India is an equal
partner in economic relationship with America
AS: Since signing of the Indo-US Civil Nuclear deal in 2006, one finds perceptible changes in the bilateral relationship between the two democracies. How would you like to assess today the level of mutual trust and confidence between these two countries?
SP: U.S.-India economic relations are very strong and getting stronger. We are seeing more trade between the two nations (accounting for the recession) than we have ever seen. As global investors are taking note of the fact that the Indian economy has been booming, in spite of a global recession, more leaders in America are realizing the value of building stronger business ties with India.
Politically, there is a lot of positive momentum between the two nations; but there have been a few hiccups along the way. India was honored to be the first nation invited for an official state dinner and has extended the same courtesy by hosting President Obama. A lot of thought goes into the selection process for events like this. So there is good will on both sides to move things forward. The new H1-B rules have some in India concerned and offended. But at the highest levels, both nations realize that they share the same strong democratic values and that has helped build a strong level of mutual trust and confidence between the two.
AS: "Our relations with India are at the highest of priorities for my administration and for me personally as president of the United States,'' Obama said in his speech at the reception for the U.S.-India Strategic Dialogue in Washington this June. India is a rising power and a responsible global power, he said viewing the U.S.-India relationship as "a defining partnership of the 21st century". Few days back, on the eve of President Obama’s India visit early November, US is reportedly finalizing a US$ 2 billion military aid package for Pakistan. What message, do you think, this action would give to the peace loving democratic millions in India if the news turns to be true?
SP: The triangle of India-U.S-Pakistan relations has never been an easy one to analyze. I believe President Obama is sincere when he says that U.S.-India relations are at the top of his list of priorities. He has also backed those words up with actions by signing joint agreements in areas addressing everything from counterterrorism to global warming.
Relations between the U.S. and Pakistan have been particularly complex since 9/11 – and if you didn’t believe it before, then the Wikileaks documents proved that the U.S. knows it has enemies within ISI and the Pakistani military. But many leaders in America feel that it is better to engage Pakistan, than to isolate the nation. America is caught in a tough position in this regard.
If this military aid package comes through soon, and I expect it will, then I understand why the people of India would be concerned. The timing in relation to President Obama’s visit is certainly unfortunate. But, the people of India should not see this as a threat to them, rather a result of internal American politics and America’s hedge to get Pakistan to cooperate with NATO’s efforts in Afghanistan.
AS: Former Under Secretary of State for Political Affairs Nicholas Burns said the other day that Indo-US relationship is loosing steam and the Obama administration should take some bold steps to strengthen this partnership? Do you agree?
SP: I have a lot of respect for Secretary Burns. I think we need to look at his comments in context. He said, "(the) relationship has been losingsome energy and needs jolts of new ideas and new ambitions." While I would agree with the first part of his statement, I would focus on the second part of his statement – searching for new ideas and new ambitions in any relationship is a positive thing.
Mr. Burns believes that long-term the U.S. and India are destined to become strong partners, as he also added: “India is likely to be, if not the primary strategic partner of the United States globally going forward in the next 40 or 50 years, certainly one of the two or three most important.” He was saying that there’s some potential yet to be realized in this relationship and he would like to see it develop, but it won’t happen by itself.
That is absolutely true. What’s more, while Secretary Burns is directing his message towards American officials, it is every bit as much appropriate for Indian leaders. Both nations need to think outside the box for some new solutions to serious issues. In several areas, India and the United States can be the global dynamic duo when it comes to addressing shared challenges.
AS: A report "Natural Allies – A Blueprint for the Future of US-India Relations" co-authored by Burns, former Deputy Secretary of State Richard Armitage and Richard Fontaine, Senior Fellow at the Center for a New American Security, said that President Obama should endorse New Delhi's bid for Permanent Membership of the UN Security Council, remove ISRO from entities list and stop asking India join NPT as a non-nuclear state. Your comment please.
SP: I fully support India’s bid for permanent membership in the UNSC. I believe President Obama will very soon as well. But everything is on the back burner until America has their mid-term elections in November.
Some consideration needs to be paid to the fact that the original UNSC permanent seats were allocated based upon the results of World War II. The organization, by design, does not make significant changes without serious negotiations. A change like this is seen as a tectonic shift within the U.N. But it is a tectonic shift whose time has come.
The United States will support India’s bid, and I anticipate France and the U.K. will follow suit. China and Russia are big question marks in my mind and they have the ability to halt the process – therein lies the biggest variable.
Remember that ISRO was placed on the list as a punitive measure after the nuclear test at Pokhran. I think 12 years has been enough for American leaders to get over the surprise of the nuclear test and move on. I foresee President Obama announcing that ISRO will be removed from the entities “blacklist” during his visit or shortly thereafter.
No one can reasonably expect India to join the NPT as a non-nuclear state. The nuclear technology will be vital to their energy policy in the future and it serves as an important strategic element in their policy towards Pakistan and potentially China. In this case, the genie is out of the bottle, and for a good reason in India’s case. I fear that in the coming decades we will see non-friendly states acquiring more nuclear technology. This is where the U.S. should be focusing its efforts – on preventing the proliferation of nuclear technology to hostile nations.
