Abe to Cash In on Modi Friendship as China Dominates Trade

Japanese Prime Minister Shinzo Abe’s personal friendship with Indian counterpart Narendra Modi is starting to yield more tangible results, with the nations close to signing deals on defense equipment and India’s first high-speed rail link.

On a three-day visit to the world’s biggest democracy this weekend, Abe will seek to nail down some concrete achievements to counter China’s increasing assertiveness in the region. The nations have a long way to go: Trade between them is about 5 percent of China’s commerce with Japan, and less than a quarter of its transactions with India.

“The relationship between India and Japan is perhaps the best it has ever been, largely because they have prime ministers who look at the region and the world in very similar terms," said Harsh Pant, professor of international relations at King’s College London. “They are very nationalistic, center-right prime ministers who have a certain idea about the rise of China and about its implications for both these states."

The close personal ties between the two leaders are helping bring the countries closer. Modi is one of a handful of people whom Abe follows on Twitter, where the pair occasionally exchange public messages. When Modi visited Japan last year, Abe took the unusual step of showing him around the ancient capital of Kyoto. This week, after their fifth formal summit, they are set to visit Varanasi for a Hindu ritual at the Ganges river.

Abe arrives on Friday for a meeting with Indian External Affairs Minister Sushma Swaraj before addressing a seminar at a five-star hotel in New Delhi, according to aschedule from the Indian government. On Saturday he meets with business leaders and India’s president before he meets Modi for a summit and trip to Varanasi.

‘Security Diamond’

The courtship is part of Japan’s effort to broaden its network of informal allies to balance China’s activities in the region -- a step toward Abe’s blueprint for a “security diamond" of regional democracies that includes the U.S. and Australia. For its part, India has been more assertive toward China in recent months, drawing up plans todevelop a disputed region along their border and echoing language used by the U.S. and Japan to criticize Chinese expansionism in the South China Sea.

Japan and India’s foreign ministers underscored their concern over China in a meeting with U.S. Secretary of State John Kerry in September. The three countries made a statement calling for freedom of navigation and overflight, as well as unimpeded lawful commerce, including in the South China Sea. In October, the nations held a naval drill in the Bay of Bengal.

Nuclear Program

While neither Japan nor India has a claim in the dispute over the South China Sea, both see parallels with their own situation. Coast guard ships from Japan and China regularly tail one another around islets disputed between the two countries in the East China Sea, while border tensions linger between India and China, which fought a four-week war in 1962 over their Himalayan border.

Abe’s enthusiasm for India dates back almost a decade to when he was prime minister the first time around. Even so, the two countries have yet to hold the kind of top level "two plus two" meetings of defense and foreign ministers that Japan holds with the U.S., Australia and several other countries. Sensitivities over India’s nuclear weapons program have hampered attempts to cooperate on atomic energy, while a proposed transfer of Japan’s US-2 amphibian planes has made slow progress.

Rail Line

Other areas look more promising. India appears set to agree this weekend to adopt Japanese technology for a 505-kilometer (314-mile) rail link between Mumbai and Ahmedabad following discussions started by Abe and Modi’s predecessors in 2012. Japan is offering a loan to cover 81 percent of the 980 billion rupee ($14.7 billion) cost. A deal would help restore Japanese pride after it lost out to China on a separate $5-billion rail deal in Indonesia, and relieve pressure on Modi to accelerate the modernization of his country.

“The Shinkansen is a symbol of Japanese industry," said Koji Kobayashi, a senior economist at Mizuho Research Institute Ltd. in Tokyo, referring to Japan’s bullet train. "If it is adopted in India, it will be good public relations for the government and will play well with the Japanese public. Particularly after the loss to China in Indonesia, it would be a great souvenir to bring back."

Modi’s government has set up an office to promote inward investment from Japan, and the two leaders vowed last year to double direct investment in five years. Japan was the fourth biggest investor in India between April 2000 and September 2015, with 7 percent of the total, compared with 0.5 percent for China, according to India’s commerce ministry.

‘Kindred Spirit’

India will also sign an agreement on defense equipment cooperation with Japan this weekend, the Mainichi newspaper said last month. The content will be based on Japan’sexisting agreements with the U.K., France and Australia, allowing it to export equipment and transfer technology for joint development projects, potentially including the US-2 planes.

