Thursday 6 December 2018

Modi a better CM than PM? (Gateway House)

Academic and columnist M.D. Nalapat, in this interview with Manjeet Kripalani, speaks of how a tardy bureaucracy has brought about “a too-cautious” policy towards the U.S. and China as opposed to the former Gujarat chief minister’s greater openness in consulting people before handing over policy implementation to the bureaucracy. He also discusses the prime minister’s shrewd approach to South Asia, the dependable warmth of the Japanese and a range of other topics.

Manjeet Kripalani: Welcome back, Professor Nalapat, to the Gateway House monthly video podcast. Four years ago, you gave us an insider’s view of what Prime Minister Narendra Modi’s foreign policy would be, should he become the prime minister. He won the election and we are now at the end of his first term.
If you put a perfect location pin on his plans, which you did the last time, what would you say has defined his foreign policy?
M.D.Nalapat: The problem that Modi has faced has been self-created: the man has been far too reliant on the bureaucracy; way too much of the input he has been receiving on various issues comes from within it. This has been a problem because he looks only at a much narrower range of options than he would have had he looked at a broader segment of society to consult. Modi as chief minister used to get inputs from a variety of people, form policy conclusions and tell the bureaucracy to implement them. For Modi as prime minister, many of the policy formulations go through the bureaucracy matrix.
M.K.: And this has had an impact on his choice of chief guest for Republic Day?
M.D.N.: I’m hearing, for example, that he is going to get South African president Cyril Ramaphosa. I still want Vice President Mike Pence to come.
(Disclaimer: This interview was recorded before the official confirmation of South African President Cyril Ramaphosa as chief guest at India’s Republic Day parade in 2019.)
M.K.: In place of President Donald Trump, who turned down the invitation?
M.D.N.: Exactly – and for a simple reason. If you are looking at the Indo-Pacific, which is a very significant body of water, or if you’re looking at space, which is a very significant area of competition in the future, India by itself cannot really hope to dominate even the Indian Ocean. The U.S. cannot hope to remain ahead entirely by itself. But primacy can be established through an alliance of the U.S., India, Japan, Australia, Vietnam, the entire body of the Indo-Pacific. So why Mike Pence? To take the example of an Indian embassy abroad: you may have a political appointee as the ambassador, who does much of the diplomatic work. He creates a lot of goodwill. But the deputy chief of mission does much of the day-to-day work. In my view, Mike Pence is the deputy chief of mission of the Trump administration. He’s an extremely influential figure; and from his Hudson Institute speech, it’s very clear that he is also a significant geopolitical thinker.

The bureaucrats will say, ‘Oh, but he is only vice president’. But then they invited the crown prince of the UAE as the Republic Day chief guest in 2017, creating a precedent of inviting the second in command. It was a brilliant choice – and entirely the prime minister’s. I hope the prime minister will shake himself free of bureaucratic tentacles, and invite Mike Pence to come as the chief guest.
M.K.: Four years ago, you had also said that Mr. Modi would focus on four countries for India’s strategic investment: the U.S., China, Japan and Russia. So continuing friends, rivals, old allies and new allies. Has he done so, and how has that worked for India?
M.D.N.: Modi has had a certain direction in foreign policy and we have seen a Modi doctrine taking shape. The only problem with it, once again, is that he has handed over its actual operation to the bureaucracy.
It’s like this. You have a strong relationship with the U.S., which is security-based. With China, you have a strong commercial relationship: Modi has made it much easier for Chinese business to operate in India and for visas to be given, much more than any prime minister since the 1960s.
But as far as the U.S. is concerned, the prime minister has not been able to get all the U.S. foundation agreements signed. The Basic Exchange and Cooperation Agreement (BECA), for example, is still awaiting signature. Some bureaucrat, somewhere, must have inserted a comment, ‘don’t sign this’ or ‘sign it under this’ or sought an adjustment elsewhere.
So on the security front with the U.S., India should aspire to be one of the Six Eyes. The Five Eyes (FVEY) should be expanded and India should be the sixth.
