A New Economic Playbook for Policymakers - Tim Besley, Andrés Velasco (Project Syndicate)

 A New Economic Playbook for Policymakers

Project Syndicate, Nov 13, 2025

Tim Besley and Andrés Velasco tout a promising successor to the Washington Consensus that recognizes the importance of politics.

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A New Economic Playbook for Policymakers
TIM BESLEY and ANDRÉS VELASCO
Project Syndicate, Nov 13, 2025

The Washington Consensus assumed that economic growth would automatically follow market liberalization. That belief has not aged well, and a new policy approach must include innovation, good jobs, climate stability, gender equality, and a state empowered to provide effective regulation and high-quality public services.
LONDON – Voters in many countries are furious. Democratic leaders, lacking a playbook, seem unable to address the causes of that fury. The only people benefiting from this vacuum are populists and wannabe strongmen.
In Britain, the Labour government looks like it wants to go back to the tax-and-spend solutions of the past, while some Conservatives pine for a revival of Margaret Thatcher’s free-market policies. Both appear clueless in articulating a vision that is attractive to today’s voters.
Especially damning is the perception, common in many countries, that governments, hamstrung by political paralysis or excessive regulation, cannot get anything done. If democratic politicians are all talk and no action, then populists, with their boasts (rarely fulfilled) of decisive action to come, offer an appealing alternative.
To help create a new playbook, we asked a group of leading economists what the world should have learned in the 35 years since the so-called Washington Consensus became a policy lodestar. Their answers, which have just been published in book form, constitute the London Consensus, offering hope that a new policy approach, based on sound economic principles, can help push back against authoritarian populism.
Like its predecessor, the London Consensus holds that an economy with low inflation, prudent fiscal policies, and openness to world trade offers the best hope for human flourishing. But unlike the Washington Consensus, the new playbook showcases a transformed approach to economics that includes innovation, good jobs, gender equality, a focus on climate, and a political economy that empowers the state to deliver.
A first order of business is getting economies to grow again. Despite being cursed as “neo-liberal” by its critics, the Washington Consensus had surprisingly little to say about economic growth. Its assumption that growth would automatically follow market liberalization has not aged well.
Over the last 35 years, thanks largely to the work of the most recent Nobel laureates, including our London Consensus co-author Philippe Aghion, we have learned that “getting the prices right” is not enough. Growth depends on innovation, which requires striking the right balance between competition and rewards for new ideas. Governments play a role by supporting research, education, and a financial system that allows firms to invest and adopt new technologies.
Although growth and well-being are linked, that connection, too, is no longer viewed as automatic. People care about incomes and consumption. But they also care about the health of their communities and the sense that policies and national politicians treat “people like them” fairly. A new approach must focus on how economic systems shape both prosperity and the social fabric that holds communities together.
Left-behind regions require a great deal more than cash transfers. The loss of jobs and businesses weakens local communities and affects people’s lives and sense of dignity in ways that money alone cannot fix. Place-based policies should be a central component of the new playbook. We need to take good jobs to where people are, not vice versa.
People want stability as well, so moderating the ups and downs of the economy should also be a main goal of policy. The Washington Consensus focused only on one kind of instability, caused by irresponsible fiscal and monetary policies, but that was too narrow. Today we understand that financial crises, health emergencies, and even climate change can also be major sources of shocks.
By serving as an insurer of last resort, as they did during the COVID-19 pandemic and the 2007-09 global financial crisis, governments can protect citizens from losing their jobs, savings, or access to health care. But advocating such an activist fiscal policy is not the same as claiming that anything goes. On the contrary: to supply last-resort insurance, governments must be able to borrow during crises, which in turn requires that they run surpluses and cut their debts in good times.
The Washington Consensus gave the impression that the state’s role should be minimal, but that was always too simplistic. An effective government should be small enough not to get in the way of the private sector, but strong and capable enough to do all the things government needs to do in a modern economy, which includes providing effective regulation and high-quality public services. In turn, building government capacity requires long-term investment in people, institutions, and systems.
The quality of governance also depends on political institutions, which to be successful must evolve along a narrow corridor. When power is too fragmented, reaching agreement on matters of common interest becomes impossible. And when power is concentrated in too few hands, without effective checks and balances, unresolved grievances accumulate, driving citizens to seek untried alternatives.
The London Consensus believes that good economics cannot be separated from good politics. Insofar as it assumed that adopting sound economic policies would automatically cause political problems to sort themselves out, the Washington Consensus was naive. The political origins of economic policies make a big difference. Reforms imposed from above, without local support or legitimacy, usually fail.
Moreover, what may seem like good economic policies can have bad political effects if they increase inequality or resentment. Rather than treating politics as an obstacle, economists should see it as essential to making fair and lasting economic choices.
We do not claim that the Washington Consensus caused the current wave of populism. But when it comes to addressing today’s challenges, it does not provide the answers. For that, we need to go beyond the old recipes. The London Consensus provides a fruitful alternative.

