August 08, 2011

After the downgrade

Indo-US relations look troubled after Standard & Poor's lowered America's sovereign credit rating, says N.V.Subramanian.

8 August 2011: After the US downgrade, the sense of drift in India-America relations will grow. Here's why. There is no natural alliance of geography or ethnicity or shared threats that pulls India and the United States together. Indeed, for most part of independent India's history, the United States has been closer to our enemies, and made that rather obvious in the 1971 war.What divides India and the United States truly are their respective democracies. Democracies by nature resist foreign interference. India made that manifest by becoming one of the founder members of the Non-Aligned Movement, whose spirit still drives it. India's mantra of "peaceful rise" flows from there. Being the greater power, any impulse for friendship with India had to come from the US, and this was most strongly advanced by the George W.Bush administration, although the foundations were laid by the previous president, Bill Clinton. It was undeniable that Bush personally was impressed by the Indian prime minister, Manmohan Singh. But great powers don't built relationships and ties entirely on personalities. The decline of America had gathered pace during the second term of Bush, and the US needed reliable allies to share its burden of managing world security. In South Asia, India was the most notable power, and therefore defence engagements with India took high profile. On its back came the Indo-US nuclear deal whose final purpose was to bring India into the NPT regime as a non-nuclear state. On his election, Barack Obama did not feel personally compelled like Bush to engage India. As senator, he opposed the nuclear deal, and was ideologically committed to non-proliferation. Like Bush, he was taken in by Manmohan Singh's erudition. But he did not generally favour India, toying with the idea of Kashmir mediation to placate Pakistan. Pakistani perfidies in Afghanistan subsequently made Obama friendlier towards India, going so far to promise to help make it a permanent UN Security Council member. His visit to India obviously pleased him, as opposed to the scorn he received in China. But there were limits to Obama's engagement, especially in the nuclear domain. While America was eager and determined to sell nuclear reactors to India, no ENR technologies would accompany them. Obama initiated and won NSG approval to ban ENR exports to countries not under the NPT. Russia and France which are in India's nuclear reactor market will have to abide by the new NSG guideline. And although India did make a conciliatory $4.1 billion C-17 deal with America, it cut it off from the $11 billion 126 jet-fighter contract to Washington's endless chagrin. This is where matters broadly were at the time of the US downgrade. The downgrade was triggered by the debt-ceiling battle amongst Obama and the Republicans and Democrats in Congress, in which the principal loser has been the United States. But none of the parties are willing to compromise, and it appears the war will heighten during Obama's re-election bid. The Republicans have taken a rare fundamental dislike to Obama and will do everything to defeat him. Strangely, Obama has proved himself handsomely where the Republicans most expected him to flunk -- on fighting terrorism. He was magnificent on the decision to take out Osama Bin Laden, bringing glory to the US military and intelligence services. But where it really matters, at home, Obama has failed. He appeared to peak out as soon as he was elected, and he permitted the Republicans to prey on him as if he were a defeated candidate or in some way unfit. Naturally, he had a hard time after the November 2008 bankruptcies. But he gave no compelling economic vision to save America, hoping that his eloquence would substitute for action. In a tortured way, the US has landed in a situation where it has been downgraded. Only one of the three big rating agencies has done so, and done so messily. But the damage is done, and others may follow suit. There are natural economic concerns for India arising from this. But there are also political and strategic disquiets that have not so far been highlighted. This writer believes the US will turn inward-looking after this, with Obama's own focus being on saving his presidency and creating a decent chance for reelection. Turning inward means, at least in South Asia, that the US will hasten its exit from Afghanistan. The downing of a Chinook with navy SEALS in Warduk province yesterday will increase the desire to withdraw at the soonest. While withdrawal by 2014 is planned, Obama may seek a more decisive turning back from Afghanistan. And with India, in particular, US relations may enter serious drift. Seeing its own rocky position, the US will go easy on its pledge to assist to make India a permanent UN Security Council member. American assurance of membership of the Nuclear Suppliers' Group, if any, will have likewise to wait. On the other hand, the Obama administration may raise pressure for the opening of Indian markets to kickstart the US economy, which will face resistance here. The Indian nuclear liability law which scares US reactor suppliers will also come under fresh attack. All in all, things look messy for India after the US downgrade.

N.V.Subramanian is Editor,, and writes internationally on strategic affairs. He has authored two novels,

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