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India-US Relations Blog

WikiLeaks and US-India Relations

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Whatever else it says about the propriety of India’s political class, the latest tranche of WikiLeaks cables now being dispensed by The Hindu newspaper contains a sobering lesson for US-India relations. The revelations about the parliamentary chicanery surrounding the 2008 civilian nuclear accord, intended to be a launching pad for a new era of bilateral dynamism, can only reinforce lingering doubts in Washington about whether India’s political institutions are even capable of acting on the ubiquitous rhetoric one now hears about taking relations to a higher plane.

PhotoIt came as a shock to U.S. officials that the nuclear agreement, which garnered strong bipartisan support on Capitol Hill, provoked extraordinary melodrama on Raisina Hill.  As the Washington Post noted in amazement at the time, “if New Delhi’s politicians cannot find a way to say yes to such a clearly advantageous agreement with a natural ally, the next U.S. administration no doubt will think twice before trying anything like it.”  Of course, Prime Minister Manmohan Singh finally did manage to push the accord through the Indian parliament, but only after an extended and acrimonious debate. It was especially disconcerting that the debate devolved into an unprecedented parliamentary vote of confidence regarding a foreign policy issue. Singh’s narrowly-won victory was possible only through resort to some exceptional measures, including the furloughing from jail of members of parliament who had been convicted of murder and other serious crimes.

As part of the debate, the main opposition party, the Bharatiya Janata Party, accused – in rather theatrical fashion – the Congress Party and its allies of paying hefty bribes in exchange for votes. A subsequent inquiry concluded that there was insufficient evidence to support the claim. But now the WikiLeaks cables give renewed credence to the allegation. In a dispatch sent a few days before the crucial confidence vote, the U.S. Embassy in New Delhi noted that the Congress Party machine was “working overtime” to ensure victory, including assembling cash-filled war chests “lying around the house for use as pay-offs.” The cable reports that members of the Rashtriya Lok Dal, a small party based in Uttar Pradesh, had already agreed to trade their votes in exchange for $2.5 million bribes and that an unsuccessful attempt had been made to inveigle members of the Akali Dal, a small Punjab-based party. Kamal Nath, a Congress Party veteran then serving as Minister of Commerce & Industry, was described as “helping spread largesse.” According to the cable, a Congress Party insider told an Embassy official that “formerly [Nath] could only offer small planes as bribes” but “now he can pay for votes with jets.”

These are serious – albeit unverified – allegations that only add to the thickening taint of corruption now engulfing Prime Minister Singh’s government. Of course, log-rolling and intrigue are nothing new in Indian politics, and those implicated in the cables have denied their veracity. But to policymakers looking on in Washington, what must be most dismaying is that, in order to secure passage of an agreement so obviously favorable to India, the Congress Party had to engage in such extraordinary steps. Apparently, the “normal” rules of parliamentary bargaining do not apply to significant foreign policy issues involving the United States.  For those, the Congress Party has to up the ante – from small planes to jet aircraft.

The WikiLeaks cables also do nothing to strengthen the BJP’s credentials for principled leadership. During the debate over the agreement, Jaswant Singh insisted that the party’s opposition was not about tawdry partisanship but rather involved solemn issues of national sovereignty and military preparedness. But the opposite now appears true. In a March 2009 conversation with the U.S. chargé d’affaires, BJP supremo L.K. Advani connected the party’s stance to “domestic political developments then at play in India” and downplayed previous declarations that a future BJP government would “reexamine” the accord.

The WikiLeaks dispatches hardly inspire confidence in New Delhi’s credibility as a serious strategic partner.  Prime Minister Singh deserves kudos for the political resolve he displayed during the tumult over the nuclear agreement. But his victory was also pyrrhic, revealing just how isolated he is inside the corridors of power. And if there is any substance to the latest accusations of political shenanigans, his reputation for probity will be further dented. For their part, BJP grandees stand exposed as petty partisans rather than stalwart champions of the national interest.