Trade Is Winning Trump’s War On It - Daniel Gros (Project Syndicate)

Parece que o comércio está vencendo a guerra que o Trump deslanchou contra ele. Sendo mais preciso: o sistema multilateral de comércio está abalado, mas o comércio vem resistindo bravamente aos golpes assestados contra ele, inclusive porque quem introduziu as surrealistas "tarifas retaliatórias" não tem a menor ideia de como funciona o comércio e que ele sempre é TACO, ou seja, recua em face dos desastres mais pavorosos para os EUA.

Este artigo de Daniel Gros, da Universidade Bocconi, examina os dados disponíveis, para confirmar que o cenário não é tão desastroso quanto o prometido por Trump ou esperado pelos alarmistas sempre à espreita. Depois que o alucinado for embora, a OMC poderá convocar uma conferência ministerial para começar uma nova rodada de reconstrução do sistema multilateral de comércio, colocando em vigência novamente o secular princípio da nação-mais-favorecida.
Cabe resistir aos idiotas.
Paulo Roberto de Almeida

Trade Is Winning Trump’s War On It
Daniel Gros
Project Syndicate, Sept 10 2025

Since returning to the White House, Donald Trump has repeatedly introduced, paused, reversed, and hiked tariffs, often to unprecedented levels, raising fears about the future of the global trading system. But the average effective tariff rate that
the US has applied remains much lower than Trump's pronouncements would suggest.

BRUSSELS – Nearly six months after US President Donald Trump announced his ultra-high “reciprocal” tariffs – in blatant defiance of World Trade Organization rules – the global trading system is holding up well. No other major economy has followed Trump’s example, and according to United Nations Trade and Development (UNCTAD), world trade has increased by about $300 billion in the first half of 2025.
Most of the world seems to understand that Trump’s tariffs are economically irrational. Of course, in many cases, economics is not the point: Trump uses tariffs to advance geopolitical goals or to salve his personal grievances. Nowhere is this more apparent than in the 50% tariff imposed on Brazil as punishment for prosecuting former President Jair Bolsonaro for inciting a Trump-inspired coup attempt in 2023, following his electoral loss.
But Trump has always held that tariffs are the key to improving the United States’ trade balance, which is why his “reciprocal” tariffs are purported to reflect the size of America’s deficit with each economy. Economists, by and large, dispute these claims, warning that tariffs will only reduce America’s overall trade volume, both exports and imports. And, so far, their admonitions have been borne out.
The very short-run data now available are difficult to interpret, because imports surged early in the year in anticipation of the tariffs. But if Trump was right about the impact of tariffs, this “hump” should by now have been offset by lower imports, as traders draw down inventories. Instead, US imports in the first half of 2025 exceeded their 2024 level.
America’s monthly merchandise-trade deficit stood at $103 billion in July – almost exactly the same level as one year earlier. And the cumulative US trade deficit has widened: during the first half of this year, it was about $160 billion larger than it was in the first half of 2024.
There are two obvious reasons why US import demand has withstood Trump’s tariffs: the US economy continues to perform strongly, and tariff rates have, on average, remained well below those Trump announced in April. In fact, Trump “paused” those tariffs almost immediately, in what turned out to be just the beginning of a bewildering succession of tariff threats, reversals, announcements, suspensions, and vague “deals” – such as with Japan and the United Kingdom – involving 10-15% US tariffs, alongside conditions relating to investment and energy.
Given the relentless changes to the tariff schedule, it is difficult to obtain a clear picture of where US trade policy stands.
After all, the WTO’s Harmonized System for goods classification has about 15,000 tariff lines, and each of America’s more-than-150 trading partners may face different tariff rates at any given time, meaning that there could be more than two million different fluctuating tariff rates to consider. Determining the average tariff rate – which would also have to account for bilateral imports (another two million pieces of information) – is thus not a simple task. But even if one carries out this calculation, it might not reflect the “real” tariff rate, because the extent to which official rates are being applied at the border is currently unclear.
Fortunately, there is a simple way to determine how restrictive Trump’s trade policy actually is, despite any discrepancy between announcement and enforcement: divide tariff revenues by imports. The resulting ratio represents the average effective tariff being applied. And, in the case of the US today, this rate is much lower than White House pronouncements would suggest.
According to US International Trade Commission data, the US collected $28 billion in tariff revenue in July, equivalent to 10% of its imports ($283 billion). This is up eight percentage points from the January level – an increase that, while unprecedented, is too small to have a strong immediate impact on trade flows. Since May, the US has collected tariffs of just 9-10%, on average, from its trading partners, owing partly to the fact that about half of all US imports still enter duty-free. The fact that tariff increases have, in practice, remained relatively contained explains why their impact on US inflation has so far been muted.
There are large disparities in the tariff rates faced by different US trading partners. Whereas most imports from China have been subjected to duties of over 50% – for an average tariff rate of 40% – less than 10% of Canada’s imports are subject to tariffs at all. The European Union falls somewhere in between, with 60% of its exports subject to tariffs, usually in the 15% range (except cars, on which Trump has imposed a 25% tariff), resulting in an average tariff below 10%. These figures belie reports that Trump has “gone soft” on China, while treating US allies more harshly.
The framework trade agreement that the EU recently agreed with the Trump administration is further evidence of US allies’ enduring relative advantages. Though many have criticized the EU for its supposed capitulation to Trump, the agreement would put the tariff rates on European imports well below those faced by China, and even slightly below those faced by America’s Asian allies, such as Japan and South Korea. Only Canada and Mexico are in a significantly better position than the EU, because the US-Mexico-Canada Agreement de facto remains largely intact (though neither economy can compete with an export giant like the EU).
When it comes to tariffs, Trump’s bark has so far proven worse than his bite. While current US trade policy will have a moderate impact on the country’s trade flows, it will not transform the global trading system – as long as the rest of the world continues to eschew Trump’s example and remains committed to open trade.

