Trade as Power Play
Trade diplomacy is far more than just economic theory; it's a complex arena where national power and security interests are deeply intertwined. Unlike
the idealized notion of comparative advantage, where nations simply exchange goods based on efficiency, real-world trade negotiations are often about asserting dominance and safeguarding national interests. As a prominent economist once noted, trade policy is, in essence, national security policy. This understanding is crucial when examining actions like President Trump's use of tariffs to bolster American power. While some nations quickly conceded to these pressures, China, Brazil, and India initially held firm. However, the recent agreement with India suggests a capitulation, raising concerns about transparency and strategic clarity.
The Need for Openness
In matters of national security, a government's actions must not only be sound but also appear so to the public. Vague pronouncements and simplistic messaging are insufficient; clear statements of intent and purpose are paramount. With Parliament currently in session, it is incumbent upon Prime Minister Modi to address the nation directly in the Lok Sabha. Allowing ministers of commerce and external affairs to engage in a game of diffused responsibility is not conducive to effective governance, especially on critical international economic and political issues. The Prime Minister, as the ultimate authority, should take ownership and provide definitive answers, mirroring the transparency shown by Prime Minister Manmohan Singh in 2005 when he detailed his discussions with President George Bush to Parliament.
Lessons from the Nuclear Deal
The approach taken during the India-US civil nuclear energy agreement in 2005 serves as a stark contrast to current practices. Prime Minister Manmohan Singh's decision to address Parliament provided a comprehensive account of his discussions with President Bush, emphasizing India's critical need for energy security and unhindered access to all energy sources, including nuclear power, to sustain economic growth. He clearly communicated that the US understood India's position on securing adequate and affordable energy supplies. This period saw detailed parliamentary scrutiny of the nuclear deal, with opposition parties, including the BJP, and even members of his own Congress party having their say. Singh's commitment to transparency ultimately garnered public trust and contributed to his party's re-election in 2009, a valuable lesson in democratic governance.
Ambiguity and Doubt
The current Modi government's handling of the recent trade agreement with the US is marked by a troubling lack of clarity. President Trump's assertions regarding a conditionality on Russian oil purchases by India remain unaddressed, neither confirmed nor outright rejected by the Indian government. While the foreign secretary's diplomatic statement might be interpreted as shrewd maneuvering by some, it has, unfortunately, come across as duplicitous, presenting a facade of Chanakyan wisdom rather than genuine clarity. Instead of portraying the trade deal as a significant triumph, the government should have honestly acknowledged it as the best possible outcome under challenging circumstances, aimed at protecting livelihoods in crucial export sectors. This mirrors India's withdrawal from the RCEP, ostensibly for national interest, but in reality, to shield certain industries from global competition.
Livelihoods and Policy
The underlying motivation behind the trade deal with the US appears to be the same as that influencing other policy decisions: the protection of livelihoods. While the government claims to prioritize national interest, the exclusion of Punjabi farmers, small and medium enterprises, and traders from trade with Pakistan suggests a selective application of this principle. The influence of certain sectors, such as the merchants of Surat and the shrimp farmers of the Coromandel Coast, seems to carry more weight. The India-US trade deal, therefore, should not be viewed as a magnanimous gesture but rather as a price India has agreed to pay to maintain a favorable relationship with the US. This pattern of yielding to pressure from major global powers is not new, but the current administration's portrayal of it as a significant achievement is unprecedented.
A Stark Reality Check
President Trump's conduct has served as a stark reminder of geopolitical realities for India. Following what appeared to be public humiliation and veiled threats directed at Indian leadership, Trump has deliberately framed the trade deal as a capitulation by India, specifically linking it to the cessation of Indian oil imports from Russia. While the government has managed to garner support from think tanks and the diplomatic community, a practice the author admits to engaging in during his own tenure, it's important to note that American leadership did not mock Indian leaders during the negotiation of the civil nuclear deal. Even India's voluntary reduction in Iranian oil imports, undertaken to appease a specific lobby, was a temporary measure for a significant strategic gain – recognition as a nuclear weapons state.
Uncertainty and Future
The long-term viability of the current trade deal remains highly uncertain. Other nations have also found themselves navigating a precarious landscape of shifting expectations and potential future disruptions. The question arises whether India's support for US initiatives will be continuously tested. For instance, if a conflict in the Gulf disrupts India's oil supplies, will India still face repercussions for sourcing oil from Russia? The government has aptly termed the agreement a 'Framework for an Interim Agreement,' acknowledging the inherent uncertainties. It is imperative for the Prime Minister to provide a candid assessment of India's foreign economic policy stance, particularly in relation to the US and BRICS nations, rather than resorting to obfuscation and a pretense of strategic genius.