There are plenty of reasons to criticize the Obama administration’s approach to bilateral relations. But the next time the Indian commentariat is tempted to indulge in the “Obama disses India” narrative, one might first inquire into New Delhi’s own capacity for far-sighted statesmanship.

India-US Relations Blog

Maximum India

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The Kennedy Center’s mega-celebration of Indian culture – an extravaganza dubbed “Maximum India” – is now well underway, with sold-out performances and throngs of people in attendance. The three week long festival is the latest indicator of how decisively American perceptions about the country have changed. Not too long ago, India was regarded as the very epitome of what the term Third World meant – decrepit, destitute and pitiable.  Yet in a relatively short period of time, the popular view of India changed in critical ways. Nowadays, it is broadly viewed as a fast-rising economic and technology powerhouse and home to a vast reservoir of highly-trained brainpower that will inevitably sap the U.S. edge in innovation. When President Obama points to Bangalore as a threat to America’s competitive advantage or invokes India as part of a new “Sputnik moment,” one quickly understands how far we have traveled from yesterday’s stereotypes.

Of course, a segment of U.S. opinion, attracted to Indian cultural traditions and the moral precepts of Mahatma Gandhi, has long held the country in high regard.  But for many decades most Americans were inclined to the views of Harry S. Truman, who dismissed India as “pretty jammed with poor people and cows wandering around streets, witch doctors and people sitting on hot coals and bathing in the Ganges.”  Truman’s Secretary of State, Dean Acheson, had an even more incisive perspective: “by and large [Indians] and their country give me the creeps.”

A decade after Indian independence, Harold Issacs’s classic 1958 survey of U.S. elite opinion, Scratches on Our Minds, revealed that influential Americans held very negative perceptions of the country, associating it with “filth, dirt and disease” along with debased religious beliefs. A State Department analysis prepared in the early 1970s found that U.S. public opinion identified India more than any other nation with such attributes as disease, death and illiteracy, and school textbooks throughout this period regularly portrayed it in a most negative light. This view was again underscored in a 1983 opinion poll, in which Americans ranked India at the bottom of a list of 22 countries on the basis of perceived importance to U.S. vital interests. A generation after Harold Issacs, the 1984 adventure film Indiana Jones and the Temple of Doom depicted India along essentially the same lines – as a country was filled with hapless, impoverished villagers and benighted religious practices.

Official attitudes in Washington tended to parallel public opinion. U.S. policymakers during the Cold War paid only episodic attention to New Delhi and when they did it was largely a function of the superpower rivalry with the Soviet Union rather a desire to meaningfully engage Indian leaders. The Kennedy administration placed considerable if anomalous emphasis on India, making a massive commitment of economic assistance. But by the end of the Johnson administration, leading Democrats grew fatigued with the country’s seemingly insuperable problems. As Dennis Kux notes in Estranged Democracies, his history of the bilateral relationship, by the late 1960s “India, in Washington’s eyes, had become just a big country full of poor people.” The Nixon administration similarly believed that India was not worthy of heavy engagement. President Nixon himself held denigrating views of Indians, seeing them as supine and indecisive, and regarded Prime Minister Indira Gandhi in an even worse light. When Daniel Patrick Moynihan was U.S. ambassador to India from 1973-75, he regularly lamented that Washington was utterly indifferent to the country’s fate; writing in his diary, he confided that it “is American practice to pay but little attention to India.”  In a cable to the State Department, he complained of dismissive attitudes, “a kind of John Birch Society contempt for the views of raggedly ass people in pajamas on the other side of the world.”

So, what accounts for the significant shift in cultural perceptions that is increasingly registered in government statements – such as, President Obama’s calling India an “emerged” country and an “indispensable partner” – and in high-profile cultural events like the Kennedy Center’s?  An obvious part of the answer lies in the dramatic turnabout in Indian prospects launched by the 1991 economic reforms. Long gone are the days when India was seen as an economic laggard or a marginal factor in global commerce. In a remarkable sign of changing fortunes, the New York Times “Room for Debate” blog in late 2010 convened seven experts for a discussion on which lessons in economic competitiveness the United States could learn from India.  Along similar lines, Fareed Zakaria in Time magazine contrasted a dejected America with an India filled with people “brimming with hope and faith in the future,” while Thomas L. Friedman in the New York Times proclaimed that “It’s Morning in India.” And a new Citibank report concludes that India will likely be the world’s largest economic power by 2050.

