India’s economic strength
Indo-US naval cooperation is not only to ensure security to a vast water mass through which almost all major countries conduct a significant amount of their annual vital trade. Security of such a water mass is surely of interest to both India and the United States. Beyond that, however, Indo-US naval cooperation has another economic angle, more so from Washington’s viewpoint than perhaps New Delhi’s.  
 

According to Raymond E. Vickery, a Woodrow Wilson Center Public Policy Scholar, US-India economic engagement - trade, investment, lending, aid and macroeconomic cooperation - has a “fundamental” impact on the bilateral strategic relationship. Speaking at an April 22, 2009, event organized by the Asia Program and cosponsored by the Program on Science, Technology, America, and the Global Economy (STAGE), Vickery asserted that these economic ties influence not just defense cooperation, but also the “political ability to cooperate” on a range of issues “of broad transnational concern.”
 

Many analysts in Washington point out that in the next few years, India and China will be the major sources of economic growth in the world. This will not only shape the global financial debate; it also makes India a critical market for Americans as they struggle to fix their own economy. Without India, the United States cannot address the major global economic issues on its agenda. While all of this may be on hold for a while till the world financial system is reset, the idea that India will be a competitive economic power to China is widely held in the United States, but how much of this is wishful thinking to counter China’s growing muscle power is difficult to assess.
 

Meanwhile, Indian development, including reforms that have largely met the West’s demands and  new trade and investment opportunities, has for now made the United States India’s largest trading and investment partner - though that position is rivaled by a growing India-China trade. US-India bilateral trade topped $44 billion and cumulative US investment in India reached more than $14 billion in 2008.  
 

Washington is keen to see globalization succeed in India; in fact, according to the financial gurus of Wall Street and London, India is something of a test case when it comes to globalization. Not only does India have a population of 1.2 billion, and growing, but for decades it had been a closed economy controlled by the government with an iron hand. In addition, India has a huge number of impoverished and poor people, whose participation in the so-called market is nominal. If globalization can succeed in a country such as India, it can succeed everywhere. That is why bringing India fully into the financially globalized world is of utmost importance to Washington - of strategic importance, in fact.
 

India’s efforts to reopen the Doha Round of talks is seen in Washington as a positive sign. When Indian Minister for Commerce and Industry Anand Sharma attended the US-India Business Council meeting in Washington, DC, last June, he held talks with Secretary of State Hillary Clinton and US Trade Representative Ron Kirk. Following those talks Sharma said India wants the World Trade Organization’s Doha trade talks to resume, as it is important for countries to cooperate and break down trade barriers in the current global economic downturn. “We are very clear that this Doha process, which has been stalled since last year, should be resumed and taken to its logical conclusion,” stated Sharma. “It’s not only a question of expectation between two countries; we are talking of a multilateral, rule-based trading system, and it will be important to recall that this round is dedicated to development … taking on board the legitimate aspirations of developing countries, because the flawed system is heavily weighed against the developing countries.” 
 

Subsequently, in early September a two-day sub-ministerial meeting of about 35 officials from different nations was hosted in New Delhi in a move that was perceived by Washington as an Indian effort to shake off its image as the spoiler in the talks and offering a road map to close the remaining gaps in the World Trade Organization (WTO) negotiations by the end of next year rather than tackling specific issues.
 

However, Washington also recognizes the political dangers that India faces in pushing through the Doha Round. It was noted in the American capitol that at the two-day sub-ministerial meeting upwards of  1,000 farmers marched through New Delhi to protest against the meeting, waving placards such as “Pascal Lamy go back” and “Save farmers, save farms.” One Indian farmer, who was quoted by Reuters, said, “This WTO is a monster. We will be finished. The government should do something.”