Daniel Gros is Director of the Institute for European Policymaking at Bocconi University.

What Trump’s Tariffs Mean for India - Project Syndicate

 

What Trump’s Tariffs Mean for India

Aug 29, 2025

Donald Trump’s imposition of 50% tariffs on US imports from India is as much a geopolitical maneuver as an economic one. By bringing its strategic agility to bear, India may be able to limit the fallout, but some risks will be difficult to contain.

Featured in this Big Picture

1. PS EDITORS
2. AJAY SHAH
3. KAUSHIK BASU
4. SHASHI THAROOR
5. BRAHMA CHELLANEY
6. JAYATI GHOSH

The Big Picture

Aug 29, 2025PS EDITORS

US President Donald Trump’s decision to impose a 50% tariff on imports of Indian goods will have severe effects on India’s economy. The United States imported $87.3 billion worth of Indian goods in 2024, accounting for about 18% of India’s total exports, and economists predict that the tariffs could increase India’s trade deficit, threaten jobs, and shave 0.5 percentage points off GDP growth this year.

But, according to Ajay Shah, Co-Founder of XKDR Forum, “several factors” – from India’s diverse trade relationships to its robust services exports – will mitigate the immediate economic impact of Trump’s tariffs. The bigger risk lies in the possibility that Trump’s economic nationalism could “provide ammunition” to Indian proponents of an insular, defensive posture that regards international engagement as a “source of vulnerability.”

Cornell’s Kaushik Basu echoes this argument, urging India to avoid following Trump’s protectionist lead and introducing retaliatory tariffs. Instead, it should draw on the legacy of the Non-Aligned Movement, which it co-founded, and “cultivate economic and diplomatic ties with countries like Mexico, Canada, and China,” as well as “other governments concerned about the impact of Trump’s tariffs,” such as in Europe and Latin America.

Shashi Tharoor, an MP for the Indian National Congress, shows that this process is already underway. India’s “strength lies in its strategic nimbleness,” he writes, and amid rising geopolitical risks – emanating not only from the US, but also from China – it is cultivating closer ties with Africa, Europe, and the Gulf.

India is even seeking to improve relations with China, notes Brahma Chellaney of the Center for Policy Research, though, on this front, Indian Prime Minister Narendra Modi should tread carefully. After all, he spent six years making overtures to China, which were never reciprocated. On the contrary, China continued to advance its territorial ambitions in the Himalayas, and it is “far more likely to exploit any hint of Indian weakness than to act as a reliable partner.”

In any case, even the most well-planned diversification strategy may not be enough to enable India to avoid an unfavorable trade deal with the US, warns Jayati Ghosh of the University of Massachusetts Amherst. Beyond exports, Trump is targeting Indian billionaires and Modi allies Gautam Adani and Mukesh Ambani, who may turn out to be the “most effective pressure point to extract significant concessions from the Indian government.”

Trump’s Tariffs and India’s Economic Future

Aug 25, 2025AJAY SHAH

US President Donald Trump’s new tariffs on India will likely cause some immediate economic damage. But the greater risk is that they will prompt the Indian government to turn inward, when it would be better off seeking new international partners and reaffirming its commitment to the globalized economy that has served it so well.

NEW DELHI – US President Donald Trump’s decision to impose new tariffs on a wide range of imports from India, ostensibly a penalty for buying Russian oil, represents another shock to the international trading system – and a sharp reversal of good relations withIndian Prime Minister Narendra Modi. These tariffs could disrupt the Indian economy, which has benefited immensely from global integration. But the greater risk lies in their potential to influence the country’s long-term strategic direction. 

