The Modi-Abe Meeting and the Emerging Strategic Equation
Photo Credit: AFP/Jiji
By Paras Ratna

The Modi-Abe Meeting and the Emerging Strategic Equation

Nov. 20, 2018  |     |  0 comments

Indian Prime Minister Narendra Modi’s visit to Japan on October 28, 2018 as part of the 13th annual summit between the two countries had brought to the fore the dynamics of the Indo-Japan bilateral relationship amidst the shifting contours of global politics.

Both India and Japan are confronting similar challenges in the Indo-Pacific and thus, the decision to deepen their cooperation seems to be a default choice. Besides the convergence of interests, Prime Ministers Modi and Shinzo Abe share excellent personal rapport and are hailed as strong right-wing nationalist leaders in their respective countries. This is PM Modi’s third visit to Japan since he assumed office in 2014. He hosted PM Abe in his home state Gujarat with great fanfare; the same was reciprocated by Abe in the form of private dinner at his picturesque Yamanashi holiday home.

Crucial agreements that were signed include a joint high speed rail project for which the first installment of INR 55 billion had been released by the Japanese Industrial Cooperation Agency (JICA) a month before; increased naval cooperation between the Indian Navy and the Japan Maritime Self-Defense Force (JMSDF) in the Indo-Pacific; a currency swap of USD 75 billion that is expected to bring a sigh of relief amidst the looming threat of trade war and rapid depreciation of rupees vis-à-vis dollar; 2+2 agreements on the lines of the US; and the commencement of negotiations to finalize Acquisition and Cross-Servicing Agreements (ACSA) which would allow both navies to access each other’s military bases for logistics purpose. While India will be able to access the Japanese base in Djibouti, the Japanese navy may dock at Andaman and Nicobar. Although PM Abe eased restrictions on defense export policy in 2014, Indo-Japanese cooperation on defense technology and equipment is far from satisfactory. Closer defense cooperation is a prerequisite for any strategic partnership.

The Japan-India relationship has expanded significantly in recent years with the ever-growing intersection between their foreign policy interests. PM Abe, while addressing the Indian parliament a decade back, said: “A strong India is in the best interest of Japan, and a strong Japan is in the best interest of India.”  In addition to the strategic sphere, Japan is India’s third largest investor. Between 2000-2017, USD 25.6 billion was invested by Japan in sectors like infrastructure, retail, textiles, and consumer durables. Tokyo was involved in big-ticket projects like the Delhi-Mumbai industrial corridor (DMIC), the Mumbai-Ahmedabad bullet train, and the setting up of around 12 industrial parks across different states in India, including Tumkur in Karnataka, Ghilot in Rajasthan, Mandal in Gujarat, Supa in Maharashtra, Ponneri in Tamil Nadu, Neemrana in Rajasthan, Jhajjar in Haryana, and the Integrated Industrial Township in Greater Noida.

Together India and Japan have constituted the “Japan-India Act East Forum” whose objective is to spearhead development cooperation in North Eastern states bordering China, Bangladesh, and Myanmar. JICA has already signed an agreement worth USD 610 million with  the government of India for phase I of the North East connectivity projects. These infrastructure projects are also motivated by strategic logic as critical projects like NH-54 (Aizwal-Tuipang) will complement projects like the Kaladan Multimodal project which is aimed at connecting Kolkata port in India with Sittwe port in Myanmar.

Although the Indo-Japan relationship has a rationale of its own, it is important to analyze the context of PM Modi’s visit to Japan. The visit assumes a special significance as it happens to take place in the backdrop of an unexpected Xi-Abe meeting just days before. Japanese PM Abe visited China for the first time in seven years and the fanfare on display was in stark contrast to the usually tense China-Japan relationship over islands in the East China Sea called Senkaku by Japan and Diaoyu by China. The tension reached its zenith in September 2012, when the Japanese government nationalized the Senkaku/Diaoyu islands. It led to widespread protests on the streets of Beijing with Japanese automobile companies being targeted. The then Japanese Ambassador Uichiro Niwa was called in to receive a strong protest by the Chinese foreign ministry. PM Abe was handed a cold reception during the APEC summit by his Chinese counterpart Xi and was made to wait in Beijing’s great hall, a deviation from the established protocol.

It is pertinent that New Delhi takes note of the variables of the emerging strategic equation, largely driven by economic concerns, so as to comprehend the extent of its strategic partnership with Tokyo.

The optics on display during the recent visit seems to defy the aforementioned political tussle by trying to offer a new narrative. PM Abe’s trip marked the 40th anniversary of the China-Japan Peace and Friendship Teaty, and a slew of agreements was signed on the occasion labeled as a “historic turning point” by the Japanese premier. Both sides agreed to cooperate on maritime search and rescue operations, the setting up of a military hotline, a joint high-speed rail project in Thailand, and most importantly, renewed currency swap agreements with a limit of USD 27 billion to offset the protectionist measures by the US Trump administration. Washington’s reliance on tariffs is prompting strategic recalibration on the part of major Asian powers.

What stands out for India is PM Abe who has earlier opposed China’s Belt and Road Initiative (BRI) adopting a more nuanced position on the same in pursuit of new markets for Japanese companies. Sino-Japan bilateral trade had jumped to USD 300 billion in 2017, a 15 percent increase from the previous year. Japan’s export business to China in 2017 was around 20.5 percent, 6 percent more compared to the previous year. Additionally, China is the market for 35.2 percent of Japanese goods. Japan is encouraging its companies to invest in the BRI, and its major logistics firm Nissin Corp. has teamed up with its Chinese counterpart Sinotrans to open up a trial logistics route from the Eastern coast of China to Western Europe and Central Asia. In contrast, the Indo-Japanese initiative AAGC (Asia-Africa Growth Corridor) has yet to take off in a big way.

The Japan-China bonhomie is motivated by multiple factors. Japan needs China’s market in the wake of protectionist US policies as Washington has threatened its automobile industry with additional tariffs; while for China, its ambitious BRI project is facing hurdles and opposition over the issues of transparency and is constantly being reviewed by different governments, partnering with Japan which is known for quality infrastructure is a much-needed boost to its image. As a consequence of the ongoing tariff war, many production lines — especially apparel and textiles, electrical equipment components, and petrochemical products — are likely to move from China to Southeast Asian countries like Vietnam, Cambodia, Indonesia, Malaysia, and the Phillippines. The yuan is expected to depreciate by another 10 percent and this will seriously undermine China’s attempt to stabilize its currency. Chinese companies are witnessing sharp slowdowns in their profits. The profits of 3,500 listed enterprises have experienced diminishing returns with profits rising just by 7 percent compared to 23 percent in the previous quarter.

China’s economy and currency are facing tough times owing to tariffs imposed by America and it is hence willing to partner with other regional powers. Notwithstanding rapprochement, the contentious political issues between them remain, and PM Abe’s shift could be at best “tactical.” India too has been working with China to improve their relations post-Doklam. Recently, India and China have collaborated to jointly train Afghan diplomats. New Delhi would do well to not view this strategic flexibility/rapprochement from a binary prism, i.e., a zero sum game. Simultaneously, it is pertinent that New Delhi takes note of the variables of the emerging strategic equation, largely driven by economic concerns, so as to comprehend the extent of its strategic partnership with Tokyo.

Leave a Reply

Your email address will not be published. Required fields are marked *