Modi, Sharif break ice with handshake in Himalayas

Sachin Parashar,TNN | Nov 28, 2014, 01.51 AM IST

Prime Minister Narendra Modi shakes hand with his Pakistani counterpart Nawaz Sharif. (PTI photo)

KATHMANDU: It took a Himalayan retreat at Dhulikhel, about 20 km from Kathmandu, for PM Narendra Modi and his Pakistani counterpart Nawaz Sharif to break some ice after the foreign secretary-level talks debacle in August.

There was at least a semblance of a thaw as Modi shook hands with Sharif and exchanged greetings at a resort terrace overlooking a wide expanse of the Himalayas and later followed it up with an even longer shaking of hands back in Kathmandu in the evening as the 18th Saarc summit ended "successfully". At the summit venue in Kathmandu, the two leaders were cheered by other Saarc leaders as they shook hands for nearly 40 seconds and posed for the cameras.

There was no substantive "one-on-one" dialogue between the two leaders at any stage but the interaction and long handshake towards the end was enough to spark hope, if not expectations, about a possible resumption of dialogue between the two countries after ties seemed to have taken a debilitating blow in August.

"We want to have peaceful relations with Pakistan, a meaningful dialogue and if this interaction or handshake leads to it, we will welcome that," said MEA spokesperson Syed Akbaruddin.

PM Modi and Nawaz Sharif were cheered by other Saarc leaders as they shook hands for nearly 40 seconds and posed for the cameras.

The fact that Pakistan relented and agreed to sign a framework agreement for energy cooperation, which the Indian cabinet had cleared last week in anticipation of a Saarc agreement, also seemed to have given Modi enough leeway to be seen in public as bonding with Sharif. Pakistan seemed to have indicated in the morning that it was looking for a successful conclusion of the agreement during the day. India described Modi's first Saarc outing as a "success" after the signing of the agreement.

At the Dhulikhel retreat, the two leaders also sat close to each other while leaders bonded over a vegetarian lunch sampling delicacies from all Saarc countries in a "convivial atmosphere''. At the retreat, as host, Nepal PM Sushil Koirala apparently played a role in getting Modi to shake hands with Sharif but Indian officials said Modi greeted Sharif as he did other leaders. "They exchanged greetings, courtesies were extended,'' said the spokesperson.

While there were reports that Sharif expressed disappointment towards the end that he could not have a bilateral meeting with Modi, Indian officials said they were not aware of any such sentiment expressed by the Pakistani side, adding that Saarc is not just about India and Pakistan. Sharif's advisor on foreign affairs Sartaj Aziz too described the summit as successful saying Saarc is not just India and Pakistan.

Interaction between PM Narendra Modi and Nawaz Sharif sparked hope, if not expectations, about a possible resumption of dialogue between the two countries.

The thaw followed fresh chill in ties when Modi on Wednesday had bilateral meetings with all Saarc leaders except Sharif, with neither side approaching the other with proposal for a structured dialogue. Pakistani officials expressed hope that the interaction in Kathmandu will lead to a more substantive engagement. India cancelled the scheduled talks between foreign secretaries in August after the Pakistan High Commissioner, Abdul Basit, chose to have a "routine'' meeting with Hurriyat leaders before the dialogue. Modi then was blamed by some for having set the bar so high for facilitating any India- Pakistan dialogue that ties could remain frozen for years.

READ ALSO: Modi, Sharif maintain distance at Saarc summit

India, however, stuck to its stand saying that this was actually the first time that a Pakistan high commissioner had met separatists in India before any scheduled dialogue in Pakistan. Modi himself saw the meeting with Hurriyat as making a spectacle of his initiative to reach out to Islamabad by inviting Sharif to his swearing-in. Modi saw the decision to hold foreign secretary-level talks as a concession to Pakistan after Islamabad under Sharif seemed to suggest that it is genuinely interested in improving ties.

Recent Messages (33)

Sid Harth • 3 mins ago

Speaking at New York's Madison Square Garden in September, Modi underlined an important reality about India. If the US had people from all over the world within its borders, Modi said Indians are everywhere contributing to progress across the world. This notion of a "universal India" applies to the subcontinent as a whole. If the Indian diaspora today is estimated to be around 25 million, the strength of the overseas communities from the rest of South Asia — Pakistan, Bangladesh, Nepal and Sri Lanka — is said to be around 15 million. Like the Indian diaspora, these communities boast of considerable wealth, and are as enthusiastic to contribute to the welfare of their respective countries. In the last few years, there has been competitive mobilisation of their respective diasporas by Delhi and Islamabad in pursuit of their foreign policy goals. Some communities with real grievances, like the Tamils and Sikhs, have been vulnerable to manipulation by extremist groups. Overall, the South Asian overseas communities have stood for political moderation, regional reconciliation and economic modernisation of the subcontinent. Modi has a rare opportunity to tap into these positive trends within the South Asian diaspora. An intensive engagement with the South Asian diaspora would be a valuable complement to Modi's declared strategy of befriending neighbours. Modi could signal the new approach by meeting representatives of the South Asian diaspora during his extended visit to Australia this month. (The writer is a Distinguished Fellow at Observer Research Foundation, Delhi and a Contributing Editor for 'The Indian Express') Courtesy : The Indian Express, November 6, 2014

Sid Harth • 3 mins ago

Things began to change only in the early 1990s, as India sought to mobilise the wealth of the Indian diaspora in support of economic liberalisation. Atal Bihari Vajpayee went a step further when he called for a more intimate relationship with Indian communities abroad. Yet, the gains were limited, despite the new and grudging respect for successful NRIs abroad and more attention to the welfare of Indian expatriate labour. The continuing obstacles to external involvement in India's development and persistent bureaucratic suspicion of "foreigners with Indian faces" meant there was little the overseas communities could do beyond lending money at high interest rates. Under UPA rule, even visiting India had become harder, as Delhi tightened the visa system after the 26/11 attacks on Mumbai. Modi appears determined to engineer a more comprehensive partnership for development with the overseas communities. His promise to improve the ease of doing business, liberalise the visa system and the invitation to participate actively in the acceleration of national development have resonated with Indian communities abroad. The success of Modi's new initiatives will indeed depend on the pace and credibility of internal change in India. Meanwhile, there is no denying the fact that India's internal divisions are fully reflected in the attitudes of the diaspora towards Modi. Rapid economic growth and sustained domestic peace are critical for reducing hostility within sections of Indian communities abroad.