Washington notes that the farmers fear that Sharma’s readiness to promote a Doha deal means he will soften India’s tough stance on measures such as a proposed safeguard to help poor farmers in developing countries cope with a flood of food imports. It is not clear how the United States is going to lean on India, and other opposing nations, in order to close the deal. But in a sign that the Obama administration is getting its trade strategy in place, President Obama nominated Michael Punke, a former trade policy adviser, to fill a key role in the team - that of US ambassador to the WTO.
 

Beyond the sticking points in economic cooperation, as exhibited by the WTO’s Doha Round, there is a genuine interest in both New Delhi and Washington to enhance economic ties. Testifying before the US House Committee on Foreign Affairs’ Middle East and South Asia Subcommittee on Feb. 26, 2009, Karl Inderfurth, a professor at The George Washington University’s Elliott School of International Affairs and the US representative to the United Nations for Special Political Affairs from 1993 to 1997, pointed out that the “underpinning the strategic partnership (between India and the United States) should be a concerted effort to reap the full economic potential of the US-India relationship.” Steps need to be taken to deepen commercial ties, identify and remove impediments on both sides (still far too many), and clear the way for a new era of trade cooperation and investment, he said. Deeper economic ties will also have the advantage of providing needed ballast in the overall relationship when political differences arise, as they surely will,” Inderfurth added.
 

Prior to Secretary of State Clinton’s July visit, the furthering of US-India relations was addressed at the US-India Business Council’s (USIBC) 34th anniversary conference in Washington on June 17.  There,  Secretary Clinton  told the audience that the United States  considers India as a “major player on the world stage, and we will look to cooperate with New Delhi as it shoulders the responsibilities that accompany its new position of global leadership.” Clinton identified human development - particularly in the fields of education, women’s empowerment and health - as a platform for cooperation. She said: “As part of that commitment, we should build on the goals articulated by India’s leadership to boost literacy, expand vocational training and improve access to higher education. I hope we can partner with India to improve outcomes at all levels of education. Our countries should continue the tradition of intellectual exchange by increasing opportunities for interaction by American institutions of higher learning and their Indian counterparts, as well.”
 

Another positive direction that has been added to the US-India economic relationship is a renewed focus on greater agricultural cooperation. “India is ripe for a second Green Revolution. A significant expansion of India’s agricultural sector would have dramatic benefits for Indians, but also could help to spur agricultural revolutions in Africa and other parts of the globe where food security remains a persistent problem,” Secretary Clinton told the audience at the USIBC conference.
 

Nuclear India and the neighbourhood

The US-India nuclear deal orchestrated in collaboration with New Delhi during the George W. Bush administration was the center of attention for months in both India and the United States. The agreement - which finally met the approval of the Indian Parliament, the US Congress and the Nuclear Suppliers Group last year (three years after it was first signed) - was intended to cement a new strategic partnership with Delhi.
 

But under the Obama administration, Indo-US ties may run into some problems on this account. There is a general understanding in Washington that President Obama will be much tougher on the issue of nuclear non-proliferation than President Bush. Since India remains a non-signatory to the NPT, there is a strong likelihood that Washington will re-open this issue and exert pressure on New Delhi to sign the treaty. Should India refuse, observers point out, the Obama administration will include that “defiance” in the overall matrix of the US-India relationship. A possible taste of things to come was felt last March, when Deputy Secretary of State James Steinberg, delivering the Obama administration’s first substantive remarks on relations with India at a seminar at the Washington-based Brookings Institute, said that the United States sought a “third stage of rapprochement.”  
 

Steinberg pointed out the relations between the two started warming in the late 1990s. President Obama’s predecessor George W. Bush later pushed a landmark deal giving India access to civilian nuclear technology despite its refusal to sign the NPT. He signalled there was no turning back on Bush’s nuclear deal - a position sharply criticized by some members of Obama’s Democratic Party as sending a bad signal to nations such as Iran who are accused of pursuing nuclear weapons. “The agreement not only provides a concrete platform for economic and technological cooperation between our two countries but also offers a basis for moving beyond one of our most serious barriers to political cooperation - the status of India’s nuclear program,” Steinberg told the Brookings Institution. But Steinberg also said India and the United States should work together for a “strengthened” NPT.  
 

