FRIENDLY
HANDSHAKE
Change is
unlikely in India-US relations in the next four years:
Kanwal Sibal---THE TELEGRAPH; Tuesday , January 29 , 2013
Kanwal Sibal---THE TELEGRAPH; Tuesday , January 29 , 2013
Looking ahead,
what could President Barack Obama’s second term mean for relations between India and the United States of America? Will the
relationship stay more or less at the level that it has already reached or will
it see a surge in the years ahead? Can it begin to wane?
There is no
reason for the relationship to wilt, even if it has not lived up to its promise
in the eyes of some Americans. India’s
nuclear liability law and the ouster of US suppliers from the 126 fighter
aircraft deal are cited as evidence. The other areas of disappointment are the
lack of convergence in views on developments in the Gulf and West Asia, India’s
reluctance to accept burden-sharing in upholding the international order as it
is obliged to do by its rising global status, as well as its inadequate
bureaucratic expertise and capacity to deal with the expanded scope of the
India-US engagement.
A less
transactional assessment of the state of relations would highlight the great
shift in Indian perceptions about relations with the US — from strategic distrust to
strategic cooperation. This is best manifested in the $9 billion worth of
defence contracts won by the US
in the last seven years, with more to come as India diversifies its sources of
supplies, as well as the numerous joint military exercises conducted with
strategic objectives in view. Counter-terrorism cooperation is acknowledgedly
much better than before, as is the quality of exchange of views on regional and
global issues. India-US relations are now stable, with a remarkably rich
bilateral agenda whose implementation will occupy both sides in the years
ahead.
The chance of
any dramatic upswing in relations in the next four years, however, seems
unlikely. For one, the economic backdrop is not very favourable. With US economic
recovery still sluggish, unemployment high and the debt problem unresolved,
Obama will remain preoccupied with the domestic agenda. He is anyway not seen
as a ‘foreign policy’ president temperamentally. In India, too, growth rates have
fallen and investor sentiment, both domestic and foreign, remains
unenthusiastic in spite of some reform measures by the government. Regulatory,
taxation, environmental, land acquisition, and implementational issues in
general remain to be addressed. With growth rates high, market sentiment
buoyant and optimism in the air, countries can deal with each other in a more
positive spirit than when they are preoccupied with protecting their own
interests first — and those of others become even more secondary.
This means
that on issues of concern to us relating to the hike in visa fees and the
denial of visas to our information technology professionals, making US
companies which outsource work ineligible for federal government grants and
loans and the totalization agreement that would address the problem of Indian
professionals in the US having to compulsorily contribute to social security,
the US, already unresponsive, is unlikely to give us satisfaction. Apart from
the populism of opposing outsourcing at a time of high domestic unemployment,
Obama seems to have an ideological bias against the transfer of jobs abroad
even if that improves the competitiveness of US firms.
India-US
economic ties are not as dynamic as some may suppose. In the last three to four
years our negotiators feel that we have not been able to secure any tangible
concessions from the US
for our merchandize and services exports. The Trade Policy Forum has not met
for two years, although it should do so in a couple of months. The US has dropped
to third place as our trading partner, down from 17 per cent to a 10 per cent
share of our trade. Investment levels are also low. The US Consumer Protection
Act, the extension of the US Foreign Account Tax Compliance Act of 2009 to
foreign companies currently under Congressional consideration, the foreign
manufacturers liability bill, the ‘Buy America’ campaign and so on are all
potential hurdles for building a stronger trade partnership with the US.
Some US trade
initiatives would need to be watched closely for their impact on India.The
Trans-Pacific Partnership that the US is promoting does not include India, or,
for that matter, China and Japan. India’s focus is on the East
Asia-centred Regional Comprehensive Economic Partnership. The contemplated
trans-Atlantic free trade area between the US
and Europe, if established, will affect Indian
interests. Bilaterally, regulatory issues on our side need resolution for
allowing trade in US agricultural products. In the education sector there are
complementarities but legislation on foreign universities operating in India is
languishing in Parliament. The stipulation of local content in the solar power
and telecommunications sectors has raised US objections. Internet governance is
a contentious issue ahead. Our energy dialogue continues, with India hoping to obtain exemption for importing
liquefied natural gas from the US.
If that happens on a significant scale, it can change India’s energy
equations and concomitant strategic calculations. The ambitious goal ahead is
to finalize a bilateral investment treaty with the US,
the prominent sticking issues being US demands on intellectual property rights
(India is on the US watchlist on
IPRs), environmental and labour issues and pre-establishment rules. In our
strategy, an India-US FTA, for which we discern no appetite in the US as of now,
should follow the BIT. All said and done, in spite of issues, it is well to
keep in mind that our economic cooperation with the US
generally builds our strategic capacities whereas that with China erodes
them.
The US envisages a key Indian role in its pivot
towards Asia, but we are not clear about its scope given the complex texture of
trade and financial interdependence between the US
and China.
Moreover, the US financial
downturn will inevitably lead to a reduction of the country’s defence budgets,
whereas any credible pivot will require enhanced US
military presence in Asia with a concomitant
increase in defence outlays. Obama’s domestic priorities could also over-ride
any robust Asia pivot. India is already distancing itself from the
pivot by the notable friendly discourse towards China by the foreign minister,
Salman Khurshid. During the Australian foreign minister’s recent visit, both
countries poured cold water on the idea of a trilateral India-Australia-Japan
dialogue, not to mention any quadrilateral dialogue involving the US in addition.
The
contours
of Obama’s policy towards Afghanistan turning on the accelerated and
effectively complete withdrawal of troops, the offer of a share in power
to the
Taliban, the use of Pakistan as a facilitator — entailing greater
deference to
its ambitions in Afghanistan — are all causing concern in India. India
could be pushed into an opposing axis in Afghanistan. India and the US
will need, therefore, to reconcile their respective visions of
Afghanistan’s
future in the period ahead. Pakistan’s
renewed agressiveness towards India
is complicating the situation further.
There are some
question marks in New Delhi about the new team
in Washington, especially with regard to the
naming of the senator, John Kerry, as secretary of state because of his
perceived softness towards Pakistan
and the expected departure of some India-friendly state department officials.
The changes in the Pentagon and the Central Intelligence Agency, however, are
not causing any particular unease. How much attention Obama pays personally to
the India-relationship, which is fundamentally on track, is open to question
too.
All in all,
therefore, India and the US will neither
enter into an embrace nor disengage; they will continue to shake friendly hands
as Obama’s second term unfolds.
The author is
former foreign secretary of India
sibalkanwal@gmail.com