The Cable

Did Obama Wait Too Long to Engage Narendra Modi?

With a simple phone call on Friday afternoon, President Obama invited the next prime minister of India to the United States and effectively ended an almost decade-long visa ban on the controversial Indian politician Narendra Modi. The Indian leader, whose Bharatiya Janata Party just swept the polls in India's general election, had been prevented from traveling to the United States due to his involvement in deadly communal riots in 2002. But given the importance of the U.S.-India partnership, and Modi's tremendous popularity at home, some experts say Obama and the State Department waited too long to forge meaningful ties with Modi risking lasting damage to the strategically vital relationship between the two powers.

"The Obama administration's failure to publicly repudiate the visa ban [earlier] can only be seen as shortsighted at best, or an example of stupefying State Department inertia at worst," said Suhag Shukla, executive director of the Hindu American Foundation, a group that advocates on behalf of Hindu-Americans.

"They should have been meeting with him immediately when it was clear he was going to lead the BJP, which was last fall," added Lisa Curtis, a senior research fellow at the conservative Heritage Foundation. 

For years, supporters of Modi, the chief minister of Gujarat, had been asking the Obama administration to clarify his travel status as the Indian leader's political career advanced. Washington denied him a diplomatic visa in 2005 and revoked his existing business visa due to his role in the 2002 communal riots in Gujarat in which some 1,000 people -- mostly Muslims -- were killed. Modi stood accused of stoking religious violence and failing to protect Gujarat's Muslim minority. A subsequent resolution passed by Congress condemned him for promoting Nazi ideology and "racial hatred." In 2005, Foggy Bottom revoked his visa under the Immigration and Nationality Act, which makes foreign officials who are responsible for "serious" violations of religious freedom ineligible for travel to America.

In recent months, the standing policy of the U.S. government was that Modi could apply for a visa and await the results. "Our long-standing policy with regard to the chief minister is that he is welcome to apply for a visa and await a review like any other applicant," State Department spokeswoman Marie Harf told Foreign Policy in December. "That review will be grounded in U.S. law."

But Modi, a proud politician in the middle of an election, had little reason to apply for a visa and risk the negative consequences of being rejected. His supporters, meanwhile, grimaced at Washington's refusal to clarify his travel status as European nations actively courted him. "The British had been meeting with Modi since 2012," noted Curtis. "The White House was behind the curve and now the onus is on them to give a very clear signal that they're ready to do business with Modi."

Of course, not everyone thinks Modi deserves a hero's welcome. Shaik Ubaid, spokesman for the Coalition Against Genocide, a group that raises awareness about the 2002 riots in Gujarat, says the group will continue to press the issue of Modi's past crimes. "We continue to believe Modi is responsible, not only for the brutal pogroms of 2002 that claimed over 2,000 lives, but also for the denial of justice to the victims, harassment of human rights activists and fake police encounter killings pursued in Gujarat as a matter of state policy," he said. "Modi's ascent to the highest executive office in India is rightly a matter of concern for all who value human rights and religious freedom."

Others believe it was time for the U.S. to embrace Modi, the leader of the world's largest democracy, and doubt that the visa ban will seriously hinder relations between the two countries over the long haul. "Modi will want to slow walk relations with the government initially," said Richard Rossow, a senior fellow at the Center for Strategic and International Studies. "But I don't think he's going to hold it over our heads too long -- particularly because business and Capitol Hill leaders have maintained strong relations with minister Modi over the years."

When asked how the U.S. would engage with Modi going forward, State Department spokeswoman Jen Psaki said Washington would prioritize a government-to-government relationship that "mirrors the affection between our people."

"With the new government, we intend to foster our strategic partnership with India and offer enhanced collaboration on the economy, defense, homeland security and counterterrorism, as well as the health sector," said Psaki.

 

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The Cable

Feds Choke Off Vital Somali Lifeline

Rules designed to keep money out of the hands of terrorists could soon cut off support to millions of ordinary East Africans too. Last week, another financial institution -- Merchants Bank of California -- started closing accounts belonging to companies that collect money from African immigrants in the United States and send it to Somalia, Eritrea, Ethiopia, and other African countries.

