The Peter Zeihan Podcast Series - Mr. Modi Goes to Washington || Peter Zeihan

Episode Date: June 22, 2023

Prime Minister Modi is stateside and prepping for his address to Congress and state dinner. While a summit with Modi may have been inevitable (as he's the leader of the most populous country and up-and-coming power), we need to look at India's relationship with the rest of the world to see what might come of this meeting. Full Newsletter: https://mailchi.mp/zeihan/mr-modi-goes-to-washington

Hey, everybody, Peter Zion here. It is the 21st of June. Here's Loki. Today we're talking about India. Loki's from India. Bingle. Anyway, Prime Minister Modi is in Washington right now. And by the time you see this on Thursday, he'll be getting ready for his address to Congress as well as official state dinner. There was some debate in Biden world about whether this is going to happen because in the past, Prime Minister Modi, especially before he was Prime Minister, hasn't been a particularly nice guy. A little on the corrupt side, a lot on the populace side, is willing to use religious divisions in order to further his political agenda, which is, you know, relatively distasteful from the American point of view and a lot of other points of view. Mayn would argue the Indian point of view.

Anyway, he is still the leader of the most populous country in the world and up-and-coming power. So obviously there was going to be a summit. The question whether he would be welcomed as warm. as he has. A few things we need to talk about India, the Indians, and the relationship with the wider world in the United States in particular. First and most obviously, the Biden administration has a few things that it wants from the Indian administration. They would like more cooperation on things like the Ukraine war and sanctioning Russia. They would like more cooperation on things like tech sanctions and in general the diplomatic isolation of China. And the Biden administration

is going to get none of that. The key thing to remember about India is that, is that, India looks out for India's own best interests. And while every country does that to some degree, the big difference between India and everyone else is that India is not really a country. It's more like the Holy Roman Empire, where there is technically a central government, but almost all decisions that matter are made at the state and local level.

And so while Modi is nominally the leader of this, and that does give him significant power and influence, he is only the most powerful of several dozen personalities across the Indian system who have decision-making power. And so the capacity of India to act like a state in the way that we think of that with France and China and Japan and the United States and the rest is very, very weak. Second, because of this internal, fractious, ever-shifting coalition and competition, India, first and foremost, concerned about how the things in the world impact India.

It makes it very, very difficult for the Indians to identify with any other power in terms of friendship or family or alliance or and sometimes even partnership. So unless they see someone on the outside that is backing them into the hilt for absolutely every little thing they care about, they're going to call the relationship at best complicated and cold. It's a very myabic way of looking at the world, but India has a very peculiar geography. It's basically locked off from the rest of the world by a series of geographic and geopolitical barriers. There are mountains and deserts and oceans and jungles and jungle mountain and jungle deserts. Not jungle deserts.

Sorry. Desert mountains that's separated from everyone and that's not even all of it because in a lot of these border territories, you've got hostile powers, whether it's Pakistan, like Liddish, Myanmar or of course China. So the ability of India to interact with the rest of the world has always always, been circumscribed. And unless you are willing to back India on everything that involves their immediate neighborhood without question, they're going to view with you with a bit of suspicion. This is one of the reasons why the Soviets during the Cold War were able to make India into a bit of a partner, because they had no interests in Southeast Asia. So they just backed whoever

happened to be the biggest power, India, against everyone else. And so the Indians developed a bit of a shine on all things Moscow, which has persisted long after the communist system has ended. What this means for the United States is India can never be family, it can never be an ally, it can never be a friend, but it can be a partner from time to time. But because the Indians view everything through the very short-sighted lens of national interest, they don't have anyone who will watch their back. The Russians have proven they're not a reliable partner and the Indians are backing away from their defense cooperation with them because the Indians now realize that the money that they've spent has been wasted, that the Russians can't

maintain their own output. They're actually asking for some of the components back in order to support the war in Ukraine. And that the high end works, like the Brahmos cruise missile, that's just not going to happen at all. And so the Indians, you know, they're not dumb. They're short-sighted. There's a difference. And eventually you get to a certain point where they realize that now they would only be putting good money after bad, and that means the Russian partnership, if that's the right term, is now functionally over as well. India is also not going to help the United States in boxing in the Chinese because they have a hard time seen past their own nose. And anything that reeks of American leadership, which obviously would be in play here, is something the Indians

are going to reflexively recoil against. Now, does this mean that I think India is doomed? No, far from it. A couple big things to keep in mind. Number one, geography works both ways. India has a hard time projecting out. Other powers have a hard time projecting in, especially on land. For naval powers like the United States or Japan, that's less true. And that's one of the reasons why this quad idea exists, because Japan, Australia, the United States, and India can cooperate to a degree on naval issues that affect the Indian Ocean Basin

because Japan, Australia, and the United States don't have strong interests in the Indian Ocean Basin, especially now that the war and terror has been closed down. There was a period for the last 20 years where Indian-American relations were not hostile, but problematic because the United States had to be up to its hips in all things Pakistan in order to get military supplies to its operation in Afghanistan. Now that that's over, the Indians and the Americans can commiserate about how much they dislike all things Pakistani, and that's done wonders for the relationship. Second, India is the first major country after, you know,

you leave the Persian Gulf, which means that no matter what happens with global commerce or global energy, India is the first in line, and it will never really have an energy crisis. Compared to what's shaping up for the rest of the world, that's amazing. Third, India's demographic structure, while not perfect, is night and day different from the country they love to compare themselves to, and that is China. New data out of China in just the last few weeks indicates the demographic profile is far worse than even I thought. The Chinese are now publicly admitting they have about half as many five-year-olds as

10-year-olds. So you carry that forward with some of the other problems that they've identified with their own demographic strategy, and it looks like whatever I was thinking was going to happen, which was already pretty atrocious, may have already happened. And we're looking at a complete Halloween now. Now, India started to industrialize in a big way 30, 35 years ago, and so the birth rate has dropped. but at current rates of birth rate decline, India will not find itself in a Chinese-style situation

for another 60 to 70 years. And that's a long time for things to go right. So India does have a demographic dividend that got along with young adults that have fewer children in the past that generally spells an opportunity for a 20 to a 30-year consumption-driven growth opportunity. That's not without risk, but on the mechanics of it, the next couple of decades look great. And then fourth, as the Chinese face problems, a lot of the manufactured goods that the world has been importing from the Chinese system are going to go away. Now, that means if countries still want stuff, they're going to have to build out their own networks to build that stuff themselves. That applies to India just as much as everywhere else,

so we should expect to see a two to three decade industrial boom in the Indian space as well. Now, it will be different from what's happening in Mexico, because remember, India has no allies, no friends, and very few partners, and those partners are erratic. So the sort of manufacturing synergies that Canada, the United States and Mexico, and to a lesser degree, Central American Columbia can generate, India has to do it all itself. That means it'll be more expensive, more time consuming, and slower to happen, use more labor, be less productive, less efficient.

and at the end of the day have lower quality product. But in a fractured world, India will have something that a lot of countries won't. It'll still have stuff. And in that sort of world, India looks good. They are perfectly capable, the Indians, of running an economy that is globally significant without being one that is globally wired. So for Biden, do I think anything of substance is going to come out of this summit? No.

The geography of India, the politics of India, the ideology. biology of India probably precludes that. But that doesn't mean that the relationship has to be hostile. And if there's going to be a major power in a different hemisphere in a strategically interesting area, you should at least have a conversation. And so think of that as what's going on with the Biden administration right now. Not a plan for the future, a conversation about it. We could do a lot worse. All right, that's it. Take care.