But a less obvious, though equally important, factor is also at work: The increasing stature of Indians in American society has changed how all Americans think about India. Large-scale Indian migration to the United States did not begin until the late 1960s and though the community remains relatively small – less than one percent of the overall U.S. population – it is one of the country’s fastest-growing ethnic groups. But the community’s growing success has given it an influence and impact wholly disproportionate to its size. As one analyst puts it, “Indians in America are emerging as the new Jews: disproportionately well-educated, well paid, and increasingly well connected politically.”

According to a recent report by the RAND Corporation, Indian-American entrepreneurs have business income that is substantially higher than the national average and higher than any other immigrant group.  High-skill immigrants from India are a significant driving force in U.S. prosperity and innovation, most famously in the information technology industry.  As Vivek Wadhwa and his colleagues document, Indians stand out among immigrant entrepreneurs, having founded from 1995-2005 more U.S.-based engineering and technology companies in the past decade or so than immigrants from the United Kingdom, China, Taiwan and Japan combined.  According to industry estimates, Indians are involved in 40 percent of all start-up ventures in Silicon Valley.  India-born scientific and engineering talent is also an important pillar of the faculties in America’s top universities.

The rising profile of the Indian diaspora has helped change public opinion in relatively short order.  For example, in contrast to the traditional sentiment of disdain or pity, a February 2010 Gallup survey found that two-thirds of Americans now have a positive impression of India, a favorability level equal to that of Israel.  In my next post, I will explore further how this societal factor has contributed to the new era in U.S.-India relations and how policymakers in Washington and New Delhi can capitalize on it.

India-US Relations Blog

Gary Locke’s Missed Opportunity

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U.S. Commerce Secretary Gary Locke traveled to India earlier this month for a six-day tour focused on enhancing bilateral high-tech trade and cooperation. The first U.S. Cabinet officer to come to India since President Obama’s state visit last November, he brought with him representatives from 24 U.S. companies, including Boeing, Lockheed Martin and Westinghouse.  The trip resulted in an agreement on closer collaboration in the area of energy technology as well as an announcement about the further easing of U.S. export controls on India. As one senior U.S. official accompanying Locke stated: “We have agreed to an unprecedented level of technology transfers to India and we can go even further.” Judged by the usual standards of such trade missions, the visit was not unproductive. Yet by the time Locke’s sojourn ended, one had the feeling that he nonetheless missed a good opportunity to significantly advance the bilateral economic agenda.

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Just how large a miss this was became clear a few days later, when Indian and Japanese Cabinet officials gathered in Tokyo to sign a comprehensive economic partnership agreement (CEPA). This accord provides a stark counterpoise to Locke’s visit, exemplifying the imaginative initiatives that should have been on his brief. The Indian-Japanese pact not only eases the movement of goods but also the flow of services, capital and labor.  It promises to increase the value of bilateral trade 150 percent over the next few years and has been received with great enthusiasm by the Indian business community. Indeed, the agreement is an apt economic expression of the growing partnership that the two countries are forging in the geopolitical realm.

Indian trade diplomacy is on a tear. Just days after the deal with Tokyo, New Delhi signed a similar arrangement with Kuala Lumpur, which will further deepen India’s involvement in Southeast Asia’s dynamic economy. And Commerce Minister Anand Sharma has raised expectations that trade negotiations with the 27-nation European Union will soon be concluded.  India has also concluded free trade accords with South Korea, Thailand and the ten-country Association of Southeast Asian Nations (ASEAN) in recent years, and has launched bilateral trade negotiations with China and Canada.

