Category Archives: India-US Relations Blog

India-US Relations Blog

Is America Achieving The Improbable in Afghanistan, India & Pakistan?

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Recently I returned from a trip to India. The biggest story during my visit was the spectacular raid inside Pakistan to get Osama Bin Laden. It was pure shock and awe. There was an instantaneous burst of applause for America’s brilliant action.

Unfortunately, within a day or two, the sentiment changed. India, like Afghanistan, had always maintained that Pakistan provides sanctuary to terrorists and in many cases actively encourages, aids and provides material support to terrorists. This reality, Indians thought, was ignored by America either because of America’s self-interest or gullibility.

The discovery that Bin Laden was hiding in the open in a Pakistani military town confirmed to Indians that they were right and America was wrong for all these years. Indian society then compared the execution of Osama Bin Laden to the complete freedom provided within Pakistan to the terror-masters of the horrific 2008 Mumbai attack.

Indians have always accused America of a double standard for terrorists. This feeling morphed into certainty after the Bin Laden raid. Then came statements by American officials exonerating Pakistan’s Top Leadership and proclamations about how Pakistan was still America’s ally.

The insult and the injury cut very deep. The people I spoke to were quietly livid. I was stunned by the intensity of their feelings against what they see as America’s duplicitous dealings with Pakistan.

These were Lawyers, Doctors, Teachers and others in India’s middle class, the heart of India’s educated society. They understand the good about America. They understand the need for Indo-American partnership. But gone is their euphoria about the heady Bush days of Indo-US Strategic Partnership. Today, their anger and contempt towards America seemed unanimous. As one said simply, “this country (America) cannot be our friend”.

The India-Pakistan relationship has been a zero-sum game. So this sentiment within India should translate into a vote of confidence for America inside Pakistan. Right?

But the anger against America seems to be even more intense within Pakistan. From reports in the New York Times and the Washington Post, the rank and file of the Pakistani Army is “seething with anger” against America. Most Pakistanis seem convinced that America is trying to bring mayhem and terror to Pakistan to meet its own objectives in Afghanistan.

What about Afghanistan? America is pouring billions into Afghanistan every year to protect Afghans from the Taliban. This seems more and more like a waste of money and more importantly lives of young American soldiers.

credit: static.guim.co.ukThis week, the Taleban launched attacks in the northern cities of Herat and Taloqan. Also this week, about 200 Afghan militants crossed into northwestern Pakistan and engaged in a gun battle with Pakistani security forces. Rather than work even more closely with American forces, President Hamid Karzai of Afghanistan issued an ultimatum this week to American Forces and NATO to cease all strikes against Afghan homes. Why?

As Stratfor, the widely respected geo-strategy firm wrote this week “Opposition to the ISAF and the counterinsurgency-focused campaign across the country is on the rise among even anti-Taliban elements of the government and general population…… the trajectory of declining patience and tolerance of and increasingly virulent opposition to ISAF military operations across broader and broader swaths of Afghan society continue to worsen,…..”.

America is deeply involved in these three countries in different ways. American leadership would like to be a mediator between these countries and facilitate accommodation between them, if not peace. Unfortunately, America seems to be achieving just the opposite.

These are three societies at conflict with one another. When you are a friend or enemy of one society, you automatically are not an enemy or a friend of the other society. But today these vastly different societies have developed the same image of America.

If this isn’t an improbable achievement, I don’t know what is!

India-US Relations Blog

In South Asia, graft begets Terror

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What do elections in India have to do with terrorism? Plenty. These days, well-heeled candidates distribute “notes for votes”, passing out currency so as to entice electors into choosing them. While illegal in India’s absurdly restrictive electoral system (where a candidate for a parliamentary seat with more than five million voters breaks the law if he spends more than $30,000 on his election), why should counter-terrorism experts need to experience blood pressure rises at the fact that an estimated $ 800 million was handed out during the 2009 national elections in India to voters? More recently, last month more than $100 million in cash was seized from politicians in just the state of Tamil Nadu, where elections to the state legislature were due.

