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Defence And Strategic Affairs Blog

BRICS – India is the biggest loser

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Guest post by Sumantra Maitra

Among other interminable dross that were churned in the recently concluded 5th annual BRICS summit in South Africa, was the idea of a Development bank, by the five ever-rising economic powers. Although the details are vague, like any other diplomatic summit declaration trying to obfuscate the deep fissures within this coalition of unequals, the fact that India agreed to this disaster in the making is a new low in the foreign policy of a country, which is not much known for rational and realistic choices. The idea behind the development bank is indeed noble, “to address…the infrastructure gap in developing countries…”, especially in Africa. But the intention to make it successful or meaningful or the national interest of each member of the coalition is not clear. One thing, which is however clear, is Indian ambivalent skepticism about bandwagoning with any power simultaneously coupled with the Nehruvian idea of being a “messiah of the mass” and trying to be a leader of the third world, which reflects the mindset of Indian bureaucracy and ruling elite, is increasingly drawing India into a dilemma.

The BRIC leaders

The BRICS is not an alliance. It is an arbitrarily formed group, mentioned in passing by an ex-banker, which was so captivating to the ruling elite of the grouped nations that they thought of formalizing it in an institution. Initially starting as rising economies, a perceivable counter balance to the G-8, these economies are no longer rising, with deep structural and institutional flaws, different modes of governance, deteriorating law and order situation and freedom of expression and censorship issues, different economic fundamentals and most importantly, absolutely different and divergent world view and interest. Joshua Keating pointed out why the BRICS couldn’t be more different than each other. The last addition to this coalition, South Africa, is the messiest of them all. The selection of South Africa is ofcourse controversial and political, regarded often as a quota position from the African continent, as it leaves out far more competent and growing economies like Indonesia, Turkey and South Korea. This comes when BRICS are accused of neo-imperialism, and banners like “don’t carve out Africa” were found everywhere near the summit in Durban.

It is well known, that the primary drivers behind the ideation in the BRICS are Russia and China. Russia wants to bandwagon with China to balance the influence of United States. The motivation and Great power nostalgia of Russian elite is simple enough to fathom. The Chinese interest is however far more complex. As a growing hegemon, China actually has interest in Africa, both geo-politically and economically. The resources of Africa are mostly still unexplored, and the market potential of cheap Chinese manufactured goods is enormous. This however comes at a time, when China is increasingly viewed with suspicion in Africa. The last couple of years have seen the murder of Chinese engineers by disgruntled and exploited African labourers, incessant strikes in Chinese operated industries and mines, and the now infamous op-ed by Lamido Sanusi, the governor of Central Bank of Nigeria, where he accused China of having neo-colonial ambitions. China now wants to portray itself as a benevolent and altruistic force, and therefore wanted to soothe Africa under the BRICS front. India, for all its independent and non-aligned foreign policy, is legitimizing Chinese actions.

It is puzzling to fathom why India is following Chinese and Russian lead. For a start, Russia is not what it used to be. It clearly views China as a far superior partner than India, and a market for superior weapons and technology, ironically at the same time when India received massive aid grant from Japan. India and China are not really partners, and as I wrote here before, will probably not be in the near foreseeable future. Nor is Indian business interest in Africa that important, scalable or maintainable. For example, assuming that India invests in some African country under the BRICS development bank, tomorrow if there is some kind of unrest, is India capable or willing to defend its business interest? India never showed any willingness to aggressively promote or defend its business interests, be it Afghanistan, Maldives, or South China Sea, and there is no reason to believe India would do that in Africa. India also lacks such far off power projection capability. Which brings us to question the wisdom; do the benefits of Indian investment in Africa outweigh the cost? What is the incentive of pledging tens of billions of dollars, all Indian taxpayers’ money, in a region which is beset by uncertainty, instability and conflict, or starting a monetary organization, potentially rival to IMF/World Bank which will not be of any direct benefit to the already slowing economy and growth rate?

On the other hand, India will eventually be viewed as just another neo-colonial resource grabbing power like China, if it continues to be with the BRICS. The respect that India enjoyed in Africa, and the goodwill as a potential democratic competitor of China will fade away, with India just being a satellite of Chinese ambitions, a satisfied mid level power in an institution guided by Russian and Chinese geo-political interests. Nor is Indian interest, in the BRICS assisted conflict resolution in Central African Republic understandable. Again, the question is geo-political, what IS India’s interest? Tomorrow if Russia leads the BRICS into conflict resolution in Syria, will India be willing to commit its resources?