The money-transmitter companies function like smaller versions of Western Union and MoneyGram, but they can send money to far-flung African villages that the big guys don't serve. They rely on banks to make the international wire transfers necessary to get the money there. It's part of a worldwide system of informal financial transactions between residents of impoverished countries and the friends and relatives living abroad who regularly send them money. The World Bank estimates that immigrants will send home $436 billion this year.

Merchants Bank sent out letters terminating its relationship with at least 20 money transfer businesses in Minnesota that serve the Somali immigrant community. In a May 8 letter viewed by Foreign Policy, the bank said it was closing the account of Amaana Money Transfer Co. due "to the ever-changing regulatory requirements and expenses imposed upon Merchants Bank of California." The financial institution said that Amaana's account would be closed on June 20 and that the remaining balance would be sent as a cashier's check.

The move is the latest in a string of account closures -- affecting everyone from porn stars to foreign diplomats -- as banks try to rid their books of customers that regulators might consider risky. Adult film actress Leyton Benton said she has decided to sue JPMorgan Chase, according to the Daily Mail, for suddenly closing her account in a sweep designed to rid the bank's books of accounts linked to industries that regulators consider risky. And José Antonio Ocampo, a former finance minister of Colombia, told the Financial Times that he is asking the Consumer Financial Protection Bureau to forbid "such discriminatory and arbitrary practices" after JPMorgan Chase dropped him. The bank said it was closing accounts of current and former non-U.S. officials to cut compliance costs.

Banks say they are simply responding to increasing scrutiny from regulators and to the skyrocketing fines being levied against them for banking fraudsters, criminals, and terrorists. U.S. prosecutors, for instance, are pushing for French bank BNP Paribas to pay more than $3 billion, a new record, for violating sanctions that prohibit financial transactions with Iran and other countries, according to the Wall Street Journal. That would top the $1.9 billion HSBC paid in 2012 to settle charges that the bank's lack of rigorous oversight led it to do business with Mexican drug cartels and blacklisted people in Iran and Libya.

Somalia presents a particular challenge. With no functioning government or central bank, the war-torn country has no formal banking system. That lack of oversight, combined with the U.S. intelligence community's concerns that banks could be used to send funds to blacklisted militants, makes Somalia one of the riskiest places to which to transfer money. In March, when Bell State Bank closed accounts that belonged to money transmitter Kaah Express, the bank's security officer told the Associated Press that it made the move because of the risk of massive fines. Two Somali-American women from Minnesota were sentenced to decades in prison last year after they were convicted of sending money to terrorist group al-Shabab. No banks or money transmitters were implicated in that case, and none of the money-transfer businesses whose accounts have been terminated are accused of any wrongdoing.

Yet the desperate situation in Somalia is also what makes the remittances all the more crucial to Somali family members who receive payments from U.S.-based immigrants. Rep. Keith Ellison (D-Minn.), whose district includes the country's largest Somali-American population, is asking bank regulators not to get in the way of his constituents sending money home. "Please act quickly to avoid exacerbating the humanitarian crisis in Somalia," Ellison said in a May 9 letter to Comptroller of the Currency Thomas Curry. Merchants Bank dropped the Somali money transmitters in response to concerns raised by examiners with the Office of the Comptroller of the Currency (OCC), according to people familiar with the matter. A spokesman for the OCC declined to comment. Merchants Bank of California did not respond to requests for comment.

The Somali money transmitters have been struggling since 2005 to find banks that will work with them. The problem came to a head in 2011 when Sunrise Community Bank, which many of the companies relied on, started closing accounts. Wells Fargo dumped them as well. Now, many of the companies have only one or two banks left that will transfer money for them.

"It's kind of a strangulation for us," said Aden Hassan, who works for Kaah Express and acts as a spokesman for the Somali Money Services Association.

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