Most of the cash handed out by generous politicians is counterfeit. They get the currency from the same networks that operate the terror and narcotics syndicates. Apart from North Korea’s Kim Jong Il, the biggest counterfeiter in the world is Pakistan’s ISI, which uses its multiple contacts in India to circulate cash that has been printed for the purpose. India has, of course, made this easy by relying on the same source for printing its currency as Pakistan does for its own, thereby ensuring that the same inks and paper become available to the ISI as are used in printing India’s legal tender. The cash gets moved into India through multiple channels, a lot of it coming into the possession of politcal leaders, who protect the networks involved so as to be assured of their own supplies of counterfeit currency.

Small wonder that Hassan Ali, one of the world’s biggest money launderers, was residing safely in India for decades, even while moving out tens of billions of dollars, most into Swiss banks. Ali is now in jail, but powerful patrons at the Union Cabinet level are seeking to ensure that he avoid naming any but the “small fish” in his roster of clients. The reality is that a Union Cabinet Minister who is holding a powerful portfolio was a close friend of Ali’s closest associate, Kashinath Tapuriah, and frequently used to meet with him in Kolkata. Small wonder that nobody is holding his or her breath waiting for accountability.

India’s top politicians use “hawala” channels to spirit their money abroad, and protect these sources in their own interest. The problem is that most of the major “hawala” channels are run from out of Pakistan, and are staffed by those active in both narcotics and terrorism. By protecting such channels, high-level politicians in India are in effect protecting the votaries of Terror.

Which is where the U.S. can come in. President Barack Obama needs to appreciate that it is not enough that the Treasury Department discover and sanitize cash belonging to terror syndicates that are in US-based entities. The U.S. needs to be similarly active in the case of entities in South Asia as well. And because of its huge size and even greater scale of corruption, India tops the list. Thus far, politicians in power have cleverly defined illegal assets abroad as “tax evasion”, thereby freeing international financial agencies of the responsibility for identifying and eliminating them, something that would need to be done, were these assets correctly labeled. For the fact is that such assets are the proceeds of crime, and need to be defined as such. Why authorities in India are resisting this is because such a change would mean that banks abroad would be duty bound to reveal the names of their clients.

Some politicians in India park funds with relatives abroad, many of whom have foreign passports. There needs to be complete transparency on the assets and occupations of the relatives of key decision-makers in India, so that the public can be alerted if – for example – a high-school dropout who may be the sister of a prominent politician in India becomes a millionaire through paths that are obscure. More than the fact that such individuals are living high on the hog at the expense of the Indian taxpayer who has been cheated of his assets, the reality is that much of the cash sent abroad through “hawala” is tainted by association with narcotics and terror syndicates. What is needed is for the U.S. to publicly offer to assist South Asian states to identify funds that have been parked abroad as a consequence of graft. This would help the War on Terror as much or more as military hardware.

India-US Relations Blog

Winning the Future Together

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The global ascendance of India as an economic power, technology hub and a source of professional talent will create major opportunities for Indian and multinational businesses alike. But this development has also injected a not-insignificant measure of zero-sum thinking into US-India economic affairs, especially in the area of human capital. These contradictory themes are a growing source of irritation, but if managed smartly could also be a good opportunity for advancing the bilateral relationship.

These contradictions have been in full view in recent months. Last year saw the rise of a populist anti-India backlash as Americans increasingly blamed the country for their economic hardships. Election campaigns trafficked in the outsourcing issue, Congress enacted heavy India-specific fee hikes on the H-1B temporary visa program for skilled foreign workers, and President Obama called for tightening tax penalties on corporate outsourcing in language that pitted U.S. prosperity against that of India’s.