As this Economist essay explains, India is utterly confused about its growing clout and new found respect as a rising power, lacks a political will, strategic culture, a status-quo bureaucracy, and timely and fast decision making infrastructure. Added to that is the notorious ambivalence towards aligning with the West, even though being perfectly aware that in the great scheme of the game, China stands as the largest potential rival. This ambivalence and skepticism stems from the utterly discredited NAM mentality which is still somehow widely followed among the Indian foreign policy circles, and the moral, altruistic, socialist Nehruvian world view, without any long term planning or Realist Raison D’etat. With the BRICS now attracting countries like Egypt, a slow and painful repetition of the outdated Indian NAM policies are in the process. Everyone knows how NAM turned out. One can only hope that India’s policymakers realize soon where her interests lie.

(Sumantra Maitra is a freelance journalist from India and a tutor of New Zealand Foreign Policy and Theories of International Relations, at the University of Otago, New Zealand. You can follow him on twitter @dailyworldwatch.)

Immigration Blog

The H-1B conundrum

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A new legislation intends to check H-1 B related frauds

Guest post by Madhu Nair

Ever since the 2008 economic crash, Americans have been accusing the H-1 B visa as an instrument used to steal their jobs. The United States is battling a high unemployment rate and the voice for a pro-American job policy is increasing day by day. With critics crying foul over the provisions of the policy and its abuse by technology majors, America’s H-1B visa policy has run into troubled waters.

According to a recent report, Senator Chuck Grassley, a ranking member of the Senate Judiciary Committee, has introduced a legislation which aims to eliminate fraud and abuse of the H-1B visa policy. The legislation intends to make reforms to increase enforcement, modify wage requirements and ensure protection of visa holders and American workers. Grassley says that the legislation will not only benefit American workers, but also help U.S. companies to get quality specialized workers from abroad.

Grassley adds, “Somewhere along the line, the H-1B program got side-tracked. The program was never meant to replace qualified American workers, but it was instead intended as a means to fill gaps in highly specialized areas of employment. When times are tough, like they are now, it’s especially important that Americans get every consideration before an employer looks to hire from abroad.”

The legislation, if passed, may affect jobseekers from India and elsewhere. The recently passed H-1B and L-1 Visa Reform Act of 2013 ensures that an H-1B application filed by a company employing 50 or more U.S. workers will not be accepted unless the employer attests that less than 50% of the its workforce are H-1B and L-1 visa holders. This, in addition, to the legislation introduced by Grassley could mean trouble for companies who seek cheap and quality workers, largely from developing economies. A recently published article had also highlighted that many of the H-1B hires do not belong to the “best and the brightest” category. This further pushed the need to reform the policy which has gained a political face of late.

With a cap of 65,000 H-1B visas a year, Indian companies were seen scrambling for approvals with over 50,000 applications being filed on the very first day of screening. Market analysts say that the cap on visas and other such compulsions will impact the margins of companies adversely. The increasing unemployment has also forced companies in the U.S. to take to sub-contracting and local hiring. This further adds pressure on companies to take to other means in order to achieve their ambitions.

While a short-term impact looks imminent, it would be better to come out with options to avoid such situations in the future. The global economy changed remarkably after the 2008 crisis with the world turning towards developing economies to pave the path ahead. India, with its growing young and abundant workforce, has an edge over other countries in reaping the benefits. But it would be rather cynical to neglect developed economies while doing so. The only way forward is to find a middle ground where countries can work together for a sustainable future.

Immigration Blog

H1B applicants not the best?

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Guest post by Madhu Nair

By definition, the H1B is a non-immigrant visa issued by the U.S. allowing companies to recruit foreign nationals in specialty occupations under the Immigration and Nationality Act. The act, practiced by a number of multi-national companies, has been their gateway to some of the best talents in the world. Aspiring workers from emerging economies like India and China have been quick to catch in on the rush. The practice gave companies an edge over their peers as it reduced their working capital, increased efficiency and scaled up their businesses. For employees, on the other hand, this was an opportunity to realize and live the American Dream.

