Singaporean Prime Minister Lee Hsien Loong and his Indian counterpart Narendra Modi shake hands ahead of their meeting at Hyderabad House in New Delhi on January 25, 2018. Photo: Reuters / Adnan Abidi
Singaporean Prime Minister Lee Hsien Loong and his Indian counterpart Narendra Modi shake hands ahead of their meeting at Hyderabad House in New Delhi on January 25, 2018. Photo: Reuters / Adnan Abidi

India’s economic diplomacy bounced back to center stage this week after a prolonged absence of more than three years, when it made a robust appearance at the World Economic Forum (WEF) meet in Davos, Switzerland, on Tuesday and New Delhi hosted a special ASEAN-India Commemorative Summit on Thursday.

Prime Minister Narendra Modi was the flag carrier on both occasions, which signals seriousness of purpose and augurs a shift toward “demilitarizing” India’s foreign policy and giving ballast to economic diplomacy toward the Association of Southeast Asian Nations, which New Delhi regards as the fulcrum of its “Act East” policy.

The salience of Modi’s keynote address at Davos was twofold – one, the world must fight against the rising challenge of protectionism, and, two, mitigating the menace of climate change must be the collective responsibility of all nations.

Modi’s remarks hinted at certain disenchantment with the Donald Trump administration’s “America First” policies. The latest Gallup poll listed India alongside Germany and other countries in their waning faith in the United States’ leadership role.

Modi’s remarks echoed portions of the speech made by Chinese President Xi Jinping last year at Davos. Interestingly, the Chinese Foreign Ministry spokeswoman in Beijing promptly took note of Modi’s speech and remarked that the Indian prime minister “stated his opposition to protectionism … which demonstrates that economic globalization is the trend of the times and serves the interests of all countries, especially the developing countries.

“China is ready to work with all parties to actively adapt to and steer economic globalization so that it will continue to be a positive force in promoting world economic growth and enhancing the well-being of all peoples,” spokeswoman Hua Chunying continued.

The main thrust of Modi’s speech was in showcasing that India’s economy has multiplied more than six times in the two decades since an Indian prime minister last attended the WEF at Davos. It aimed at promoting India as an attractive investment destination by highlighting that another phase of economic reform and market liberalization is afoot.

Delhi Declaration

Broadly, the same approach of putting economic diplomacy in the front seat is evident also in the Delhi Declaration issued after the summit meeting with the ASEAN leaders on Thursday.

New Delhi has not proposed even a single political initiative in terms of galvanizing India’s “Act East” policy in a strategic direction with an eye on China. The Declaration not only avoids any mention of the idea of the “Quad” (quadrilateral alliance of the US, Japan, Australia and India) but altogether ignores the hyperbolic concept of the “Indo-Pacific.” It repeatedly mentions the Indian Ocean and Pacific Ocean as, well, two oceans, and not as conjoined at the hips.

On the other hand, India reiterates its “support for ASEAN centrality in the evolving regional security architecture.” In this spirit, India and ASEAN have affirmed that they “support the full and effective implementation of the Declaration on the Conduct of the Parties in the South China Sea … and look forward to an early conclusion of the Code of Conduct in the South China Sea.”

ASEAN is pressing for a “swift conclusion” of the Regional Comprehensive Economic Partnership (RCEP) agreement. Singaporean Prime Minister Lee Hsien Loong said in his closing speech at the summit, in his capacity as the ASEAN chairman: “ASEAN and India should work together to ensure the conclusion of the negotiations in 2018 so that the benefits can be realized earlier.”

Indonesian Trade Minister Enggartiasto Lukita said: “I believe India will not disappoint ASEAN. I believe India will stand with ASEAN to conclude the negotiation for the RCEP this year.”

ASEAN’s priority is to gain better access to the Indian market for trade and investment. Lee candidly noted, “By 2025, India’s consumer market is expected to become the fifth-largest in the world.” He stressed deeper economic integration between ASEAN and India.

The final clincher would have been the stance of Vietnam. Prime Minister Nguyen Xuan Phuc pointedly noted in an interview with an Indian daily that there had been “positive and commendable signs” of an easing of tensions in ASEAN-China relations and he anticipated more confidence-building measures. His advice to the Indian leadership is that “trade and investment should be targeted as the main engine and first priority for the ASEAN-India strategic partnership.”

Easing ASEAN-China tensions

To be sure, New Delhi senses the shift in the direction of an overall easing of tensions between ASEAN and China. Speaking at Manila Airport while departing for Delhi, Philippine President Rodrigo Duterte proposed that ASEAN should take China’s help in maritime security to put an end to piracy and other problems in the Celebes and Sulu seas.

“I will tell you, if we can’t do it, we just have to call China to come in and blow them off, just like [in] Somalia, that Aden Strait there,” Duterte said. “Were it not for the presence of the Chinese, the piracy there would not have been stopped.”

When the Philippines and Vietnam, the two “frontline states” in the South China Sea, are cautiously optimistic about Chinese policies, and when Singapore, India’s staunchest ASEAN ally, counsels a shift in priority toward focusing on economic integration (by enhancing trade, investment and connectivity), it is bound to prod new thinking in New Delhi and dispel the self-serving notion of India as a balancer vis-à-vis China in the Southeast Asian region.

Ironically, ASEAN leaders pin much higher hopes on India intrinsically as a driver of growth for their economies at a juncture when the consensus on globalization and free trade is fraying and for sustaining the positive Asian story, deep economic integration with India is desirable and necessary.

Of course, this narrative will take time to percolate down India’s idiosyncratic media and the strategic community with their warrior identity, but the bottom line is that Modi has put his imprimatur on the new thinking. It will be a remarkable achievement if the RCEP gets concluded this year.

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