India-Japan: potential still unrealised

Arriving in Kyoto on August 30, 2014, Prime Minister Narendra Modi got the personal touch from his Japanese counterpart Prime Minister Shinzo Abe, who travelled by train for 3 hours to help roll out the red carpet for an Asian leader who shares many of his convictions. This gesture came at a very busy time for Abe who was preparing to reshuffle his cabinet and also trying to overcome some missteps on history—including praise for WWII criminals whom he credits for laying the foundations of modern Japan — and getting hammered by the media for continuing a golfing holiday while a major mudslide wreaked havoc in Hiroshima. So guiding Modi to some of Kyoto’s temples and hosting a welcome banquet certainly underscored the importance Abe attached to the visit.

This was Modi’s diplomatic debut on the international stage, his first significant overseas foray, demonstrating that personal bonds make a difference in establishing foreign policy priorities. Modi’s visit began with a welcome bear hug, temple tours and a tea ceremony, and Modi showing off his drumming and chopsticks- handling skills. Both leaders bonded just the way their handlers choreographed it, projecting as much friendliness as they could muster.

Modi even spoke some broken Japanese while calling upon business leaders for more investments. During his meeting with the Emperor he told him that he would improve Japanese language instruction in India to help promote closer ties. But this historic encounter merited barely a minute on the evening news, and was overshadowed by coverage of the cabinet reshuffle, a Japanese tennis player reaching the quarterfinals of the U.S. Open, lifting of the Hiroshima mudslide evacuation order and, longest of all, the gout beer story.

So why was this much touted summit an inconclusive washout? NaMo & Shinzo had a lot to talk about—stalled negotiations on a civilian nuclear deal, arms sales, dealing with China, nurturing a strategic relationship, massive infrastructure projects and promoting trade and investment. But at the end of the day not much happened. The two sides were unable to overcome the impasse over the nuclear energy deal that has been pending for four long years because Japan wants to retain the right to suspend participation if India conducts nuclear weapons tests, and is reluctant to grant India the right to reprocess spent fuel, even though it allows Turkey to do so as per a deal concluded last year. India perhaps imagined that Japan would cave in because it offers a potential $85 billion market for new reactors, underestimating just how sensitive the issue is in Japan. And like U.S. counterparts, Japanese nuclear exporters (Toshiba, Hitachi and Mitsubishi) are allergic to India’s stance on nuclear liability. What both sides were prepared to offer was less than what each was prepared to accept.

More surprising from Tokyo’s perspective was Modi’s reluctance to upgrade regular talks on foreign policy and security affairs to the cabinet level—the 2+2 model of talks between foreign and defence ministers that Japan has adopted with Washington and Australia. The Asahi newspaper speculated that Modi shied from the upgrade due to concerns about angering China with which India shares a long and disputed border. But it seems more likely that India is withholding the 2+2 deal as a bargaining chip in the broader negotiations.

India, moreover, isn’t eager to be a strategic counterweight to China in cahoots with Tokyo and Washington, not the least because India doesn’t have the capacity to do so.

Hence, there is disappointment in Tokyo (and Washington) that Modi is not as ardent a Cold War II warrior as it hoped. Abe remains eager to nurture a strategic partnership, with the two nations serving as bookends for the Arc of Anxiety China has stoked through its aggressive unilateralism and assertion of sweeping territorial claims based on dubious assertions.

Geo-strategic concerns are also offset by business considerations. Modi and Abe both won elections promising economic revival. The leaders of the second and third largest economies in Asia are eager to tap China’s enormous market potential despite concerns over Beijing’s hegemonic ambitions. China, after all, is the largest trading partner of both nations – India’s trade with China stands at $66 billion in 2012-13 dwarfing the $18.5 billion with Japan, while Tokyo’s bilateral trade with China exceeds $300 billion. So both nations have a huge stake in maintaining good relations with Beijing even as they seek to counter its strategic rise.

So what was accomplished? Not much beyond some pledges and reaffirmations aimed at bolstering business and security ties that fell far short of commitments. They called for doubling Japanese FDI and the number of Japanese firms operating in India over the next five years. Currently India accounts for only 1.2% of Japanese FDI. And they reaffirmed the importance of strengthening strategic ties and called for the continuation of maritime training drills and joint exercises. There was also more talk about selling the Japanese manufactured US-2 amphibious aircraft for search-and-rescue missions – made possible after Abe lifted Japan’s self-imposed arms export ban this past spring. Abe is also eager to sell India the same submarines that Australia intends to purchase. The biggest lure, however, may well be the urgent need to upgrade India’s dire infrastructure, representing a huge potential market for the long distance Shinkansen high speed train technology and mass transit projects in some 30 cities. In order to promote such projects Abe announced Japan’s intention of providing public and private financing and investments, including foreign aid, totaling nearly $35 billion over the next five years.

Following his debut in Japan, Modi returned home to greet Australian Prime Minister Tony Abbott and will later this month host Chinese President Xi Jinping before visiting U.S. President Barack Obama in Washington, now that his name has been removed from the visa blacklist. These visits bolster Modi’s desire to carve out a more dynamic role for India in global affairs. On his part, Abe is off on September 6 for visits to Bangladesh and Sri Lanka where he plans to offer support for social infrastructure projects to counter China’s growing influence.

NaMo-Shinzo did nurture their personal relationship and identify areas of convergent interests that suggest the possibilities of enhanced cooperation. They have laid the groundwork for doing so, but tapping the potential for enhanced security cooperation and business ties depends on nitty-gritty determination to bridge differences. India is pursuing a hedging strategy vis-a-vis China and that places constraints on what will develop with Tokyo.

Jeffrey Kingston is the Director of Asian Studies, Temple University Japan.

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