But if a recent report is to be believed, the quality of H1B workers does not fit the category of “the best and the brightest”. Norman Matloff, professor of computer science at the University of California in Davis along with the Economic Policy Institute, published a study which compared U.S. and foreign IT workers’ salaries, rates of PhD awards, doctorates earned and employment in research and development to determine if H1B visa holders had skills beyond those of U.S. IT workers. As per Matloff, the study did not give any indication of exceptional talent among the H1B holders. He says, “We thus see that no best and brightest trend was found for the former foreign students in either computer science or electrical engineering,” He further writes, “On the contrary, in the CS case the former foreign students appear to be somewhat less talented on average, as indicated by their lower wages, than the Americans.”

Nevertheless, managers at top companies insist they still are not able to source the best minds domestically, forcing them to look beyond boundaries. For Peter Cappelli, professor of management and director of the Center for Human Resources at the Wharton School, this does not sound reasonable enough. In a Wall Street Journal article in October 2011, he argues, “Some of the complaints about skill shortages boil down to the fact that employers can’t get candidates to accept jobs at the wages offered. That’s an affordability problem, not a skill shortage.”

For countries such as India and China, who account for a major share in the H1B program, this should set alarm bells ringing as it may affect their nationals directly. Coming to India, the number of H1B visa approvals saw an upward trend for the year 2012. In the fiscal year 2012, 130,000 H category visas were issued as against 114,000 issued in FY 2011, an increase of 15%. The year, however, saw a 26% increase in denial rate with respect to the number of applications. The rise in denials was mainly attributed to the growing concerns over the business models used by Indian IT consulting companies. This led to heightened scrutiny by the consulate officials which saw the number of approvals go down.

With U.S. still recovering from the 2008 crash and Eurozone yet to come out of the sovereign debt crisis, the current scenario does not look good either. While there is no immediate threat to H1B workers, a relook at the quality of education may perhaps save them the axe. India and China both boast of a large number of highly skilled workers. However, with the current report out, officials and analysts in the U.S. may hesitate to hire anybody from these countries.

The solution, however complex it may be, lies in accurately nipping the problem at the source. There is a need for governments to work together towards a future void of any such conflicts that may lead to a human resource problem. The interests of US’ domestic workers need to be protected, whereas those of H1B applicants also need to be carefully studied. A pragmatic and sensible solution will not only prevent discontent among many, but also lead to a better environment at workplaces.

 

India-US Relations Blog

India’s foreign policy: A year in review

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Guest post by Gateway House

As 2012 draws to a close, it’s imperative to assess India’s foreign policy performance, and look ahead to what we can expect in 2013.

So far, the report is mixed: Four foreign policy hotspots, five sweet spots, and two blind spots. About the same as 2011, when we gave six jeers and five cheers for India’s foreign policy performance.

Geopolitically, 2011 was the year of celebrating the shift of global growth and power to Asia; a year later, 2012 has seen the beginning of pushback on Asia from the U.S., which has seen the confidence of newly elected governments in Japan and South Korea and increased aggression from China as a result of its own domestic power shift.

Internationally, India has been an active participant in the creation of alternate financial instruments and institutions from emerging countries. And so far New Delhi has deftly handled the U.S. pivot to Asia, and maintained bi-partisan support in Washington, while simultaneously balancing its energy imports from Iran.

In contrast, New Delhi has been ham-handed at home. This is the year in which the government has been put on the mat by a strong anti-corruption movement started in 2011, to the current anti-rape movement engulfing the country. An enfeebled centre could hang on, or bring on mid-term elections in 2012 – a distinct possibility after the Bharatiya Janata Party’s win in Gujarat this month. It could change if the ruling Congress government genuinely confronts corruption and addresses law and order issues, continues on its path to economic reform and provides jobs to the 14 million youth who join the workforce every year. They are the boiling cauldron of the under-educated and unemployed young who yearn for political and economic change.

Clearly, our international stature is better than our image at home. We present our top foreign policy Hotspots, Sweet spots and Blind spots for 2012.

Foreign Policy Hot spots

The Maldives: In the wake of the regime change in the Maldives in February, New Delhi may have reacted hastily by recognising the new government led by Mohammed Waheed and bypassing the friendly and more secular former president, Mohamed Nasheed. The increasing fundamentalism and political breakdown that have followed in the Maldives have made India an easy target – most recently highlighted by the GMR-Maldives dispute. But two external factors may also be at play: China’s increasing economic influence in the island-nation and possible Western interest in the old World War II military base in Gan, the southernmost island in the Maldives.