Sid Harth • 3 mins ago

As he heads east later this month to Myanmar and Australia, Modi is likely to stop at Fiji, which, along with Mauritius and the Caribbean, showcases the global footprint of the South Asian labour migration from the early 19th century. The Indian community in Australia is gearing up to organise a massive public reception in Sydney. They hope to go one better than the spectacular event at New York's Madison Square Garden in September. Modi's approach to the diaspora is a significant break from independent India's policies, which were defined by either condescension or instrumentalism. If developed further, the policy could resemble the pre-Partition imagination of a "Global India" unfettered by territoriality. Jawaharlal Nehru took a legalistic approach towards overseas Indians. He insisted that Delhi's interest in the people of Indian descent should be strictly limited to humanitarian and cultural fields. Nehru encouraged Indian communities to be loyal to their new homelands and was reluctant to engage with their concerns, given his focus on promoting solidarity among postcolonial states. At the operational level, though, Delhi's new elite viewed the descendants of Indian labour with the disdain that comes naturally to the middle class, and was embarrassed by the riches of the Indian merchant communities around the world, which were accused of being too exploitative of the local population. By the late 1960s, Delhi began to frown at "brain drain" as a new wave of outward migration, amid growing frustration with the lack of opportunities at home.

Sid Harth • 4 mins ago

Imagining Greater India C. Raja Mohan 06 November 2014 Reports that local Pakistani businessmen are joining the Indian community to welcome Prime Minister Narendra Modi in Australia later this month point to many interesting political possibilities that await New Delhi as it vigorously cultivates the diaspora. If Modi looks beyond the "Indian" diaspora and seeks out the much bigger overseas "South Asian" community, he could find novel ways to limit the contestation between Delhi and Islamabad, strengthen ties with smaller neighbours and reinforce India's quest to promote regional economic integration in the subcontinent. Above all, such an approach could help Delhi imagine a "Greater India" that is not defined in narrow territorial or divisive religious terms. It could make India, and the subcontinent as a whole, more attractive to investments by the South Asian diaspora and restore the collective weight of the region on the global stage. Few governments in independent India have devoted as much attention to the diaspora as the Modi government has. Consider two recent trips abroad by External Affairs Minister Sushma Swaraj. This week, she was in Mauritius, marking the 180th anniversary of the arrival of the first group of Indian indentured labour at Port Louis and the beginning of an extraordinary migration from the subcontinent. A few weeks ago, Swaraj was in London to attend a regional meeting of the "Pravasi Bharatiya Divas". She spent her first few weeks in office focusing on rescuing Indian citizens caught in the Iraqi civil war.

Sid Harth • 4 mins ago

While deeming Rajnath Singh's visit as "very significant", Prime Minister Netanyahu has conveyed Israel's keenness to be a part of Modi's "Make in India" campaign. "Israeli industries, including the defence industries could 'make in India' and thereby reduce costs of manufacturing products and systems developed by Israel", the Prime Minister stated. Prime Minister Modi invited up to 49 per cent foreign investment in India's defence sector, under the "Make in India" project. Since the partition of the subcontinent, India's Israel policy has been influenced by ideological inhibitions and domestic politics. Traditionally, the Indian leadership has been opposed to the creation of a state based on religion. Moreover, given a large Muslim population, internal criticism over New Delhi's position towards Israel has been largely articulated through the Islamic prism. Concerns over moderating Pakistan's influence in the Gulf and the Islamic world have also been reflected in India's diplomatic relations with Israel. However, India's huge stakes with Israel and the Arab world have necessitated that New Delhi approach each relationship independently. Israel and the Arab states also want a stronger partnership with India and political transformations in the region have evolved the traditional nature of the Arab-Israeli dispute. Common strategic interests and diplomatic pragmatism, thus, have marked the Modi administration's policy towards Israel. (The writer is a Junior Fellow at Observer Research Foundation, Delhi)

Sid Harth • 5 mins ago

Despite strong defence and trade ties with Israel, the UPA government did not initiate any significant diplomatic activism towards Tel Aviv. The only senior ministerial level visit to Tel Aviv during the UPA government's tenure from 2004-2014 was that of then Foreign Minister SM Krishna's trip to Israel in 2012. His visit, however, was termed as a "regional visit" and included trips to Jordan, the UAE and the Palestinian National Authority in West Bank. Before Rajnath Singh, L.K. Advani was the last Indian Home Minister to visit Israel in 2001. L.K. Advani, accompanied by then Foreign Minister Jaswant Singh, set up the Indo-Israeli Joint Working Group on Counter-terrorism. A Joint Defence Cooperation Group was also established in 2001 and since then, defence and counter-terrorism cooperation have been the hallmark of Indo-Israeli bilateral relations. In 2003, then Israeli Prime Minister Ariel Sharon visited India and the two states inked a number of bilateral agreements. However, the UPA government failed to maintain the momentum with reciprocal high-level engagements with Israel. Following Modi's electoral victory, the BJP government has provided a boost to India-Israel ties. It is increasingly speculated that Modi will become the first Indian Prime Minister to visit Israel. Sushma Swaraj, the new Foreign Minister, has also stressed on the importance of deeper engagement between India and Israel. Swaraj met with Israeli Minister of Foreign Affairs Avigdor Liberman in New York on October 1, 2014 and accepted his invitation to visit Israel in 2015. Sushma Swaraj has held the post of the Indo-Israeli Parliamentary Friendship group since 2006.

Sid Harth • 5 mins ago

India-Israel relations: From UPA to Modi Kanchi Gupta 12 November 2014 Displaying a shift from the previous Indian administration, the Modi government has initiated high-level political engagement with Israel. Prime Minister Narendra Modi met with his Israeli counterpart, Benjamin Netanyahu, at the sidelines of the United Nations General Assembly in New York in September. Soon after, Union Home Minister Rajnath Singh travelled to Israel in November on his first trip outside India after assuming office. Simultaneously, Prime Minister Modi also received former Israeli President Shimon Peres on November 6, 2014. President Peres was in India to boost cooperation in trade and technology, as well as to launch the Australia-India-Israel joint project on technological research and development. He also met Congress President Sonia Gandhi. Peres referred to Modi as a "world leader, a true partner in confronting global challenges and a friend of Israel". Modi cultivated deep ties with Israel as the chief minister of Gujarat. He took new initiatives including pharmaceuticals, water management, water recycling plants, agro-research, advanced agriculture technologies, and solar power. Modi invited Israel to partner in the 2014 Gujarat Agro Tech Global Fair. Now it has been proposed to set up a corpus fund for industrial development. While in New York, Modi and Netanyahu agreed to expand cooperation in the above fields and discussed computer software and cyber security as emerging areas of collaboration. Prime Minister Netanyahu extended an invitation to Modi to visit Israel. Modi had visited Tel Aviv in 2006, when he was the Gujarat Chief Minister. Modi's outreach then to Israel was developed independent of the policies of the Congress-led UPA government that came to power at the centre in 2004.

