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A new star playing to an old script in India

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Author: Arun Swamy, University of Guam

The story of 2014 in India was the story of Narendra Modi’s rise from chief minister of Gujarat to prime minister of India. Son of a tea stall owner and once associated with the 2002 massacre of Muslims on his watch as chief minister, Modi electrified the electorate during a six-month campaign. He led his Bharatiya Janata Party (BJP) to an absolute parliamentary majority for the first time, while reducing the long dominant Indian National Congress (INC) to a seat total too low to qualify for official parliamentary opposition status. In office since May, Modi has taken a flurry of high profile international visits. This led Singapore’s Straits Times to choose him as their Asian of the Year, while readers of Time magazine voted for him Person of the Year. But it is unclear if much has really changed.

India's Prime Minister Narendra Modi. The story of 2014 in India was the story of Modi’s rise from chief minister of Gujarat to prime minister of India. (Photo: AAP).

A trip to the United States in September was illustrative. An unqualified public relations success, it included a rapturous reception from the Indian-American community at New York’s Madison Square Garden, being feted by Hollywood celebrities in Central Park, and a UN General Assembly speech which featured a call for an international yoga day. An op-ed jointly authored with President Barack Obama spoke in glowing terms of shared values and interests. Obama agreed to be guest of honour at India’s annual Republic Day celebration in January 2015. Yet, substantively, Modi’s US visit achieved only modest gains, with a billion dollar package aimed at promoting clean energy in India taking centre-stage.

Modi’s visits with other world leaders confirm the continuity in Indian foreign policy. A trip to Brazil reaffirmed India’s commitment to the BRICS group’s efforts to balance the West. A state visit to Japan and visits to India by Chinese President Xi Jinping and Russian President Vladimir Putin resulted in many substantive agreements. India’s Look East strategy was underscored with trips to Fiji, to Myanmar to attend the ASEAN summit, and to Australia where Modi combined a G20 summit with a state visit and addressed the Australian parliament. The Putin visit stands out. While the West worked to isolate Russia over Ukraine, Modi reaffirmed Russia’s historic ties to India, including as India’s principal defence supplier. Perhaps the only important shift in India’s foreign policy is a shift on the Middle East in favour of Israel.

While Modi’s foreign policy makes clear his priority is development, this may not presage sweeping liberalisation. Unabashed in his desire for foreign investment, especially in infrastructure, Modi’s approach to trade negotiations remains nationalistic, most prominently by vetoing a WTO agreement over provisions on agricultural subsidies. Moreover, the government does not enjoy a majority in the upper house of parliament, elected by state legislatures, which is preventing critical economic legislation from passing. The reform agenda has therefore consisted of efforts to speed up bureaucrats, weaken environmental regulations, and mobilise civil society through quixotic initiatives like Swachchh Bharat (mobilising volunteers to ‘clean India’), and the Saansad Adarsh Gram Yojana, which encourages members of parliament to adopt one village in their constituency as a model village.

The BJP’s winning streak in state elections may change this. Of four elections since May, the BJP has won three — Maharashtra in the west, Haryana in the north and Jharkhand in the east. All were previously under INC-led governments. It also emerged, for the first time, as contender for power in the disputed, Muslim-majority state of Jammu and Kashmir. Nationally, the INC appears in complete disarray with Muslims — one of its core constituencies — turning away. Meanwhile, powerful anti-BJP chief ministers in Tamil Nadu and West Bengal have faced major corruption charges, weakening their ability to anchor anti-BJP alliances. The only sign of life in the opposition is the potential merger of various regional factions of the erstwhile Janata Dal.

The Kashmir elections highlighted the absence of progress on relations with Pakistan. The meeting of the South Asian Association for Regional Cooperation (SAARC) in Nepal was dominated by reports of a Modi snub to Pakistani Prime Minister Nawaz Sharif and a subsequent handshake. But the Modi government has not adopted a more aggressive posture toward Pakistan, either. It appears to be reaching out actively to other neighbours, such as Bangladesh, with whom Modi appears to have overruled more hardline views in his own party on a border dispute, and Sri Lanka, whose record on treatment of its Tamil minority is controversial among Indian Tamils.

One cause for concern is the sway of the BJP’s core Hindu nationalist constituency. Several actions appear to politicise education and weaken India’s commitment to secularism. These include: the appointment of a controversial scholar to head the main historical association with oversight over textbooks; a mid-year decision to replace the teaching of German with Sanskrit in government schools; and proposals to declare the Bhagavad Gita a ‘national scripture’. Actions by legislators, regional leaders or allied organisations have also caused the government embarrassment. Apparently anti-Muslim statements in Parliament by a minister, the declaration that the Taj Mahal was a Hindu site, and apparent attempts at the forcible conversion of Muslims to Hinduism all feed into these concerns.

But in all other areas, the BJP has governed conventionally. The perfect metaphor for Modi’s first six months in office was India’s successful launch of a probe to orbit Mars. While the launch fit neatly into Modi’s favourite rhetorical motif of India as an ancient civilisation finally on the move again, the groundwork was laid by the previous INC government. In this, as in much else, Modi is reading a script written by his predecessors — albeit with more style. For a new script, we will have to wait.

