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Foreign Policy Challenges Fi EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE DELHI THE HINDU 10 EDITORIAL TUESDAY, JUNE 11, 2019 EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Foreign policy challenges five years later In an unpredictable global environment and with resource constraints, India needs to shape a domestic consensus would attract kinetic retaliation. step. We no longer have the luxury tiates its exit from Afghanistan Despite good planning there is al­ of distance to be non­aligned. At raise New Delhi’s apprehensions ways the risk of unintended esca­ the same time, the U.S. is a fickle about the Taliban’s return, consti­ Striking a balance lation as Balakot (this year) and partner and never has it been tuting another potential irritant. The RBI’s nuanced approach in the revised the downing of an Indian Air Force more unpredictable than at pre­ R akesh Sood (IAF) MiG­21 showed. In the ab­ sent. External balancing circular on stressed assets is noteworthy sence of communication channels In 2014, Mr. Modi displayed un­ How New Delhi manages its rela­ between India and Pakistan, it ap­ usual pragmatism in building tions with Washington will be he efforts of the Reserve Bank of India to clean up s Prime Minister Narendra pears that the U.S., Saudi Arabia upon a relationship that had stea­ closely watched in Beijing and the non­performing loans mess in the banking Modi begins his second and the United Arab Emirates GETTY IMAGES/ISTOCKPHOTO dily grown under the previous re­ Moscow, which have been moving Tsystem suffered a setback in April when the Su­ Aterm, the world looks more played a role in ensuring the quick alism because our bilateral rela­ gimes, after the nuclear tests in closer. It is reminiscent of 1971 preme Court shot down its circular of February 12, disorderly in 2019 than was the release of the IAF pilot, Wg. Cdr. tions provide us with significant 1998. The newly appointed Exter­ when China began moving closer 2018, terming it ultra vires. Version 2.0 of the circular, case five years ago. U.S. President Abhinandan Varthaman, thereby advantages. With all our neigh­ nal Affairs Minister, S. Jaishankar, to the U.S. to balance the then titled “Prudential Framework for Resolution of Stressed Donald Trump’s election and the defusing the situation. Unless the bours, ties of kinship, culture and had played a key role as the then USSR, with which its relationship Assets”, issued by the central bank on June 7, manages new dose of unpredictability in Modi government wants to out­ language among the people strad­ Ambassador in Washington. Later, was strained. Today, both see me­ U.S. policy pronouncements; the source crisis management to ex­ dle boundaries, making the role of as Foreign Secretary, he success­ rit in a common front against the to retain the spirit of the original version even while ac­ trade war between the U.S. and ternal players, it may be better to governments in S tates bordering fully navigated the transition from U.S., though for China the rivalry commodating the concerns of banks and borrowers. China which is becoming a tech­ have some kind of ongoing dia­ neighbours vital in fostering closer the Obama administration to the with the U.S. is all­encompassing The RBI has achieved a good balance between its objec­ nology war; Brexit and the Euro­ logue between the two countries. linkages. This means investing at­ Trump administration while keep­ because of its geography and Tai­ tive of forcing a resolution of stricken assets and giving pean Union’s internal preoccupa­ This could be low­key and dis­ tention in State governments, both ing the relationship on an upward wan. Russia has interests beyond, banks the elbow room to draw up a resolution within a tions; erosion of U.S.­ Russia arms creet, at whatever level considered at the political and bureaucratic le­ trajectory. in Afghanistan, West and Central set timeframe without resorting to the bankruptcy pro­ control agreements and the likeli­ appropriate, as long as no undue vels. Despite this, a number of issues Asia and Europe, and it is here that cess. Banks will now have a review period of 30 days af­ hood of a new arms race covering expectations are generated. A pol­ have emerged that need urgent at­ Mr. Modi will need to exploit new nuclear, space and cyber domains; icy in­between diplo­hugs and no­ Managing China and the U.S. tention. As part of its policy on opportunities to reshape the rela­ ter a borrower defaults to decide on the resolution stra­ the U.S.’s withdrawal from the Iran communication provides both China will remain the most impor­ tightening sanctions pressure on tionship. tegy, as compared to the one­day norm earlier. They nuclear deal and growing tensions nuance and leverage. tant issue, as in 2014. Then, Mr. Iran, the