Yet when Mr. Obama arrived in India for a state visit last November, his rhetoric markedly shifted. The country was now portrayed as an economic opportunity too golden to pass up; indeed, the main purpose of his visit seemed to be securing as many commercial deals for American companies as possible. In an address to Indian corporate leaders in Mumbai, he emphasized that “in our interconnected world, increased commerce between the United States and India can be and will be a win-win proposition for both nations. I realize that for some, this truth may not be readily apparent.” For good measure, he added that “there still exists a caricature of India as a land of call centers and back offices that cost American jobs. But these old stereotypes, these old concerns ignore today’s reality.”

The antinomies of the bilateral economic relationship similarly were on display in Obama’s State of the Union address in January. He cited the growth of science and technology capacity in China and India as a threat to America’s competitive edge, while also acknowledging that continued U.S. prosperity requires greater access to the human capital originating from both countries. The success of U.S. enterprises engaged in the advanced technology sectors Mr. Obama identified in his address as key to “winning the future” will increasingly depend on access to the global reservoir of skilled professionals, of which India is a major contributor. The president admitted as much when he criticized the self-defeating nature of U.S. immigration policy: “[Students] come here from abroad to study in our colleges and universities.  But as soon as they obtain advanced degrees, we send them back home to compete against us.  It makes no sense.”

The President has regularly sounded off on this latter theme, most recently in a series of events over the last month aimed at reviving the issue of immigration reform.  In a speech in El Paso earlier this month, for example, he noted that:

[W]e provide students from around the world with visas to get engineering and computer science degrees at our top universities. But our laws discourage them from using those skills to start a business or power a new industry right here in the United States. So instead of training entrepreneurs to create jobs in America, we train them to create jobs for our competition. That makes no sense. In a global marketplace, we need all the talent we can get – not just to benefit those individuals, but because their contributions will benefit all Americans.

The President added that “We don’t want the next Intel or Google to be created in China or India. We want those companies and jobs to take root in America.”*

Obama’s remarks picks up a proposal he made during the last presidential campaign to create a “fast track” mechanism allowing foreign students with advanced technical degrees from U.S. institutions to receive an employment-based visa. At present, 20,000 H-1B visas are reserved for such graduates – many of whom are Indian – though demand greatly eclipses this number.

Although immigration policy remains a hotly-contested issue, the adverse consequences of limiting U.S. access to foreign-born skilled labor are widely acknowledged. New York Mayor Michael Bloomberg, for example, is at the head of a broad group of civic and business leaders calling for a job-creation strategy based on visa reform.

The United States has been able to maintain its global preeminence in no small part due to the influx of foreign science and engineering professionals and graduate students. Immigrants comprise nearly half of the science and engineering workforce holding PhD degrees. High-skilled immigrants are a significant driving force of American prosperity and innovation, most famously in building the information technology industry.  Research indicates, for instance, that Indian immigrant entrepreneurs play a leading role in founding some of the most dynamic high-tech companies. Studies also point to the valuable entrepreneurial streak immigrants possess: They are 30 percent more likely to form new businesses than native-born Americans, and foreign-born university graduates are some three-times more likely to file patent applications than US-born citizens.

Foreign-born scientific and engineering talent – particularly Indian – is an important pillar of the faculties in America’s top universities. And foreign students earn the majority of engineering doctoral degrees awarded by U.S. universities, and of this number a large percentage opt to remain in the country for some period of time. Their presence, along with other high-skilled immigrants, has helped the U.S. technology workforce expand at a faster rate than the United States is graduating native-born scientists and engineers.

America’s dependence on foreign-born technology professionals will shortly become all the greater. Since younger native-born workers tend to lack the skill levels of their baby boomer parents now nearing retirement age, the United States could face broad and substantial skill shortages in the coming decade. Thus, the United States should be promoting greater access to the global talent pool, and India is a good place to start.

