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The U.S. Bets on Modi

September 23, 2014

Wall Street Journal/ By Daniel Twining

America anticipates an Indian resurgence that could tilt Asia's power balance.

India's Narendra Modi was once subject to a U.S. visa ban for failing to halt communal violence while chief minister of Gujarat. He meets President Obama at the White House on Sept. 29 as an honored guest. Prime minister of the world's second-most populous country, with the biggest electoral mandate of any Indian leader in decades, he can afford to be magnanimous about former slights. The two leaders should embrace an agenda that strengthens their role as democratic and economic counterweights to growing global disorder.

Obama might envy what Mr. Modi has already accomplished: India's stock market is up 30%, growth has surged to nearly 6%, and the defeated Congress Party is so feeble it cannot even lead India's fractured opposition. Mr. Modi makes the political weather in his country, whereas Obama seems a bystander in his own. But their countries' common interests compel cooperation.

India urgently needs American technology, investment, energy and trade to reform a still-statist economy that sputtered badly under the previous government and lacks the foundations for Chinese-style growth. India could also use American support to manage a dangerous security environment featuring a witches' brew of Pakistani-based terrorism, internal insurgency and tensions with a revisionist China driven by what Mr. Modi calls an "18th century expansionist mindset." His recent summit with Xi Jinping was overshadowed by a military standoff along their border.

America anticipates an Indian resurgence that could tilt Asia's power balance in a democratic direction and drive global growth. A thriving India could also uplift the region, including troubled Pakistan. As sectarian violence engulfs the Middle East, India and its nearly 200 million Muslims exemplify relative tolerance. The United States has a considerable stake in India's success.

Refreshingly, Mr. Modi has said all things are possible between India and America—even a strategic alliance. But the two countries still have much distance to travel to create one. An agenda for the Obama-Modi summit should encompass five critical areas for cooperation: defense, energy, trade and investment, the future of Afghanistan and the crisis in the Middle East.

India is the world's largest arms importer. America is its principal supplier of military hardware, and Indians exercise more with U.S. armed forces than with anyone else. It is now time to engage in joint planning for contingencies that impact both countries. Mr. Modi's liberalization of foreign investment in the defense sector and pending renewal of a 10-year U.S.-India defense agreement offer a chance to work together to propel India's military modernization.

India faces chronic developmental bottlenecks from energy supply constraints. The 2008 Indo-U.S. civilian nuclear deal was designed to help—but Indian liability laws made it impossible to implement. The new team in New Delhi should push through enacting legislation as part of a pro-growth package of reforms. America could also supply natural gas as India opens its energy market to international investment. This would be a bounty for a country overly reliant on risky Middle Eastern suppliers.

And it is surely time for a U.S.-India investment treaty that opens the way to a broader agreement covering trade, technology and knowledge workers; after all, America remains India's largest trading partner in goods and services combined. Messrs. Obama and Modi should clear away the bureaucratic underbrush to make it happen. India's exclusion from the Trans-Pacific Partnership and obstructionism at the World Trade Organization could otherwise marginalize it from the global trading system at a time when almost half India's GDP is tied to the world economy. Integration into global supply chains is a developmental imperative.

India and America have high stakes in preventing Afghanistan from spiraling back into warlordism after Western forces withdraw. Indians recall that the 1999 hijacking of Air India made them—not Americans—the first foreign victims of the Taliban's alliance with Al Qaeda and other extremists. Washington and New Delhi should develop a joint plan to expand training of Afghan security forces and enhance India's stabilizing economic and diplomatic role.

Even more pressing, the victories of Islamic State compel a closer degree of Indo-U.S. collaboration. India's Arab allies—and principal energy suppliers—are all part of the U.S.-led anti-IS coalition; even China is considering cooperating. New Delhi opposed action in Libya and Syria at the United Nations and has taken a hands-off approach to the region. But how can India—home to as many Muslims as Iraq, Syria, Libya, Saudi Arabia, and Egypt combined—sit this one out?

Prime Minister Modi recently said that modern countries can follow two paths—vistarvad (expansionism) or vikasvad (peaceful development). India and America are aligned in the second camp. Mr. Modi urgently needs to revitalize India's economic fortunes and manage pressing security challenges. For both he could use, and deserves, American help.

Mr. Twining is senior fellow for Asia at the German Marshall Fund of the United States.

(The views expressed above are the personal views of the author)

The U.S. Bets on Modi


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