The commercial relationship with China is going very slow. Chinese 5G technology is state-of-the-art. Huawei. If Chinese technology comes into India, it can compete with American players and others, and, as a result, consumers will have greater competition.
M.K.: They’re already here, Alibaba is.
M.D.N.: They’re not here for 5G.
M.K.: They’re here with e-commerce.
M.D.N.: Whether it is Facebook, Twitter, Google or Amazon, we are a digital colony of two states in the U.S. – Washington state and California. The fact is that the only country that can compete with it is China. So if they come in and these two giants compete, maybe there’ll be enough space for Indian players to expand. This needs to be done.
Both in the commercial relationship with China and the security relationship with the U.S., Prime Minister Modi has a correct perspective, but implementation has been slow, hyper cautious, because the prime minister has given too much power to the bureaucracy to implement his doctrine. I’m not sure that they even understand or fully appreciate it. Therefore, we have a too-cautious U.S. policy and also a too-cautious China policy.
M.K.: What about Japan and Russia?
M.D.N.: The Japanese are very important for the Indo-Pacific. In my view, India, the U.S., Japan, principally, Australia, etc., we should have primacy in the waters of the Indo-Pacific. India should have the same policy that Britain had in continental Europe, viz. that no one country be allowed to dominate continental Europe. The British alliance system was accordingly structured. Likewise, we should have a security alliance system whereby no one country is allowed to dominate the Eurasian continent. Once it does, in a matter of 15 years, that country will dominate the world. And we don’t need a unipolar world anymore. A unipolar world is an extremely insecure, unstable world. We need a multipolar world. The U.S. is a declining power. But some others are advancing.
M.K.: China.
M.D.N.: I’m not going to name countries. We have to ensure that no country can dominate the Eurasian landmass, which is where the security architecture comes in.
M.K.: And Japan and Russia?
M.D.N.: Japan is very important, and so is Russia.
M.K.: Prime Minister Modi and Mr Abe are almost the best of personal friends. How has that played out? Japan has given India a lot of money in low-cost loans for India’s infrastructure build-out. We have never seen Japan participate in India like this.
M.D.N.: It was in 1992 or thereabouts that the Narasimha Rao government reached out to Taiwan and Japan for money because it was in a bad way. The Taiwanese president at that time, Lee Teng Hui, said, ‘Where/who is India? ‘Get lost’! But the Japanese helped.
Today, the Prime Minister went to Abe san, his old friend, who delivered big time. From $50 billion, that special facility has been extended to $75 billion. That’s not pocket change.
The Japanese have always been good friends of India’s, but Abe san, especially, likes to meet foreigners. Many Japanese hate meeting even other Japanese. But here’s a man who loves foreigners, Indians. So yes, the relationship is strong.
As far as Russia is concerned, we made a mistake signing the S-400 deal. I am not sure that we’re going to get a waiver from the U.S. on it. I was in Tokyo recently; an India-Japan-U.S. discussion was held by the Hudson Institute. I argued very strongly for India and Iran to maintain normal relations. I didn’t make an argument for the India-Russia defence relationship because you can’t have a situation which is good and strong for India, coexisting with a stronger and stronger security relationship with the U.S., with more and more arms and defence equipment being bought from Russia. We should have tried for THAAD, for Patriot, not the S-400.
M.K.: Doesn’t that make us very dependent on one country?
M.D.N.: We have been dependent on Russia for quite some time, and eventually, if the Lockheed guys tell us, ‘Transfer the entire production line to India’, we’ll help develop our own. We have the Mahindras, Tatas, Birlas, Reliance. L&T is a good company. There are so many companies that can be big in the defence space. We have had this ridiculous policy of depending only on the public sector in the defence space. The result is, we are crucially dependent on foreign countries. But India and the U.S. have to move together in defence, which is not possible as long as we have an outsized dependence on Moscow. A strong defence relationship with the U.S. and continued dependence on Russia, are contradictory boats: we cannot ride in both.
We don’t have to cut Moscow down. If we spend $10 billion every year on Russian items, we can transfer that money from defence equipment to, say, oil or nuclear reactors. We give the $10 billion – through a high level of purchases – to Russia every year, but not in defence. I want us to eventually reduce defence purchases from Russia to zero.
