Two-horse race for president. King’s longevity holds the answer. Watching Korea. Transmission cut. By Hamish McDonald.

India looks to Modi to restore the economy

Narendra Modi is set to lead India for the BJP after his election victory.
Credit: AFP

What a convulsive month this is turning out to be in Asia. On Monday, a new Indian government will be sworn in, led by the contentious Narendra Modi, after his Hindu nationalist and pro-business Bharatiya Janata Party (BJP) achieved the first outright win since the victories of the secular welfarist Congress Party under Indira Gandhi and her son Rajiv in the early 1980s.

Although Modi paid due homage to the various shibboleths of the saffron (Hindu) camp − building a temple to Ram on the demolished mosque site at Ayodhya, getting tough with Muslim “infiltrators” from Bangladesh, et cetera − he will be well aware that the massive swing away from Congress was due to disgust with the economic mismanagement and corruption of its second term, when the respected economist Manmohan Singh was revealed to be a completely token prime minister.

Modi’s record as chief minister in Gujarat state, overseeing rapid industrialisation, made voters overlook his dubious role in the 2002 anti-Muslim pogrom. The financial markets in Mumbai are banking on a foreign investment boom to get India’s growth quickly back up to the 7 per cent level, though Modi has ruled out the key retail sector in deference to his party’s strong following in the Bania (trading) castes. The BJP and its coalition partners control only one-third of the upper house, meaning it will battle to get any sweeping reforms through, such as a goods-and-services tax.

The Congress Party is, meanwhile, descending into greater farce. It had banked on the appeal of a fourth-generation of the Nehru-Gandhi dynasty, Rajiv’s son, Rahul, but he proved quite lacklustre and out of touch with the masses. Both he and his mother, Sonia, have offered their resignations from party leadership, but these have been refused.

Desperate loyalists are now looking to Rahul’s younger sister, Priyanka, considered to have some of her grandmother Indira’s steel but with the disadvantage of marriage to a scandal-prone businessman, Robert Vadra. With fewer than 55 seats in the 541-seat lower house, Congress may well lose the opposition leader’s position, which may go to former film star Jayalalithaa Jayaram who, despite an amazing personality cult, has overseen a progressive administration in her Tamil Nadu home base.

1 . Two-horse race for president

Washington saw Modi’s win coming and took him off its persona non grata list some weeks back. It may yet have to do the same with Indonesia’s new leader after Prabowo Subianto, the former Kopassus (Special Forces) general and former son-in-law of the late president Suharto, managed to get the Golongan Karya (Golkar) party to back his nomination for the presidential election on July 9.

This adds the immense money and organisational power of the Suharto regime political vehicle to that of his Gerindra (Great Indonesia Movement) party, which is not without a lot of rupiah either. In addition, Prabowo has enlisted as running mate Hatta Rajasa, a popular former minister from the National Mandate Party that is linked to the Muhammadiyah, a Muslim association claiming nearly 40 million members. Two other significant Muslim parties have also linked up.

Golkar’s move means it has finally dumped businessman Aburizal Bakrie as its candidate. It also reduces the election to a two-candidate race, with no runoff needed after the July 9 vote. Joko Widodo (“Jokowi”, as he’s known), the front-running candidate of the Sukarnoist group, the Indonesian Democratic Party of Struggle, this week wisely followed this column’s advice and chose former vice-president Jusuf Kalla as his running mate.

Kalla had added decisiveness to President Susilo Bambang Yudhoyono’s first term as his deputy, notably overseeing the Aceh peace accord. A Bugis from the strongly Muslim South Sulawesi, Kalla will add appeal in the more pious parts of the outer islands to that of the more secular Javanese Jokowi. He also has a lot of money, and was for a while the chairman of Golkar, so may draw away some of its usual voters. Still, the odds have narrowed.

2 . King’s longevity holds the answer

Thailand went through another turn in its political cycle this week, sort of, with the army declaring martial law, then a full coup d’etat. The usual thing is that an elected government becomes so unpopular that everything grinds to a halt in street protests; the army stages a coup, runs the country for a while, writes a new constitution, and steps back for fresh elections for a new civilian government.

The circuit-breaker has stopped working for the past decade, however, because the party backed by the former police colonel and telecom billionaire, Thaksin Shinawatra, always wins the elections, thanks to its populist welfare and subsidy policies for the rural majority. Various judicial institutions kicked out Thaksin some years back, and this month his sister Yingluck, but the party is holding on.

The question now is whether the army can stop the Thaksin “red shirts” and the Bangkok establishment’s “yellow shirts” going at each other with the firearms readily available from neighbouring countries. The state is held together by loyalty to the ailing King Bhumibol, 86, whose status is protected by a zealously enforced lèse majesté law. Whether his heir apparent, Prince Vajiralongkorn, can continue this role is widely doubted. Many are hoping the king has secretly nominated the more respected Princess Sirindhorn as successor, which is his prerogative.

Some scholars speculate the life support option might have to be employed: keeping the king technically alive for many years more through the miracles of medical technology.

3 . Watching Korea

Watch the North Korean situation closely. The collapse of a jerry-built apartment block in Pyongyang this month, built in a Stakhanovite “work storm” by conscript soldiers, is the kind of thing that can fatally break the spell of a totalitarian regime. The disaster got unprecedented news coverage rather than being covered up, with Kim Jong-un said to have stayed up all night in grief.

Japan recently leaked what was said to be a Chinese contingency plan for North Korean implosion, involving a swoop to lock up the regime leadership before they could cause trouble. The leak was disinformation possibly aimed at nettling Beijing. But resolution of the 70-year division of Korea is the great unsettled business of World War II.

A smart China would see a reunited Korea as the key to US withdrawal from east Asia; by opening diplomatic relations with Seoul in 1992 it has already made clear which regime it sees as a better bet. Would this new Korea be aligned, or studiously neutral − perhaps with Pyongyang’s nukes added to its powerful economy?

4 . Transmission cut

So much going on, and the Abbott government’s first budget has just choked off one channel to these Asian nations, the Australia Network television service. This fulfils a promise said to have been made to News Corp by Julie Bishop when the previous government chose the ABC over News for the 10-year, $22 million a year funding in late 2011. The service closes in July, and will weaken the overall ABC foreign coverage as well.

Foreign Affairs Minister Bishop will see her empire shrink from 4120 staff to 3704 next year, thanks to the abolition of AusAID as a separate organisation. At this rate DFAT would disappear entirely in nine years. But the shrinkage levels off the year after.

Still, Canberra’s diplomatic and information outreach stays at one of the meanest levels among advanced nations, while the defence establishment that achieved so much in Iraq and Afghanistan continues to expand.

This article was first published in the print edition of The Saturday Paper on May 24, 2014 as "India looks to Modi to restore the economy".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.