The issue of the Comprehensive Test Ban Treaty (CTBT), another potential sticking point in Indo-US relations, has already been brought to the fore by President Obama. Speaking before 30,000 people outside Prague Castle in April, Obama set out a plan to secure loose fissile materials, ban nuclear testing, and halt the spread of illicit weapons. He also pointed out that he would work toward getting the US Senate to ratify the CTBT. The logic that follows within the powerful non-proliferation bureaucracy in Washington is that US ratification of the CTBT will cause China to follow suit, which would then be followed by India, Pakistan and Israel. 
 

In that speech, Obama also said: “And we should build a new framework for civil nuclear cooperation, including an international fuel bank, so that countries can access peaceful power without increasing the risks of proliferation. That must be the right of every nation that renounces nuclear weapons, especially developing countries embarking on peaceful programs. And no approach will succeed if it’s based on the denial of rights to nations that play by the rules. We must harness the power of nuclear energy on behalf of our efforts to combat climate change, and to advance peace and opportunity for all people.” 
 

Whether the American president will be able to achieve any of these plans is moot; but New Delhi must be aware that pressure from Washington on various nuclear-related issues will remain and is likely to surface. New Delhi became aware of the unwillingness of Democratic Party members to endorse the US-India nuclear deal. The opposition was not simply because the deal was orchestrated by a vastly unpopular Republican Party president, but traditionally the Democratic Party is an anti-nuclear group. President Obama is not only a Democrat, but the Democratic Party enjoys a significant majority in both houses of the US Congress, and this will inevitably have a profound impact in the area of nuclear cooperation between India and the United States.
 

It is imperative that New Delhi have an accurate understanding of the perceptions many in Washington’s nuclear policy community have about the US-India nuclear deal. Many analysts, particularly those based in Washington, see the agreement as a mere fig-leaf for India’s desire to acquire additional nuclear fuel and technology for weapons production. While it was certainly true that India wanted the ability to gain increased access to fuel for its nuclear arsenal (formally disallowed under the agreement), it is equally the case that India was desperate for an alternative to its current coal-based fuel system, which is straining mightily under increased domestic energy demand and the continuing struggles of an industrial reform process. In Washington, analysts, experts and researchers tend to be somewhat ignorant of Indian domestic political interests and are more carefully attuned to issues surrounding nuclear weapons; as a result, they tend to overemphasize the weapons dimension of the agreement. Yet for India, this deal is just as much about energy as it is about weapons.
 

There are also some among US policymakers who continue to fret that the nuclear deal is one-sided, helping India but doing nothing for the United States. In July, the Wall Street Journal carried an article in which Jeremy Kahn pointed out that the state-owned energy firms from Russia and France have already gotten the jump on their American competitors in the Indian nuclear power plant boom. “This is despite the fact that the US paved the way for this $100 billion business bonanza in the first place, when the Bush administration junked 30 years of non-proliferation policy and inked a deal with New Delhi that would allow India to import nuclear technology and fuel, even though India had refused to sign the Non-Proliferation Treaty (one of only four nations to do so) and thumbed its nose at Washington by testing nuclear devices in 1974 and again in 1998.”

Kahn obviously does not believe the deal was a smart move, but opines that the Bush administration had its own reasons for allowing India this privilege. First, Kahn argues, was the China factor: “The Bush administration saw India as a natural counterweight to China’s expanding power in Asia and thought a closer relationship with Delhi might help the US keep Beijing in check. The Bush administration also saw India as an ally in ‘the global war on terror’ - and allies were to be rewarded.” 
 

The second reason for the deal, Kahn says, was the global warming issue. Since India is massively short of electrical power, India will need to build a large number of power plants to provide electricity to the hundreds of millions who do not have electricity and the growing population. Washington thought, as Kahn says, that this electricity should be generated from less-pollutant nuclear power rather than from air-fouling coal.  
 

