By Douglas Busvine
NEW DELHI (Reuters) - If prime minister-elect Narendra Modi can revive a faltering economy, as his people clearly believe he can, India may finally be able to deal with overseas allies, foes and rivals from a position of strength.
Elections are won and lost on domestic issues, and the 2014 ballot, in which Modi and his Bharatiya Janata Party (BJP) won a resounding victory in results on Friday, was no exception.
But the Hindu nationalist's focus on reviving a flagging economy will also feed through into foreign policy issues ranging from regional security to trade.
"If the country looks strong, then even its companions will change, neighbours will change and the atmosphere will change," Modi, 63, said in a recent TV interview.
Dating back to the Cold War, India has tended to avoid close alliances. Its ability to project power rests largely with its nuclear deterrent. And, despite a population of 1.2 billion, the diplomatic corps is barely larger than Singapore's.
Balancing Beijing's great-power ambitions, and keeping Washington interested in the region after U.S. troops pull out of Afghanistan, will require India to raise its game, or risk leaving its land borders and sea lanes vulnerable, experts say.
But, given their history of mutual suspicion and war, Pakistan remains the challenge most likely to dominate Modi's foreign policy agenda at least in the short term.
"It is not possible to have discussions amid bomb blasts and gunshots," he said in the same Times Now TV interview.
Modi in fact vowed continuity in India's dealings with Islamabad over disputed Kashmir, the Muslim-majority region which Pakistan also claims as its own.
The neighbours have fought three wars over Kashmir, the third, in 1999, a smaller conflict that was undeclared. And India never fully quelled a separatist insurgency in the part of the region it controls which claimed tens of thousands of lives.
Pakistani Prime Minister Nawaz Sharif quickly extended an invitation for Modi to visit, supporting Modi's agenda of economic revival.
"In order to resolve disputes, you need better relations and more dialogue, and improving economic ties is the best way to get there," Sartaj Aziz, Sharif's adviser on national security and foreign affairs, told Reuters.
But the intelligence and security establishment in Islamabad views Modi as an adversary and expects him to take a tough line.
"Modi has always rallied against Pakistan," said a top Pakistani defence official. "He's openly suggesting cross border covert ops against Pakistan. Under him, there will be much, much more muscular Indian diplomacy."
GETTING TO KNOW YOU
Modi's compelling victory, in which the BJP claimed India's strongest mandate in 30 years, will assure him greater control over India's trade and security agenda.
"The challenge for India is no longer about the world impinging on its choices, but to use its economic and political weight to shape the external environment to its benefit," journalist and commentator C. Raja Mohan wrote recently for the Carnegie Endowment for International Peace.
Possibly sensing the strength of the political tailwind sweeping Modi towards power, Washington sent a coded message of warmth as voting ended on Monday, calling the election an "inspiring example" of democracy.
Washington denied Modi a visa in 2005 over sectarian riots in Gujarat three years earlier, when he had just become chief minister of the state, in which more than 1,000 people, most of them Muslims, were killed.
Modi has denied any wrongdoing and an inquiry ordered by the Supreme Court found no case to answer.
U.S. diplomats say he would now be welcome to visit. But instead of rolling out the red carpet, a first meeting is likely to come on the fringes of the United Nations General Assembly in New York this autumn.
Washington wants to quintuple trade with India to half a trillion dollars, but India's $11 billion bilateral surplus has created friction in areas like pharmaceuticals that will have to be addressed once Modi forms a government.
But analysts believe he could bring a new assertiveness to the table.
"The question is not how the U.S. would deal with a Modi victory - the question is rather how Modi would want to deal with the U.S.," said David Sloan, Asia director of the Eurasia Group political risk consultancy.
British Prime Minister David Cameron had no hesitation in calling to congratulate the prime minister-elect and has already invited him to visit - an invitation Modi accepted.
TRADE IS KEY
Getting involved in trade initiatives like the U.S-backed Trans-Pacific Partnership or wrapping up a long-delayed free trade deal with the European Union will be vital to delivering on Modi's promise to create millions of new jobs every year.
India runs a trade deficit of nearly $40 billion with China, which, thanks to its embrace of export-led growth, now has an economy four times larger.
Modi wants follow a similar path of job-intensive growth, but for the time being will be able to do little to narrow China's three-to-one lead in defence spending.
Analysts and diplomats said Modi would have an opportunity to revive a dormant process to delineate the long Indo-Chinese border. In return he might want to tie progress there to greater access to the Chinese market and stem the type of outward infrastructure investments that has helped Beijing to acquire friends and influence in India's backyard.
"If I were a betting man, which I'm not, I would suspect that Modi's first visit would be to China," said W.P.S. Sidhu, a senior fellow at the Brookings India Centre and Brookings Institution.
A trip to Tokyo could also be on the cards - Modi is an admirer of Prime Minister Shinzo Abe. As chief minister of the state of Gujarat, he has developed strong ties with Japanese investors who have backed major infrastructure projects.
Modi will also be expected to attend a summit of leaders from the BRICS caucus of emerging markets, which includes Brazil, Russia, China and South Africa, just after the soccer World Cup hosted by the Latin American nation.
(Additional reporting by Mehreen Zahra-Malik, Maria Golovnina and Katharine Houreld in Islamabad and David Brunnstrom in Washington; Editing by Mike Collett-White)
