It is now a month since the U.S. presidential elections and the surprise win of Donald Trump, a rank outsider. His political predilections were ambiguous and it was not clear whether, once coming into office, he would continue to adhere to the many apparently improbable and even outrageous campaign promises he had been making – such as building a wall to keep Mexican immigrants out, deporting illegal immigrants, penalising China for currency manipulation and unfair trade, and making U.S. allies pay more for their own defence. For the past month, Mr. Trump has been busy announcing several senior-level appointments in his incoming administration, and these give some indication of the likely changes one should expect in U.S. policies, both domestic as well as external. There have also been some statements from Mr. Trump himself which one should regard as a harbinger of what to expect from the new administration. A few of the policy changes may directly affect India. Others will do so mainly through collateral consequences.
Washington and the Paris pledge
In domestic policy, it is clear that despite his sharp criticism of Wall Street and U.S. big business, Mr. Trump’s appointments so far suggest a boost to the corporate sector, with several senior appointees such as Gary Cohn, the president of Goldman Sachs, who will chair the National Economic Council, Wilbur Ross, a billionaire who will head the Commerce Department, and a former Goldman Sachs executive, Steve Mnuchin, who will be Treasury Secretary.
It is almost certain that there will be a roll-back even of the modest climate change initiatives President Barack Obama had undertaken. The appointment of Scott Pruitt, a former Attorney General from Oklahoma, as head of the Environmental Protection Agency (EPA) and of Rick Perry, former Governor of Texas, as Secretary of Energy, would point in that direction since both are vocal climate change deniers and strong supporters of the fossil fuel industry. This does not augur well for the implementation of the Paris Agreement. Mr. Trump may not walk out of the agreement but since commitments under it are voluntary with no compliance procedures, there would be no downside to the U.S. not implementing its so-called Nationally Determined Contributions (NDC). One could argue that the pressure on India to deliver on its NDCs would also diminish as a result. But this would be the same for other major emitters too. Since India is one of the countries mostly adversely impacted by climate change, the slowing down – if not reversal – of the current global trend towards renewable energy as a result of U.S. backtracking will exacerbate the climate challenge for India.
Defence, bilateral ties with India
Under the current U.S. Secretary of Defence, Ashton Carter, India-U.S. defence relations have witnessed unprecedented expansion. Several co-development and co-production initiatives have been launched. India will have a direct interest in who succeeds Mr. Carter in the Trump administration. James Mattis, a former general who has served in Iraq and Afghanistan, is Mr. Trump’s appointee for this position. He has familiarity with Pakistan which falls under the U.S. Central Command, but not with India. In that sense Pakistan may have an advantage. However, he is equally focussed on jihadi terrorism and has faulted the Obama administration for not taking the threat seriously. Like Mr. Trump, he believes that in West Asia, the focus should be on defeating the Islamic State (IS). Whether the focus on Islamic terrorism will increase the heat on Pakistan or whether it will give the latter additional leverage in relations with the U.S. is not clear. The sooner the Narendra Modi government engages with Gen. Mattis the better it would be because much is at stake.
The President-elect has appointed Rex Tillerson, CEO of the oil giant ExxonMobil, as his Secretary of State. Mr. Tillerson has no diplomatic experience but is familiar with Russia where he has had extensive business interests and counts Russian President Vladimir Putin as a close friend. His appointment would appear to confirm that Mr. Trump wishes to normalise relations with Russia and work with Mr. Putin to tackle shared challenges such as the IS and jihadi terrorism in general. A return to more friendly relations between the U.S. and Russia should be welcome to India which can once again pursue closer relations with both without contradiction. Furthermore, a U.S.-Russia détente would diminish Russian dependence on Beijing, and Moscow’s anxieties about a resurgent China on its borders may well resurface. This would be a good development from the Indian perspective.