Kahn points out that some officials in the Obama administration are now insisting that India provide written assurances that sensitive nuclear technologies will not be passed on to foreign governments or third parties. For their part, American companies have been reluctant to get into the Indian market until India signs on to an international convention that will limit the liability of power companies for nuclear accidents. Indian lawmakers are balking at doing so. 
 

Then, there are some analysts and legislators, among others, who point out that there remain substantial risks for both the US and its allies in pursuing the nuclear alliance with India. The first is a possibility of proliferation to other countries, as was the case in Pakistan with AQ Khan’s proliferation network. Given the level of corruption in the Indian state, such a possibility cannot be discounted, they say. The second risk is a growing nuclear arms race in South Asia. In October 2008, in clear and direct response to the US-India nuclear deal, China announced an agreement to provide two new nuclear reactors to Pakistan, thus raising the nuclear stakes in South Asia. 
 

Finally, there is the prospect of unintended blowback from the inspection regime. If India is “caught out” using allegedly civilian nuclear technology or materiel for military use, the politics of enforcement would become difficult, these critics say. An attempt to enforce punishment for violations would wound Indian national pride, which is a particularly significant driver of Indian national policy. In and of itself, an inspection or monitoring regime is seen as provocative by many hard-line Indian nationalists.  
 

The China Factor

Behind the three issues - naval cooperation, economic cooperation and nuclear power and nonproliferation - that are the principal anchors on which US-India cooperation is being built, looms the unmistakable shadow of China - inside the mind of Washington. Efforts are made in Washington, as well as in New Delhi, to prevent that shadow from showing. Still trapped in the 20th century geopolitical mindset of the British empire-builders and fortified by Kissingerian balance of power tenets, the US-India relationship is being strengthened in order to counter an increasingly powerful China.  
 

The US National Intelligence Strategy (NIS) - compiled every four years - issued on Sept. 15, named emerging superpower China and former Cold War foe Russia alongside Iran and North Korea on a list of the four main nations challenging American interests. In another report outlining the major priorities for the US intelligence community, China was singled out for its “increasing natural resource-focused diplomacy and military modernization.” 
 

On Sept. 9, James Dunnigan, writing in the Strategy Page, pointed out that last year the US revealed what the American Navy EP-3 electronic reconnaissance aircraft was spying on, when it was clipped by a Chinese fighter in early 2001. The target was the new naval base China is building in the south. Three years ago, commercial satellite photos began to show details of a new naval base under construction at Yulin, near Sanya, on the southern island of Hainan (near Vietnam). The base has underground docking facilities for nuclear and diesel-electric subs and surface ships, created by tunneling into coastal hills.
 

Rumours of such a base have been circulating for six years, apparently since locals began noticing the construction activity and tight security around the site. The underground facilities not only protect the boats from air or sea-based attack, but enable maintenance and modifications to be done in secret. Apparently back in 2001, the US Navy believed there were enough electronic emissions coming from the construction site to justify sending an EP-3.
 

Washington’s suspicion about Chinese strategy in the region, however, does not mean that the United States wants to antagonize China at this point in time. On the contrary, during the Bush administration, fallout from the global economic crisis became the window of strategic opportunity for the US and China to secure a peaceful, beneficial co-existence, some analysts in Washington point out. President Obama’s decision to send Hillary Clinton to China on her first visit as Secretary of State augurs well not only for US-China relations, but for Sri Lanka and other South Asian countries, these analysts claim.
 

Though China’s “string of pearls” strategy, as it was called in a report titled “Energy Futures in Asia” prepared by Booze Allen Hamilton for the Pentagon in 2005, is ostensibly to secure China’s foreign oil and trade routes so critical for peaceful development, it was seen in an altogether different light in Washington. “String of pearls” extends from the Coast of Hainan in China through the littorals of the South China Sea, the Straits of Malacca, and across the Indian Ocean to the littorals of the Arabian Sea and Persian Gulf.
 