To be sure, several factors will mitigate the immediate impact of Trump’s tariffs. Despite being India’s largest trading partner, the United States is a distant country, and high transport costs have led India to diversify its trade relationships. Moreover, international markets are not static, and Trump’s global tariff war will redirect trade flows and reconfigure supply chains all over the world. Indian exporters – like their counterparts in other countries – will invariably find new markets, though the transition costs implied by this shift are likely to be high. 

Consider also that the new US tariffs apply to roughly $65 billion in annual merchandise exports from India. With the country’s total merchandise exports reaching around $441 billion in the last fiscal year, the affected goods constitute less than 15% of these trade flows. While not insignificant, this figure is unlikely to cripple India’s export economy. 

A narrow focus on merchandise also overlooks the most dynamic component of India’s trade portfolio: services. With annual services exports now exceeding $380 billion and growing robustly, this sector is the true engine of India’s global economic ascent. Crucially, these exports – which include IT services, financial services, business-process outsourcing, and research and development – are not subject to tariffs. 

As an added benefit, the policy uncertainty created by Trump’s tariff war could accelerate multinational firms’ diversification of operations away from America. India is well-positioned to capitalize on this shift, and I know from my own experience that Indian exporters of both goods and services have already begun to intensify their efforts to develop business links in OECD markets other than the US. 

But beyond trade economics, Trump’s tariffs raise a larger question: What is India’s place in the world? Two competing visions have long animated domestic debate on this issue. One vision presents the country as outward-looking and confident, pursuing growth by embracing globalization and leveraging Western technology, finance, and markets. To realize its potential, India must embrace deeper integration into the world economy. 

This vision reflects the closer ties that India has forged with the West in recent decades – and which underpinned its economic success between 1991 and 2011. The Indian diaspora has grown in size and prominence throughout the Western world, while India itself has come to rely on Western technology and business networks. For all the talk of enhancing economic links with Russia or China, good luck finding an elite family in India whose kids are studying in either country. 

The opposing view portrays international engagement not as an opportunity for India, but as a source of vulnerability. This defensive posture is shaped by skepticism toward the West – a holdover from the colonial period – and a belief in self-reliance to the point of autarky, often at the expense of efficiency and growth. 

Trump’s new tariffs have provided ammunition to the proponents of this more insular vision by bolstering the narrative that the global system is unreliable, and that engagement with the West is ultimately harmful to India’s interests and security. To the extent that these arguments find purchase among India’s leaders, the country risks embracing protectionism and nativism. Such a shift would be detrimental to India’s long-term prosperity, Asian security, and what remains of the liberal world order. 

Fortunately, there are signs that the outward-looking view remains dominant. The free-trade agreement that India just signed with the United Kingdom commits it to reducing protectionist barriers. It also illustrates India’s willingness to pursue deeper economic links with OECD countries when they are based on mutual interest and respect. One can only hope that ongoing negotiations for a comprehensive trade agreement with the European Union will follow a similar trajectory, further anchoring India to the principles of economic openness. 

America’s tariff attack has created an opportunity for India to clarify its strategic priorities. The country’s optimal response to US protectionism is not to retaliate or retreat, but to seek and cultivate other partners that remain committed to rules-based international trade. By deepening trade and investment ties with the UK, the EU, Japan, and Australia, India can recalibrate its economic relationships and reaffirm its commitment to the globalized economy that has served it so well. 

India Must Not Fall Into Trump’s Tariff Trap

Aug 13, 2025KAUSHIK BASU

US President Donald Trump’s decision to hit nearly all Indian imports with a sweeping 50% tariff has upended one of India’s most important trade relationships. Instead of retaliating, India should draw on its non-aligned legacy and cultivate economic relationships with a wide range of like-minded countries.

NEW YORK – Economic relations between India and the United States have been thrown into disarray after US President Donald Trump announced a sweeping 50% tariff on nearly all Indian imports, with the exception of iPhones and certain pharmaceutical products. The move places India among the five most heavily targeted countries under Trump’s tariff regime, alongside Brazil (50%), Syria (41%), Laos (40%), and Myanmar (40%). 

The announcement caught Indian policymakers off guard, particularly given Prime Minister Narendra Modi’s open support for Trump’s re-election campaign. The White House’s harsh statement, framing the move as punishment for India’s purchases of Russian oil, has only added to the confusion. As the Wall Street Journal recently noted, this reasoning does not hold up, since China – the largest buyer of Russian oil – has not been penalized for its purchases. 