Sri Lanka: Bowing to pressure from both domestic coalition politics and international organisations and allies, India voted against Sri Lanka at the UN Human Rights Council in March; the vote eroded our position of non-interference in the internal affairs of sovereign nations. In September, the bilateral hit a new low, with threats and attacks on Sri Lankan pilgrims and school children travelling in Tamil Nadu. It was exacerbated by the politically opportunistic demands of the Chief Minister of Tamil Nadu, that India must stop training Sri Lankan military personnel. Meanwhile, China raised military aid to more than $100 million and billions in strategic infrastructure for Sri Lanka.

South China Sea: Our Chief of Naval Staff’s statement that India is “prepared” to protect Indian interests in the South China Sea was subsequently watered down. Nevertheless, Beijing reacted sharply, stating that it “opposes any unilateral oil and gas exploration activities in disputed areas in the South China Sea,” despite its own infrastructure-building activities in disputed areas of Pakistan-occupied Jammu and Kashmir. The U.S.’s rebalancing in Asia juxtaposed with recent election outcomes in Japan and South Korea have given New Delhi more strategic space to be firm with China. We must continue our policy of balancing our economic interests in trade and attracting Chinese investment and negotiating our concerns on the border with positioning on Chinese disputes with ASEAN members in the South China Sea and its adversarial posturing towards the U.S.

Syria: India’s Track II diplomacy in Syria was not successful for the people of Syria, who remain caught in the battle between the West and Gulf-funded “rebels” and fundamentalists, and the Bashar al-Assad government. Despite India’s close relations with Damascus and efforts to mediate an acceptable solution at the UN Security Council in July, India voted, along with the West, for stronger sanctions against the Syrian regime, while fellow BRICS nations Russia and China exercised a veto. It is only a matter of time before the exit of Assad, but the sectarian fighting could continue for decades, at great cost to the Syrian people and secularism in the region. The conflict may cause further regional destabilisation, more friction between Israel and Iran, and eventually a rise in the price of oil.

Foreign Policy Sweet spots

India-Myanmar: After 25 years of cautious engagement, India’s policy of not shunning military governments – while simultaneously maintaining support for Myanmar’s democratisation – put us on the right side of history. Successive high-level visits this year resulted in a credit line worth $500 million to Myanmar and various agreements on border issues, energy and infrastructure. India is poised to play a vital role in Myanmar: as a model for democratic institution-building and also with business and development solutions that are affordable and adaptable. In particular, Myanmar can benefit from India’s experience in addressing complex identity issues.

Alternate financial instruments: In March, New Delhi proposed a BRICS Bank and in December the government moved further to promote more SAARC currency swaps. India already has currency swap deals with Japan worth $15 billion and is part of a SAARC deal worth $2 billion. These are positive signs of emerging economies taking the initiative to design alternative financial instruments to mitigate the volatility caused by the financial crises of the U.S. and Europe. Could a viable multilateral option emerge from BRICS? Can bilateral currency swap deals be the building blocks of an alternative financial system?

Afghanistan: India hosted the first ‘Investment Summit on Afghanistan’ in June, probably with the cooperation of Washington, and then participated in the first India-U.S.-Afghanistan trilateral dialogue in September. Indian business is supporting New Delhi’s efforts in Afghanistan, and more than $10 billion is likely to be invested in the Hajigak iron ore mines and various coal, fertiliser and small development projects. New Delhi must now amplify its role on the ground in Afghanistan – through both security and infrastructure cooperation. This, however, entails a dilemma: how can India expand its presence without becoming a target for the Taliban and unfriendly Pakistani entities?

Energy security: So far, India has successfully balanced two fundamental interests: our strategic relationship with the U.S. and our escalating energy requirements. The MT Omvati Prem became the first ship with Indian insurance to load oil from Iran in August, after European Union sanctions came into force in July. With increasing instability in West Asia, we will need more such creativity to maintain the steady flow of oil from the Gulf and we must also look for alternative suppliers in other geographies.

ASEAN: The recently-concluded negotiations of the India-ASEAN Free Trade Agreement in services and investments is a significant step in improving regional connectivity. Over the past two decades, our engagement with ASEAN has intensified and become multifaceted, with a massive increase in trade from $2.9 billion in 1993 to $80 billion in 2012. The region is not only at the centre of our Look East policy, but it is also vital to our efforts to economically and strategically balance China in an Asia that is increasingly important globally.

Foreign Policy Blind Spots

Central Asia: We have not been able to leverage our cordial relations with the Central Asian states to advantageous positions on energy, on membership of the Shanghai Cooperation Organisation (SCO), trade, and tactical cooperation in Afghanistan. We should more actively engage with Central Asia to press our case for membership of the SCO and to expand economic exchanges.