Sid Harth • 7 mins ago

Expectations from the Summit The three declarations on energy and connectivity that will be tabled on the 26th of November are of great importance to the long term goal of regional integration of South Asia. However, whether these declarations will lead to the political commitment to time-bound projects, especially in the joint construction of cross-border electricity transmission lines, and road and rail networks, is up for debate. On the other hand, as substantiated in the analysis above, the Islamic State and the Ebola virus pose immediate threats to the region, which also need to be accounted for, not simply by highlighting them in speeches and declarations, but through exploring ways of using the existing mechanisms in SAARC to undertake timely action. Over its 29 years of existence SAARC has come under a substantial amount of criticism for its lack of progress in stimulating cooperation. However, it stands to reason that as the preeminent regional body, it is the only channel through which both the long term visions of regional energy cooperation and transport connectivity and the immediate needs of confronting the IS and Ebola can be achieved collectively. (The writer is a Visiting Fellow at Observer Research Foundation, Delhi and a PhD candidate at the Centre for Social Responsibility in Mining, the University of Queensland)

Sid Harth • 7 mins ago

The Ebola virus: The Ebola Virus has so far killed 5,420 people in the West African region. The highly contagious nature of Ebola combined with poor health infrastructure, low patient to doctor ratios, high population densities and porous borders make South Asia particularly vulnerable to this deadly disease. Although the SAARC Health Ministers launched the SAARC Regional Strategy on Communicable Diseases in 2012, one wonders why there have not yet been any emergency meetings at the SAARC level on the dangers posed by Ebola, considering that such a meeting was held in 2003 to address the breakout of the Severe Acute Respiratory Syndrome (SARS) virus. Although Ebola is likely to come up for discussion, declarations and recommendations are hardly adequate to contain a disease that can have catastrophic consequences for the region. In this regard, prompt and collective action is required to set up a regional monitoring cell, comprising health, customs and border protection officials. A contingency plan in the event of an outbreak also needs to be drafted and ratified.

Sid Harth • 8 mins ago

Immediate threats The agreements discussed above can have great economic, political and social benefits in the long-term. However, South Asia currently faces grave external threats which have not yet seen a concerted regional response. This section examines whether the upcoming SAARC summit has any relevance towards efforts to counter two contemporary threats facing the region: the rise of the Islamic State (IS) and the Ebola Virus. The Islamic State: The rise of the IS has not only thrown West Asia into chaos, it has the potential to have severe security concerns for South Asian countries. Already, the brutal terrorist organization has made its mark in Bangladesh, where one recruiter and three would be recruits have been arrested. In India, the IS has made overtures to recruit youngsters with reports of Indian citizens joining the group in recent months. Pakistan and Afghanistan, already reeling with home-grown insurgencies have also been the target of recruitment and propaganda by the IS. The ratification of the SAARC Regional Convention on the Suppression of Terrorism and its Additional Protocol in 1988 and the creation of the SAARC Terrorist Offences Monitoring Desk (STOMD), which is meant to form a collective pool and source of information related to terrorism, has had little or no impact on the reduction of terrorism in the region. The last meeting of the STOMD was held as far back as 2011. The need to collectively counter terrorism is bound to come up for discussion in Kathmandu, with Prime Minister Sheikh Hasina declaring her intention to speak about the issue. However, given the use of social media and internet chat sites by the IS to recruit members from South Asian countries, the need to increase the cooperation via the STOMD, particularly in the realm of cyber monitoring and information sharing among customs officials, should be implemented without further delay.

Sid Harth • 8 mins ago

From the very limited information that is available on the agreements, one question that may be asked is whether provisions have been made in the three agreements for the collective development and upgrading of energy, road and rail infrastructure and if any of the segments of cooperation have time-bound deliverables. The term collective is important here, as the purpose of energy and connectivity should not be limited to economic goals but they can also be used as confidence building measures between the countries of South Asia. For this to happen, the responsibility of reviving the Grand Trunk Road or implementing the SAARC Energy Grid would be best undertaken by a regional organization that can coordinate with national actors. The piecemeal approach of national actors working towards a regional goal by developing infrastructure only within their own territories would not have the desired level of efficiency or technical expertise as compared to the holistic approach of a regional body. A legitimate argument against this notion is that a regional body will unnecessarily complicate and even delay projects. However, a long-term vision will justify the necessity of a regional approach as it can have the essential impact of binding together the bureaucratic and technical elements in South Asia, which will increase the variety of stakeholders in the integration process and incentivize peace building. It needs to be reiterated that the impact of all three agreements will be magnified if time-bound deliverables are factored in during subsequent follow-up meetings at the Ministerial or Secretarial levels. These deliverables should not be constrained to the formation of groups or the commissioning of studies but constitute of actual progress in issues such as land acquisition, environmental clearances and the floating of tenders.

Sid Harth • 8 mins ago

Long-term goals of the 18th SAARC Summit The upcoming SAARC summit is expected to see the signing of three important declarations: 1) SAARC Framework Agreement for Energy Cooperation (Electricity) 2) Motor Vehicle Agreement for the Regulation of Passenger and Cargo Vehicular Traffic 3) SAARC Regional Agreement on Railways The exact details of the three agreements are yet to be released. However, at the risk of speculation, media reports have suggested that the agreement on energy will cover issues such as the enabling of cross border trade in electricity, the development of a common regulatory mechanism, considerations of the waiving of customs fees and the promotion of competition in the energy market. For Bangladesh, gaining access to the electricity market in Bhutan and Nepal through Indian territory will be of primary importance, while India’s extensive portfolio is expected to include the transmission of electricity from the North East through Bangladesh. The motor vehicle agreement will allow vehicles of South Asian states to ply in their neighbourng countries’ territories for transportation of cargo and passengers, while the rail agreement is meant to enable low-cost, energy efficient and environmentally sustainable transportation in the SAARC region.

Sid Harth • 9 mins ago

Indo-Pak rivalry: One of the greatest impediments to the functioning of SAARC has been the continued military and political conflict between the nuclear armed India and Pakistan. In the face of continued rivalry and the perception among some policymakers in Pakistan that economic and other issues must take a backseat unless the Kashmir dispute is resolved, the SAARC summits of late has been termed by one analyst as the ’India-Pakistan show’. Pakistan has also refused to give ’Most Favoured Nation’ status to India, and the low level of trade between the two countries has had a crippling effect on the goal of regional economic integration. Ironically although Article X was meant to insulate SAARC from bilateral and contentious issues, the very functioning of SAARC has been undermined by this bilateral dispute between India and Pakistan. These two are among a range of issues that have held back SAARC as a regional institution. However, as has been documented by Murthy (2000), SAARC not only remains to be the pre-eminent regional institution in South Asia, but many major breakthroughs have been achieved in reducing tensions between India and Pakistan on the sidelines of Summits. Analysts such as Jha (2007) have rightly stated that there is great scope for cooperation between SAARC countries on non-controversial issues such as the environment. In this light, how the three agreements that are expected to be signed can best facilitate the long-term goals of regional energy integration and connectivity needs to be examined.