Even as the India-Japan relationship blossoms, Modi has taken care to maintain friendly ties with President Xi Jinping while Abe has also worked to overcome tensions with China. Still, Pant from King’s College London says, Modi is a leader who can help justify Abe’s long-time optimism toward India.

“He has found his kindred spirit," Pant said of Abe. "If ever there was any hope of tackling some of the difficult issues, this is it."

2. 

Modi had to look for the spotlight during his US visit

Indian Prime Minister Narendra Modi's recent visit to the U.S. was his second since he took office in May 2014. Since then, U.S.-India relations have rebounded from the lows they wallowed in during the second term of the previous United Progressive Alliance government, headed by Dr. Manmohan Singh.

     Barack Obama in January became the first U.S. President to attend Republic Day celebrations in India; he is also the first U.S. President to visit India twice during his presidency. 

     During Obama's January trip, a U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region was issued. In it, the two nations affirm "the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea." For India, this was indeed a break from the past; it had always been wary of being seen as collaborating in any kind of venture that aims at overtly challenging Beijing's growing aggressiveness.

While Modi was in the U.S. last month, Chinese President Xi Jinping was also there for a state visit. The attention showered on Xi showed both the U.S. government and U.S. industry -- in spite of concerns over cybersecurity and China's growing belligerence, especially in the South China Sea -- prefer to engage China rather than confront it.

     Xi made sure the U.S. business lobby was not disappointed: As he arrived, China placed an order for 300 Boeing aircraft worth nearly $38 billion. Boeing, meanwhile, decided to set up an aircraft assembly plant in China.

Major agreements

Just before Modi left for the U.S., the Indian government cleared a deal for the purchase of 22 Apache AH-64E attack helicopters and 15 Chinook CH-47F helicopters from Boeing. The deal is worth nearly $3 billion. In addition, before Modi started his U.S. trip, India and the U.S. held their first U.S.-India Strategic and Commercial Dialogue, in Washington, D.C.

     Defense cooperation between India and the U.S. is on the increase. India, the U.S. and Japan later this year will take part in the Malabar exercises in the Bay of Bengal. 

     Meanwhile, Brazilian President Dilma Rousseff, Japanese Prime Minister Shinzo Abe, German Chancellor Angela Merkel and Modi met on the sidelines of the 70th U.N. General Assembly. Leaders of these countries had not sat down together since the 2005 World Summit. They did so to jointly push their cases for permanent membership of an expanded U.N. Security Council. They released a joint statement in which they "strongly emphasized that the process underway in the U.N. to enlarge the Security Council should be conducted, given its urgency, in a fixed time frame."   

     Modi also visited the West Coast of the U.S. to court Silicon Valley-based technology companies and invite them to invest in India. He attended a Facebook Town Hall at the Internet giant's headquarters in Menlo Park, in the state of California, along with Facebook founder Mark Zuckerberg.

Microsoft announced that it would help to wirelessly connect 500,000 Indian villages to the Internet, while Qualcomm pledged $150 million for Indian startups. Google had already announced it would help the Indian government provide 500 free Wi-Fi hot spots at Indian railway stations.  

What next?

Pope Francis was also in the U.S. during Modi's visit. While he and Xi dominated U.S. headlines, Modi, like he has during previous overseas trips, courted the nonresident Indian crowd by giving a sold-out speech at the SAP Center in San Jose, California.

     It is this influential constituency that Modi will have to deal with the most in case of a change of government in the U.S.

     Republican front-runner Donald Trump has already taken aim at the H1B visa program, under which a lot of Indian tech professionals find employment in the U.S. He has indicated his desire to either cap or roll back the program, which is certainly not good news for India.

     On the other hand, were Democrat Hillary Clinton to become President, she might be more friendly toward India, given her long-standing ties with the Indian American community and also because of the India connections of her husband, former U.S. President Bill Clinton. It was Bill Clinton's landmark India trip in 2000 (two years after India conducted nuclear tests) that led to a new era in Indian engagement, not only with the U.S. but also with Japan and other nations.

     However, there are still areas where India and the U.S. are not on the same page. For one, they differ on how to deal with Pakistan.

     There is no denying that U.S.-India relations have been on the upswing since Modi took office, but India still has a lot of work to do if it is to improve its business climate. The country ranks a dismal 142 (out of 189 countries) in the World Bank's latest "ease of doing business" rankings.