So, what explains Trump’s decision? Paradoxically, India’s policy of unquestioningly siding with Trump may have made India easier to take for granted, to the point that even a minor departure from Trump’s preferences is treated as unacceptable. 

This dynamic is reminiscent of Anton Chekhov’s short story “The Ninny,” in which an employer withholds the equivalent of nearly a month’s salary from his children’s governess for arbitrary reasons. The governess accepts each cut without protest – a passivity that the employer chastises as spineless. The economist Ariel Rubinstein later drew on Chekhov’s story to develop a model illustrating how submission can invite exploitation. 

India’s current subservience to Trump marks a sharp departure from its longstanding role as a strong, independent country. As a co-founder of the Non-Aligned Movement, it once championed strategic autonomy, balancing relations with multiple countries while avoiding subordination to any major power, be it the US or the Soviet Union. 

It is time for India to draw on that legacy and cultivate economic and diplomatic ties with countries like Mexico, Canada, and China. This also means strengthening trade and cooperation with other governments concerned about the impact of Trump’s tariffs, particularly in Europe and Latin America. 

It would be a mistake for Modi to retaliateby matching Trump’s tariffs, as some prominent Indian commentators have urged. While retaliation would hurt the US, the damage to India would be far greater. The US is India’s largest trading partner, whereas India is only the tenth-largest partner for the US – well behind Mexico, Canada, China, and Germany. The US economy is also far larger and therefore better able to absorb major shocks. 

More importantly, courage does not necessarily mean responding in kind. By imposing heavy tariffs on longtime trading partners, the US is making a grave error, isolating itself and inflicting enormous damage on its own economy. 

To be sure, tariffs can play an important role in economic policy. A well-known example is the infant-industry argument, which holds that when a promising sector is still in its early stages, temporary tariff protections can give businesses the confidence to invest, allowing the sector to grow, achieve economies of scale, and become competitive. But once the industry matures, tariffs should be reduced, so that the discipline of open competition can help it perform even better. 

India is a case in point. In 1977, a political dispute led the government to expel IBM, compelling the country to develop its own mini- and micro-computers. Protected by trade barriers, the domestic computing sector expanded quickly. But it was the economic reforms of 1991-93, which opened up India’s markets to international competition, that enabled its IT sector to flourish and Indian corporations like Infosys, Wipro, and Tata Consultancy Services to emerge as global leaders, driving a period of unprecedented economic growth. 

Interestingly, the infant-industry concept predates modern academic economics and can be traced back to Alexander Hamilton, America’s first Treasury Secretary, who successfully advocated for US tariffs to protect and nurture its nascent industries. Although trade policies shifted after 1860, relatively high tariffs remained in place until 1934, after which they fell sharply, fueling a sustained economic boom. 

By contrast, Trump’s decision to raise tariff rates to their highest levels in more than 90 years is less an infant-industrypolicy than a nonagenarian one, shielding a manufacturing sector that long ago outgrew any need for protection. Moreover, competing with emerging economies like India, Vietnam, and Indonesia would require driving down US workers’ wages – a strategy that is neither realistic nor desirable. 

The same applies to India: tariffs should not be used to settle political scores. In the long run, the collateral damage will far outweigh any short-term gains. And, as for Trump’s tariff policy, we can only hope that he will recognize the mistake and reverse course before it causes any more damage to the US economy. 

Multi-Alignment Is India’s Superpower

Aug 29, 2025SHASHI THAROOR

Donald Trump's imposition of a 50% tariff on US imports from India is a stark reminder that even the most robust partnerships are vulnerable to a populist leader's whims. Fortunately, India has long practiced an agile foreign policy, guided not by rigid alliances but by long-term interests.

NEW DELHI – In the theater of global diplomacy, India has long mastered an agile balancing act – non-aligned in principle, pragmatic in practice. Today, as geopolitical tensions rise, allegiances shift, and the world order fractures into overlapping spheres of influence, India is again finding itself under growing pressure to recalibrate its posture. 

Relations with the United States are particularly strained, as India becomes a leading target of President Donald Trump’s economic nationalism. The Trump administration’s introduction of 50% tariffs on US imports from India – the highest rate the US has imposed on any trading partner – will have substantial economic consequences: the US accountedfor 18% of India’s total exports last year. 

But this is more than a trade issue. The US and India have been deepening their strategic ties for more than a quarter-century, with the US regarding a rising India as a vital counterweight to Chinese influence in the Indo-Pacific region. But the new tariffs are a stark reminder that even the most robust partnerships are vulnerable to a populist leader’s whims. While the tariffs might augur a brief period of economic friction, they also could end up reshaping the bilateral relationship. 