Suggestions have been floated about crafting a U.S.-India free trade agreement (FTA), an idea that would certainly result in significant economic gains for both countries. Despite dramatic increases over the past decade, the bilateral economic relationship is far from achieving critical mass and will require purposeful nurturing to reach its full potential.  Trade and investments flows between the two countries remain a small fraction of the U.S.-China level, and China recently eclipsed the United States as India’s top trading partner. Indeed, it is a telling indicator that President Obama’s visit to India netted trade deals worth some $10 billion, while Chinese Prime Minister Wen Jiabao’s trip just a month later resulted in $16 billion in business deals – this despite the increased diplomatic tensions that color India-China relations. Moreover, the two countries used the Wen visit to announce an ambitious effort to nearly double their trade in the next five years to $100 billion annually. For all of the spectacular improvement in U.S-India ties, India is still only the 14th largest trading partner for the United States and India remains a comparatively minor destination for U.S. investment flows.

So a far-reaching multi-dimensional U.S.-India FTA deserves an important spot on the bilateral agenda, though one must also admit the difficulties in forging one. Given that Washington and New Delhi are at loggerheads in the Doha Round negotiations, as well as the unpromising political climate in the United States regarding trade policy, the prospects for a broad-based bilateral FTA are not strong in the foreseeable future.  Moreover, the agricultural access issues that will need to be included are highly problematic for both sides. Consider, for example, that India’s negotiations with the European Union have lasted nearly four years and since the EU is not a large exporter of farm products, agricultural issues have not been the major obstacle in the EU-India FTA talks that they would be in an U.S.-India negotiation. At best, Washington and New Delhi should announce a commitment to signing such an accord by 2015, even if it is one whose provisions take effect over an extended period. An excellent opportunity to make such an announcement is in early April, when the next round of the U.S.-India Strategic Dialogue convenes in New Delhi.

But even as Washington and New Delhi hash out the terms of a broad-based FTA, trade officials should focus the bulk of their energies on an accord that promises a large payoff in the immediate term. A sweeping initiative aimed at capitalizing on mutual synergies in the area of high-technology trade would do just that.

The high-tech sector plays a critical – and largely complementary – role in the economies of both nations, and the United States has been a prominent factor in the spectacular development of the Indian IT sector. Yet overall bilateral trade in advanced technology products is surprisingly low and important synergies remain untapped. And unlike a more comprehensive FTA – entailing prolonged negotiations, unwieldy bargaining tradeoffs and protracted coalition-building at home – an arrangement with a limited but sharp focus on the innovation economy could likely be formulated relatively quickly, and its self-evident “win-win” features would override bureaucratic timidity and domestic opposition.

A model for such an initiative exists in the 1997 Information Technology Agreement (ITA), which eliminated tariffs on a range of capital goods, intermediate inputs and final products in the information and communications technology sector. The agreement was negotiated by 29 original countries (then representing about 80 percent of the global IT trade). Although conducted under the auspices of the World Trade Organization, the agreement was formulated quickly outside of its normal (and cumbersome) negotiating process. The final agreement was quickly joined by other countries (including India) and currently has over 70 participants (collectively representing 97 percent of the global IT trade). The ITA is credited with spurring world trade in IT products, currently estimated at $4 trillion annually, and remains the only industry-specific comprehensive free trade agreement ever signed.

While the ITA is still in effect, its value has been significantly diluted by a series of technological developments in the period since its creation. Specifically, disputes have arisen among the signatories over how to apply the agreement to hundreds of new IT products that were not foreseen a decade ago and on addressing the issue of non-tariff barriers. Moreover, multi-party negotiations to update the ITA have been stalled for years.

In light of these problems, the United States and India should launch a bilateral effort to further liberalize trade and deepen engagement in the IT field or, even more one that covers the entire range of advanced technology products and services.  This agreement could then be opened to the participation of other like-minded countries.  Given the vital role of the high-tech sector in the American and Indian economies, not to mention the broader world economy, such an initiative would pay robust commercial dividends.  Additionally, with Washington and New Delhi at odds in the Doha Round talks, this initiative would have great political value, further solidifying the U.S.-India partnership and providing an important example of joint leadership in the global economy between developed and emerging nations.  Finally, it would be a good down payment on the Obama administration’s pledge to double U.S. exports over the next five years, as well as India’s effort to double its own trade levels.