Sid Harth • 9 mins ago

Constraints of SAARC: • A restrictive mandate: The creation of SAARC by Bangladesh’s President Ziaur Rahman was initially looked upon with suspicion by both India and Pakistan. India suspected SAARC to be a platform that will be used by the smaller South Asian countries for ’ganging up’ against it, while Pakistan viewed it as an instrument of perpetuating Indian hegemony in the subcontinent. Subsequently, India insisted on the adoption of Article X within the SAARC Charter. This article has two provisions: Firstly it enshrined the principle of unanimity in decision making, and secondly it excluded all bilateral and contentious issues from deliberations (SAARC 1985). These two provisions and India’s general preference of bilateralism over multilateralism has constrained the decision making powers of SAARC and effectively eschewed the discussion of critical issues that have been labeled ’contentious’, thereby perpetuating conflicts which in turn impinged on regional cooperation.

Sid Harth • 10 mins ago

SAARC Summit: Long term opportunities and immediate threats Mirza Sadaqat Huda 24 November 2014 Since its inception in 1985, the efficacy of the South Asian Association for Regional Cooperation (SAARC) as a viable institutional mechanism that can facilitate the collective development and security of the region has come under increasing scrutiny. As the heads of the eight South Asian nations meet at the 18th SAARC Summit on November 26 in Kathmandu, one may be forgiven for questioning whether any concrete results are likely to emerge, or if the self defeating cycle of summits that lead to declarations to form expert groups, who create studies that ultimately gather dust in libraries and bureaucratic shelves is bound to continue. Despite the failures of the past, the repeated declarations by the Indian Prime Minister Narendra Modi of the need to reinvigorate ties with neighbouring states have created a renewed interest in the possibilities of multilateral cooperation under SAARC. As the leader of the founding member country of SAARC, Bangladesh’s Prime Minister Sheikh Hasina has consistently emphasised on the need for greater cooperation in the region. A certain sense of hope has been created via statements by the Indian and Bangladeshi governments to sign declarations on the crucial issues of energy and connectivity at the Summit. However, whether these declarations have any specific time-bound provisions for implementation, particularly in the realms of infrastructure development, remains a question. In addition, several contemporary challenges have endangered the entire South Asian region and current provisions under SAARC are either inadequate or are missing altogether to elicit a collective response. This article firstly examines the constraints of SAARC as an institution, followed by an examination of the long term opportunities espoused by the three agreements that are expected to be signed at the 18th SAARC Summit. The subsequent section of the article undertakes an analysis of two immediate threats that confront South Asian countries and the ability of SAARC to adequately mitigate them.

Sid Harth • 10 mins ago

Nawaz's K-issue push to Obama Pakistan PM Nawaz Sharif has again sought US intervention to resolve the dragging Kashmir issue, asking President Barack Obama to take up the matter with the Indian leadership during his upcoming visit to attend the Republic Day parade as the chief guest. Sharif, who has been spearheading a persistent campaign to internationalise the Kashmir issue despite India's assertion that it should be handled bilaterally, raised the matter when Obama telephoned him late on Friday to inform him of his forthcoming visit to New Delhi. Sharif "urged President Obama to take up the cause of Kashmir with the Indian leadership, as its early resolution would bring enduring peace, stability and economic cooperation to Asia", said a statement issued by Pakistan's Foreign Office. A readout of the same conversation issued by the White House made no mention of the Kashmir issue, saying only that Obama spoke with Sharif to discuss efforts by the US and Pakistan to "advance shared interests in a stable, secure, and prosperous Pakistan and region". According to the statement from the Foreign Office, Sharif referred to his visit to India earlier this year to attend PM Narendra Modi's swearing-in and said the trip was "aimed at taking Pakistan-India relations forward". Modi scored a diplomatic coup on Friday by getting Obama to accept his invitation to be the chief guest at the Republic Day parade. (The writer is a Distinguished Fellow at Observer Research Foundation, Delhi) Courtesy: Mail Today

Sid Harth • 10 mins ago

Modi's historic Obama coup reveals PM's 'out of the box' vision for India Manoj Joshi 24 November 2014 The decision to invite US President Barack Obama to be the chief guest at the 66th Republic Day is the clearest indicator of the directions of Prime Minister Narendra Modi's strategic outlook. An assertive China under the leadership of Xi Jinping is seeking to re-draw the geopolitical landscape of Asia backed by a modernised PLA and the massive cash reserves of the country. India's ally Russia is drifting into the Chinese camp. New Delhi has so far been somnolent, but now, with a new and vigorous Government, it is staking out its response. This is evident to those reading between the lines of official statements and comments made during the official visits of Modi to Japan, the US and Australia in recent months. Remarkably, till now, not a single American leader has ever been invited as the chief guest for Republic Day. We have had the Chinese — Marshal Ye Jianying in 1958, and even the Pakistanis, Ghulam Mohammed in 1955 and Rana Abdul Hamid in 1965 — and of course, the Soviets, British, French and others, but never an American. This was clearly no oversight, but a statement of India's world view. Well, that world view is now changing. The decision to dump hidebound attitudes is very much in keeping with Modi's "out of the box" approach in policy-making. This was first evident in Modi's invitation to all SAARC leaders to attend his swearing-in. Subsequently, he followed this up with close interactions with America's two key Asia-Pacific allies Japan and Australia. It was also marked by the showmanship visible in the public meetings with Non-Resident Indians (NRIs) in New York and Sydney which helped focus minds in Washington and Canberra. There should be no doubt in any mind that these two countries march lockstep with the Americans and all our initiatives with them, especially those related to nuclear and strategic issues will come to nought, unless Washington is on board. Actually, to be more accurate, the issue was more about India coming on board the American-led initiatives to coordinate a response to the rise of China. Prime Minister Atal Bihari Vajpayee recognised this when he spoke of the US and India as "natural allies". Subsequently, US Secretary of State Condoleezza Rice privately declared that the US was ready to help India become a great power in the 21st century. Since 2010, Beijing's growing assertion has been causing disquiet in many Asian capitals. It is to address this that the US announced a "pivot" to Asia, later rechristened "rebalance." Though India was facing its own pressures along the entire length of its 4,000km border with China, New Delhi chose to stick it out alone and try and work out an accommodation with Beijing. Towards this end, it accepted the Border Defence Cooperation Agreement in October 2013 and accepted China's invitation for a Maritime Security Dialogue. But the events in September 2014, wh