According to the Heritage Foundation’s Lisa Curtis, while on the surface Indian-Chinese relations appear to be improving (trade has increased eightfold in the last six years to almost $40 billion), both sides harbour deep suspicions of the other’s strategic intentions. Signs of their deep-seated disagreements have begun to surface over the last two years, and it is likely such friction will continue, given their unsettled borders, China’s interest in consolidating its hold on Tibet and India’s expanding influence in Asia. China has moved slowly on border talks and conducted several incursions into the Indian states of Sikkim and Arunachal Pradesh since January 2008.
 

Curtis points out that some Indian analysts believe China is pursuing a two-pronged strategy of lulling New Delhi into complacency with greater economic interaction while taking steps to encircle India and undermine its security. China is strengthening ties to its traditional ally, Pakistan, and slowly gaining influence with other South Asian states. Beijing is developing strategic port facilities in Sittwe, Myanmar; Chittagong, Bangladesh; Hambantota, Sri Lanka; and Gwadar, Pakistan, in order to protect sea lanes and ensure uninterrupted energy supplies.  China also uses military and other kinds of assistance to court these nations, especially when India and other Western states attempt to use their assistance programs to encourage respect for human rights and democracy, Curtis pointed out.
 

In US–India Relations: The China Factor (Heritage Foundation, November 2008), Curtis refers to India’s difficulties with China in resolving the border dispute and Chinese suspicions about India’s role vis-à-vis the Tibet issue. She points out that China’s increasing assertiveness over the past two years has led to a near freeze on border talks. The 12th round of special-representative talks in mid-September in Beijing ended without any specific agreements, and with both sides merely stating they would fulfill the guidelines of their leaders and negotiate a “fair and reasonable” solution.
 

Moreover, the Chinese have recently toughened their position by insisting that Tawang district - a pilgrimage site for Tibetans in Arunachal Pradesh - be ceded to China. India refused and reiterated its position that any areas with settled populations would be excluded from territorial exchanges. In what could be an attempt to pressure the Indians on the issue, the Chinese have been strengthening their military infrastructure along the border and establishing a network of road, rail, and air links in the region, Curtis notes. Beijing also stirred controversy in May 2007 when it denied an entry visa to an officer of the Indian Administrative Service (IAS) from the state of Arunachal Pradesh on the ground that he was from territory the Chinese officially recognize as their own. India cancelled the visit of the entire group of more than a hundred IAS officers to China for a training program.  
 

Is Curtis involved in stirring up trouble between India and China? Even if that is what one concludes, there is no doubt that she reflects a strong undercurrent of thought among a section of policymakers in Washington. In this view, under the circumstances, the United States should:
    

- Continue to build strong, strategic ties to India by encouraging India to play a more active political and economic role in the region. To help India fulfill that role, Washington should continue to seek a robust military-to-military relationship with New Delhi and enhance defense trade ties. Washington should also develop an Asian dialogue with India to discuss developments in the broader Asia region more formally and regularly.

- Encourage India’s permanent involvement in value-based strategic initiatives like the US-Japan-Australia trilateral dialogue. Former Japanese Prime Minister Shinzo Abe had proposed that Japan, India, Australia and the US formalize a four-way strategic dialogue. Indian-Japanese relations have been strengthening in recent years, as demonstrated by Prime Minister Singh’s late October visit to Japan, where he signed a joint declaration on security cooperation and accepted a $4 billion Japanese loan commitment for infrastructure projects in India. The security agreement was the third such pact Japan has ever signed, including one with the US and one with Australia.

- Collaborate more closely with India on initiatives that strengthen economic development and democratic trends in the region and work with India to counter any Chinese moves that could potentially undermine such trends in order to ensure the peaceful, democratic development of South Asia and Southeast Asia. The US should, for example, encourage India’s role in helping Afghanistan develop into a stable democracy by encouraging Indian assistance to strengthen democratic institutions there, deepen US-Indian exchanges on developments in Afghanistan and ensure that India has a role in any regional efforts to stabilize the country.