The Trump administration is also alienating India in other ways. In particular, it has been warming to Pakistan, with Trump receiving the country’s army chief, Field Marshal Asim Munir, at the White House, despite his long history of incendiary rhetoric. Munir’s provocations – some issued on American soil – have included nuclear saber-rattling and references to Kashmir as Pakistan’s “jugular vein.” That the US has met such comments with diplomatic indulgence, rather than censure, speaks volumes about the transactional nature of Trump’s foreign policy. 

To be sure, such flirtations with Pakistan are more of a strategic irritant than an existential threat. America’s long-term interests – economic, technological, and strategic – still align more naturally with India’s. The challenge lies in managing asymmetries, so that tactical US-Pakistan engagement does not undermine Indian security, especially along Kashmir’s volatile Line of Control, which Pakistan-based terrorists breached this past April to carry out a brutal assault on tourists. 

China’s support for Pakistan compounds the risks to Indian security. During Operation Sindoor – India’s reprisalagainst the Pakistani terrorist attack in April – China offered real-time military and diplomatic support to Pakistan. China is also Pakistan’s largest supplier of military equipment – including weapons that Pakistan has wielded against India. 

Moreover, the single largest project in China’s continent-spanning Belt and Road Initiative – which has enabled China to entrench itself in multiple areas of vital strategic significance for India – is the China-Pakistan Economic Corridor, centered on the Gwadar Port in southwestern Pakistan. The project is proof that the China-Pakistan axis is no longer a tactical alignment; it is a strategic entente. As such, it demands a comprehensive response from India, including economic resilience at home, military preparedness along the border, and diplomatic outreach across the Indo-Pacific. 

China has also engaged in direct territorial aggression against India. The scars of the Battle of Galwan, a brutal chapter of the Sino-Indian war of 1962, were reopened in 2020, when Chinese troops breached the Line of Actual Control in the Galwan Valley, leading to violent clashes and 20 Indian deaths. China’s high-altitude military deployment along its Himalayan frontier with the Indian state of Arunachal Pradesh compounds tensions. 

Amid this upheaval, India’s partnership with Russia has proved resilient. Forged in the crucible of Cold War non-alignment, the bilateral relationship is based on a shared respect for each country’s strategic autonomy. So, while the two countries do not agree on everything, India sources critical defense equipment from Russia, and Russian President Vladimir Putin is scheduled to visit New Delhi later this year. But even here, India has reason to worry: as Russia becomes increasingly dependent on China, India’s own partnership with Russia could become collateral damage. 

To mitigate rising geopolitical risks, India is diversifying its international partnerships. With Europe seeking to restructure its supply chains, India saw an opportunity to negotiate a free-trade agreement with the United Kingdom and reinvigorate sluggish trade negotiations with the European Union. Countries like France and Germany are eager to embrace India as a democratic alternative to China. 

India is also revitalizing its historical ties to Africa, which, with its favorable demographics and resource wealth, is central to India’s global ambitions. Whereas China has long pursued an extractive approach to the continent, India is working to foster mutually beneficial partnerships, including by expanding Indian investments in health care, education, and digital infrastructure. 

In the Gulf, India’s stake is both human and strategic. More than eight million Indians live and work in the region, and their remittances often serve as an economic lifeline for their families back home. But as the Gulf states seek to diversify beyond oil, India has far more to offer: tech, talent, and trade. India’s Comprehensive Economic Partnership Agreement with the United Arab Emirates, as well as its growing defense cooperation with Saudi Arabia, signal a shift from transactional ties to strategic depth. 

Within Asia, India surely misses the leadership of the late Japanese Prime Minister Abe Shinzō, who sought to deepen the already close bilateral relationship, especially in the security domain. India would certainly welcome a renewal of this approach from Japan’s current government. 

India’s strength lies in its strategic nimbleness. Rather than being bound by rigid alliances, it is guided by interests. So, it engages with the US on defense and technology, with Russia on energy and arms, with Europe on trade and climate, and with Africa and the Gulf on development and the diaspora. But such calibrated complexity demands clarity. India must draw and enforce its red lines on terrorism, sovereignty, and economic coercion. It must invest in its own institutional capacity, from infrastructure development and information technology to diplomacy and defense. And it must continue to champion a vision of global order that is inclusive, rules-based, and democratic. 

Appeasing China Won’t Help India Counter Trump

Aug 29, 2025BRAHMA CHELLANEY

Appeasement has never tamed revisionist powers, and it has often emboldened them. Indian Prime Minister Narendra Modi learned this the hard way during his first years in power, when China took advantage of his goodwill to alter the Himalayan status quo in its favor, but now he is at risk of falling into the same trap.

NEW DELHI – In 2020, China’s stealth encroachments into India’s Himalayan borderlands triggered deadly clashes and a prolonged military standoff that nearly erupted into war. Five years on, the border crisis remains largely unresolved, yet Indian Prime Minister Narendra Modi is headed to China in an apparent effort to ease friction – just when India is facing punishing tariffs imposed by US President Donald Trump. But recent history offers a stark warning: trusting China is a dangerous path. 