Sid Harth • 11 mins ago

Positive unilaterism Modi has three options. The first is to focus on a two-speed Saarc. As Delhi waits for better relations with Pakistan, it could, in the interim, move towards subregional cooperation. In the east, India can take steps to foster integration with Nepal, Bhutan and Bangladesh. In the south, it can construct deeper links with the Maldives and Sri Lanka. The second is to build on transregional institutions like the BIMSTEC, which connects the eastern subcontinent with parts of Southeast Asia or join Chinese Silk Road initiatives that hope to connect different parts of the subcontinent with various regions of China. While India can do much on the first and second, it is the third way that offers Modi the greatest opportunity — unilateral action. Modi, for example, has already proposed, unilaterally, to build a Saarc satellite for use by its neighbours. Former foreign secretary Shyam Saran has suggested that Modi could open India’s market for goods produced in the neighbouring countries by reducing tariff and non-tariff barriers and improving trade facilitation. Delhi could also consider transit to its neighbours — for instance, letting in overland trade between Bangladesh on the one hand and Nepal and Bhutan on the other. Modi can also announce unilateral visa liberalisation. Instead of negotiating the setting up of a Saarc bank, Modi could unveil an Indian financial facility for liberal lending to transborder connectivity projects in the subcontinent. If he can break from Delhi’s old mindset, a strategy of positive unilateralism would allow Modi to push the subcontinent a little faster towards long overdue regional integration. (The writer is a Distinguished Fellow at Observer Research Foundation, Delhi and a Contributing Editor for ’The Indian Express’) Courtesy : The Indian Express, November 26, 2014)

Sid Harth • 12 mins ago

Economic partition Territorial disputes would not have mattered if India and its neighbours had built open economies. Instead, they all turned to state socialism that de-emphasised trade and connectivity. As a consequence, what was an integrated economic space under the Raj broke up into several inward-oriented markets. The global compulsions for economic reform in the early 1990s had also set the stage for regional integration. If New Delhi was a hesitant reformer at home, it has been equally tentative in its efforts to rewrite the economic map of the region. The few initiatives that India has taken in Saarc in recent years have, however, run into political problems. This unfortunate situation is unlikely to change at the Kathmandu summit. For example, it is not yet clear if Pakistan is ready to sign the regional agreements on rail, road and energy connectivity that have been drafted for the Kathmandu summit. Even if it signs them, it is by no means guaranteed that Islamabad will implement them. The experience of the South Asian free trade agreement that Pakistan was unwilling to extend to India is a case in point. Pakistan’s argument is simple: as long as it has political problems with India, it will not

Sid Harth • 12 mins ago

The PM had raised expectations that India would take the leadership of the region by his surprise invitation to all the Saarc leaders to attend his swearing-in ceremony in May. His visits to Bhutan and Nepal have reinforced those hopes. Modi, however, has a problem. He has inherited a dysfunctional Saarc, whose failures are rooted in geography and history. As the largest country located at the heart of the subcontinent, India has borders with all its neighbours. Only two other members, Pakistan and Afghanistan, have a border with each other. It is no big surprise, then, that most of the regional trade is actually bilateral trade between India and its neighbours. So are the problems that come from a common border. That takes us to the history of these frontiers. The partition of the subcontinent created new borders and territorial disputes within the subcontinent. Nearly seven decades later, India does not have settled borders with either Pakistan or Bangladesh. In the northwest, Kabul does not accept Islamabad’s claims that the Durand Line drawn by the British Raj between undivided India and the subcontinent at the end of the 19th century is the legitimate boundary between Afghanistan and Pakistan.

Sid Harth • 12 mins ago

Modi's regionalism C. Raja Mohan 26 November 2014 For all its trappings of a multilateral organisation, the South Asian Association for Regional Cooperation, whose leaders are gathering in Kathmandu this week, is only an aggregation of India’s bilateral relations with its neighbours. This is the reason why the world is focusing on what Prime Minister Narendra Modi has to offer during the first Saarc summit that he is attending.
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There is no point in my composing and posting a scholarly comment, if it vanishes, in few seconds. I am an expert in an Indian phenomon-Modi. You may censor all my comments, whenever I venture to make them, there wold be at least ten thousand live links-thanks to Google on the internet.

Have a nice day.

…and I am Sid Harth

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Oct 28, 2014 – … Previous PostSC Whacks Modi’s Saffron B … … “You do not have to take interest in people (having foreign bank accounts). …. US Midterm Elections and Modi’s Foreign Policy · Tom ‘Car Talk’ …
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Oct 24, 2014 – Mr Modi’s foreign policy also appears to be sending mixed signals: he clearly wants to strengthen neighbourhood ties, but the way his

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Oct 28, 2014 – Vietnam PM’s India visit: China will be frowning upon PM Modi. by Rajeev … This is absolutely contrary to China’s recent foreign policy push.
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About the Democracy and Rule of Law Program

The Carnegie Democracy and Rule of Law Program rigorously examines the global state of democracy and the rule of law and international efforts to support their advance.

My following comment was censored:

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Presently, the specified countries in this regard are Pakistan, Bangladesh, Sri Lanka, Bhutan, Afghanistan, China and Nepal. Citizens of these countries are not eligible to get PIO cards. Detailed information on the PIO Scheme is available on

OCI and PIO card holders can visit India for business, employment, tourism and education without visa. However, those OCI and PIO card holders desirous visiting India for purpose of conducting Research, must obtain separately a No Objection/Research Project Clearance Certificate. This includes Scholars awarded Scholarship under Fulbright or any other scheme. click here for details
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Finally, it remains to be seen how he addresses some of the key structural bottlenecks constraining India’s foreign policy. For a country and society as diverse and as complicated as India, foreign policy should not be made in a straitjacket. The biggest challenge will likely not come from Pakistan or China; it will be internal, coming from India’s ambitious regional leaders and from Modi’s own backers in the BJP and its affiliates.

Interesting times lie ahead for India’s foreign policy.

Niranjan Sahoo is a senior fellow at the Observer Research Foundation in New Delhi.

The Carnegie Endowment is grateful to the Robert Bosch Stiftung, the Ford Foundation, and the UK Department for International Development for their support of the Rising Democracies Network. The opinions expressed in this article are the responsibility of the author.

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narasa.rao24 •

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• Hyd • 42 mins ago

No Paki PM can be trusted.

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Conclusion

The new government of Narendra Modi has raised huge expectations for India’s foreign policy. Every move the government makes is being keenly watched, and there are indications that Modi’s foreign policy will be significantly different from that of his immediate predecessors. With his known aversion to the Nehruvian worldview, the most significant change will be the gradual abandonment of nonalignment for neorealism.

While expediency will demand that most foreign policy engagements be cast in terms of geoeconomics, the nationalist in Modi may push toward geopolitics and major power politics. He has long and frequently exhorted India’s ancient glory and former global role, so he is likely to drive the country’s geopolitical ambitions forward, particularly in Asia. In addition, his personality and ideological background suggest a muscular foreign policy. His strong conviction that India is not proud enough of its democratic successes is good news for democracy supporters. In short, Modi’s foreign policy engagement is going to be active and full of surprises.

Yet, one does not know for sure how different triggers will shape the foreign policy of this ambitious new Indian leader. Although his comfortable election victory potentially frees his foreign policy from being held hostage by domestic politics, this could also lead to adventurism and overambition. The recent cancellation of foreign secretary talks with Pakistan is a reminder of this. Modi can be impulsive and unpredictable.