An effort focused on crafting a bilateral free trade mechanism relevant to the advanced technology sectors would instill a level of momentum in bilateral ties that has been noticeably missing since George W. Bush left the White House. The Obama state visit succeeded in righting a relationship that had been adrift for the better part of two years.  But with the civilian nuclear accord now a done deal, officials in both governments are still searching for a bold, creative initiative capable of driving relations forward.  An exchange that occurred at the start of the Obama administration is instructive. In January 2009, Richard Boucher, then U.S. Assistant Secretary of State for South Asia, suggested to Shivshankar Menon, then India’s Foreign Secretary and now Prime Minister Singh’s National Security Advisor, that both capitals needed to find “the next big idea” to animate bilateral affairs. Menon concurred, noting that in the absence of something that captures the imagination “Indians were beginning to view the relationship with the U.S. as only about political-military and nuclear issues.”

Focusing on the high-tech agenda would be a very good way to stir imaginations in both countries. It would underscore the critical role that economic engagement has played in launching the new era in U.S.-India affairs.  Indeed, increased private-sector ties will be one key in securing the growth of broad-based, resilient relations over the long term, since they work to limit the risk that momentary political and diplomatic frictions could escalate and disrupt the overall bilateral partnership.

India-US Relations Blog

K Subramanyam and the Indo-US Relationship

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K Subramanyam

On 2 Feb, K Subramanyam, often referred to as the Bhishma Pitamaha of the Indian Strategic community passed away. During his years of published writing, Subbu’s views and analyses swung from a consistent but measured anti-American stance to one favoring a joint US-India approach on most world strategic issues. This extraordinary u-turn was another measure of the greatness of the man – that in a changed world he was capable of changing his views and his conclusions on Grand Strategy. Many thinkers his age plodded on in their furrows, too inflexible or too frightened to change their outlook and their explanations on how the world conducted its affairs.

In the 1970s, much of what the U.S. did to apparently win the Cold War hurt India, and of course Subbu deeply. A great deal had to do with arming Pakistan, but Subbu was alone, raising a voice in panic alarm in the eighties as he saw Islamabad moving towards a bomb capability , unheeded by his own colleagues. He saw the U.S. as complicit as much as he saw the consequences of Pakistani state irresponsibility, once they had the bomb under their belt. His computer-like mind was never at a loss for precedents, incidents and promises that the U.S. had made, often going back a quarter century, to prove Washington’s unbroken anti-India stance. This cold blooded accuracy won him respect among his American critics because they saw they confronted facts and not sentiment.

All his disapproval changed in a few short years after the end of the Cold War and when the India-US relationship re-began, after both sides acknowledged how bad it had been. When Bush went out of his way to remove India’s technological isolation with the nuclear deal, Subbu saw that it signaled a seminal change in India’s status – a lift for India to help it on its way to a possible great power status. It wasn’t that Subbu had no sentiment; he did- even on behalf of his ungrateful countrymen who thought that lack of gratitude signaled high statesmanship.

Subbu soon pieced the new jig-saw puzzle together. There were many pieces to fit in. One was the Manmohan Singh reforms that jetted India into the 9% growth league and the possibility of greatness. A second was the huge, rich and successful Indian Diaspora who, by denying themselves luxuries, had clawed their way to becoming the richest ethnic community in the US, almost all of them as technological professionals. A third was Cancun, where Subbu saw the outlines of the next technological revolution which the world was demanding – to simultaneously live well, and yet not pollute the Earth. The fourth and final one was that which brought all these pieces smoothly together – The removal of the technological isolation would enable the brilliant Indians in the U.S. to be part of the next alternate energy revolution. The great final pieces of innovation would take place in the US, with India as the research supporting base. The resultant prosperity would halt the U.S. economic decline, and propel India forwards, even possibly past China, with the two democracies joined together in mutual success. What, Subbu would ask, was the alternative to the Democracies deciding how the world should be run?