As far as Iran is concerned, I defend totally our decision to buy its oil. I’m sorry that some private companies in India are so scared of the U.S. that they immediately stopped buying Iran oil. The Americans didn’t even say ‘boo’ before these companies ran away from Iran. I’m glad that our public sector companies are still buying from Iran. I want us to buy as much Iranian crude as possible and for as long as possible.
M.K.: South Asia has been a central theme for Mr. Modi during his term. How have relationships with our neighbours progressed? And how do you think things are going to look now that Pakistan has a new prime minister, Imran Khan? Is this going to change the complexion of the past four years of keeping Pakistan out and progressing with the rest of South Asia? What is the Modi doctrine, in your view?
M.D.N.: Prime Minister Modi has a very good policy towards South Asia. The Modi doctrine is: every South Asian country, even if they are dealing with another country, like China, must respect India’s core concerns, and we will respect you, in turn. Whether the Maldives, Sri Lanka, Nepal, Pakistan, Bangladesh or Afghanistan, the prime minister has silently and subtly ensured that this message is communicated. President Rajapaksa, the former president of Sri Lanka, came to India about two months ago. He was made aware of India’s core concerns, and we about Sri Lankan concerns.
Today in South Asia, every South Asian leader is aware of India’s core concerns, and except for one country – Pakistan – they will ensure that these are not neglected. Even K.P. Oli of Nepal is not anti-Indian. I’m sure he respects India’s core concerns.
As for Imran Khan – we call such people ‘coconuts’: brown on the outside, white on the inside. Imran is an Englishman, like Jawaharlal Nehru, who was technically an Indian, but actually, an Englishman. Imran, the Nehru of Pakistan, is still good friends with his ex-brother-in-law, Zac Goldsmith – Zac is one of the most outstanding politicians, who can be the second Jewish prime minister of Britain after Disraeli. Imran’s heart is still somewhere in Britain, nowhere else.
M.K.: But what does that mean?
M.D.N.: It means that Imran is just a face for the Army and the ISI. He will say all these sweet things, and he sincerely believes it when he talks sweetness and light about India. But the poor man has no power at all.
M.K.: He’s a puppet, as everybody says.
M.D.N.: I wouldn’t call him a puppet – a puppet too has some strings. Imran is completely helpless. So to expect him to make any paradigm shift is to chase an illusion. As far as security is concerned, the India policy, terror, Kashmir or the nuclear button, he has no role at all. So it doesn’t really matter. He is the beautiful face of Pakistan foreign policy. He will try and convince the government of India: ‘Mr. Modi, Inder Gujral, Atal Bihari Vajpayee, Manmohan Singh – these people trusted us’. ‘Us’ means the ISI, and the military speaking through the civilian government. ‘They gave us so many concessions. Why don’t you be like them? And look at me, Imran Khan. What a wonderful person I am. I love India, I love Sidhu’. He has several good reasons, according to his ex-wife’s book, to be friendly with India.
M.K.: Let’s switch to economics. India has done better at 7.5% growth, four-and-a-half years after Mr. Modi came in. He came in at 4.5% growth. You had talked about a 15% GDP for India over the next 15 to 20 years before Mr. Modi came in. Are the structural changes now in place to achieve that goal, and will we become that middle-income country that we ought to be?
M.D.N.: Narendra Modi is brilliant, visionary and far-seeing. The problem is that the instruments he has at hand are not. He has not paid enough attention to ensuring he has a good team. His ministry is filled with Vajpayee’s people, his administration with Manmohan Singh’s. The proof of the pudding is 2004 – politically, the BJP failed. Manmohan Singh – again, the proof of the pudding is there, in the extreme unpopularity of his government. They failed.
Demonetisation was a brilliant idea – changing the currency so that everybody puts money in the bank. You have a better tracking system. But at the same time, the cash economy is crucial to India, the Indian economy will slow down without cash. So he should have ensured that the Reserve Bank and the finance ministry kept liquidity high. Vast stocks of cash should have been kept ready. We had nothing! Even the ATMs could not work, they had to be recalibrated because the size of the note was wrong. We were starved of liquidity and it was a disaster. It was a brilliant measure that was very poorly implemented by the RBI and the finance ministry.
