Amid the aftershocks of the political earthquake that has vaulted Narendra Modi into the strongest political position of any prime minster in decades, he faces two huge challenges. He must remake massive political, economic and bureaucratic machines that are resistant to change. With that as pre-requisite, he also must prepare the ground for an economic revival that will reward businesses and provide jobs for the 15 million Indians who enter the national labor market each year. How he lifts India’s sagging growth rate and provides for his main support base, the millions of youth that voted him into office, will help shape politics at home and in the neighborhood.
As Modi shapes India’s relations across South Asia, he has a choice: either build bridges or rely on assertion of raw power. Coming from a business-friendly border state, his experience should incline him toward involving business in political decisions. Therefore he would do well to listen more to Bangalore and Mumbai than to Delhi.
To the West, Modi faces a fellow business-oriented prime minister, Nawaz Sharif, who like Modi was born after the traumatic Partition of India and Pakistan in 1947. Sharif, who was among the first to congratulate Modi, is facing a domestic task as difficult as Modi’s. Sharif and Modi would do well to look jointly to Afghanistan as an opportunity rather than an obstacle for their dreams of an integrated neighborhood. Both India and Pakistan need a stable Afghanistan as the conduit for their projects to import energy from Central Asia and to export their goods to that region. If they squabble over influence in Afghanistan, both may end up losing big.
Modi and Sharif also could unleash the power of business interests to build cross-border trade and investment. But they face enormous hurdles in their horrendously complicated visa regimes. Cutting through this red-tape barrier will win both of them support at home and abroad. Open borders mean open trade and also open minds, as people discover that more important needs united them than divide them. Religious tourism, in both directions, would expand exponentially if the India-Pakistan border were made porous.
Many in Pakistan fear that Modi may be too beholden to his religious right to act quickly and positively with Pakistan. How he handles his party’s hardline Hindu base will be critical to his ability to generate cooperation in the region. To help Modi, a key step for Pakistan will be to speed up the stalled trials of Pakistanis charged with sponsoring the 2008 Mumbai terrorist attacks. Closure on that issue will let Modi generate momentum for more open relations.
Given the long list of issues between the two countries – including Kashmir, the frontier disputes of Sir Creek and the Siachen Glacier, and the sharing of waters from the Indus River and its tributaries – an “all or nothing” approach will delay agreements. Yet resolution of each offers vast opportunities for joint development and growth. A recent Atlantic Council report notes that increased “annual bilateral trade between India and Pakistan may result in a GDP trajectory that could be as much as 1.5 per cent more than present.” Prime Ministers Modi and Sharif would do well to keep that in mind as they try to rejuvenate their domestic economies. Their people are waiting for results.
Shuja Nawaz directs the South Asia Center at the Atlantic Council.