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• 43 mins ago

Other than its normative importance, democracy offers Modi the opportunity to consolidate and expand India’s power in the rapidly changing geopolitics of the Asia-Pacific. China’s swift rise and the uncertainties over its ambitions have generated considerable momentum among the major powers of the region to create a democratic hedge against the authoritarian power.13 Pro-democracy platforms that could drive realignment in Asia, such as the quadrilateral initiative between the four major democracies of Australia, India, Japan, and the United States, as well as an “axis of democracy” between Japan and India, could provide immense strategic value to India against a rising China.

As India’s own development budget increases, there will be additional resources for projects relevant to democratic reform. However, only time will tell to what degree Modi can overcome the country’s traditionally low-key posture on democracy promotion.

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The India-West rapprochement on democracy issues has taken a beating during the last ten years of the United Progressive Alliance government, a coalition led by the Congress party. This has been largely due to the government’s ambivalence toward democracy support, which it considered interventionist in nature,12 and a series of high-profile scams and scandals that overwhelmed the government in its second term and left little time for external engagement with democracy promotion and human rights protection. This may change under Modi.

While the prime minister will personally push the BRICS through geoeconomics, Modi will also push for the democracy club IBSA—India, Brazil, and South Africa—to get its due. On the margins of the BRICS summit in Brasilia this July, Modi secured hosting the next IBSA meeting in 2015. He is keen to build on India’s soft power.

However, his natural playfield for democracy promotion will be in South Asia. With Nepal, Myanmar, Pakistan, Bhutan, the Maldives, Bangladesh, and Afghanistan experiencing political upheavals and needing support to secure or achieve democracy, India’s democratic experience can be of considerable help. Modi did well in this regard during his recent visit to Kathmandu. Not only did he praise the Nepalese population for shunning violence and embracing democracy, he applauded their efforts to prepare a constitution and promised to provide the interim government all possible help in its journey toward democracy. Modi’s conviction that the “democracy glue” will eventually bind South Asia together serves the cause of democracy promotion well.

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Democracy Promotion: The IBSA Moment Again

Democracy is likely to be a second-order issue in Modi’s foreign policy. But it still offers opportunities for the new government, and Modi’s nationalist perspective on geopolitics and national power could mesh well with democracy promotion.

Even as the BRICS forum builds momentum, what sets India apart from those countries are its long-standing democratic credentials. For many countries striving to be democracies, India remains an inspiration. As Modi said in his first speech after assuming office, the world should understand the strength of India’s democracy so the country gets the respect and status it deserves.10 The prime minister reiterated this during his Independence Day address when he referenced the power of democracy in his own rise from a boy selling tea to the office of prime minister.11 This is not out of character for a leader from Modi’s party—it was a previous BJP prime minister, Atal Bihari Vajpayee, who took an unprecedented departure in 1999 from the tradition of nonalignment and nonintervention to dedicate funds to the Community of Democracies, former U.S. president Bill Clinton’s initiative to encourage democratic norms and institutions.

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And the Modi government will deploy geoeconomics to strengthen India’s most critical relationship: with the United States. The Indo-U.S. relationship has suffered in recent years from stagnation on trade negotiations, disputes over intellectual property, sluggish economies, and the Obama administration’s preoccupation with Afghanistan and Syria. The once-blossoming relationship recently fell to a new low after the arrest of an Indian diplomat in New York.7 Aware of this, Modi has already taken important steps to facilitate a turnaround. The bold announcement to open India’s $250 billion defense sector to private participation,8 which of course will include U.S. firms, could revitalize Indo-U.S. economic relations.

Trade will also be the cornerstone of Modi’s foreign policy with the EU, much of the Middle East, and Eurasia. With Modi eager to make India a manufacturing hub (he called for a “Made in India” campaign in his Independence Day speech in August 2014),9 trade with Germany, India’s biggest partner in Europe, assumes greater importance.

In all likelihood, Modi will highlight issues relating to trade, investment, infrastructure, and the other economic and development inputs necessary to revive economic growth. In short, his government’s priority is to bridge the gap between the country’s development goals and its foreign policy.

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Decoding Modi’s Foreign Policy
Source: Getty
Niranjan Sahoo Article September 23, 2014
Summary

India’s new prime minister wants to expand the country’s global role. Economics will take center stage in the effort, but Modi may also emphasize democracy promotion.

Ever since the Bharatiya Janata Party (BJP) won India’s 2014 parliamentary elections in a landslide, debate has intensified over the likely direction of the country’s foreign policy. The BJP and the new prime minister, Narendra Modi, have received the strongest mandate ever for an Indian political party other than the dominant Indian National Congress. Given that, there are unprecedented expectations that the new government will finally unburden the country’s foreign policy from the ideological fixation of the Nehruvian era,1 reorienting to meet the demands of new geopolitical realities. While it is too early to know precisely what the new foreign policy will be, a few signposts—the BJP’s vision statement, Modi’s own political beliefs, and some of his recent statements—offer clues.

Modi’s foreign policy is likely to be a mix of nationalist-led geopolitics and expedient geoeconomics. These twin foci mean that democracy and human rights issues will become second-order issues. However, Modi may push international democracy more than the previous Congress-led government as part of his geopolitical agenda to extend Indian global power.

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Of course, Indian politics do not translate neatly into the American political idiom. The cultural chasm between the two countries is compounded by important institutional differences. India has no party primaries, for instance, and unlike presidents, prime ministers are not elected on the basis of the popular vote. Voting decisions in India are also more influenced by ethnically based patronage politics than they are in the United States. But the character of India’s next leader is of sufficient global significance that it is worth stretching a point to highlight the dangerous turn the country may be taking.

India’s strategic analysts have been asking whether Modi might end up as “Nixon in China” — a leader whose hard-line credentials allow him to pursue a radical foreign-policy initiative, such as redefining India’s relationship with Pakistan. My fear is not only that Modi is ill-equipped to pull off such a diplomatic coup, but that he will bring to India’s highest office the worst elements of the Nixon package: the concealment, paranoia, sulking, denial, vindictiveness, and outsized sense of entitlement.

Photo by Kevin Frayer/Getty Images

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In 2013, an investigation ordered by India’s Supreme Court found insufficient grounds to prosecute Modi. He says he has been given a “clean chit.” That is an exaggeration. The investigation found damning — if not criminally prosecutable — evidence of questionable actions (and inactions) by Modi, as well as indications that crucial records had been destroyed. Some of Modi’s behavior after 2002 is puzzling too. Why, for instance, did he in 2007 appoint to his cabinet Maya Kodnani — a politician suspected of, and later convicted for, distributing swords to rioters and exhorting them to attack Muslims? Then again, why did Nixon make Spiro Agnew his vice-presidential running mate, knowing his reputation for corruption? (Agnew eventually resigned in disgrace, but never served prison time.)

