India Divided Under Modi Faces Big Risks

(Bloomberg) --

Indian Prime Minister Narendra Modi’s Hindu-nationalist agenda put sectarian tensions on full display during this week’s visit by Donald Trump.

As the leaders met in New Delhi to discuss defense deals and India’s potential as a counter-weight to China’s regional clout, police used tear gas on people clashing over a new law that fast-tracks citizenship for religious minorities from neighboring countries but excludes Muslims.

At the same time, large groups of Hindu men vandalized mosques and attacked citizens in Muslim-majority neighborhoods with sticks and stones.

The violence is showing no signs of easing — the death toll stands at 20 and the city’s chief minister called for the army to be sent in. Thousands of kilometers away in the tea-growing state of Assam, the government is building detention centers to house millions in danger of being declared stateless as it weeds out undocumented Muslims who originally came from neighboring Bangladesh.

Trump said he raised the issue of religious freedom with Modi, but he would not be drawn on questions about the citizenship law.

While that may offer Modi tacit international support, it will only deepen concerns in Washington among Democrats who’ve been critical of Modi’s policies.

As India grapples with a slowing economy and the highest unemployment rate in four decades, investors will be looking to Modi boost growth and calm tensions. What’s not clear is whether he has the will to so.

Global Headlines

Friendly fire | Democratic presidential candidates ripped into two of their own in the last debate before Super Tuesday, saying that nominating either front-runner Bernie Sanders or best-funded candidate Michael Bloomberg would all but guarantee Trump’s re-election. Yet none of the other contenders had the kind of breakout moment needed to dislodge Sanders.

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• Click here for more takeaways from the debate and here for an annotated transcript.

Mixed messages | Trump and his advisers want global markets and the public to believe the coronavirus poses little risk to the U.S. But the Centers for Disease Control and Prevention is saying the opposite — warning the spread of the disease in America is inevitable and could disrupt the world’s largest economy. So far, markets are siding with the CDC.

Economic hit | As the virus spreads, the economic challenges are rising. More than a quarter of businesses grappling with the outbreak in Asia are setting up or using supply chains that curb reliance on China, a survey found. France’s Danone cut its 2020 sales growth target as the virus hurts sales of bottled water and infant formula in China. Hong Kong announced a $15.4 billion relief package today in its annual budget.

• Click here for a look at how the virus is damaging Italy’s economic heartland.

Talking past each other | As the European Union and Britain get down to the nitty-gritty of a post-Brexit trade pact, there's renewed risk of the two sides misreading each other. Ian Wishart explains why Brussels may want to take more seriously Prime Minister Boris Johnson’s threats to walk away without a deal if the U.K. doesn’t get full control over its own laws.

Green deal | New European Commission chief Ursula von der Leyen has pledged to make Europe the world’s first carbon-neutral continent within the next 30 years. Laura Millan Lombrana and Ewa Krukowska explain how a network of experts in business, policy, and science worked behind the scenes to put climate front and center.

What to Watch

• Rival candidates to become the leader of German Chancellor Angela Merkel’s party are due to give speeches at traditional Ash Wednesday political events at opposite ends of the country.
• Finance Minister Tito Mboweni is likely to lower South Africa’s economic growth forecast when he presents his 2020 budget statement today.
• The U.S. House Judiciary Committee meets today to consider a rewrite of federal surveillance powers, setting up a messy fight that could expose fractures within the Trump administration.

Tell us how we’re doing or what we’re missing at balancepower@bloomberg.net.

And finally ... Cultural customs may be the next victim of coronavirus, as epidemiologists say limiting certain types of person-to-person contact could help slow its march. In an echo of King Henry VI’s 1439 ban on kissing to battle the Plague, authorities in Singapore, India, Russia, and Iran have called for people to avoid kissing, hugs and handshakes. The World Health Organization doesn’t go so far as to recommend a blanket halt, but its guidelines imply that might not be such a bad idea.

--With assistance from Kathleen Hunter and Michael Winfrey.

To contact the editor responsible for this story: Karl Maier at kmaier2@bloomberg.net, Rosalind Mathieson

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