July 25, 2014

Indian PM’s upcoming visit to Japan: A new alliance in the making?

Newly elected Indian Prime Minister Narendra Modi is expected to make a visit to Japan in mid-August to meet with Japanese PM Shinzo Abe. Two previous meetings between Modi and Abe took place in 2007 and 2012. The two leaders are known to havea close personal relationship and similar views on economic and foreign policy.

The meeting between Abe and Modi was initially scheduled for July, but it was later postponed because of its overlap with the first Budget Session in India. Although political considerations concerning China’s reaction may have played a role in this postponement, media reports suggest Modi is still planning to visit Japan before he departs for the U.S. in September; therefore he is determined to make Japan the target for his first major overseas visit after inauguration. Moreover, Modi made it clear with his recent public statements that one of the highest priorities for his government is boosting cooperation and consolidating friendship with Japan.

In Modi’s first significant overseas visit to come, the two pro-business, assertive, and nationalist leaders will discuss possible fields of mutual cooperation regarding economy and security. Among these fields are civilian nuclear energy, infrastructure projects in India to be funded by Japanese construction and engineering firms, and Japanese investments in the Indian market. Japan’s future arms sales to India, defense cooperation, and policies aimed at hedging China’s increased power and assertiveness in the region are also expected to be among the headline topics brought to the table.

Nuclear energy tops the agenda

As Japan wants to maximize its industrial and infrastructure-related exports under Abe, nuclear energy sales offer an unmatched potential in this regard. Japanese firms produce key components for nuclear reactors, and Japanese PM Abe is determined to build numerous reactors and sign lucrative contracts with countries which wish to take advantage of Japanese experience in this field.

Even though the Japanese public is utterly sensitive to the nuclear issue, the Abe administration today has the capacity and willingness to convince the country of the reliability and profitability of nuclear cooperation with a key partner like India for Japan’s best interests in the 21st century. In this respect, Abe can start by explaining to the Japanese parliament, i.e. Diet, that the Nuclear Suppliers Group (NSG), a prominent international body which was initially established as a reaction to India’s nuclear tests, will also back his decision to pursue nuclear cooperation with India, as its members, including the U.S., are all confident of India’s goodwill.

Indeed, over $60 billion worth of nuclear contracts in India are currently on hold because a civilian nuclear agreement is yet to be concluded between Tokyo and New Delhi. Therefore if Modi and Abe can come to terms in the nuclear energy field, the floodgates will be opened for joint construction and engineering projects.

Another stumbling blockon the road to cooperation is the patchy and insufficiently implemented, complex legal framework covering the subject of nuclear cooperation. Foreign nuclear vendors investing in India are vulnerable to the local government’s predation and the central government’s arbitrary measures which can inhibit their profitability and threaten their businesses at large. Liability is a major source of concern for potential nuclear investors in India, and all that these companies have for assurance is a single clause in contracts that they’ve signed with the Nuclear Power Corporation of India. In this respect, Modi’s government needs to insulate foreign investors from intrusions if it wishes to develop the country’s prospects for foreign direct investment and nuclear cooperation in particular.

Security cooperation

Washington has long been pushing Japan to tolerate nuclear tests by India, despite the fact that itis not a party to the Non-Proliferation Treaty (NPT), in a bid to establish acounterweight in Asia that it can rely on in the face ofa rising China. A bloc of nuclear allies surrounding China, cooperating in various defense-related fields, possibly including nuclear energy, is perceived in both Washington and Tokyo as themain pillar of a hedging policy against China in the region. It is also in this vein that Abe wants to develop the Quadrilateral Security Dialogue between Japan, India, the U.S., and Australia.

Both New Delhi and Tokyo are of the opinion that defense cooperation and arms deals constitute a promising field in which their countries can conclude lucrative deals and develop the mutual trust which will cement a long-term partnership. And thanks to Japanese PM Abe’s recent lifting of the self-imposed ban on Japanese arms sales, Japanese production of military equipment ready for export is flourishing. The selling of navy-related items such as amphibious vehicles, maritime reconnaissance and rescue planes, and submarines, which are produced byJapan and demanded by India,bears the potential to boost bilateral relations and pave the way for further security cooperation.

It is a fact that at this juncture, India seems unwilling to, and incapableof involving itself in a macro-scale security cooperationindirectly targeting a country as large and strong as China right next-door. Nevertheless, India is disturbed by China’s alliance with its arch-rival Pakistan, its extensive claims in the South China Sea, its naval ports popping up all over the maritime region surrounding the Indian Ocean, also known as the ‘ring of pearls’,and the decades-old border dispute between the Indian state of Arunachal Pradesh and China’s Tibet Autonomous Region. Therefore rising competition between the two, especially over the maritime region surrounding Southeast Asia, can compel India under Modi to adopt a more rigid stance in the years to come.


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