U.S. has terminated the In a post­ideology age of pro­ will also have the freedom to decide whether or not to between Saudi Arabia and Iran are Relations with countries on our Modi went along with the old poli­ sanctions waiver that had enabled miscuity with rivalries unfolding drag a defaulter to the insolvency court if resolution some of the developments that periphery, irrespective of how we cy since the Rajiv Gandhi period India to import limited quantities around us, the harsh reality is that does not take place within 180 days of default. Banks add to the complexity of India’s define our neighbourhood, will al­ that focussed on growing econom­ of Iranian crude till last month. India lacks the ability to shape had no such option earlier. By making an Inter Creditor principal foreign policy challenge ways be complex and need deft ic, commercial and cultural rela­ The Generalised System of Prefe­ events around it on account of re­ Agreement between lenders mandatory, the RBI has of dealing with the rise of China. political management. Translating tions while managing the diffe­ rences scheme has been with­ source limitations. These require ensured that they will speak in one voice, while the con­ India’s natural weight in the region rences on the boundary dispute drawn, adversely impacting about domestic decisions in terms of ex­ Redefining neighbourhood into influence was easier in a pre­ through dialogue and confidence­ 12% of India’s exports to the U.S., panding the foreign policy esta­ dition that dissenting lenders should not get less than As in 2014, in 2019 too Mr. Modi globalised world and before China building measures, in the expecta­ as a sign of growing impatience blishment though having a sea­ the liquidation value puts a floor on recovery from the began his term with a neighbour­ emerged in its assertive avatar. To­ tion that this would create a more with India’s inability to address soned professional at the top does resolution process. hood focus but redefined it. In day, it is more complex and play­ conducive environment for even­ the U.S.’s concerns regarding mar­ help. We need to ensure far more The RBI’s nuanced approach now is noteworthy. 2014, all South Asian Association ing favourites in the domestic pol­ tual negotiations. Underlying this ket access, tariff lines and recent coordination among the different There will be disincentives in the form of additional for Regional Cooperation (SAARC) itics of neighbours is a blunt was a tacit assumption that with changes in the e­commerce policy. ministries and agencies than has provision of 20% to be made by banks if a resolution is leaders had been invited for the instrument that may only be em­ time, India would be better placed A third looming issue, perhaps been the case so far. Our record in not achieved within 180 days and a further additional swearing­in. However, the SAARC ployed, in the last resort; and if to secure a satisfactory outcome. It the most critical, is the threat of implementation projects is patchy spirit soon evaporated, and after employed it cannot be seen to fail. has been apparent for over a de­ sanctions under the Countering at best and needs urgent attention. provision of 15% if this extends to a year. If that is the the Uri attack in 2016, India’s Since that may be difficult to en­ cade that the trajectories were American Adversaries Through The focus on the neighbourhood stick, the carrot is that they can write back half of the stance affected the convening of sure, it is preferable to work on the moving in the opposite direction Sanctions Act (CAATSA), were In­ is certainly desirable, for only if we additional provision once a reference is made to the in­ the SAARC summit in Islamabad. basis of generating broad­based and the gap between the two was dia to proceed with the purchase can shape events here can we look solvency court and the remaining half can also be Since an invitation to Pakistan was consent rather than dominance. widening. For Mr. Modi, the Dok­ of the S­400 air and missile de­ beyond. However, the fact that clawed back by banks if the reference is admitted for in­ out of the question, leaders from This necessitates using multi­ lam stand­off was a rude reminder fence system from Russia. Till the China too is part of the neighbour­ solvency resolution. This approach will give banks the the Bay of Bengal Initiative for Mul­ pronged diplomatic efforts and be­ of the reality that the tacit assump­ end of last year, then U.S. Defence hood compounds Mr. Modi’s fo­ freedom to explore all options before referring a defaul­ ti­Sectoral Technical and Econom­ ing generous as the larger econo­ tion behind the policy followed for Secretary James Mattis had been reign policy challenges in his se­ ic Cooperation (BIMSTEC) coun­ my.
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