One can certainly understand Modi’s motivations for seeking a diplomatic thaw with China. The US-India relationship, once touted as a bedrock of America’s strategy for ensuring a “free and open Indo-Pacific,” has plunged to its lowest point this century. The decline beganduring the final years of Joe Biden’s presidency, but accelerated rapidly under Trump, who has now raised tariffs on US imports from India to 50%. 

Trump’s actions are as ironic as they are absurd. The US long courted India as a vital counterweight to China across the vast Indo-Pacific region, yet it is India that is now being subjected to sky-high tariffs, while China is enjoying a reprieve. Moreover, Trump claims he is punishing India for buying Russian oil, but India purchases less energy from Russia than China or Europe. Trump’s real objective, it seems, is to strong-arm India into a lopsided trade deal. 

Meanwhile, Trump is attempting to woo Russian President Vladimir Putin – to whom he has shown far more respect than Ukrainian President Volodymyr Zelensky – so that Putin not only ends the Ukraine war, but also takes a step backfrom China. But while Trump recognizes that punishing and isolating Russia drove the country closer to China, creating considerable risks for the US, he is repeating this mistake with India. 

Modi, however, should beware of letting Trump push him into China’s arms. In traveling to China at this moment, given the pressure he is under, India’s prime minister will come across less like a confident leader shaping events than a wounded statesman courting his country’s chief security threat. Past experience indicates that China is far more likely to exploit any hint of Indian weakness than to act as a reliable partner. 

Ever since China annexed Tibet in 1951, turning what had previously served as a buffer with India into a Chinese military stronghold, Sino-Indian relations have been marked by rivalry and mistrust. When Modi became prime minister in 2014, he made it his mission to change that. His initial hope of improving the relationship may not have been misguided; but his refusal to change course, even when China relentlessly exploited his goodwill to make quiet territorial advances on the ground, certainly was. 

China took few pains to hide its intentions: its troops encroached on an Indian borderland as Modi welcomed Chinese President Xi Jinping to India for the first time. While that initial 2014 summit was portrayed as a success, Chinese forces remained on Indian territory until India dismantled its defensive fortifications there. 

The following year, Modi delisted China as a “country of concern,” in order to attract Chinese investment. What India got instead was a flood of cheap Chinese imports. China’s trade surplus with India has grown so large that it now exceedsIndia’s entire defense budget – the world’s fifth largest. In effect, India is helping to finance China’s military buildup and thus its territorial revisionism. 

In 2014-19 – as China steadily tightened its strategic axis with Pakistan, erectedmilitarized “border villages” along India’s frontier, and expanded its high-altitude military infrastructure – Modi met with Xi 18 times. So committed was Modi to rapprochement that he continued to engage in “appeasement diplomacy,” even after China’s 2017 seizure of the strategic Himalayan plateau of Doklam. It was only after Chinese soldiers quietly surged across multiple frontier points in April 2020 – inexplicably catching India off guard – that Modi suspended his overtures to China. 

Five years later, Modi is at risk of falling into the same trap. Modi is traveling to China mainly to attend the Shanghai Cooperation Organization summit in Tianjin. But the SCO is largely a Chinese initiative, and India – the only established democracy among its ranks – has not treated it as a priority. Last year, Modi skipped its summit in Astana, Kazakhstan’s capital; and in 2023, when India held the rotating chair, he downgraded the summit to a virtual format. Modi’s decision to show up this year was probably more about signaling conciliation toward China than about the SCO. 

China has given India no reason to think this time will be different. On the contrary, when India conducted targeted strikes on Pakistani terrorist camps in May – a response to a brutal attack on tourists in the Indian-administered part of Kashmir – China lent Pakistan critical support, including real-time radar and satellite data. Furthermore, China recently confirmed plans to build the world’s largest dam adjacent to India’s border – an undertaking that will have grave ecological and national-security implications for India. 

Appeasement has never tamed revisionist powers; more often, it has emboldened them. By allowing China to profit from Indian markets even as it chips away at India’s sovereignty and security, Modi has conveyed that India, despite its tremendous economic and strategic clout, is willing to be treated as a doormat. Only with a hardnosed strategy that meets Chinese coercion with Indian resolve can Modi safeguard India’s interests and territorial integrity. 

Modi’s Billionaires in Trump’s Crosshairs

Aug 28, 2025JAYATI GHOSH

Following the collapse of US-India trade talks, Donald Trump’s administration has stepped up efforts to pressure oligarchs linked to Indian Prime Minister Narendra Modi, most notably Gautam Adani and Mukesh Ambani. By targeting Modi’s inner circle, Trump may have found the leverage needed to force India to submit to US demands.