With India a major source of high-skill professionals and the U.S. needing to draw on foreign talent to fortify its own science and engineering workforce, both countries have a keen mutual interest in cooperating in the area of human capital, the most critical resource in the dawning global innovation economy. To this end, Washington and New Delhi should conclude a bilateral agreement guaranteeing a set number of temporary work visas for high-skill Indian professionals. The United States has crafted bilateral agreements with a select number of other countries that could serve as a template, including the TN temporary visa program (created via the North American Free Trade Agreement) that exempts qualified Canadian and Mexican professionals from the annual quota on H-1B work permits.

Admittedly, important constituencies in both countries regard the global talent pool as a zero-sum equation.  In the United States, some argue that increased mobility of foreign high-skill workers will displace or depress wages of native professionals. The empirical evidence, however, suggests that greater numbers of talented immigrants actually supports job creation in the United States and that immigrant entrepreneurs complement rather than crowd out native-born counterparts.

India likewise would stand to benefit from the increased mobility of its technology professionals. Instead of causing “brain drain,” the global innovation economy is actually generating “brain circulation” or a “brain chain,” in which expatriate talent returns home with acquired capital, skills and knowledge, as well as personal links to transnational entrepreneurial and technological networks. Obviously, some of the high-skill Indians who benefit from the bilateral immigration accord will choose to remain permanently in the United States, though they would in time contribute a significant stream of remittance income and serve an important bridging function between Indian innovators and entrepreneurs and those in other countries.  But others, empowered by new ideas and experiences, will return in time and play a direct role in the nation’s development; indeed, this process is already underway (see here and here).

The United States and India are prime constituents in the brain circulation process. Far from seeing access to the global talent pool as a competitive proposition, the interdependency of their skills base requires them to act in a cooperative, synergistic way. Doing so not only makes sound economic sense for both countries, but would also strengthen the foundation of US-India relations.

* Ironically, as Mr. Obama was uttering these words, the Indian science minister was lamenting that the country’s lack of innovation infrastructure keeps India from producing companies like Google and Blackberry.


India-US Relations Blog

Fighter Shoot-Down

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India’s elimination of Boeing’s and Lockheed Martin’s bids in its $11 billion fighter aircraft competition – one of the country’s largest-ever defense deals – is bound to have negative repercussions for the U.S.-India relationship. Analysts had expected at least one of these bids to advance to the final selection round; that neither did is being perceived as a deliberate snub of Washington. John Elliott, a long-time observer in New Delhi, interprets the move as an effort aimed at “keeping the U.S. firmly in its place.”

http://www.usinpac.com//images/stories/F-16IN_AT_AeroIndia2011.jpgThe Indian decision will add to Washington’s growing list of bilateral frustrations and is yet another sign that ties between the two nations continue to fall far short of the promise that glistened just three short years ago when the landmark nuclear cooperation accord was concluded.  That news of India’s action coincided with the (unrelated) announcement of Timothy J. Roemer’s resignation as U.S. ambassador in New Delhi only heightened the sense of disillusionment and fatigue.

The decision makes some sense on the basis of technical merits. The F-16 aircraft proffered by Lockheed Martin is a widely-used workhorse but also a 30 year-old platform; that Pakistan is one of the 26 air forces flying the plane also could not have endeared the Indian defense ministry. Boeing’s F/A-18 is a much newer system but it reportedly did not perform well in flight tests over the Himalayan ridges in Ladakh.  Eurofighter’s Typhoon aircraft – which New Delhi has shortlisted for possible selection – has much to recommend it technically. Additionally, the four-nation Eurofighter consortium (composed of British, German, Italian and Spanish defense companies) – along with France’s Dassault Aviation SA (whose Rafale fighter also was advanced to the final round) – also was more generous than the U.S. companies in terms of technology transfer.

American companies (including Boeing and Lockheed Martin) have snapped up a number of recent contracts from the Indian military, and one can expect New Delhi to award additional deals in the coming months as palliatives for U.S. disappointment at losing out of this highly lucrative transaction.