When Subbu made his pronouncements, after careful analysis, the audience always presumed that it would, and must be brilliant. Few realized, what intellectual honesty was required for a man in his late seventies to make the U-turn that he did. But the ideas that Subbu came up with were worth the courage and clear headedness that he put into his U-turn, tyres smoking. As the world is challenged by the possibility of a rising but autocratic power, calling itself a Republic, it is well that the democracies and the real Republics, independently analyze their way into mutuality.

India-US Relations Blog

US, India and aid for Pakistan

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In his budget proposal for 2012, President Obama has proposed $3.1 billion in aid to Pakistan. The aid is spread across various parts and will be provided partly under the five year Kerry-Lugar-Berman initiative and Oversees Contingency Operations (OCO). This proposal comes even as the two countries stand-off over the Raymond Davis affair and the news of Pakistan expanding its nuclear weapons program.

Out of the $3.1 billion, $1.9 billion will go towards promoting a “secure, stable, democratic and prosperous Pakistan with a focus on energy, economic growth, agriculture, the delivery of health and education services, and strengthening the government of Pakistan’s capacity to govern effectively and accountably.” However, a recent U.S. Inspector General’s report said that the U.S. (in effect Pakistan) has failed to demonstrate that the $7.5 billion civilian aid package provided in 2009 has improved the availability of basic needs such as food, education, healthcare etc in Pakistan. The former Chairman of Competition Commission of Pakistan (CCP), Mr. Khalid Mirza reiterated the lack of economic growth in Pakistan when he said that there is no clarity in the Pakistani government’s economic vision. The political and economic instability in Pakistan gives us no reason to believe that the new $1.9 billion will be spent wisely and to the benefit of the Pakistani people as intended.

Another $1.1 billion of the package will be dedicated to the Pakistan Counterinsurgency Capability Fund (PCCF) set up for training Pakistani forces to better fight insurgents along the Western border with Afghanistan. Here again, Pakistan has not provided us sufficient reason to believe that the aid is being used only to fight terrorists and insurgents along its Western border, or the terrorist safe-havens within its own territory. Instead there have been news of an increase in Pakistan’s nuclear capability with the country having more than 100 deployed nuclear weapons; followed by doubts about the construction of a fourth plutonium reactor. U.S. officials themselves are not convinced that Pakistan’s nuclear arsenal is safe, and are concerned about the volatility in the country.

But apparently U.S. desperation in Afghanistan supersedes all other considerations, and the U.S. is willing to overlook Pakistan’s inefficiency and transgressions in fighting terrorists and insurgents. The carrots and stick strategy is but a populist rhetoric, and the U.S. is willing to forgo the sticks and appease Pakistan with carrots and more in the hope that Pakistan will help it win the war on terror. The irony of the situation is however, appalling.

The Obama administration, with its call for change, has not managed to change the U.S. attitude on Pakistan, and continues to be willing to excuse all of its excesses. New Delhi has also been unsuccessful in breaking the cycle in spite of its ‘strong’ relations with Washington. All it gets is a couple of statements from the U.S. showing support and sympathy for its position and threat from Pakistan. But when it comes to action, all is forgotten and Pakistan emerges the winner with billions in aid every year it fails. Probably India needs to learn diplomatic manipulation from its western neighbor.

Along with talking with the U.S. administration and agencies, India should begin engaging the Indian-American community that has a large stake in the security of both the U.S. and India. The increasing political participation and strength of the community should be harnessed by the Indian government to lobby the U.S. to rethink the quantity and nature of economic assistance, and enforce strict accountability mechanisms for all aid to Pakistan. It is incumbent upon the Indian side to secure its own national security interests. The U.S. cannot be expected to reprioritize its national interests and goals to align with Indian interests.