NEW DELHI – The world’s largest corporations now rival most governments – not only in terms of revenue and assets, but also in their ability to shape political outcomes. Their power is reinforced by the immense personal fortunes of billionaires, which enable them to wield disproportionate influence over public policies, laws, and regulations. 

Crucially, extreme concentrations of wealth and power could not have developed without the active support of policymakers, whether tacit or explicit. And because governments themselves create the legal, regulatory, and political environments in which these fortunes are built, they retain the authority to restrain, regulate, or even expropriate private wealth. The fact that they rarely do so does not reflect a lack of capacity, but a deliberate political choice. 

Consequently, being an oligarch is inherently precarious. Crony capitalism may grant enormous advantages, but it also carries built-in risks. Chief among them is political change: new leadership, whether elected or imposed, may not extend the same protections or privileges to elites favored by the previous government. 

That danger is especially acute in authoritarian or personality-driven regimes, where leaders’ whims often override institutional checks. Falling out of favor can happen for many reasons: insufficient displays of loyalty, inadequate payoffs, becoming entangled in court intrigues, being perceived as a potential rival, or personal animosity. The on-again, off-again bromance between US President Donald Trump and Elon Musk is an obvious example. 

As geopolitical tensions escalate, however, oligarchs are no longer contending solely with domestic challenges. Increasingly caught in global power struggles, they have become convenient targets for hostile foreign powers seeking to pressure or undermine the leaders they support. 

The sanctions imposed by the United States and the European Union on oligarchs linked to Russian President Vladimir Putin following the 2022 invasion of Ukraine are a case in point. While these measures have done little to change the course of the war, they have profoundly disrupted the lives and businesses of those affected. 

Indian billionaires Gautam Adani and Mukesh Ambani have also found themselves in America’s crosshairs. Both have profited enormously from their ties to Prime Minister Narendra Modi – a fellow Gujarati – with their fortunes growing in tandem with his political ascent. This has made them useful bargaining chips in the ongoing trade negotiations between the US and India. 

To be sure, Ambani’s Reliance Group had already mastered the art of leveraging political influence to advance its business interests well before Modi rose to power. But Ambani’s alliance with Modi has pushed Reliance’s dominance to new heights. Adani’s rise, by contrast, is inextricably tied to Modi, dating back to the latter’s tenure as chief minister of Gujarat. 

Both oligarchs, particularly Adani, have relied on their proximity to Modi to expand their business empires, benefiting from regulatory reforms tailored to their interests and acquiring state assetsthrough lucrative privatization deals, often without a public tender. They have also moved into new sectors by purchasing successful firms targeted by Modi’s administration, effectively neutralizing potential competitors. 

Moreover, Ambani and Adani have enjoyed privileged access to publicly owned banks, receiving favorable loan terms that allowed them to restructuretheir debts with minimal scrutiny. Their political connections, evidenced by frequent appearances alongside Modi during his international trips, have helped them secure major contracts abroad. 

These political alliances have translated into lenient regulatory treatment. In Adani’s case, allegations that he has engaged in stock manipulation through opaque shell companies in offshore tax havens – exposed by US-based short-seller Hindenburg Research – were met with a muted response. Regulatory bodies like the Securities and Exchange Board of India declined to pursue a serious investigation. 

All of this makes the Trump administration’s decision to go after Ambani and Adani particularly striking. Officially, Ambani has come under scrutiny for profiting from the resale of Russian oil, effectively circumventing US sanctions, while Adani is being investigated for alleged bribery. But Trump’s actions appear to be a calculated attempt to pressure Modi through his inner circle. Adding insult to injury, they come from a US president whom Modi has long described as a “true friend.” 

That said, the recent collapse of the US-India trade talks can be attributed to several factors, many of which remain undisclosed. Modi has claimed that his sole concern is protecting Indian farmers – a statement that would surely come as a surprise to the farmer protest movement, which his government has long vilified and suppressed. 

Trump, for his part, insists that his priority is securing a better deal for American producers and workers. In reality, many of his key demands are aimed at advancing the interests of US-based multinationals and those of his own companies. 

But given Trump’s track record, it’s hard to imagine that personal grievances did not play a role. Relations between the two leaders have noticeably cooled since Modi refused to endorse Trump’s dubious claim that he helped broker the recent India-Pakistan cease-fire – a narrative Trump had hoped would strengthen his bid for a Nobel Peace Prize. Modi’s refusal to play along effectively derailed that effort. 

Trump and Modi are both shrewd and self-interested enough to recognize each other’s true priorities. By attacking Modi’s tycoons, Trump may have found the most effective pressure point to extract significant concessions from the Indian government. If Modi yields, it won’t just be a costly political blunder but also a tragedy with far-reaching consequences for India and the world economy. 

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