India, like other major powers, will have to carefully monitor how the Obama legacy morphs into the Trump inheritance and the degree of continuity in past policies.
The assumption of office by US president-elect Donald Trump and his penchant for pursuing a disruptive agenda has aroused both interest and concern globally. Earlier there was a revisionist reference to the sanctity of the ‘one China’ policy much to Beijing’s ire. The Trump phase of US politics promises to be turbulent globally and bilaterally.
In the absence of a cogent policy document, one can outline broad and likely Trump policy indicators and their relevance for India. The levels at which the impact of the Trump presidency can be analysed are:
- Geostrategic affairs
- Trade relations
- Immigration policy
- Bilateral relationship
- Indian Economy
- The personal equation between leaders
Early reactions indicate that Pakistan and China are nervous about resetting their relationship with the US. That would imply good news for India because America under the Democrats had been very convenient for both. While Pakistan has successfully exploited its geostrategic positioning to blackmail the US into providing a perpetual line of credit, China has sucked dry US manufacturing jobs and runs a huge trade surplus.
Not surprisingly, both nations have issued nervous statements, warning Washington that any change in the terms of engagements will end up harming US interests. While China is concerned about increased American isolationism, Pakistan's nervousness stems from Trump's anti-Muslim rhetoric and his open admiration for India.
At the bilateral level, India will continue to be seen as a significant strategic partner of the US. The introduction of an India-specific law during the last lap of the Obama administration that enables greater defence cooperation will be nurtured.
Trump faces an incongruity of policies because the angry, forgotten men and women who propelled him to Oval Office demand a greater share of the economic spoils that globalisation promised but failed to deliver. A tiny few seemed to have gotten richer in a globalised world at the expense of a vast number of the discontented, and the inequality of wealth has caused an angry populace to install a protectionist leader at the helm. Trump vowed, just like Nigel Farage (the father of Brexit) did, that he would slap duties, taxes and tariffs but in a world which runs on interconnectivity, that would mean raising costs of the nuts and bolts of the engine that drives America.
The American economy depends on access to a global supply chain that produces parts used by innumerable industries, along with a great range of consumer goods. Mexico and China are central actors. Disruption threatens to increase costs for American households. Tariffs on China might provoke a trade war that could slow economic growth, while most likely just shifting factory work to Vietnam and India. If America raises the cost of trade with China, India stands to benefit in more ways than one.
This has been the biggest area of concern for Indians. Given the fact that we are witnessing a global backlash against softer borders and easier immigration policies, one may be inclined to think that Trump's term might be bad for India's IT industry. But the reality isn't so simple. Trump has been contradictory, at certain times he has been praising the contribution made by skilled Indian workers and at other times needling US companies for hiring them in large numbers.
Trump is in favour of bringing skilled foreign workers into the US, as long as they come legally. He has also canvassed for increasing the H1B visa fees to pressurise US companies into hiring domestic workers.
When it comes to government to government relationship, A Trump regime might be just what the doctor ordered for India, which is boxed in by an irritant in Pakistan and a formidable power in China. Indo-US areas of interest converge on a number of issues and Trump, for one, has not been hesitant in calling India America's "natural ally".
Indian wonks and political leaders should find it easier to deal with a businessman rather than a career politician like Clinton who carried a greater understanding of bilateral relations but also a huge baggage of past mutual suspicion. Trump, who still has large business interests in India, should be a refreshing change.
The sub-text of the US relationship with India since the nuclear rapprochement of late 2008 has been the strategic underpinning to the bilateral relationship and this is where the manner in which the Trump team defines its Asian policy will be critical for India.
During the election process, Trump promised to lower taxes and increase military expenditure. It is assumed that to fulfil these promises, Trump will use government money that may lead to a debt burden and a falling dollar. And a recession in US, would obviously adversely affect investment and growth across the world, including India.
Then there’s the fact that Trump has openly expressed dislike for Pakistan. He’s really suspicious of the country. This distrust for Pakistan can work in India’s and the world’s favour. Whereas, the Obama policy was one of muted acceptance of a fait-acompli that Rawalpindi is both the problem (US troops being killed by US taxpayers’ money given as aid to the Pakistani military) and the solution–to ensure the safety of US troops stationed in Afghanistan and its periphery. While Trump has been antithetical to this view.
The personal equation between leaders:
Trump has never hidden his admiration for Narendra Modi and has been effusive in his praise for Hindus and Indians. He has praised Modi's leadership, his effort to simplify the tax system through GST and on his part, Modi has carefully veered away from reacting to any of the controversies that dogged Trump during the election campaign. With a better personal equation between the two leaders, Indo-US relationship should remain on the path of a greater synergy.
The US, Russia, China and India are now grappling with the contradictory compulsions of 21st century globalization and the Trump advocacy of ‘make America great’ will be carefully studied. Is the US likely to retreat and adopt an isolationist economic and trade policy and is this a viable option? Will the US-Russia bilateral relationship become more accommodative of Moscow’s strategic anxiety? And what of climate change? Will this also be jettisoned?
The answers to these questions will point to the contours of opportunities and challenges of what the Trump presidency will mean for India. Uncertainty is in the air.