India Is Elsewhere

Local columnists may squirm, but then it comes as no surprise that US President Barack Obama didn’t mention India even once in his State of the Union address on 20 January, just five days before his visit to New Delhi. He is not known to be pro-India, though he has tirelessly quoted Mahatma Gandhi, India’s Father of the Nation and an inspiration for the African-American civil rights movement that opened the way to the White House for Obama. Interestingly, in his high-wattage speech, he referred to Cuba five times, China thrice, Russia twice, Putin and Pakistan once.

Questions linger: is Obama, the first US president to be chief guest at India’s pompous Republic Day parade, content staying cold to India’s security needs and more committed to doling out trade concessions to an aggressive China and associating with the failing state of Pakistan— in the name of global trad e and the war on terror? Is this visit low on substance? Was he, thanks to this visit, hoping to placate India over his establishment’s grand overtures to China and Pakistan? Can all that swagger, spin and lavish praise of India’s flawed but vibrant democracy hoodwink the Indian leadership?

Michael Kugelman, senior program associate for South and Southeast Asia at Woodrow Wilson International Center for Scholars, concedes that Obama is not perceived as pro-India as was his predecessor, George W Bush. Since Obama took ownership of the Afghanistan War, his chief policy priority for South Asia has been Afghanistan and by extension Pakistan. India has drifted, for sure, he says. “But Obama is nonetheless a big supporter of a strong US- India relationship, and I imagine he will make a big pitch on the [nuclear] liability issue. And on this, he would find much support in the Republican-controlled US Congress,” Kugelman notes, adding that the Indian perception of Obama may be a misplaced characterisation.

Scholars like Kugelman are also preoccupied with history. The India-US relationship has come a very long way since the Cold War era, when the countries didn’t talk to each other, he says. “Of course, there is still a lot of baggage and tensions, as the Khobragade affair made crystal clear. Despite all the shared interests and values, this is a relationship that is plagued by multiple policy divisions— from views of Russia to accusations of protectionism to disagreements about global climate change negotiations. And these won’t magically go away, despite all the happy talk we may hear during Obama’s visit,” he says.

That said, he avers that there’s much reason to be hopeful about the future. “First, the US combat troop withdrawal from Afghanistan means that Washington won’t be as fixated on the Afghanistan-Pakistan front, which presents opportunities for deepening engagement with India. Second, Washington is talking more and more about completing its rebalance [of approach] to Asia. This is a policy that envisions a strong Indian role—from serving as a counterbalance to China to working with Washington to boost economic partnerships in Pacific Asia,” Kugelman declares.

Of course, there are positives. Vivek Lall, former chief of defence at Reliance Industries Ltd who is now CEO, commercial strategic development, at the San Diego- based defence contractor General Atomics, says opportunities for the “deepening of engagement” between India and the US have been put in place by the leadership of Narendra Modi. Lall, who has often talked about an ‘India fatigue’ among US companies while the UPA was in power, says that there is now a “significant change” in the mood and perception of the ability to conceive and execute plans jointly. “This is because a climate for businesses to succeed is being worked upon at a policy level [in India],” he says.

The US may be on friendly terms with China and Pakistan against New Delhi’s wishes, but Washington is certainly pursuing greater trade and military cooperation with India. There is now a strong connection between businesses in India and the US that had been lacking earlier, says Richard M Rossow, Wadhwani Chair in US India Policy Studies at The Center for Strategic and International Studies, Washington DC. Adds he: “Apart from strengthening long-term bonds, there appears to be a strong set of possible deliverables for the visit, ranging from defence deals, defence co-development and co- production projects, resolving the civilian nuclear liability issue, greater US infrastructure investment in India, and cooperation across a range of environmental issues, at the very least.”

Rossow contends that even if some of these agreements are not ready to be announced during Obama’s visit, such frequent engagement by the two leaders puts pressure on officials of both sides to sustain a robust dialogue in the interim. “The leaders set the vision, and their senior teams then hammer out the details,” he says.