Some Indian commentators are of the view that, with bilateral ties now so multi-dimensional and mature, Washington’s sense of letdown will be fleeting. But this is likely to prove wishful thinking.  The Indian decision will certainly not derail bilateral affairs. But given the Obama administration’s aggressive lobbying on behalf of the American bids, it will only deepen the perception in Washington that New Delhi has not lived up to its side of the bargain by reciprocating the huge commitment the United States has made over the past decade to bolster India’s great power prospects.

As Siddharth Vadarajan, the strategic affairs editor of The Hindu, notes, Washington came at the fighter deal with “all guns blazing.” The U.S. campaign included President Obama, who made a personal intervention with Prime Minister Manmohan Singh during his state visit to India last November and then followed up in February with a letter underscoring “the strategic importance the United States attaches to the selection of a U.S. proposal in India’s Medium Multi Role Combat Aircraft competition.”  Ambassador Roemer was tireless in pressing the same message.  And to sweeten the pot, the United States granted India the opportunity to participate in Lockheed Martin’s program to develop the advanced technology F-35 fighter aircraft – an offer that New Delhi effectively rebuffed last December when it opted for a joint arrangement with Russia to develop a separate fifth-generation fighter aircraft.

As an earlier post argued, Washington is becoming increasingly weary of New Delhi’s capacity for strategic engagement. The political soap opera accompanying the Indian parliament’s debate about the nuclear cooperation agreement in the summer of 2008 was disheartening from the U.S. perspective and could hardly inspire confidence that India was ready to move ahead with full-throttle cooperation. Adding to the list of sorrows is that the nuclear liability law adopted by India last year has the effect of all but blocking the involvement of U.S. companies in India’s nuclear energy sector – one of the things that the nuclear deal was supposed to bring about. (And following Japan’s nuclear disaster, U.S. hopes that New Delhi would revisit the law anytime soon are stillborn.) And despite numerous suggestions for bi-national endeavors at producing clean energy technology, Washington is miffed that Indian restrictions on imports of solar-power technology are thwarting the entry of U.S. firms into one of the world’s fastest-growing solar-energy markets.

Boeing's F/A-18 at the Aero India 2011 air showTroubling as well are reports that a major factor in India’s elimination of the Boeing and Lockheed Martin bids was the military’s continued wariness of the United States as a full-fledged strategic partner. In contrast to institutional memories of past U.S. technology embargoes that still linger throughout the security establishment, the military supply relationship New Delhi has forged with Paris – Dassault’s Mirage 2000 fighter has long been in service with the Indian air force – seemed to play an important role in the decision to shortlist the Rafale. The Obama administration had worked hard to ease these memories, including advancing the F-35 offer and the further easing of U.S. export controls on India that were announced in February.  Mr. Obama’s letter to Prime Minister Singh also made promises on this score.

While India’s decision will certainly not produce a bilateral rupture, its consequences may be more pronounced than the rosy scenario sketched by the optimists. At a moment when the Obama administration has begun to turn its attention back to New Delhi, it will reinforce nagging doubts in Washington about India’s willingness to make the big decisions necessary to dramatically advance the relationship.  Such doubts could even break into the open given the bilateral frictions likely to ensue as the United States approached the endgame in the Afghan conflict. There may be solid technical reasons behind the fighter decision. But the soundness of its strategic logic is about to be put to the test.

India-US Relations Blog

How to lose friends and alienate people

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India’s decision to reject U.S. fighter planes is strategic stupidity.

New Delhi, it is reported, has shortlisted two European vendors for its long-drawn procurement of fighter aircraft for the Indian Air Force. Now, military analysts can have endless debates and even objective opinions on which among the American, European and Russian aircraft is technically superior and better suits the stated requirements of the IAF. Financial analysts can have similar debates and objective opinions on which is the cheapest or the best value for money. These opinions may or may not converge. But when you are buying 126 planes worth more than $11 billion dollars, you are essentially making a geostrategic decision, not a narrow technical/financial one.

