Afghanistan, Barack Obama, China, Civil Liability for Nuclear Damage Act, CLNDA, economy, India, Indo-US nuclear deal, intellectual property rights, Liquefied Natural Gas, LNG, Narendra Modi, nuclear, Pakistan, Richard Verma, taxation, United States
Narendra Modi’s meeting with Barack Obama at the end of this month after addressing a session of the United Nations General Assembly will close a most eventful month in Indian foreign policy. The beginning of September found the Indian prime minister in Japan, where he secured $34 billion in investments from Shinzo Abe; Chinese premier Xi Jinping’s recent visit secured another $20 billion in MoUs though the Chinese pointedly boasted about making deals worth five times that amount; Modi’s visit to the United States will end a flurry of diplomatic activity that has involved the three most significant countries to India.
Before the general elections, there was much speculation that Modi would shun the United States in favour of closer ties with his own neighbourhood. It was rumoured that this was partially due to a personal grudge over the US denial of a visa to him in 2005. However, the Indian prime minister has received overtures from the United States with unexpected warmth without ignoring India’s relations with its own region. Now, over five days, Prime Minister Modi will address the UNGA, meet with several members of the US Senate and House of Representatives, and end his trip with two days of discussions with President Obama.
Recent hiccoughs in the India-US romance have caused many to question the commitment of the other side; the Obama administration is seen by many Indians as relegating relations with the world’s most chaotic democracy to the doldrums after its heyday during the George W Bush White House, while Washington feels insufficiently acknowledged for bringing India in from the nuclear cold and opening its defence market to the country. It is hoped that Modi’s meeting with Obama will be able to smoothe ruffled feathers of bureaucrats and politicians at home as well as abroad.
If previous behaviour is any indication, the Indian premier will focus primarily on economics; Modi will raise the issue of work permits for Indians (H1 visa), seek US investment in India’s infrastructure, and invite assistance in improving his country’s manufacturing potential. Admittedly, there are quite a few disagreements between the two estranged democracies as the WTO deal proved last month. The challenge will be for both countries to take stock of the other’s position ideologically and politically as well as recognise the different stages of development, prosperity, and demographics the two find themselves in.
The United States has recently expressed willingness to begin joint defence production with India and doing so would allow Delhi to join the lucrative global armaments supply chain. The technology transfer and manufacturing experience would boost its own production as well as introduce India’s services in upgrades and maintenance to the world’s armed forces. With Modi Sarkar contemplating an entry into the arms trade, defence manufacturing would be a strategic investment.
For the United States, who has been eager to see India take up a greater role in Afghanistan, the sale of Indian weapons to Kabul is much desired. It will balance the influence of Beijing and Moscow on Kabul as well as help keep the Taliban at bay. Washington must have by now accepted the idea of Indian boots on the ground as unrealistic and providing material, training, and intelligence support to Afghanistan will have to suffice. There is a silver lining to this arrangement – Foggy Bottom’s naughty little friends in Islamabad will have less to be paranoid about than if they saw Indian troops on two fronts.
There are more economic disagreements between India and the United States than is sexy for the press to cover. India’s tax system, intellectual property, US labour laws, pharmaceutical testing, immigration, the WTO, and protectionist trade barriers are just a few of the concerns businessmen in both countries have. The recent nomination of Richard Verma as the US ambassador to India is a welcome move and if confirmed, Verma will have his hands full with economics rather than his specialties, non-proliferation and national security. Interestingly, defence cooperation, which was only a couple of years ago seen as the benchmark of good relations, will be important but less meaningful than the economic agenda.
Another item of interest to India is LNG exports from the United States. With increasing troubles in the Middle East and several of India’s assets in Syria, Iraq, and Sudan overrun by strife, Delhi is looking to diversify its purchases. Iran is not yet a viable option and pipelines from Central Asia would have to either connect to Chabahar via India’s much vaunted but as yet incomplete International North-South Trade Corridor or pass through the hostile territories of China or Pakistan. Until Chabahar and the INSTC is operationalised, the United States is the best medium-term option for energy. Presently, US gas is available only to countries with which the United States had a Free Trade Agreement. The Gas Authority of India (GAIL) received a special dispensation three years ago but Indian business is hoping Modi can persuade the US to issue a complete waiver.
Perhaps the single greatest issue for the United States during these talks will be the operationalisation of the nuclear deal. Unlike boring trade talk on solar panels, textiles, farm quotas, subsidies, or insurance sector reforms, India’s nuclear industry is not just a big-ticket item and public symbol but also an enormous business opportunity. Talks with Delhi have so far been lifeless on six Westinghouse reactors for Chhaya Mithi Virdhi and another six reactors from General Electric for Kovvada due to India’s unconventional nuclear liability law that holds reactor suppliers as liable as operators.
An agreement on nuclear energy will have tremendous multiplier effect – not only will it spur industrial growth and domestic personal consumption but the chances of a nuclear agreement seeing some aspects of the manufacturing supply chain move to India are high. The deal will also put pressure on Japan for a quick agreement on nuclear cooperation with India as both Westinghouse and GE are partnered with Toshiba and Hitachi.
The disappointed editorials in newspapers and blogs in India and the United States betray a palpable impatience for relations between India and the United States to improve rapidly. For the United States, a close ally in India renews the global order of Western-style liberal democracy; for India, the US economy is the quickest path to development and prosperity. After decades of Nehruvian economics, a young and aspirational India no longer has the patience to wait for state-planned growth.
However, Delhi has no intention of becoming another USS England; India has its own interests, which do not always align with those of the United States, processes by which it will do things, and a domestic audience which it has to keep placated. At best, Washington can expect India to be another France – difficult and exasperating, but an ally nonetheless. Similarly, India will have difficulty in convincing Foggy Bottom of setting Pakistan adrift; this will affect not just Kashmir and the South Asian nuclear balance of terror but also Afghanistan.
Both countries will occasionally be perturbed by the other’s positions on global events. Yet these disagreements need not derail relations every time if handled maturely and some notion of sphere of influence is respected. The most important thing the two nations can do to bring themselves closer is boost contact through trade, education, tourism, governmental official exchange programmes, or even regular joint military exercises. Indians and Americans must get to know each other beyond the occasional and sensational headline in the newspapers and on the television. Modi’s focus in his foreign policy dealings so far has been just that – trade as the foundation of cooperation and friendship. If that can be achieved, it may just be the beginning of a beautiful relationship.