To be fair to the US, India’s tough nuclear liability law has scared even an otherwise phlegmatic Russia, and no defence contractor would like to set up base in India unless some of the guidelines are tweaked by striking a balance between making concessions to Washington and deferring to domestic political and economic factors that make large-scale changes in the liability rules unlikely. Which is why Kugelman feels that the upshot of this presidential visit could be a small agreement that benefits a single American company, in the spirit of a deal that Obama signed with Manmohan Singh a few years ago that helped Westinghouse. “I think we can best expect incremental progress here, nothing game-changing,” he offers. He adds that the liability issue has been one of Washington’s chief ‘asks’ ever since the Indo-US Nuclear Deal was finalised more than five years ago. He admits that all of this is a sensitive issue for New Delhi, given the legacy of Bhopal, which looms so large in this context.

“At the same time, if India wants to demonstrate to Washington that it really wants to take the relationship to a new level—and give American companies more of a chance to compete with [nuclear suppliers] from France and other friends of India—then it will need to give a bit more than it has in previous years,” he says.

It was in 2014 that the Contact Group—comprising stakeholders from nuclear industries from both sides such as India’s Nuclear Power Corporation of India and the US’s Westinghouse and GE-Hitachi—was created to find a solution to the civilian nuclear liability issue that has, so far, precluded American involvement in India’s nuclear power sector. The deadlock is over the Civil Liability for Nuclear Damage Act, 2010, which contains a speedy compensation mechanism for victims of a nuclear accident. The group has already held two rounds of talks on several issues including plans to set up US-designed nuclear power plants in India.

Rossow, who has watched this scenario unfold, notes that without a single obvious solution to the liability issue, apart from the extremely difficult path of amending the Act of 2010, the Contact Group will have to be creative while keeping in mind the fact that a solution must be commercially viable.

According to Union Defence Ministry officials and various reports, India and the US are seeking greater momentum on the Defence Trade and Technology Initiative (DTTI), which promotes collaboration on defence technology and enables co-production and co-development of critical defence systems. The Contact Group is also working on the modalities of joint production of drones and transport planes. According to a Reuters report, officials from both sides are looking at executing two pilot projects, one involving unmanned aerial vehicles (UAVs) and the other involving systems for the C-130 military transport aircraft built by Lockheed Martin Corp. The transport plane project involves the manufacturing of roll-on, roll-off modules that allow C-130s to be used for surveillance and as VIP transport, or for hospitals, as Reuters quoted an industry source as saying. “The primary aim here is to iron out contentious issues in the seven-year-old Indo-US civil nuclear deal,” a Defence Ministry official tells Open.

The two sides are also expected to discuss the global entry programme, meant to expedite the entry of Indian travellers to the US and thus boost to commerce between the two countries. A key agreement that is expected to be signed, reports suggest, is counter terror cooperation on dealing with improvised explosive devices. A slew of projects are also expected in collaborative efforts between the two countries, especially in the infrastructure sector—which will cover Modi’s pet ‘smart city’ programme—and in renewable energy.

With such negotiations on, according to the Washington-based lawyer and India expert Robert Metzger, the Obama visit will be more accomplished than mere atmospherics. “While the Modi Government was formed less than a year ago, it already has accomplished a transformation in expectations. US companies see improved prospects for doing business successfully in India. The US government recognises the central importance of India to security in South Asia and beyond,” he says, emphasising that he expects a number of agreements to be announced during President Obama’s visit. These, he says, will cover a variety of commercial, technological and security subject areas. “No single agreement will redefine the bilateral relationship. But collectively they will signal stronger bonds between these two great democracies. These agreements likely will signal expanded trade, technology transfer and defense cooperation over the next several years. A renewed Defence Framework Agreement will be an important accomplishment. We also may see concrete progress in the Defence Trade and Technology Initiative that envisions cooperation in development and production of new military systems optimised for India’s specific security needs,” elaborates the India expert.

