Tuesday, October 14, 2014

India-US Ties: Opportunities and Challenges

Kanwal Sibal, 
Dean, Centre for International Relations and Diplomacy, VIF

Prime Minister Narendra Modi’s visit to the US was undoubtedly a great personal success. President Barack Obama, following the personal gestures made by Japanese Prime Minister Shinzo Abe to Modi and those made by the latter to Chinese President Xi Jinping, probably felt it would be diplomatically politic if he too could emulate them in some way. He made the unusual gesture of accompanying him for a tour of the Martin Luther King memorial, and through this show of regard sealing the reconciliation between a forgiving Modi and a defensive Obama on the visa denial issue.

By providing firm leadership, expressing determination to attend to some long neglected basic social issues, focusing on development, wooing the business community, emphasizing his agenda to make India a manufacturing hub, Modi has caught the imagination of Indians of course, but foreign partners of India as well as they see doors opening for more economic opportunities in India. By his remarkable self-assurance and the confidence he exudes, Modi is changing perceptions about India. This is in itself a major achievement. But now that he has raised expectations about the changes he intends to bring about, his performance in the months ahead will be closely watched.

Modi’s US visit presented him with a particularly difficult challenge, as the relationship between India and the US presents opportunities as well as problems that are on a different scale compared to our relationship with any other country. At the rhetorical level projecting the India-US relationship is easy, especially as rhetoric comes easily to the Americans and we too are comfortable with platitudes. The US can call its relationship with India as a defining one in the 21st century, though what it means is unclear and actual US policies towards India do not support that rhetoric. Our hype about India and US being natural partners- or “natural global partners” as embellished by Modi- is not justified by the record of our relations with the US ever since our independence. Even after the end of the Cold War, we were not brought together “naturally” and even now, with the general perception that India-US relations are marked by loss of dynamism and have entered a phase of stagnation, the rhetoric of a natural partnership seems unconnected with reality.

One big underlying problem is the widespread US grouse given vent to in US official and strategic circles is that India has not adequately rewarded the US for lifting nuclear sanctions on it through the bilateral nuclear deal and the NSG exemption. The assumption behind such thinking is that India should have had no grievance against the US for over three decades of sanctions aimed at stunting India strategically and confining it permanently to an inferior international status, and should actually be grateful for the reprieve given to it by the US. India has, in fact, made compromises when it comes to sovereignty over our nuclear programme by accepting oversight and safeguards that no other nuclear weapon state has conceded. We look upon the lifting of sanctions on India as a necessary step for India and the US to have normal ties, even though it is recognized that the US was politically bold to revise its nuclear posture towards India. But that is no reason for India to be so grateful as to abandon an independent view of its interests, and act as an ally of the US. That the US should expect its nuclear firms to get business in India is normal, but to behave as if the nuclear deal’s primary purpose was to open commercial doors in India for its firms does not make sense. The US can certainly lobby for an amendment to the Indian nuclear liability act in order to facilitate the business interests of its firms, but to make it almost a central reason for the malaise currently affecting the relationship is taking a transactional, not a strategic, view of the India-US nuclear deal.

The other US grievance colouring US views of India currently was the exclusion of its firms from the magnum combat fighter deal. After that “unfair” blow, the US now eyes a big share of the Indian defence procurement pie as compensation. On the economic side, apart from the slowdown of India’s economic reforms, particular in the financial sector, that has cooled off the ardour of US firms towards India, US corporations have launched a political campaign against India’s intellectual property, trade and investment policies for the damage they do to US corporate interests, especially in the pharmaceutical sector. On WTO issues, the US sees Indian positions as obstructing consensus. 

Unfortunately, the US government converts differences in a multilateral forum that affect several countries into bilateral differences. This then becomes a point of pressure on India bilaterally, adding to the list of divergences between the two countries on shaping the global trading system.

It is in this background that one must assess the results of the Modi visit. In effect, Modi and Obama have discussed these issues without being able to close differences. Normally, at a joint press briefing, both sides highlight the principal agreements and concrete understandings reached. A careful reading of Modi’s remarks shows that while discussions may have clarified respective positions, they did not produce concrete results. In his remarks, Modi said he “believes” that with the change in Indian policies and processes intended to make it easy and productive to do business in India, the India-US economic partnership will grow rapidly in the coming years. This is a reasonable expectation to have. On IT related issues, Modi pointedly mentioned that he had sought Obama’s support “for continued openness and ease of access for Indian services companies in the U.S. market”- a major concern for us. He did not clarify what Obama’s response was to his expression of dissatisfaction. On the “candid discussion” on the WTO stand-off over the trade facilitation-agricultural subsidies issue, Modi maintained the position that while India supports trade facilitation, he also expected a solution, hopefully soon, “that takes of our concern on food security”. It is to be hoped that Obama found force in Modi’s concerns and that India will not be berated diplomatically by the US in the WTO.