The UPA government’s decision to reject both American proposals, of the F-16 and F/A-18, demonstrates either a poor appreciation of the geostrategic aspect or worse, indicative of a lingering anti-American mindset. While the U.S. ambassador has resigned, whether or not it will prove to be a setback for India-US relations remains to be seen. Damaging the careers of pro-India American officials is a silly thing to do.

This move will most certainly reduce India’s geopolitical leverage with the U.S. military-industrial complex, at a time when India needs it most. From the unfolding dynamics in the Afghanistan-Pakistan region, to the changing balance of power in East Asia, to UN Security Council reform, to a number of geoeconomic issues, the United States can take positions that can have long-lasting consequences for India’s interests. Is the United States more likely to be sympathetic to India’s interests after a $11 billion contract—which means much needed jobs for the U.S. economy —is awarded to someone else? Long used to complaining that the United States doesn’t care for India’s interests, will awarding the contract to some European firms help change the situation?

The argument that the European bids were ‘technically’ superior are not entirely credible either, for two reasons. First, at sufficiently high levels of technology, the difference between the planes on offer is marginal. To suggest that the European models are vastly superior defies logic, because some of the world’s most powerful air forces are flying F-16s, leave along F/A-18s. Second, the notion that combat requirements can be perfectly defined at the time of procurement is false. It is the combination of man and machine that wins battles. The focus on machines ignores the reality that much swings on the man flying it. Moreover, given the nuclear deterrence relationships obtaining in the subcontinent and across the Himalayas, those planes might never see an aircraft-to-aircraft dogfight in their lifetimes. For other tasks like air support for ground operations, the specifications are even lower.

What about those alphabet soup agreements and fine-print contracts that the U.S. insists that India sign, that might prevent the planes from being used when needed? Those who make these arguments do not understand what war means. War means all bets are off, and India will do whatever necessary to protect its interests. While the existence of those agreements was a usual bargaining chip for India, to get a discount, to believe that such arguments will hamstring India’s military options is naivete. The government might not need to spell this out in public, but it should know it.

It has been this blog’s argument that in the contemporary geopolitical environment, India’s interests are best served by being a swing power, holding the balance between the United States and China. It must enjoy better relations with each of them than they have with each other. It must also have the credible capacity to give pleasure and inflict pain. In this context, buying fighter planes from the United States would have been an excellent move.

And who has New Delhi shortlisted instead? European companies. The European Union is a bit player in the international system, zealously safeguarding its own legacy position at the United Nations Security Council, the G-20, the World Bank, IMF and other places, against India. Italy is engaged in process of blocking India’s UNSC candidature. An order placed with Eurofighter or Rafael isn’t going to change its plans. EU busybodies can be found everywhere from inviting Kashmiri separatists to speak, to attending court hearings of Binayak Sen. Some small EU states almost wrecked the India-specific waiver that the United States was obtaining at the Nuclear Supplier’s Group. When it’s crunch time in Afghanistan, does anyone in New Delhi think that the EU will or can make any move that’ll safeguard India’s interests? Why is India being gratuitously generous to Europe when there is much to gain from giving the contract to the United States?

Yes, France, Britain and Germany are countries that India must engage. There are ways to allow them to benefit from India’s growth process—from power projects to manufacturing to services. The fighter aircraft contract need not be awarded to European firms, because it has higher strategic opportunity costs.

The downshot is that the UPA government has squandered a unique opportunity to gain leverage in Washington at a crucial time when closer ties are in India’s interests. It first took way too long to decide, dragging the procurement process even China built its own new fighter plane. It now decided to pick two vendors who might well sell a technically superior and cheaper product, but do no more than that. To put it mildly, this is strategic stupidity.

(This post originially appeared on this author’s blog at acorn.nationalinterest.in)