Arun R. Swamy is Associate Professor of Political Science at the University of Guam.

This article is part of an EAF special feature series on 2014 in review and the year ahead.

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A new star playing to an old script in India

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ASEAN weathering the COVID-19 typhoon

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Vietnam's Prime Minister Nguyen Xuan Phuc addresses a special video conference with leaders of the Association of Southeast Asian Nations (ASEAN), on the coronavirus disease (COVID-19), in Hanoi 14 April, 2020 (Photo:Reuters/Manan Vatsyayana).

Author: Sandra Seno-Alday, Sydney University

The roughly 20 typhoons that hit Southeast Asia each year pale in comparison to the impact on the region of COVID-19 — a storm of a very different sort striking not just Southeast Asia but the world.

 

Just how badly is the COVID-19 typhoon thrashing the region? And what might the post-crisis recovery and reconstruction look like? To answer these questions, it is necessary to investigate the strengths and vulnerabilities of Southeast Asia’s pre-COVID-19 economic infrastructure.

Understanding the structure of the region’s economic house requires going back to 1967, when Southeast Asian countries decided to pledge friendship to one another under the ASEAN framework. While other integrated regions such as NAFTA and the European Union have aggressively broken down trade barriers and significantly boosted intra-regional trade, ASEAN regional economic integration has chugged along slower.

Southeast Asian countries have not viewed trade between each other as a top priority. The trade agreements in the region have been forged around suggestions for ASEAN countries to lower tariffs on intra-regional trade to within a certain range and across limited industries. This has lowered but not eliminated barriers to intra-regional trade. Consequently, a relatively significant share of Southeast Asian trade is with countries outside the region. This active extra-regional engagement has resulted in ASEAN countries’ successful integration into global value chain networks.

A historically outward-facing region, in 2010 around 75 per cent of Southeast Asian commodity imports and exports came from countries outside of ASEAN. This share of extra-regional trade nudged closer to 80 per cent in 2018. This indicates that ASEAN’s global value chain network embeddedness has deepened over time.

Around 40 per cent of ASEAN’s extra-regional trade is with the rest of Asia. From 2010 to 2018 Southeast Asian countries forged major trade relationships with four Asian countries: China, Japan, South Korea and India. Outside Asia, the United States is the region’s major trading partner. ASEAN’s trade focus on Asia’s largest markets is not surprising. Countries tend to establish trade relationships with large, geographically close, and culturally similar markets.

Fostering deep relationships with a few large markets, however, is a double-edged sword. While it has allowed ASEAN to benefit from integration in global value chains, it has also resulted in increased vulnerability to the shocks affecting its network connections.

ASEAN’s participation in global value chains has allowed it to transition from a net regional importer in 1990 to a net regional exporter in 2018. But the region’s deep embeddedness in a small and tightly-coupled network cluster of extra-regional global value chain partners has exposed it to disruption to any and all of its external partners. By contrast, ASEAN’s intra-regional trade network structure is much more loosely-coupled: a consequence of persistent intra-regional trade barriers and thus lower intra-regional trade intensity.

In the pre-COVID-19 period, ASEAN built for itself an economic house held up by just five extra-regional markets, while doing less to expand and diversify its intra-regional trade network. The data shows that ASEAN trade became increasingly concentrated in these few external markets between 2010 and 2018.

This dependence on a handful of markets does not bode well for risk and crisis management. All of the region’s major trading partners have been significantly affected by COVID-19 and this in turn is blowing the ASEAN economic house down.

What are the ways forward? The immediate task at hand is to get a better picture of the region’s position in global value chain networks and to get on top of managing its network risk exposure. Already there are red flags around the region’s food security arising from its position in food value chains. It is critical to look for ways to introduce flexibility into existing supply chains for greater agility in responding to crises.

It is also an opportune time for ASEAN to harness the technology transfer gains of global value chain participation and invest in innovation-driven diversification of products and markets. The region’s embeddedness in global value chain networks certainly places it in a strong position to readily access large export markets not just in Asia but also Europe and the Americas.

Over the longer term, ASEAN is faced with the question of whether it should seriously look…

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Tiger Trade Launches SGX Trading, Meeting Demand from Asian Investors

Access to the Singapore Exchange (SGX) adds to Tiger Brokers’ current menu of stock exchanges, such as the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (NASDAQ), the world’s two largest stock exchanges, as well as the Hong Kong Stock Exchange (HKEX).

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SINGAPORE (ACN Newswire) – Tiger Trade, a one-stop mobile and online trading application by Tiger Brokers, has launched access to the Singapore Exchange (SGX).

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Can Asia maintain growth with an ever ageing population ?

To boost productivity in the future, Asian governments will have to implement well-targeted structural reforms today.

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Asia has been the world champion of economic growth for decades, and this year will be no exception. According to the latest International Monetary Fund Regional Economic Outlook(REO), the Asia-Pacific region’s GDP is projected to increase by 5.5% in 2017 and 5.4% in 2018. (more…)

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