Lost Opportunities for Growth: India’s fiscal problems were highlighted many times in 2012 – in April, for instance, when S&P revised our outlook from stable to “negative” with the threat of an investment rating downgrade to “junk” status within 24 months. India’s growth rate continues to slide and is now 5.3 percent. India is struggling with a falling rupee and a rising oil import burden, along with the budgetary imperative to reduce fuel subsidies. We are condemned to a continuing economic slowdown unless the government confronts corruption more seriously and implements economic reforms.

Looking forward to 2013

What can we expect for 2013? Despite the best efforts of our Prime Minister to keep India-Pakistan relations on an even keel, the critical issues with Pakistan – Jammu & Kashmir, water, terrorism – remain intractable. Don’t hold your breath: nothing will change till Pakistan’s elections in May 2013 and perhaps even our own in 2014. Pakistani Interior Minister Rehman Malik’s disastrous recent visit to India has set back the improvements that had come with New Delhi’s patient diplomacy. Just as we have been able to successfully do with Myanmar and Iran, we should resist American efforts to influence us to make concessions on Pakistan, and handle the relationship according to our own imperatives.

For India-U.S. relations, a visit by Barack Obama, which would be an unprecedented second visit by a serving U.S. president, could propel the strategic bilateral relationship to new heights.

We hope for better times in 2013: an end to the conflict in Syria, more stability in Pakistan, less aggressive posturing by China in Asia and a recovered global – and Indian – economy.

(This article originally appeared at Gateway House and has been republished with their approval. All views mentioned in the article are those of the author and do not reflect the opinions or positions of USINPAC in any manner.)

Immigration Blog

L-1 Visas Issued in India Declined by 28 Percent in 2011

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Given the significant and increasing ties between the US and Indian economies, it is not surprising that companies with offices in India seek to transfer personnel into the United States. However, to do so is not a simple matter, especially over the past year.

Recently, I obtained data from the State Department that show L-1 visas (used for intracompany transfers) issued by U.S. posts in India declined by 28 percent between 2010 and 2011. Yet during the same time period, L-1 visas issued at U.S. diplomatic posts in the rest of the world increased by 15 percent. (See the report here.)

L1 visas are used by companies to transfer from overseas to the United States executives, managers and professionals with “specialized knowledge.” It is believed one of the reasons for the increase in denials centers around consular officers in India adopting a new, stricter interpretation of “specialized knowledge.” Immigration law defines “specialized knowledge” as “special knowledge of the company product and its application in international markets” or “an advanced level of knowledge of processes and procedures of the company.” A company must have employed the L-1 applicant for one year or more continuously within the past 3 years.

Request for Information

On October 25, 2011, the U.S. embassy in New Delhi issued a press release with the headline, “US Mission to India Reports 24% Year-on-Year Increase in H-1B Visas Issued.” The press release stated, “The U.S. Mission to India saw H-1B (specialized skills work visa) issuances in India increase 24% between the U.S. Government’s Fiscal Year (FY) 2011 and FY 2010 . . . This 24% increase is tied to the highest ever H-1B application and issuance rates in the history of the US Mission to India, and illustrates the booming nature of US-India business relations.”

Something appeared to be missing from the press release – information on whether L1 visa issuance increased or decreased in 2011. Curiously, the press release contained only a single reference to L-1 visas, stating: “India also remains the leader in issuances of L1 (intracompany transfer) visas, issuing more than 25,000 L-1s in FY 2011 – or 37% of issuances worldwide.”

Yet without the exact figure on 2011 or the data on 2010, there would be no way of knowing what happened to L1 visas over the past year. Many companies had been reporting increased denials but hard data from the US Department of State remained elusive.

The Data on L-1 Visas

In response to a request for data, the State Department sent me the information on L1 visas issued at U.S. posts in India in 2010 and 2011, as well as L1 visas issued at other posts around the world. The results appear in Tables 1 and 2.

L1 visa data table

 Why Is India Different?

The data appear to be proof that something strange is going on in the L1 visa issuing process in India, which the State Department in the past has denied. The release of the data is likely to spur additional inquiries into why L1 visa issuance is declining in India, while in the rest of the world it is rising. Since every U.S. diplomatic post operates under the same set of laws there is so far no easy answer to the question:

Why are U.S. consular officers in India apparently denying a higher proportion of the L-1 visa applications that come to them than consular officers in other countries?