On a more positive side, he spoke about the great convergence on stability on “peace and stability in the Asia Pacific region” and of the US being intrinsic to our Look East and Link West policies. This is a significant statement as it recognizes the role of the US in our larger strategic calculus. However, on terrorism and the “new threats of terrorism in West Asia”, contrary to advice being proffered by many in the US and India, he did not mention the ISIL by name in his joint press conference, simply mentioning the agreement “ to intensify our counter-terrorism and intelligence cooperation”, which is unexceptionable. Modi’s reticence in supporting the US-led “coalition of the willing” in West Asia would have disappointed those campaigning for India to join Obama’s war against the Islamic State. Why India should not have learned the right lessons from the abysmal failure of an earlier such coalition in Iraq is not explained. The current US action is outside the UN framework, and to that extent is contrary to international law. Bombing Syria without obtaining the consent of the Syrian government is against international law too. Obama himself has been ambivalent about military action in Iraq, as the centre-piece of his strategy has been to extract the US from wars in this region. The US has decided to arm and train Syrian “moderate extremists” to fight the ISIL as well as the Assad government. With these kinds of legal and geo-political complexities, it hardly made sense for India to feel obliged politically or morally to support the US in its military action against the Islamic State, however odious this group is.

In his joint press conference, Modi especially welcomed “the U.S. defence companies to participate in developing the Indian defence industry”, without mentioning any specific initiatives, in particular the US offer of 10 co-development and co-production projects. It is unlikely that even with the FDI ceiling in defence raised to 49%, US companies will invest in India’s defence sector substantially and transfer technologies meaningfully. They would want majority shareholding, and even then they would deny certain technologies so that any recipient country remains dependent.

Those curious whether the joint statement would say more about the nature of discussions and the concrete outcomes would have not been better enlightened. The joint statement expresses positive intentions and decisions to set up committees or other mechanisms to deal with issues on the agenda, but without announcing any breakthroughs. Some are arguing that this vision statement has a longer-term perspective and not immediate deliverables. This begs the question why it was not possible to have immediate deliverables if the relationship is otherwise so fecund in prospects. Is there nothing achievable with the US in the short term? If not, what is the guarantee that the medium to longer-term prospects would be better?

The joint statement says that both sides “will facilitate” actions to increase trade five-fold, meaning that the figure will almost reach US-China levels. This might be a desirable objective but it is simply not achievable in any realistic time frame. India needs to modernize its poor infrastructure. Can the US realistically help build India’s physical infrastructure on the scale of India’s requirements? The two sides have “pledged” to establish an Indo-US Investment Initiative and an Infrastructure Collaboration Platform to develop and finance infrastructure. Is the US ready to develop industrial corridors like Japan is doing? Can it compete with more cost-efficient competitors in building highways, ports and airports etc? India has “offered” U.S. industry lead partnership in developing three smart cities, but then we have offered cooperation in this area to Japan, Singapore and even China. US technology in Indian railway networks is mentioned, but can the US compete in this area with Japan, France, Germany and now China? It is certain that some homework has been done by both sides about commercial possibilities in all the areas mentioned above, but details are lacking. The US no doubt has strengths in the education and health sectors, in biotechnologies, digital technologies, or what is generally called innovative technologies. Clean technologies is another area of its strength. One could have expected a big announcement during the Modi visit in the R&D sector- in solar energy, for example, for meeting India’s needs and those of other countries too. That would be relevant to climate change concerns too.

On the bitter WTO wrangle, the officials were “directed to consult urgently” along with other WTO members on the next steps. With India now believing that unlike at Bali where it got limited support on food subsidies, the number of countries now supporting India’s position has swelled. Would this make an India-US understanding on the subject easier? The two leaders “committed to work” through the Trade Policy Forum to promote an attractive business environment (how and what are the metrics?) and to establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-making and technical-level meetings as part of this Forum (will this bridge real differences, especially when the US is too demanding and India insists that our policies are TRIPS compliant?). Already “officials” on our side have made it known that India will not budge from its position and that the Working Group agreed to is not for making concessions to the US.

On civilian nuclear cooperation, the two sides have reaffirmed their commitment to implement fully the U.S-India civilian nuclear deal and establish a Contact Group to advance it. This poses the question whether we are willing to revise our liability act, and if not, is the US willing to work within it and find a mutually acceptable solution that limits the liability in time and in financial terms. On defence cooperation they “stated their intention” to expand it to bolster national, regional, and global security- which in effect would raise such cooperation to an unprecedentedly high level. Defence cooperation to bolster “global security” has far reaching implications, and because of this the scope of such cooperation is difficult to grasp under the present circumstances. What does expanded defence cooperation mean in terms of “regional security”? Is the US ready to change its accommodative policies towards Pakistan, deny it military aid and take steps to curb its nuclear programme. How does its talks with the Taliban fit into this scenario?

The decision to renew for ten more years the 2005 Framework for the U.S.-India Defence Relations is to be welcomed, but directing the defence teams of the two countries “to develop plans” for more ambitious programs and activities means that specific proposals are lacking at this stage. Nonetheless, the intention to be more ambitious in the sector is significant politically, and other partners of India will watch carefully progress in this area. Enhancing technology partnerships for India's Navy, including assessing possible areas of technology co-operation, will be considered, which is important if it can be accomplished. The agreement to upgrade the existing bilateral exercise MALABAR is important in terms of the two sides working closely together in the Indian Ocean to safeguard the sea-lanes of communication. Surprisingly though, there is no mention of the 10 projects US has offered for co-development and co-production.