     American companies have surely taken note.

2. 

Abe's Upcoming India Visit: Breaking New Ground in Japan-India Relations

On Friday, Japanese Prime Minister Shinzo Abe will begin his three day visit to India, where he will meet his counterpart, Narendra Modi.

This will be the ninth time for Japan and India to hold annual summit-level talks at the prime ministerial level. Relations between the two countries began to pick up during Abe’s previous term, and he was the chief guest at India’s Republic Day celebrations in January 2014 during the tenure of former Indian Prime Minister Manmohan Singh, a first for any Japanese premier. That is an indicator of the fact that closer ties with Japan enjoys bipartisan support in India.

During his visit, apart from the regular meetings he will hold, Abe is also expected to visit Varanasi, which is also the Lok Sabha constituency of Indian Prime Minister Narendra Modi. A partnership city arrangement was signed between Varanasi and Kyoto during Modi’s visit to Japan last year.

What is the significance of Abe’s visit? There are five points to keep in mind that provide important context for both what is likely to occur during this visit as well as the backdrop against which it is occurring.

First, Abe’s visit will sustain the momentum already built up in bilateral ties. Japan was the first country Modi visited outside the Indian subcontinent after he took office in May last year. This return visit by Abe will be a boost in the other direction. During Modi’s Japan visit, the relations were upgraded to a “Special Strategic and Global Partnership.”

Second, economically, this visit by Abe is expected to see the finalization of the deal for Japan to supply its Shinkansen (bullet train) technology to India, beginning with the Mumbai-Ahmedabad bullet train corridor in western India.

Third, turning to the security realm, the trip comes against the backdrop of a Japan that is looking to enhance its contributions to regional and global security. In that vein, during Abe’s visit, a deal may also be reached for India to buy the Japanese-made US-2 maritime reconnaissance aircraft, marking a first for Japan, which has traditionally been reticent to supply Japanese-made military hardware to other countries. It is also likely that a technology-sharing agreement for this aircraft will be concluded.

Fourth, Abe’s India visit will also strengthen security ties at a time when broader convergences are occurring between India and Japan as well as other countries like the United States and Australia. After years of not being invited by New Delhi to participate in the India-U.S. Malabar naval exercises for fear of alienating Beijing, Japan was invited this year. The exercises were held in October in the Bay of Bengal. India, Japan, and the United States have also been holding a trilateral dialogue among themselves which started in December 2011. Although India is not an ally of the United States, during the visit of U.S. President Barack Obama to India as the chief guest during the Republic Day celebrations in January this year, the two countries issued a joint statement affirming “the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea.” In the past, India has been wary of being drawn into the South China Sea dispute, but this statement marked a break from the past.

Fifth, India is one of four outside bases Japan has selected for its specialized intelligence gathering unit to collect information on terrorist activities (the other three are Jordan, Egypt, and Indonesia). Terrorism has been a growing concern for Tokyo. Although there have been no terrorist attacks on Japanese soil, its nationals Kenji Goto and Haruna Yukawa were beheaded by the Islamic State this year, while an attack on a natural gas facility in Algeria in January 2013 killed seven Japanese citizens. In March 2015, a terrorist attack on a museum in Tunisia led to three Japanese deaths. In addition to helping save Japanese lives at home and abroad, intelligence will boost Japanese security as it prepares for the G-7 Summit in May next year at Ise-Shima in Mie Prefecture and the Tokyo Olympics in 2020.

This is not to say that there aren’t challenges for Japan-India relations. For example, the two prime ministers will have to do some heavy lifting in order to boost trade levels. Even though a Comprehensive Economic Partnership Agreement (CEPA) was signed between the two countries and implemented from August 2011, bilateral trade stood at just $16.31 billion during the fiscal year 2013-14, which represents just around 1 percent of Japan’s total foreign trade. In addition, it remains to be seen if a civilian nuclear deal between Japan and India can be finalized during this visit. There are still many details to be worked out and Abe is likely to face huge domestic opposition back home if he does sign a civilian nuclear pact with India.

Both Abe in Japan and Modi in India lead majority governments and hence are not prone to the pulls and pressures of coalition politics. All the more reason, then, for both of them to seize the initiative and take the bilateral relations to a new high.