23 January 2015

A tricky partnership- Dealing with the US will always be a challenge

Kanwal Sibal
January 23 , 2015

The visit of the American president, Barack Obama, to India this month as chief guest at our Republic Day celebrations invites some reflections on the state of India-United States of America relations and expectations from the visit.

India-US relations in the last decade have become distinctly warmer. The 2005 India-US nuclear deal dissipated mutual strategic distrust and triggered numerous dialogues in the areas of energy, education, health, science and technology, trade, defence, counter-terrorism, innovation and so on. This had the objective of building Indian capacities in various sectors with US know-how to fuel India's growth and give the US a greater foothold in an expanding Indian economy. These dialogues have produced modest results.

In 2010, during his India visit, Obama visualized the India-US relationship as a defining one for the 21st century, meaning, presumably, that India as a democracy and a growing economic power could, in the decades ahead, join the US in managing a liberal global order. If shared values are the basis for India calling the US a natural partner, then India's democracy and pluralism have not shielded it from punitive US policies in the past and do not guarantee any special consideration in the future at the cost of US interests. In both cases, rhetoric and reality differ.

The loss of momentum in India-US ties became impossible to ignore in Obama's second term. American companies felt deprived of nuclear business because of India's Nuclear Liability Act. In defence, the US, in a major strategic gain, bagged almost nine billion dollars worth of defence contracts, but India baulked at signing three 'foundational' agreements in the areas of logistics, inter-operability and so on to avoid too close a defence embrace, although this was balanced by numerous joint military exercises. The US offers under the defence trade and technology initiative to manufacture several defence items in collaboration with Indian partners received a lukewarm response. India's attachment to "strategic autonomy" was seen by US strategists as a throwback to its nonaligned past. India's cautiousness about the US pivot towards Asia because of doubts about US capacity and willingness to curb China's power, given the huge financial and commercial interdependence between the two, was noticeable.

While India-US economic ties expanded to almost $100 billion over the last decade, the drift in political relations adversely affected the business atmosphere, with Congressional campaigns by select US corporations against India's trade, investment and intellectual property rights policies prompting a year-long investigation of them by the US international trade commission, now extended by another year. The US trade representative too began an investigation of India's IPR policies focused on our patent laws, but this has been discontinued in view of the Narendra Modi government's reforms-oriented policy statements. We have agitated against US restrictions on the movement of personnel from India to the US in the information technology sector, the increased costs of H1B and L1 visas, the campaign in the US against outsourcing, as well as the unresolved totalization agreement.

The quick acceptance of the Indian prime minister, Modi, of Obama's invitation to visit Washington in September 2014 was intended to infuse bilateral ties with a new energy. While short on concrete breakthroughs, the visit established mechanisms to address existing issues and possibilities of enhanced future cooperation. It was agreed to increase trade five-fold, establish an Indo-US investment initiative and an infrastructure collaboration platform to develop and finance infrastructure, give US industry lead partnership in developing three smart cities, promote an "attractive" business environment through the trade policy forum, establish an annual high-level intellectual property working group and a contact group to work on implementing the nuclear deal. The investment initiative document has been signed this month in Washington. The working groups on IPRs and the nuclear deal have met, and so has the TPF. But the US will hardly develop industrial corridors like Japan or competitively build highways, ports or airports in India. Reaching a trade figure of $500 billion is unrealistic in any reasonable time frame. It is also not clear how US demands and India's position that our IPR policies are in conformity with the World Trade Organisation TRIPS agreement can be reconciled.

In Washington, Modi mentioned India's concerns about IT issues, with no clear response from Obama. He sought the participation of US defence companies in developing the Indian defence industry, without mention of any of the projects offered by the US as part of the DTTI. The intention expressed to expand defence cooperation to bolster regional and global security seems incongruous at the regional level with continuing US military aid to Pakistan, while at the global level, apart from the securing of the sea lanes of communication in the Indian Ocean, the implication is not clear. It was decided to renew for another 10 years the 2005 Framework for US-India Defence Relations, incorporating more ambitious programmes, including enhanced technology partnerships for India's navy.

On geopolitical issues, Modi's reference to the "great convergence" on "peace and stability in the Asia Pacific region" has significance in the background of China's assertiveness there. He called the US "intrinsic" to our Look East and Link West policies, which is a formulation pregnant with geo-political meaning. The commitment to work more closely with other Asia- Pacific countries, including through joint exercises, would logically bring up Japan and Australia.

On terrorism and religious extremism, rhetorical convergence and some specific cooperation on counter-terrorism issues apart, our concerns are not adequately met because US regional interests are not fully aligned with ours. During Modi's visit, the two sides called for the disruption of all support networks of al Qaida, the Lashkar-e-Toiba, Jaish-e-Mohammad, the D-company and the Haqqanis, but the omission of the Taliban from the list is striking. Washington's accommodative signals and those of the new Afghan president on Pakistan's role in Afghanistan presage problems for us as the US withdraws from that country by 2016.

Between Modi's visit to Washington and Obama's visit now, there has been too little time to process major agreements. Yet, the visit has to go beyond symbolism. With the government moving on the goods and services tax, raising the foreign direct investment ceilings in the insurance sector and amending the Land Acquisition Act, the signals to the US in advance of Obama's visit are positive. In terms of tangible results, a more ambitious defence cooperation framework agreement will be extended for another 10 years. The US hopes that at least one joint defence manufacturing project will be announced during the visit. Any announcement on naval technologies will capture interest. Discussions on a bilateral investment treaty are likely to be re-energized. Any progress on our membership of the four export control organizations - for which the US needs to be pushed - can occur only after the visit. The US will press us on climate change issues, as the secretary of state, John Kerry, has indicated during his visit to the Vibrant Gujarat summit. The issue of our access to US shale gas is on the agenda. Regrettably, though, the agenda is more focused on what we can do for the US rather than the reverse.

Modi's invitation to Obama is a bold and desirable diplomatic move, but dealing with the US will always be a challenge.

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