Modi’s lack of contrition for his government’s failure to protect Muslims in 2002 is the clearest sign of his Nixon-esque penchant for denial. Nixon, likewise, never admitted his involvement in the Watergate scandal while in office and rejected claims that his administration violated international law during the Vietnam War, which he insisted had the backing of a “silent majority” of Americans.

Modi once compared his feelings about the 2002 violence against Muslims to the sadness anyone would feel if he or she accidentally ran over a puppy. His attempts to clarify this statement have not gone down well with his critics. Nixon fared much better with his own puppy story — his famous 1952 “Checkers speech,” which saved his political career two decades before the Watergate break-in ended it. Accused of corruption, Nixon said that the only gift he ever kept during his years in office was a cocker spaniel named Checkers and that he would not break his children’s hearts by getting rid of the little pup.

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Even more Nixon-like, however, is Modi’s effort to counter his image as the darling of India’s richest industrialists by embracing a tired genre of cultural populism. Modi’s surrogates frequently disparage the “Delhi-based intelligentsia” that has coalesced around the Congress party establishment. Substitute “East Coast” and “Ivy League,” and you can almost hear Nixon speaking. Where Nixon loathed the Kennedys, Modi disdains the Nehru-Gandhi family, the dynasty that has dominated Indian politics for most of the nearly seven decades since independence in 1947.

Like Nixon, Modi is prone to bouts of self-pity. After losing the 1962 California gubernatorial election, Nixon famously informed his detractors that they would not “have Nixon to kick around anymore.” Modi, who also occasionally refers to himself in the third person, recently stated that “Modi” should be “hanged” if found guilty of the main charge leveled against him: that as Gujarat’s chief minister in 2002, he directed state police not to intervene as extremists burned, beat, and in some cases hacked to death approximately 1,000 Muslim residents. Yet Modi displays a hauntingly Nixonian persecution complex when journalists raise the substance of the accusations. In 2007, he walked out of a television studio when an interviewer persisted in asking about what happened in 2002.

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Otherwise, much about Modi’s early life remains hazy, partly due to a Nixonian preoccupation with secrecy. In early April, when filing his election papers, Modi revealed for the first time that he is married and has been for decades. Previously, he had always left the marital-status line blank. The BJP explained away the marriage as a customary matter arranged by two traditional families when Modi was a child. But given that Modi has made his time as a chai-wallah (“tea-seller”) a staple of his campaign oratory, why did he omit the part of his self-made-man narrative that involved defiance of community elders? Probably because it would not appeal to a certain segment of tradition-minded voters. This selective amnesia is classic Nixon, who talked up his humble Quaker roots only when politically convenient.

Like Nixon, Modi maintains a coterie of private-sector associates, some less savory than others. A 2012 report by the Comptroller and Auditor General, India’s top accounting body, found that the Gujarat state government had engaged in a range of financial “irregularities,” many of which provided “undue benefits” to favored firms, including the Gujarati-based conglomerate Adani Group. A study of special economic zones in Gujarat published in March and conducted by social researcher Manshi Asher, claims that the state government helped the Adani Group to obtain land at favorable prices and to violate environmental laws with impunity.

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• 48 mins ago

Like Reagan, Modi is committed to replicating his regional success on the national stage, while somewhat contradictorily pledging to decentralize power to the states. Reagan and Modi each promised to unleash the pent-up capitalist energies of an entrepreneurial people. Modi’s policy agenda has been described as Thatcherite, a close cousin to Reaganomics. And Modi’s brain trust includes free market economists such as Columbia University professors Jagdish Bhagwati and Arvind Panagariya. Slashing dependency-creating welfare programs is a signature trope for Modi, as it was for Reagan. And Reagan’s other key campaign promise, to cut red tape in Washington, finds strong echoes in Modi’s plans for taming India’s bureaucracy.

Modi, like Reagan, is a master of the personal anecdote, effortlessly tying individual stories to larger principles. And both have employed catchphrases to mock adversaries. Reagan frequently replied to Carter in the 1980 presidential debates with a head tilt and a well-rehearsed “there you go again” — as if Carter kept repeating the same mistake. Modi refers to his main rival, Rahul Gandhi of the Congress party, as the “prince” — a barb that stings because it’s so true. His father (Rajiv Gandhi), grandmother (Indira Gandhi), and great-grandfather (Jawaharlal Nehru) were all prime ministers.

Similarities in style mask substantive differences, however. While associated with the religious right, Reagan was basically a centrist. Modi, by contrast, presents himself as a centrist, despite having spent much of his adult life with the Rashtriya Swayamsevak Sangh, an organization whose divisive ideology promotes the idea of India as a Hindu nation. In 1990, Modi helped organize a notorious, religiously themed tour by BJP leaders through India’s Hindu-Muslim flash points, which left a shameful trail of intercommunal violence in its wake.

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Narendra Modi, of the conservative Bharatiya Janata Party (BJP), is heavily favored to emerge as India’s next prime minister after the votes from the country’s five-week parliamentary election are counted on May 16. Modi’s supporters expect him to usher in an era of national optimism. The country’s youth, in particular, see him as ideally suited to reviving India’s self-confidence after a period of malaise under the current prime minister, technocrat turned politician Manmohan Singh, whose combination of personal integrity and weak leadership have made him the Jimmy Carter of Indian politics.

To an American eye, India’s voters seem to be yearning for the inspirational tonic of their very own Ronald Reagan. This is troubling enough for those who recall Reagan’s stigmatization of welfare recipients and adventurism in places like Grenada and El Salvador. It would be far more worrying, though, if India actually elected Modi, a leader who in many ways bears a greater resemblance to that other iconic California Republican, Richard Nixon.

Certain Reagan-Modi parallels are easy to spot. Both ran on their records as governors of prosperous, modernizing states on the western coasts of their respective countries. Gujarat, like California, has long been an engine of industrial growth. Modi’s business-friendly policies have helped per capita income triple in Gujarat since he took office in 2001 — though critics attribute these gains to previous reforms and complain that health and other human development indicators have not kept pace with economic growth.

Like Reagan, Modi is committed to replicating his regional success on the national stage, while somewhat contradictorily pledging to decentralize power to the states.

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• 48 mins ago

Argument
Is Narendra Modi India’s Reagan or Nixon?
Gujarat’s shiny free market reformer has a dark side.

BY Rob Jenkins
APRIL 29, 2014

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Argument
Is Narendra Modi India’s Reagan or Nixon?
Gujarat’s shiny free market reformer has a dark side.

BY Rob Jenkins
APRIL 29, 2014

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• 49 mins ago

Even in Brazil, there are signs that Rousseff will appoint a more market-friendly finance minister in the coming weeks with a view to placating markets. The Bovespa has already risen 7.5 percent since the election. Investors may be taking the view that Rousseff’s second can’t possibly be any worse than her first. Still, her victory has thrown the challenges of implementing reforms in EMs into sharper relief. It has been a cold shower for those investors who were giddy with excitement after Modi’s victory.

