease-fire agreement survived that long was because it was backed by a peace dialogue...In the absence of a peace dialogue accompanying it, I don’t think that this cease-fire agreement will survive.”

Why this Matters: I can’t help but agree with Professor Jacob here. Indeed, cross-border firing has been a hallmark of deteriorating relations between India and Pakistan. But one point that should be noted is that while peace dialogue and political settlements are going to be crucial, India will also have to reckon with the dual, and at time opposing forces within Pakistan’s government, namely the civilian government and the military. Too many times, India has heard conciliatory tones from the civilian government, only to see terrorist outfits, often backed by the ISI, attack Indian targets with the sole purpose of derailing peace talks. Continuing peace talks under such conditions would not only be useless, but potentially deleterious to India’s national security. How to solve this quandary, however, is the question of the century.

Government Plans to Privatize Air India Flop as No Entities Submit Bids

Last month, the Indian government announced plans to privatize India’s national air carrier, Air India, by selling 76% of its stake in the company. The deadline for entities to submit formal bids for the company was set for May 31. As the deadline passed, reports emerged that no entities submitted bids at all for the airline.

Now, as Indialogue readers know, the contours of the deal that the government offered were already incredibly complex (read Indialogue’s coverage here andhere, as well as my article for The Diplomat here). To recap, the major impediments for private entities to bid for the deal include:

The deal would involve any company that wins the bid would have to absorb a burden of debt worth Rs. 33,392 crore or over $5 billion.

The government also specified that the deal would not include the winning company taking over control of Air India’s international operations or its low-cost carrier, Air India Express.

These factors led to major Indian airlines and conglomerates, such as IndiGo, Tata Group, and Jet Airways, ruled out participation in the bidding process

While foreign firms such as Lufthansa, Singapore Airlines, Air China, Air Canada, United Airlines, British Airways and Etihad Airways expressed interest in bidding, the specifications of the deal also specified that the control of Air India should remain with an Indian firm. With major domestic contenders pulling out, it became even more difficult for such firms to find Indian partners.

Insight: Privatization of loss-making public-sector companies, such as Air India, has been a key part of Prime Minister Modi and his government’s reform agenda. Such a setback is hugely disappointing for PM Modi as he looks project the image of a “reformer” as the BJP heads to the 2019 general elections. Moreover, given how close we are to the election, it remains likely that the government will punt further reforms, including further privatization efforts, until after the elections. As a result, taxpayers will continue to foot the bill for the losses Air India continues to accrue.

Stories you might enjoy:

Alyssa Ayres writes “Successive U.S. administrations have strengthened ties with India and developed strategic frameworks for a broad U.S.-India partnership. The Trump administration’s Indo-Pacific emphasis could be its most consequential strategic initiative, building on the work done by the Obama administration’s U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region. But it will need—very soon—to identify and implement some specific projects for the grand strategy to become reality.”

“As the country braces for the next general election,” Puja Mehraexamines “what really is the state of the economy, whether it is better poised now for take-off to 10 per cent growth, essential for transiting from middle-income to high-income status, and what Modi’s term, as he starts his fifth year, tells us about his economic philosophy, policy, and strategies.”

ThePrint cites a study from Thushyanthan Baskaran, Sonia Bhalotra, Brian Min, and Yogesh Uppal that finds that “women legislators in India raise economic performance in their constituencies by about 1.8 percentage points per year more than male legislators.”

Sonal Varma argues “Prudent monetary and fiscal policies place India’s macro fundamentals on much higher ground today than in 2013. Yet, given the global backdrop and risk that quantitative tightening could spring a surprise anytime in the coming quarters, there is no room for complacency. India should stand ready with a multi-pronged strategy.”

Ejaz Ghani notes “As a latecomer to urbanization, India will benefit from technological innovations – including digital technologies, cleaner energy, innovative construction materials, and new modes of transport – that will enable it to leapfrog some of its more developed counterparts. But taking advantage of those technologies will require effective policies, including smart infrastructure investments and measures to make cities more competitive, particularly in modern industries

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