Since demonetisation, though, I have been wondering whether Narendra Modi will come back as prime minister. Now again, GST: having a single low rate, exempting up to five crore people from GST would have been a brilliant idea, but you made such a complex system that it’s almost unworkable, and now, you have to make it workable as it goes along. Why? Because both in demonetisation and in GST, the bureaucracy, front and centre, has been given charge of the process. So you have a brilliant idea by the Prime Minister, he hands it to the bureaucracy and by the time the results finally come out, they are very different from what the prime minister intended.
You’re saying 7% is a great rate of growth. I’m disappointed. I never expected Modi’s rate of growth to be anywhere below 9%. I expected by now it would be 12%. The fact that we’re talking about 7.5% is because Prime Minister Modi has the wrong tools with which to implement his ideas. The brilliance of his ideas is matched by the lack of brilliance and ability of those whom he entrusted with the execution. And the sad fact is, there is no accountability. Every one of those involved in demonetisation has been promoted. The people responsible for the GST disaster have all been either retained in government or promoted. Prime Minister Modi is too soft, too lacking in ruthlessness.
M.K.: Which brings us to our last question. Should Mr. Modi get a second term? If you were to look at the planetary charts, what would be your forecast for India? What do you foresee?
M.D.N: I hope he gets a better, more efficient team, and goes back to what he was doing as chief minister of Gujarat – consulting a large number of people, from across society, in framing policies. Now that kind of consultation frankly, is pro forma. Take for example, the consultations on tax and business. Everybody is so terrified of a tax today, of an inquiry, that nobody wants to speak the truth, the truth being that some of these ideas are absolutely unworkable.
I was among the few people skeptical about demonetisation and about the way GST was implemented. People who said it was a brilliant idea on television used to tell me privately that they thought the way I did. They were scared.
The reality is that you have to have minimum government. You have to bring down the power of government. The more powerful government is, the less progress we make. The less powerful government is, the more progress we make. Here is a group of entrepreneurs who rely on their control of government, politicians, officials, to get things done and grow. Then there is a group of mostly younger people, who rely on brains and competence to get things done, and are the ones who are happy with Modi because he has done a lot to ensure the system is cleaned up, individual initiative gets recognised, regulatory roadblocks get cleared – though some remain. These are the people we should encourage. And for that, government must be pushed back.
The prime minister of India has 15% power, the president of China 60%, the president of the U.S. 10%. Instead of trying to take the power of the prime minister from 15% to 25%, he should bring it down to 10%. And he should be true to his image of minimum government, maximum governance.
Millions of young people in India can create Amazons, Yahoos, Microsofts, all these treasures of the industrial landscape. You can have 20 Jack Mas coming up in India. You don’t need to go through government. But the entire class of entrepreneurs who are succeeding is because they have got politicians in their pockets, politician in one pocket, officials in the other. This class deserves to be extinct, or run away to London or New York or Miami…
M.K.: As they are doing.
M.D.N.: And good riddance to them. The people who remain are the people who will depend on themselves. Prime Minister Modi has to be more like Chief Minister Modi if he gets a second term.
M.K.: Thank you very much. So we are sort of back-to-the-future in some sense.
M.D.N.: Exactly.
M.K.: Mr Modi as prime minister should be more like Mr. Modi as chief minister, and if he gets a second term, about which you worry, then he should go back to being what he was.
M.D.N.: I was supporting Narendra Modi since 2006. My problem with him is not that there’s too much of him, but too little in what is called the Modi government.
M.K.: Thank you very much.
This is a transcript of a video interview conducted with Professor Nalapat on 30 November 2018 and has been edited for this format.
Professor Madhav Nalapat is Director of Geopolitics, Manipal University
Manjeet Kripalani is Executive Director, Gateway House
Click here to view the preceding interview with Professor Nalapat at the start of Mr. Modi’s  first term as prime minister.
This interview/video/podcast was exclusively created/recorded by Gateway House: Indian Council on Global Relations. You can read more exclusive content here.
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