The lessons are clear: Investors should lower their expectations — even if business-friendly candidates win elections — and should pay more attention to the politics of economic reform. As Rousseff’s win demonstrated, the fear of change can be as important as the yearning for it.

MAURICIO LIMA/AFP/Getty Images

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On the policy side, things are even tougher for EM presidents and prime ministers. Brazil is stuck with excessively tight monetary policy — the central bank was forced to hike interest rates on Oct. 29 to a punishingly high 11.25 percent in an attempt to shore up confidence — and a lack of faith in Rousseff’s economic policies. India, on the other hand, has a dream team in place following Modi’s victory in May’s parliamentary election: a central bank led by the highly regarded Raghuram Rajan, whose inflation-fighting credentials have allowed it to reduce interest rates and an inspiring and charismatic prime minister who has already started to liberalize energy prices and appears committed to fiscal and structural reforms.

And yet, overall, the stocks of developing economies have fallen 7.5 percent over the past three months (15.5 percent in the South America) mostly due to a deterioration in EM growth prospects and concerns about the fallout from a rise in U.S. interest rates. But this pessimism is unwarranted. While the resurgence of the dollar will keep EM currencies under pressure, bond markets have been faring relatively well due to the strong presence of domestic institutional investors who, unlike their foreign counterparts, are less likely to reduce their holdings of debt when market conditions deteriorate.

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• 49 mins ago

This means markets are likely to remain volatile in the coming months, with investors forced to pay more attention to countries’ economic fundamentals, such as inflation and balance of payments, which are invariably glossed over during periods of low volatility.

For EMs, this is not the best time to be under closer scrutiny. Following Rousseff’s victory, two uncomfortable truths about developing economies have been brought into sharp relief: First, the politics of economic reform matter as much — if not more — as the reforms themselves. Second, the quality and credibility of economic governance matters hugely.

Rousseff won Brazil’s election because she was able to portray her two main opponents in the campaign as enemies of the poor who, if elected, would have endangered Bolsa Familia, the popular social welfare scheme set up by Lula da Silva in 2003 which has lifted millions of Brazilians out of poverty. The experience of Enrique Peña Nieto, Mexico’s president since December 2012 and probably the most radical reformer among the leading EMs, is an even more cautionary tale. Despite undertaking a sweeping overhaul of the energy sector, Peña Nieto has managed the politics of economic adjustment badly. Not only did his fiscal policies contribute to the sharp slowdown in Mexico’s economy last year, he is perceived by many Mexicans to be living in an ivory tower, aloof from the drug-related violence and crime ravaging the country. The lesson here is that while Peña Nieto may be a bold economic reformer, Rousseff just got re-elected because she was more attentive to the everyday concerns of ordinary Brazilians.

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To be sure, sentiment towards EMs was already deteriorating by early September because of renewed fears that the Fed was likely to start hiking interest rates sooner than anticipated. The rate-sensitive yield on two-year U.S. Treasury bonds, which has been a reliable gauge of investors’ appetite for increasing their exposure to so-called “risk assets” (such as EM equities and bonds), shot up from 0.41 percent on Aug. 15 to nearly 0.59 percent on Sept. 24.

After falling sharply in the first half of October because of mounting fears about the threat of deflation, particularly in Europe, it has since risen again and now stands at 0.51 percent as investors once again bet that a strengthening U.S. economy will force the Fed to tighten monetary policy in the middle of next year. If market interest rates rise, in particular short-term interest rates, this is a sign that there is a stronger likelihood that official interest rates will soon go up.

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For a while, it seemed like Brazil was about to follow suit. In the closest and most bitterly fought presidential election in recent memory, Dilma Rousseff — the country’s center-left president who is deeply mistrusted by both financial markets and most members of Brazil’s business community because of the interventionist policies that were the hallmark of her four years in power after taking over from her popular predecessor, Luiz Inácio Lula da Silva — won the run-off on Oct. 26 by the skin of her teeth.

Rousseff’s victory was enough to spook an already jittery financial community.

Rousseff’s victory was enough to spook an already jittery financial community. Brazil’s stock market had bounced up and down like a yo-yo during the last two months of the presidential campaign because of uncertainty about whether Rousseff would win. The staggering 37 percent rise in the Bovespa, Brazil’s main equity index, between mid-March and early September showed the extent to which investors can get ahead of themselves.The day after the election, the real, Brazil’s currency, slid to a nine-year low against the dollar. Brazilian stocks, which have fallen 11 percent over the past three months because of fears that Rousseff would win, dropped nearly 3 percent. And the impact of Rousseff’s victory is being felt far beyond South America. By winning re-election, she set back the cause of economic reform in EMs around the world. In the space of five months, “Modi mania” has given way to “Rousseff revulsion.”

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For most of the first-half of this year, investors in developing economies had a spring in their step. The bond and equity markets in countries known as emerging markets (EMs) enjoyed a surge in inflows because of expectations that the world’s main central banks, including the U.S. Federal Reserve, would maintain their ultra-loose monetary policies. The excess capital floating around had to go somewhere, and the higher-yielding bond markets of Brazil, Indonesia, Mexico, and other EMs still seemed like an attractive place to park their money.

And investors had good reason to have faith in these countries. The prospects for meaningful reforms in EMs — in particular public finance and labor market reforms as well political and institutional overhauls to root out corruption and improve governance — looked bright following the overwhelming victory of the business-friendly Narendra Modi in India’s month-long parliamentary election that ended on May 16. In the first five months of this year, India’s main equity index surged 15 percent. In July, investors were given another reason to cheer when Joko Widodo, the popular governor of Jakarta, won Indonesia’s presidential election on promises of far-reaching political, institutional, and structural reforms. Indonesian stocks have risen by a whopping 24 percent this year.

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• 51 mins ago

Argument
Dilma’s Smoke, Modi’s Mirrors
From India to Brazil to Indonesia, getting emerging market economies in order is going to be a lot harder than investors want to believe.

BY Nicholas Spiro
NOVEMBER 7, 2014

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Of Sandpiles and Modi’s Whirlwind Diplomacy | So Sue me
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November 26, 2014; Modi’s Days are Numbered November 26, 2014; Modiji, ‘There ain’t no such thing as a free lunch-TANSTAAFL.’ November … Of Sandpiles and Modi’s Whirlwind Diplomacy · November 27, 2014 / elcidharth / 0 Comments …
In a Shift, Rajnath Singh Extends India’s Role in Pakistan …
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Of Sandpiles and Modi’s Whirlwind Diplomacy November 27, 2014; World Oil Prices Sink November 27, 2014 … November 22, 2014 / elcidharth / …

...and I am Sid Harth

Thursday, November 27, 2014

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