Modi's focus shifts from investment to foreign policy amid Kashmir, Balochistan troubles

During his first two years in power, Prime Minister Narendra Modi was busy spreading the message that India was open for business. Now that his efforts seem to be paying off, his attention has switched to the country's two oldest rivals: China and Pakistan.

"Courting investors is increasingly taking a back seat to Modi's effort to balance China and isolate Pakistan, playing to his nationalist base," Eurasia analysts wrote in a note on Saturday.

Indian Prime Minister Narendra Modi (C) on the second day of the Association of Southeast Asian Nations (ASEAN) Summit in Vientiane on September 7, 2016
YE AUNG THU | AFP | Getty Images

Since assuming office in May 2014, the former Gujarat chief minister has embarked on an international charm offensive to court foreign investors by detailing his plans to eliminate red tape and make the world's second-most populous nation realize its economic potential.

While Modi's job is far from over, his reform drive has succeeded in improving sentiment. India attracted the most greenfield foreign direct investment in the world last year, according to intelligence firm Eurasia, while April-June gross domestic product expanded 7. 1 percent—the fastest pace of growth among major economies.

These indicators give Modi space to focus on other parts of governance, Eurasia suggested.

Modi's decision to skip both the United Nations General Assembly (UNGA) meeting in New York and the Non-Aligned Movement (NAM) summit in Venezuela later this month [making him the first Indian leader to miss a NAM summit] are proof of his new foreign policy priorities, Eurasia continued.

"Modi's absence in New York signals that he feels less need to personally meet with the business community, a regular focus of past UNGA trips. Similarly, giving NAM a pass demonstrates both that India now enjoys closer than ever ties with the U.S. and regional powers."

Hedging against China, isolating Pakistan

Recent months have seen 65-year old Modi increasingly lash out against Beijing and Islamabad, marking a new chapter in India's strategy towards the two countries.

When Modi came to power, he attempted to regenerate momentum in both bilateral relationships but "Modi's bet on a positive transformation of ties inevitably run into the structural problems that beset India's engagement with both the countries," Carnegie India director C. Raja Mohan said in note last month. "These problems come together in Kashmir and Balochistan."

India and Pakistan have long fought over the disputed territory of Kashmir and recent developments are further fanning tensions. The China-Pakistan Economic Corridor (CPEC), a $46 billion highway that would run from Kashgar in China to Gwadar in Pakistan, intends to cut across parts of Kashmir as well as Gilgit-Baltistan, another area claimed by both Islamabad and New Delhi.

CPEC also connects with the sea in Balochistan, Mohan pointed out. "The prospect of a Chinese military base in Balochistan links India's problems with Beijing in the Himalayas with the challenge of PLA's [China's People's Liberation Army] rising maritime profile in the Indian Ocean. Throw in a fresh bout of turmoil in Srinagar into the mix, you have the explosive cocktail that is blowing up the traditional frameworks of India's engagement with Pakistan and China."

Previously, Delhi signaled that it could live with CPEC but that's no longer the case. In August, Swaraj discussed the matter with Chinese Foreign Minister Wang Yi and at last week's G-20 summit, Modi warned Chinese President Xi Jinping that both countries had to be sensitive to each other's strategic interests.

"In the past, Indian leaders were unwilling to express differences with China in public and hesitant to question in private those policies of Beijing that hurt Delhi. Modi, however, is not willing to pretend all is well with Beijing," Mohan explained.

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In Pakistan's case, Modi is also upping the ante.

During his Independence Day speech on August 15, Modi referenced human rights violations in Balochistan, one of Pakistan's four provinces and home to Gwadar. A few days earlier, Modi said at a parliament meeting that Islamabad must answer for its atrocities against Balochistan and Pakistan-administered Kashmir.

The death toll in Kashmir has been mounting ever since the July 8 killing of 22-year old Burhan Wani, a separatist leader who was popular among Kashmiris seeking secession from India, while Balochistan has witnessed a sharp rise in sectarian attacks.

"Modi's reference to disputed territories in his speech alerts the region, especially China, to revisions in India's Pakistan policy. Pakistan-occupied Kashmir is part of the China-Pakistan Economic Corridor. Modi has thrown down the gauntlet on China's infrastructure plans for Pakistan-occupied Kashmir and Gilgit, areas of dispute," said Harsh V Pant, professor at King's College London, in an August 25 note on Yale Global Online, a publication of Yale University.

Modi's comments reveal his hardened stance on resuming dialogue with Pakistan, Pant continued. "The Modi government is no longer holding back and wants to expose Pakistan's own internal vulnerabilities to the world in an attempt to change the strategic calculus of its neighbor."

Taking a tough line against Islamabad will also boost Modi's position as a strong leader as his ruling Bharatiya Janata Party faces 15 state elections over the next two years and as continued bloodshed weighs on the coalition government in Kashmir, Eurasia pointed out.

Indian policy strategists have long cautioned against the idea of changing terms of engagement with China and Pakistan. But as Mohan observed, Modi's administration seems to view the matter as especially pressing. "Some in Delhi insist these two fronts are no longer separate and that India has no option but to come to terms with their fusion—most notably in Kashmir and Balochistan."

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