AS: Do you think that in Pakistan where the Army appears to have a dominant voice in the policy and decision making of the government, the confidence building dialogue that both India and Pakistan governments are trying to build up over decades brick by brick would bring any tangible and meaningful results to end the J&K issue? This is not to suggest any interference by the US in resolving this bilateral issue but what role you think Obama administration can play at least to bring both the countries closer in real sense of the term?
SP: A peaceful resolution to the Jammu and Kashmir dispute would be in the interest of all parties (i.e. India, Pakistan and the people of Jammu & Kashmir). However, I do not think that the political will exists on any side for real progress at this time. I also do not believe that the United States has a prioritized strategic interest in seeing a resolution to this problem. Ultimately, this is going to be an issue that India, Pakistan and the people of Jammu and Kashmir need to address themselves.
AS: Would you be expecting any major policy announcements (by both India and the US governments) during Obama’s India visit?
SP: The Democrats, led by President Obama, are likely going to lose a number of Congressional seats in these midterm elections. The new look of Congress will be known mere days before President Obama’s visit. It will not be the right time for any major policy announcements. But, we will see a booster shot given to improved relations on counterterrorism, technology exchange and business cooperation. I do expect an announcement regarding India’s bid for a permanent seat on the UNSC, but this will likely come shortly after he returns to Washington.
AS: The US government, investors and others are talking about trade barriers that exist in India. What would be your suggestion to New Delhi to facilitate American investments in India? Would you be expecting any major announcement in this regard during President Obama’s India visit?
SP: Trade barriers between India and the U.S. are a very sensitive topic. India should rightfully look at some key sectors whose opening up might benefit them as well as the U.S. companies i.e. retail, insurance and defense while simultaneously ask the U.S. about its position on the movement of people i.e. IT skilled workers, outsourcing etc. India is an equal partner in this economic relationship.
AS: India is disheartened about Ohio state’s ban on “outsourcing”. Indian IT industry platform NASSCOM has reacted very sharply and said that “It is imperative that the focus on free trade remains strong, but instances like Senator Schumer’s Borders Security Bill and the Ohio State ban on outsourcing only reinforce our stand on discrimination.” Your view please.
SP: Both of these incidents are unfortunate. Senator Schumer chose to do what most politicians do with upcoming elections – take on the easy thing that wins you political points without understanding the long-term consequences for the nation or their state. As mentioned earlier, India is an equal partner and since President Obama is going to spend significant amount of time in Mumbai (i.e. 3 economic events), it will have an opportunity to bring up the Schumer bill that was signed by him.
This bill by nature is discriminatory towards India and India needs to say this clearly to President Obama. This cannot define the relationship; but this should not be swept under the rug since the economic resurgence of India began through its IT industry and there has to be a certain pride in protecting it..
Ohio’s actions were done for domestic consumption and were not targeting India. The Ohio State Legislature made this decision after outcry from a news story which revealed that the Texas-based firm Parago Inc., overseeing an $11-million federally-funded energy-efficient appliance rebate program, had outsourced the call handling and application processing work to a company in El Salvador. This was particularly disconcerting because this program is part of the economic stimulus plan, designed to help create American jobs. Critics of the stimulus program were using this as fodder to say that the stimulus is not working and is in fact funding jobs overseas at the expense of the American taxpayer.
I doubt we’ll see many other states following suit. On the contrary, I know that Mahindra Satyam just received a contract from the state of Kentucky to provide IT support for their Cabinet of Health and Family Services.
AS: "We're deepening our economic cooperation -- on finance and investment and the trade that creates jobs in both of our countries," Obama said in his speech at the reception for the US-India Strategic Dialogue. Do you think Ohio decision is contrary to what the country’s President is trying to convey?
SP: The messages may be contradictory, but they are not coming from the same source. Remember that Ohio does not speak for the nation.
That is one great thing about the United States – a single state can take a position like that if that state chooses. Meanwhile, the White House can have its own policies and encourage those at the federal level.
AS: China is replacing US as the largest trade partner. Do you think the US needs to change its trade policy towards India or it is because of India opening up its market slowly that Indo-US trade is not expanding the expected way? Or both?
SP: China has the advantage of being in close proximity to India and also being an export-driven economy. The U.S.-India trade relationship has lost some steam because a large part of the big ticket items were aviation (Boeing) and during the economic recession not too many airlines were buying planes. But expect that to change soon since the airlines now are placing new orders.
Also, the U.S. companies are more skeptical about India now having been there for some time due to the challenges of the bureaucracy, shifting rules and regulations. It is a very difficult environment for them to deal with i.e. without a local partner.
On the India side, they are making giant strides in the Middle East, Africa, Europe and also in some instances the U.S. I expect the volume of trade to grow, but gradually, for a number of reasons.
AS: Last but not least. The EU Trade Commissioner had said that Doha would be the litmus test for India's leadership in trade negotiations. Agriculture being the mainstay, what role you would be expecting of India as leader of developing nations' block at WTO?
SP: I don’t see much hope for progress on this front. It seems as though the U.S. has made up its mind that agricultural subsidies will remain in place. Meanwhile India and other nations, such as China, are going to continue to lobby hard for some changes in this area. It’s interesting to see this however, when you consider that agriculture only makes up 1.2% of America’s GDP while it makes up 17% in India. And yet America puts so much of its weight behind this sector of its economy.
November 5, 2010