Research & Analysis

India: The economics and politics of soft power

The author contextualises responses to recent Indian decisions to argue that domestic political and economic stability have great potential to buttress a country’s soft power credentials.

Indian External Affairs Minister (EAM) Dr S Jaishankar, at the 4th Ramnath Goenka lecture on 14 November 2019, gave a rundown of India’s foreign relations, and highlighted critical milestones. His key thrust was on the need for an Indian foreign policy audit anchored in realism.

In his speech, Dr Jaishankar underplayed the role of India’s domestic political landscape and economy in its foreign affairs, and rightly chose to invoke the principle of sovereignty in response to questions on external perceptions of these two policy decisions. Given this background, this article will look at the relevance of a country’s domestic political decision-making and economic stability to foreign policy, and how they contribute to the projection of soft power.

Foreign affairs is inherently linked to the domestic landscape. A democracy’s rule of law, its economy, and its secular credentials, among others, represent the yardsticks for its image externally. India, despite its religious and ethno-lingual diversity, has historically managed to cultivate such an image. However, a spate of recent decisions – the watering down of Article 370, imposition of a protracted internet ban in the Kashmir Valley, enactment of the Citizenship Amendment Act (CAA), coupled with a rhetorically proposed nationwide National Register of Citizens (NRC) – have invited massive public protests across the country. These decisions have been perceived as majoritarian and anti-secular in many domestic and foreign quarters.

Domestic Decision-Making and Foreign Scrutiny: Impact on Soft Power

The Indian government has cited the persecution of religious minorities in Afghanistan, Bangladesh, and Pakistan as the motivation for the CAA’s enactment. Afghanistan and Bangladesh have so far issued statements countering this narrative with regard to religious persecution in their countries. Pakistan, since August 2019, has worked to rally China and some Islamic countries against India, with the aim of delivering a blow in the court of international public opinion. To this end, Pakistan has been successful in gathering a parallel grouping that met on the sidelines of the Organisation for Islamic Cooperation (OIC) in Kuala Lumpur. This parallel bloc has led the OIC to take heed of these developments. These developments could have the potential to negatively impact India’s efforts since 2014 to strengthen relations with many Islamic countries while seeking to bypass Pakistan in these endeavours. A recent success of this of course was the invitation extended to former Indian EAM Sushma Swaraj by the OIC to attend their inaugural session in March 2019 despite Pakistan’s opposition.

India has received some significant bad press in the international media in light of its policies, and this has been somewhat bolstered by the Indian government’s seemingly inchoate public communications approach on the implementation of said decisions. For instance, while the European Parliament’s decision to defer the voting on a joint resolution against CAA until its next session in March 2020 has been claimed as a diplomatic victory for India, that it got to this point itself is a cause for concern. Many have also interpreted India’s sharp reduction of palm oil imports from Malaysia to be a result of bilateral tensions, following the latter’s claim that recent Indian policies are discriminatory against Muslims. Malaysia has since increased its sugar import from India, apparently in a bid to resolve the issue. However, that a disagreement, that too with a country otherwise considered an important part of India’s Act East Policy (AEP), spiralled to a level high enough to require resolution, is telling of the kind of narrative that needs urgent countering.

Another development that received attention was the EAM withdrawing from a meeting with the House Foreign Affairs Committee during the 2+2 India-US dialogue in December 2019 due to the presence of Representative Pramila Jayapal, who had initiated a congressional resolution on Kashmir. While the resolution itself did not find many in its favour, Dr Jaishankar’s decision was countered with the observation that for India, it is as important to engage supporters as detractors. Regardless of how this specific instance is perceived, with views on either side of the aisle, it could however have a negative bearing on India’s lobbying of Democratic lawmakers. It is India’s right to demur participating in such dialogue on the grounds of these decisions being internal matters. At the same time, it is worth considering the damage, if at all, it may cause to India’s soft power projection, and the bigger role it seeks on the global stage.

The foreign scrutiny of India’s internal landscape appears to have been aggravated by the country’s economic slowdown. In November 2019 Moody’s downgraded India’s outlook from stable to negative, “partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses…” India has also recently featured as fifth in Eurasia Group’s list of top ten biggest geopolitical risks of 2020. The analysis in this report termed the recent decisions as ”controversial social policies at the expense of an economic agenda.” The US-headquartered Eurasia Group has been largely favourable in its assessment of India, particularly since 2014, focusing mostly on the economic story. This change in their stand to include social and political developments could be read as a reflection of the wider perception of Indian domestic developments.

The impression that the Indian government is prioritising and/or badly managing domestic politics over much-needed economic reform is not a positive one. At this time, the reaction from foreign investors is mixed – for example, Jeff Bezos announced a US$ 1 billion investment on his visit to India, while Western Asset Management Co. cut its Indian government bond holdings by US$ 453 billion. However, in the long-term, domestic instability and an economic slowdown together could have negatives consequences for the country as a growth market.

Looking Ahead

In a world of complex interdependence, domestic issues cannot be completely delinked from foreign policy, particularly for a country that has aspirations to a greater role on the global stage. Recent precedent shows that proactive diplomacy that critically and effectively engages public opinion – both good and bad – is instrumental in this regard. The jury is still out on if, and to what extent, India’s image has suffered on the basis of its domestic policy decisions together with the economic slowdown. Whatever the damage, these are important considerations to keep in mind going forward, because political and economic stability have great potential to buttress a country’s soft power credentials while also protecting sovereignty.

 

 

 

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