On terrorism, which is a prime issue for both India and the US and on which there is much convergence in theory but less in terms of priorities and required action, the two leaders reaffirmed “their deep concern over the continued threat posed by terrorism, most recently highlighted by the dangers presented by the ISIL, and underlined the need for continued comprehensive global efforts to combat and defeat terrorism”. This is the only joint public reference to ISIL during the Modi visit. It can be taken for granted that India is strongly opposed to the kind of ideology that animates groups like ISIL. It is not the nature of the ISIL but the forces that have spawned it and allowed it by design or default to rise that account for India’s reticence in joining the US in its fight against it. The mere mention of ISIL in the joint statement is being cited by those pushing for Indian support for the latest version of the Coalition of the Willing, unheedful of the disaster of a similar coalition in West Asia in the past, as a welcome step by India to discard its nonaligned baggage and assume its global responsibilities as a rising power- as advocated by the US. On the other hand, Modi did not mention ISIL in his speech at the UN as many hoped he would. Actually, he obliquely expressed reservations about the combat against terrorism in West Asia as not being inclusive, implying that Iran and Syria were being excluded, when in fact it was a problem for all countries, irrespective of geopolitics. He did not mention ISIL in his speech at the Council on Foreign Relations in a gesture to please Obama before their meeting. The joint statement stresses the need for joint efforts, including the dismantling of safe havens for terrorist and criminal networks, to disrupt all financial and tactical support for networks such as Al Qaeda, Lashkar-e Taiba, Jaish-e-Mohammad, the D-Company, and the Haqqanis. This is to be welcomed, but one must not see in this a new US determination to apply pressure on Pakistan. Notwithstanding a big bounty declared on his head by the US, Pakistan is not deterred from allowing Hafiz Saeed freedom to conduct his provocative activities. The omission of the Taliban from this list is noteworthy and exposes the limitation of what has been agreed to by both sides in combating terrorism.
Obama’s affirmation that India meets MTCR requirements and is ready for membership in the NSG, and his support for India’s early application and eventual membership in all four regimes, is a positive element in the joint statement, though it is not clear when this might happen. He essentially repeated the formulation he used in 2010 on India’s permanent membership of the UN Security Council, indicating no forward movement in the US position in the last four years, which is to be expected.

It is on Asia-Pacific that the joint statement shows a more substantial convergence of interests. Significantly, it makes a subtle link between India’s "Act East” policy and the United States’ rebalance to Asia. The joint commitment to work more closely with other Asia Pacific countries, including through joint exercises, points towards more cooperation with Japan and potentially Australia. The joint concern expressed about rising tensions over maritime territorial disputes, and affirmation of the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea are significant in the context of China’s assertive policies in the western Pacific. Exhorting all parties to avoid the use, or threat of use, of force in advancing their claims is a clear allusion to China. In this connection, the importance of the trilateral dialogue with Japan and the decision to explore holding it at Foreign Minister’s level- a formulation used in the Tokyo Declaration during Modi’s Japan visit- assume significance. It is clear that on this subject, President Xi’s visit did not tie Modi’s hands in finding common ground with the US on the challenges China’s rise presents to neighbouring countries.

The scope of the India-US engagement is large and the stated intentions on both sides are always buoyant. The problem resides in the US expecting too much and too quickly, and India being unable to respond to the pace and scope of US demands because of sensitivities over issues of independence and sovereignty, disparity in power, non-identical world-views, different stages of economic development and policy and legislative changes required at the Indian end.

Overall though, despite the fact that the parsing of the joint statement brings out areas where the two sides are not on the same page, Modi’s visit to the US has been a huge publicity success, both for him and India. The rapturous welcome he got from the Indian American community in New York indicates the hopes he has raised about India amongst our people abroad, with his focused approach to making India strong. His appearance at the Central Park event was imaginative and dismissing such unorthodox initiatives as “event management” shows narrow-mindedness. His joint editorial with Obama was a coup as it equated the two politically and conveyed that there was enough convergence of their respective views on bilateral and international affairs to allow them to put their thoughts together in a public text.

The most important outcome of the visit was, in a sense, the self-assured and confident way Modi conducted himself, projecting in the process a new and confident India. He handled Obama as an equal and did not feel obliged to make any unilateral effort to establish the right chemistry with him and convince him of his own credentials and those of India as an eligible strategic partner of the US. This was contrary to the defensive advice proffered by many in the American and Indian strategic communities that Modi should assume the burden of responsibility in winning over Obama.

Resolving problems with the US will remain a challenge, but India should be wise to address that challenge as it needs good, stable relations with America for dealing with a very complex geopolitical chess board on which it must try to win advantageous positions.


Published Date: 14th October 2014, Image source: http://www.indiawrites.org/
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)

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