Through an economic lens
http://dawn.com/2012/06/11/through-an-economic-lens/
ON Wednesday, US Secretary of State Hillary Clinton and Indian External Affairs Minister S.M. Krishna will meet in Washington for the third annual US-India Strategic Dialogue.
The ever-closer ties between Washington and New Delhi are a cause of many sleepless nights and conspiracy theories in Pakistan. But developing a nuanced understanding of the present state and likely trajectory of US-India relations should prevent Pakistan’s short-term foreign policy from falling prey to hysteria and paranoia.
Last week, Pakistanis were angered to see the US and India bonding over the fact that they share a complicated relationship with Pakistan during US Defence Secretary Leon Panetta’s trip to New Delhi. In addition to critiquing Pakistan’s counterterrorism efforts, Panetta called on India to play a greater role in Afghanistan and provide additional support to Afghanistan’s fledgling security forces.
In the context of collapsing US-Pakistan relations, Panetta’s comments in New Delhi seemed to indicate that the US and India are looking to close ranks over Afghanistan and work together to contain Pakistan.
To think that regional security, in particular an anti-Pakistan convergence, is the crux of the US-India relationship would be a big mistake. As the meetings in Washington this week are likely to show, Washington and New Delhi are currently focused on strengthening their economic partnership — everything else is a sideshow.
There are incentives on both sides for better economic ties. India is the world’s third largest economy, but America’s 13th largest trade partner. New Delhi has investment agreements with 80 countries across Europe and the Asean, but has failed to fiment treaty with Washington, putting US investors at a disadvantage compared to other foreigners. The share of Indian trade with the US has also dropped from 10.6 per cent to 7.3 per cent between 2005-06 and 2010-11. In short, the US feels like it’s missing out.
On the Indian side, GDP growth slowed to a nine-year low of 5.3 per cent in the last quarter, causing Standard and Poor to temper its outlook for the Indian economy.
Last month, the Indian rupee also fell to an all-time low. Political opposition — which led the government to rescind its decision to allow Walmart-style, multi-brand retail outlets to invest in India — has also undermined the country’s investment climate. In this context, seeking more direct investment from the US is a greater priority for India than playing bully with Washington.
Even in Afghanistan, Indian interests are largely economic, focused on gaining access to minerals and other raw materials. In April, four state-owned companies made it to a short-list to bid for four copper and gold projects in Afghanistan’s Ghazni, Badakshan, Herat and Sar-e Pol provinces.
This effort follows a successful bid last year by a consortium of Indian state-owned and private companies for rights to the Hajigak iron ore mines in Bamiyan. India’s search for mineral wealth abroad is propelled by the fact that the process of acquiring licences to mine within the country has become extremely complex as a result of widespread illegal mining, which has decimated the environment — in certain districts, the Indian Supreme Court has banned iron ore mining to prevent further ecological damage.
In the short term, then, US-India cooperation has more to do with economics and less to do with a joint desire to clamp down on Pakistan. But this will not remain the case in the long term. As US-India economic ties strengthen, New Delhi is likely to ask for greater political support from Washington as well. (As an aside, the US has already asked for — and to some extent received — political support from India on the matter of reduced oil imports from Iran; though grudgingly, India in May reduced oil imports from Iran by 38 per cent from the previous year. As a result of this “substantial” import reduction, India hopes to gain exemptions from American sanctions without having to entirely cut off Iranian oil flows.)
A study conducted earlier this year by the Foundation for National Security Research (FNSR), a New Delhi think tank, revealed what India expects of its strategic partners. After assessing the benefits for India of its strategic partnerships with the US, UK, Russia, France, Germany and Japan, the study gave top billing to Russia.
Despite having the lowest volume of trade with India from among the six countries assessed (approximately $5bn annually), Russia won out because it consistently backs the Indian stance on Kashmir, Pakistan, Afghanistan, China’s rise and regional terrorism.
The US, meanwhile, ranked second after scoring poorly on FNSR’s ‘political-diplomatic’ scale. The study pointed out that US support for India on Kashmir, Pakistan, Afghanistan and its bid to become a permanent member of the UN Security Council is “insubstantial and inconsistent”. Ultimately, then, India values political support from its strategic partners, even those with whom it has strong economic ties.
What does this mean for Pakistan? In the short term, the country should consider US-India ties through an economic perspective, rather than an exclusively geopolitical lens.
Acknowledging that there is more to the US-India bilateral relationship than stymieing Pakistan will allow Islamabad to continue the process of normalising ties with New Delhi and rescuing relations with Washington from the trash bin in Chicago.
Continued engagement with the US and India is Pakistan’s only option for avoiding diplomatic isolation and preventing the fear of a US-India gang-up against Pakistan from becoming a self-fulfilling prophecy.
Continued engagement with the US and India is Pakistan’s only option for avoiding diplomatic isolation and preventing the fear of a US-India gang-up against Pakistan from becoming a self-fulfilling prophecy.
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