Thursday, October 17, 2013

From Romance to Realism in U.S.-India Ties

Doubts about the U.S.-India relationship abound. But the strategic logic is solid

Blink and you might have missed the U.S.-India summit earlier this month. Sitting in the Oval Office, Indian Prime Minister Manmohan Singh watched as U.S. President Barack Obama began his remarks – by talking about Syria. Later that day, the president reappeared before the press, not to tout a burgeoning partnership with New Delhi but rather to announce his telephone diplomacy with Iran and to press Congress ahead of the government shutdown.

It was an inauspicious last visit to Washington for the Indian prime minister, who will likely relinquish his post no matter which party wins parliamentary elections next spring. But it highlighted the nature of ties between the United States and India. Those relations, which are still undergirded by compelling strategic logic, have visibly evolved from romance to realism.

Romance quickened the pace of progress for a number of years. Beginning in the Clinton administration, there emerged a desire in both India and the United States to put aside decades of mutual distrust and divergent Cold War sympathies in favor of warming ties between the world’s oldest and largest democracies. The Bush administration oversaw a revolution in relations with India, carving out an exception for India in global nonproliferation rules and paving the way for international recognition of the country’s anomalous nuclear status. Military to military ties increased, trade expanded, and Indian leaders spoke of America as a “natural ally.” Obama the endorsed India’s permanent membership in the U.N. Security Council, relaxed export controls that impacted Indian entities, and restarted bilateral investment talks.

And yet, as the quiet Singh visit demonstrated, there remains today a sense that relations between the United States and India have reached a plateau, with high-level meetings producing few “deliverables” and even fewer big ideas to propel ties forward. More serious still, both Washington and New Delhi express deep-seated doubts, not only about the nature of bilateral ties but also the trajectory of Indian and American power.

Consider first American doubts about India.

Until quite recently, high economic growth rates were moving millions of Indians into the middle class, attracting foreign investment from the United States and around the world, and giving the country heft in the G20 and other economic forums. Indian leaders expressed profound confidence in their economic model, and drew a none-too-subtle distinction with China’s brand of export-led state capitalism. Yet as the economic reforms Singh helped midwife as finance minister in the early 1990s ran their course, the Indian political system has proved unable to generate successive rounds that would unleash further growth. The result has been a plunge in the rate of expansion; growth this year has slowed to four percent, less than half the rate in 2011. The rupee has lost value as well, putting upward pressure on the prices of imported goods.

The result is that American policymakers have begun to express misgivings about the economic engine of Indian power. At the same time, economic differences, rather than convergences, have characterized bilateral engagement in recent months. In the run-up to the Singh visit, a number of American businesses took out advertisements and lobbied Capitol Hill to call for “fair trade” with India and criticized India’s “buy local” rules, caps on foreign investment, inconsistent treatment of foreign patents and insufficient protection of intellectual property. Bilateral investment treaty negotiations have stalled and negotiators have not met since last year.

The “big idea” in U.S.-India relations for several years was the civil nuclear cooperation agreement. That agreement, hammered out between the Singh government and the Bush administration, was to pave the way for India to rely on American technology for its civilian nuclear reactors and would bring India into the global nonproliferation fold. Then the Indian parliament passed a liability law that would hold the suppliers of nuclear technology and materials liable for decades. The result was that for five years after the agreement was signed no American companies did business in India’s civil nuclear sector. The Singh visit to Washington coincided with a deal in which Westinghouse would supply nuclear reactors in Gujarat, but it remains to be seen whether this is a one-off arrangement or will lead to further American investments in Indian nuclear power. The Diplomat

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