Still, all agree that it is unwise to expect Obama to take initiatives with India that depend on the US Congress making changes to the American statute.

Says Metzger: “Even before Republicans took over both houses of Congress, cooperation between the President and the Congress was poor. However, President Obama has shown that he is willing to press his executive powers to accomplish without legislation what some in Congress think can be done only by legislation. He may similarly wield his presidential authority to achieve the desired results with India.”

The rough edges in Indo-US ties will endure, though, especially with India disappointed over the US inability to stop Pakistan’s covert nuclear operations. Metzger feels that the relationship will remain characterised as one that combines a broad canvas of opportunity with areas of frustration and uncertainty. “Between such powers, it is natural that there will be areas of coherence and those of tension or even contention. Both countries should be guided by recognition of shared core values and common objectives. There are many such credits on this positive side of the ledger. The goal should be to execute on mutually beneficial opportunities while working to understand differences and narrow gaps. Patience is required,” he states. The US industry will need to establish long-term partnerships with India’s emerging defence private sector; at the same time, India needs to make its Defence Procurement Procedure and offset requirements more businesslike and avoid the kind of rigidity that risks paralysis or project failure, he adds.

Meanwhile, many Indian analysts have suggested that the US under Obama has been straying from its key objectives by trying to warm up to China—bilateral trade in goods and services between China and the US is more than six times that of India and the US. Rossow admits that there are increasing concerns about China’s aggressive maritime posture. “The US’s strongest ally in Asia, Japan, feels a very direct form of pressure. China will continue to rise in the coming decades, and it is in all of our interests to encourage a peaceful, prosperous rise that benefits the region,” he says. However, he adds, pushing China into a purely confrontational mode should be avoided, though the US must remain vigilant and prepared for future contingencies.

As for the argument that US Secretary of State John Kerry’s recent visit to Pakistan was high on hype and low on substance, he says, “It is unclear what messages were privately conveyed. Publicly, Secretary Kerry showed support for the Pakistan military’s major campaign in Waziristan, which is considered a likely trigger for the horrific school killings in Peshawar in December. The military campaign in Waziristan is quite real, and the US Department of Defense notes that it has slowed cross- border attacks into Afghanistan. This is in both America and India’s interest as two large external stakeholders in Afghanistan, realising India has a stronger near-term interest in cutting cross-border terrorism on its own border with Pakistan.”

Kugelman offers a contrarian take. He says one needs to be realistic about what the US can and cannot do when it comes to Pakistan. “The US may provide billions in aid to Pakistan, but this hasn’t given it the leverage to get it to do what Washington may want it to do. And this pertains to the full gamut of Pakistan’s nuclear programme—from the power plant issue to the alarming increase in the number of its nuclear weapons. In reality, there is little the US can do about these things. And the few countries that do have the leverage—namely China and Saudi Arabia—are disinclined to push Pakistan on these nuclear matters, given how close they are to Pakistan.” Contends the Defence Ministry official: “[Kugelman’s argument on US limitations] may be true, but doling out more aid to Pakistan cannot be compensated for by a symbolic visit to India.”

Indeed, India and the US have gone a long way from the Cold War years of the last century: from foes to friends. But friendships should also mean more benefits and greater cooperation. Obama’s pitch in his State of the Union address for favourable tax codes for Americans in international trade is proof of his opposition to efforts on the part of countries like India to protect local industries. In his speech, he also warned that he will close loopholes that reward companies that keep profits abroad, and reward those that invest in America. Which means he continues to underestimate the strength of the US economy to efficiently employ resources both domestically and from around the world.

That could scare off potential investors keen on responding to Prime Minister Modi’s aggressive ‘Make in India’ initiative aimed at reviving India’s ailing manufacturing sector. Which only means that ties between the world’s two big democracies are destined to improve, but despite the US president.

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