The year ahead: In the friend zone

The goal of the Narendra Modi government in the coming year will be to position India as an island of calm in a world of storms. The destination for companies seeking to set up a secure supply chain. A country with a capital where politics is boringly predictable. A nation with a military that is unlikely to spar with its neighbours.

One measure of progress is that Modi is able to host summits with Russia’s Vladimir Putin, China’s Xi Jinping and the US’s Donald Trump without ruffling feathers.

When the PM says his third term is about the idea of the Vishwabandhu, or universal friend, it is more than a slogan. There is thought behind the phrase.

The world is likely to fight less but squabble more in 2025. Ukraine is slow-transitioning to a postconflict state. Neither side seems to be aiming for a decisive win; a peace conference with Kyiv and Moscow is on the horizon; and Donald Trump could prove to be the dove in shining armour.

Nothing will happen in a hurry. Wars of stalemates can take months to wind down.

West Asia is more of a muddle. With Gaza flattened and the collapse of Iran’s informal Shia empire, the question is what the ascendant Qatar-Turkey axis has in mind. So far, the new axis has preached peace on earth and goodwill to all men (except Kurds). There is something for diplomacy to work with here, if Trump’s anti-Ayatollah sentiment doesn’t boil over.

Where global tensions will rise and cause ripples will be in economics and technology. Trump plans to be a tariff bull in a China shop, accelerating a splintering of international trade and investment. Noticeably, the new year has been heralded not by Tel Aviv and Tehran exchanging missiles, but by China warning that it will respond to any US tariffs with massive yuan devaluation.

India and other emerging economies fret about the fallout of a trade slugfest: waves of even cheaper Chinese goods, deeper tariff moats around more major economies, and currencies sinking as capital seeks the highest ground.

Imposing tariffs has long been Trump’s curious opening slap-in-the-face action before he moves towards a “big deal”. And he does not discriminate. (Who would have thought Canada would be his first target?)

However, given the gaping trade deficit and larger trust deficit between Washington and Beijing, it is hard to see the contours of such a deal between the two largest economies in the world. Off-hand, such a trade deal would be Godzilla-sized and destructive in its own right.

The next round of US-China contestation will be a trade and technology humdinger of a battle. Forget the aircraft carriers, this will be about supply chains and semiconductors, treasury bonds and pork belly futures. Much more destructive.

Which is why governments around the world are preparing for the coming storms. India has deliberately piled up foreign exchange, increased its external ministry’s budget by a quarter, eased tensions with main adversary China, and deepened relations with countries ranging from Guyana (an oil power in the making) to existing crude superpower Russia. Foreign minister S Jaishankar has publicly warned that the next decade in geopolitics will make the past five years of upheaval seem “conventional”.

India has quietly taken on the axis of irritants; the motley collection of governments whose leaders believe they can score points at home by attacking India, Modi or both. Turkey, Azerbaijan and Malaysia are among those who now see a benefit to being less raucous.

The new year is likely to see the fall of Justin Trudeau in Canada and the diminution of Muhammad Yunus in Bangladesh, both leaders who have failed to understand that de-risking is the name of the international game.

The Modi government will likely continue trying to sandpaper some of the world’s jigs and jags. New Delhi has been seeking to serve as a bridge between Kyiv and Moscow, Tel Aviv and Tehran. “We are doing multiple conversations and are very transparent about telling each party at the end of the conversation, saying that this is what we’re going to tell the other party,” as Jaishankar explained.

India has also positioned itself as a first responder in the Indian Ocean Region, using its navy to fight off pirates, saving Sri Lanka from an economic death spiral, even lending a helping hand to the deeply anti-India Maldivian leader Mohamed Muizzu.

But, besides battening down its hatches, there is another side to the 2025 story for India. This involves selling itself as the “safe and secure” partner for assembly lines looking for a level landing place, a “trusted geography” for data flows and digital processing, and the “resilient partner” for countries looking to escape either Wolf Warriors or MAGA men.

This will be about geopolitical agility but it will also be about finalising domestic economic reforms, whether with relating to labour or logistics, trade agreements or tax reforms.

As Shaktikanta Das noted during his recently concluded term as central banker, “Strengthening one’s fundamentals is the best buffer against global spillovers in today’s uncertain world.”

“India is a source of stability in the world,” a Chinese academic who visited Delhi admitted last year. That’s a sales pitch India will look to spread far and wide in 2025.

(Pramit Pal Chaudhuri is South Asia practice head for the Eurasia Group)