February 27, 2014

Challenges in India-US ties

Washington becoming strident in economic relations
G Parthasarathy

TRAVELLING across the US as the winter Olympics in Sochi commenced, one was saddened to witness how India's international credibility had been shaken when television audiences across the world saw three forlorn Indian athletes marching without the national flag. India faced this disgrace, thanks to the avariciousness and nepotism of an internationally disgraced Indian Olympic Association. Sadly, this was accompanied by charges of corruption, nepotism, match fixing and worse involving the President of the BCCI. Many Indian friends in the US asked in anguish: "Is there no section of national life left in India which is free from corruption and venality?"

The mood in Washington, where one had an occasion to meet a cross section of senior officials, business executives, analysts and scholars, was quite different. In marked contrast to the earlier years, I found widespread criticism of the conduct of foreign and security policies by President Obama. The Administration had not just botched up its healthcare programme, but was seen as indecisive and weak in dealing with challenges in West Asia, Afghanistan and the provocations of a jingoistic and militaristic China. President Obama, in turn, is acutely conscious of the mood in the country which wants an end to foreign military entanglements.

More significantly, as the US moves towards becoming a net exporter of energy, thanks to the expanding production of shale gas and oil, the country's geopolitics are set for profound change. Using its leadership in areas of productivity and innovation, the US now appears set to the stage for increasing domination of the world economic order. From across its eastern shores, the US is negotiating comprehensive trade and investment partnerships with its European allies. Across its western shores in the Pacific, the Americans are negotiating transpacific partnerships with Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, South Korea and Vietnam as negotiating partners. While China has informally indicated an interest in joining this partnership, the US will use its influence to ensure that China is not admitted till American political and economic pre-conditions are met.

There is naturally interest in Washington in the forthcoming general election in India. The assessment appears to be that the ruling Congress is headed for a drubbing in the polls. Not many tears will be shed in Washington or elsewhere about this inevitability as the only questions which well-wishers of India ask are how India landed itself in its present morass of corruption and whether a new dispensation, which may be fractious, will be able to restore India to a high growth path. Speaking informally, a senior official recalled that President Obama had described the US-India partnership as "one of the defining partnerships of the world". The official noted that "every meaningful partnership between powerful nations encounters setbacks", adding that such setbacks should be minor compared to the benefits of the relationship and the magnitude of what the two could accomplish together.

The Khobragade episode was a defining event in India-US relations. The Americans found Indians across the political spectrum united in the view that insults to India's national dignity would not be acceptable. It is important that in future negotiations by the Task Force set up to address such issues, India should make it clear that it will not tolerate events like Mrs. Sonia Gandhi being threatened with prosecution while undergoing medical treatment in New York, or the supercilious attitude adopted towards Mr. Narendra Modi, who is a constitutionally elected Chief Minister. We should not accept a situation where Americans believe that they can behave high-handedly towards our elected politicians because of their domestic lobbies. The US should also be left in no doubt that on such issues, including consular and diplomatic privileges, India will firmly adhere to a policy of strict reciprocity.

The Obama Administration has messed up its relations with President Karzai in Afghanistan, dealing with him in a manner that showed scant regard for his position as the elected Head of State of Afghanistan. Worse still, by its actions, the US has clearly given the impression that despite its protestations it was clandestinely dealing, behind Mr. Karzai's back, with the Taliban. While the US-Afghanistan Strategic Partnership speaks of joint determination in eliminating the "al-Qaida and its affiliates," the US now speaks only of eliminating al-Qaida and not is affiliates like the Taliban, the Islamic Movement of Afghanistan, Lashkar-e-Taiba and Jaish-e-Mohammed. There are naturally concerns in Afghanistan that the US, which needs Pakistan's assistance for withdrawing its military equipment from Afghanistan, will seek to appease the Pakistanis by giving them a less-than-healthy role in determining the future dispensation in Afghanistan and the role of the Taliban in such a dispensation.

While there is an evident congruence of interests in working with the US, Japan and others in the face of growing Chinese military assertiveness, New Delhi and Tokyo cannot ignore the reality that there have been many flip-flops and inconsistencies in the approach of the Obama Administration to China. Moreover, the US is becoming increasingly strident in its economic relations with India on issues ranging from sanctions on sections of our pharmaceutical industry and our civil aviation facilities, while demanding changes in our policies on solar panels and equipment and placing restrictions on the movement of IT personnel. It is, however, not India alone that is the recipient of such measures from the US!

Despite these challenges, India cannot ignore the reality that the US is the pre-eminent power in the world. Moreover, it will remain so in the coming years, primarily because its innovative and technological strengths are going to be reinforced by its energy surpluses, together with the energy potential of its neighbours like Canada, Mexico and Argentina. It will, moreover, remain the foremost power in the manufacture of high-tech equipment, particularly in defence and aerospace. It is for India to fashion industrial policies to leverage its strengths and potential to secure high levels of investment and partnership in crucial high-tech industries. I was advised in Washington that contracts currently secured with US companies enable us to import 5.8 million metric tonnes per annum of shale gas from the US annually. According to oil industry sources, these contracts alone provide us more gas than we could obtain from the controversial Iran-Pakistan-India pipeline. But, for all this to fructify, the new dispensation in New Delhi will have to replace economic populism and accompanying fiscal irresponsibility with a quest for accelerated growth.


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