- Help India strengthen its cooperative activities with the International Energy Agency to coordinate response mechanisms in the event of an oil emergency. The US has a major stake in how India copes with its increasing energy demand and how it pursues competition with China for energy resources. The US should work closely with India as it develops its strategic oil reserves to ensure that the major energy-consuming countries are prepared to cooperate to resolve any potential global energy crises.

- Avoid any potential India-China military conflict over unresolved border issues given the US interest in ensuring stability in the region. Washington should watch their ongoing border talks closely without trying to mediate. The two sides are unlikely to reach any breakthroughs in their discussions in the near future, but Washington should remain watchful for any signs that tensions are ratcheting upward.
 

Conclusion

What is becoming increasingly evident is that in developing and strengthening its relations with India, Washington has a definite strategic interest. However, there is no indication as of now that the Obama administration will fully embrace the present opportunities or strive to expand them. At the same time, it is likely that cooperation between the two nations in those areas where they share a common strategic interest will progress rather smoothly.
 

Where the problem in pursuing a common goal might crop up in the future is on the question of priorities. For instance, in pursuing joint naval cooperation, India’s objective, as often articulated by New Delhi, is not to antagonize any other nation in any form or manner - China, in particular. But, in the coming years, if the United States becomes more suspicious about China’s “string of pearls” policy, India’s non-antagonistic stance may become a serious political issue in India, challenging such joint cooperation between India and the US.  
 

In the area of close economic and environment-related area cooperation, India will find the United States’ interests are in certain cases in direct conflict with New Delhi’s. Take the ongoing discussion on man-made carbon emission as the chief cause of so-called global warming, for instance. Apart from the weak scientific validity of this claim, India cannot afford to agree to it. Taking that proposition seriously would impede the country’s efforts to ease poverty and improve the living conditions of its citizens. Already, India has made it clear that the terms and conditions pursued by the developed countries on the carbon emission issue, and the basis on which an international conference is scheduled to be held in Copenhagen in December, are plainly unacceptable to New Delhi. It is possible, but not by any means certain at this point in time, that Washington, for one, will relent to this demand.
 

Then there are other issues. Now engaged in a very difficult conflict in Afghanistan, Washington wants Pakistan to focus its military entirely toward Afghanistan and help the US in the process. There is a strong lobby in Washington that continues to echo the Pakistani military’s “fears” that unless the eastern border with India is secured, which means the six-decades-old Kashmir dispute-related conflict with India is permanently resolved, the Pakistani military cannot afford to turn its full attention to its western border with Afghanistan. Whether that is a ruse or not, the fact remains that in 1972 the heads of state of both India and Pakistan signed a written agreement that henceforth “all bilateral disputes” will be resolved through “bilateral negotiations.” Neither Washington nor any other nation is at all welcome to address these bilateral disputes, as India has insisted ever since.
 

During the previous administration’s reign in Washington, the Kashmir issue was not forgotten, but kept under wraps. Occasional noises were heard during those days of the nuclear war threat that the dispute poses because of the nuclear weaponization of both India and Pakistan. But Washington chose not to antagonize India by trying to pose as a mediator of the Kashmir dispute. But since then, the war in Afghanistan has gotten nastier, and Washington is desperately seeking help from every quarter to prevent the humiliation of a military defeat and the resulting strengthening of various militant outfits gunning for the US. 


The Obama administration’s hasty announcement of its so-called “Af-Pak” policy - combining two areas of instability into one great theatre of instability - attests to the desperation. Accordingly, in the coming months and years, Washington can be expected to pay more attention to Pakistan’s views on the region, and that may include entertaining once again the Pakistani establishment’s demand that the eastern borders of Pakistan be made “peaceful’ through resolution of the Kashmir dispute. 

 
The author is South Asian Analyst at Executive Intelligence Review News Services Inc.