In the past few years, particularly after the Ukrainian crisis, U.S. and European sanctions against Russia had driven it closer to China. Russia had started aligning itself with China on some issues of concern to India, for example, weapons sales to Pakistan. Hopefully this will begin to change as Mr. Putin gains new room for manoeuvre with improvement of relations with Washington. Mr. Tillerson is likely to be a key instrument in this regard.
It is not clear what Mr. Tillerson’s attitude will be towards India. One presumes that he will follow his President’s lead. He may be a welcome change from the often sanctimonious John Kerry, the outgoing U.S. Secretary of State, who also seemed to have a soft corner for Pakistan. As a CEO of a multinational company, he may also look upon India as a significant economic opportunity for the U.S. provided the Modi government gets its act together and shuns the path of populism which may look enticing in dealing with the negative consequences of an ill-planned demonetisation.
The China factor
Mr. Trump’s China policy will have a significant impact on India-China relations. The appointment of Terry Branstad as Ambassador-designate to Beijing suggests an acknowledgement of the importance and sensitivity of Sino-U.S. relations. He is from Iowa where Chinese President Xi Jinping had come on a homestay in the 1980s. He has known Xi since then and has maintained close ties since. His appointment has been welcomed by the Chinese media which has described him as “an old friend” of China. On the other hand, the latest controversy involving Mr. Trump having a telephonic conversation with the President of Taiwan, Tsai Ing-wen, has already created strains in the relationship. Mr. Trump rejected Chinese protests and repeated his charge that China was devaluing its currency, indulging in unfair trade and militarising the South China Sea. He appears prepared to confront China on several issues and this may become the defining feature of the geopolitical landscape going forward. Chinese calculations that a Trump presidency may create larger space for China to assert its dominance in Asia may prove to be premature.
India should remain prepared for either possibility; one, that after the initial jousting this new administration, too, will settle down to a relationship of managed competition, avoiding chances of open confrontation or conflict; two, that this administration will contrarily inaugurate a new and hard-line policy towards China with a willingness to risk confrontation. There will be less room for manoeuvre for India in the first instance, more in the second instance.
Trump’s choices for National Security Adviser (NSA), for the Central Intelligence Agency (CIA) and for Homeland Security suggest a more robust and hard-line approach to terrorism. Michael Flynn, the NSA, and John Kelly at Homeland Security are both former military officers while Mike Pompeo at the CIA has also served some years in the military. They all bring a tough – even harsh – attitude to terrorism and this may augur well for India-U.S. cooperation in this critical area. As is well known, counterterrorism is one area, in addition to defence, where India-U.S. cooperation has seen unprecedented progress in recent years.
Trade and business relations
Finally, what may be areas of direct impact on India due to Mr. Trump’s policies? Clearly, there appears a determination on his part to limit H-1B visas for foreign professionals and a general discouragement to offshoring. This will impact India’s IT industry but this was already a trend even in the previous administration. On the other hand, the scrapping of the Trans-Pacific Partnership (TPP), which had the potential of pushing India to the margins of global trade, has given the country some breathing space. We should use this to contribute to the early conclusion of the Regional Comprehensive Economic Partnership, which has less onerous provisions than the TPP. India should also press ahead with its application for membership of the Asia-Pacific Economic Cooperation (APEC) which the U.S. Trade Representative in the current administration had opposed despite Mr.Obama’s public commitment of support. APEC membership will enable India to be part of the proposed Asia-Pacific Free Trade Area, should that become a realistic possibility now that TPP is no longer on the anvil.
Overall, one can now see some emerging trends that may define the incoming Trump administration even though uncertainties and unpredictabilities remain in good measure. What we know now seems to suggest a hard-right and conservative administration which should be welcome to big business, particularly powerful fossil fuel producers. A U.S.-Russia détente appears to be on the cards while the current indications are of a more confrontational policy towards China. For India, the balance of outcomes may be positive rather than negative but it is early days yet. Shyam Saran, a former Foreign Secretary, is currently Chairman, Research and Information System for Developing Countries (RIS), and Senior Fellow, Centre for Policy Research.