The honeymoon between the US and India seems to be over. But there’s plenty that both sides can do to get things back on track.
Perhaps not surprisingly, the US-India partnership is losing momentum under President Barack Obama’s stewardship.
Fortifying the alliance was always bound to be a secondary priority for any administration faced with a recession, a flagging war effort in Afghanistan, political stalemate in Iraq, stalled Middle East peace efforts, defiant pariah regimes in Iran and North Korea, and strategic tensions with China. Still, allowing the partnership to falter appears to have come easier to a president who never quite displayed George W. Bush’s zeal for Indian-American ties.
Of course it isn’t just the US that’s at fault—problems also exist on the Indian side as New Delhi has itself fallen into a form of post-honeymoon malaise, as the phase of grand political gestures gives way to tough technical negotiations. But rather than mitigate the downside of this difficult period, the Obama administration is pursuing an agenda that further complicates it. In doing so, it risks some of the tremendous gains made in US-India relations over the past decade.
In some ways, Obama is less guilty of undercutting the foundations of the US-India partnership than he is of failing to meet expectations. Indeed, to its credit, the administration has gone out of its way to stress the importance of the bilateral relationship, praising India as an ‘indispensable partner.’ In June, Undersecretary of State William Burns reaffirmed that the US government was ‘deeply committed to supporting India’s rise and to building the strongest possible partnership between us.’
The remarks came on the eve of the inaugural Strategic Dialogue between the United States and India, a bilateral, top-level dialogue initiated by President Obama to pull India toward diplomatic parity with China. During the same speech, Burns moved the US closer than it’s ever been toward openly supporting a permanent seat at the Security Council for India. Obama also extended Indian Prime Minister Manmohan Singh the honour of his first State Dinner last November. However, this last gesture was widely perceived as compensation for an uninspiring first year in US-Indian relations.
So what went wrong? Obama first raised Indian eyebrows in 2006, back in his days as a junior senator from Illinois, when he introduced two amendments to the landmark US-India nuclear deal tailored to restrict India’s access to nuclear fuel supplies. The move was a bid to bolster his non-proliferation credentials in Washington, but earned him few friends in New Delhi.
Then, as a presidential candidate, Obama earned the ire of the Indian media when he reportedly considered appointing a special envoy to oversee/arbitrate the hyper-sensitive Kashmir dispute. That mandate was eventually withheld from Richard Holbrooke, Special Representative to Afghanistan and Pakistan, but first impressions are hard to reverse. Scepticism about Obama’s agenda was reinforced when, as president, his initial foreign policy priorities—namely non-proliferation and global warming—placed the US and India on opposite sides of the international negotiating table.
Photo Credit: Uniphoto Press
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U.S. companies should insure themselves
Jeff Smith wrote: “Problems exist on the Indian side as New Delhi has itself fallen into a form of post-honeymoon malaise, as the phase of grand political gestures gives way to tough technical negotiations.”
Indians are not just making an anti-imperialism point in protesting attempts to shield U.S. nuclear firms from accident liability. They are protecting their population’s security.
Indians have little to gain from caving to U.S. pressure.
Washington officials should see the law as India intended it — a graceful way to change the focus of U.S.-Indian relations to more important non-nuclear topics. If Washington fails to seize on this, it won’t be India’s fault, it will be America’s.
India Unmasks America’s Nuclear Liabilities
Private companies should insure themselves, not ask Delhi to do it for them.
Henry Sokolski WALL STREET JOURNAL 14 September 2010
http://online.wsj.com/article/SB10001424052748703897204575488620396728104.html
Indian Expectations + Democrat B-U-F-F-O-O-N-E-R-Y
Jeff Smith: “Obama is less guilty of undercutting the foundations of the US-India partnership than he is of failing to meet expectations.
Obama can remove India’s major defence and research institutions from an export control list. The outdated sanctions have restricted the companies from trade in US advanced technology since India’s 1998 nuclear test.”
Sections of Indian industry, from the high-tech and space sectors to IT giants, are deeply unhappy with the U.S. intransigence on a range of issues at the very heart of their operations. Some of the most serious concerns are the following.
First, export control restrictions, particularly on dual-use, high-tech items.
Second, the U.S. Bureau of Industry and Security has inexplicably retained government organisations such as the Indian Space Research Organisation (ISRO) on the Entities List, thereby banning U.S. corporations from trading with them.
Third, the “totalisation” conundrum has led to Indian professionals paying “huge amounts” as social security contributions in the U.S. and yet they are unable to draw any benefits on the basis of such contributions.
The most recent salvo came last week when labor union B-U-F-F-O-O-N-S Charles Schumer and Clair McCaskill sponsored — and got passed — a border security bill entailing an H1-B- and L-visa application fee hike of $2,000 for firms with a higher proportion of non-American employees.
Obama and Indian industry: navigating tough waters
Narayan Lakshman THE HINDU 18 August 2010
http://www.thehindu.com/opinion/op-ed/article576733.ece
What about Labor Union B-U-F-F-O-O-N Schumer?
Jeff Smith wrote: “Yet too many influential Indian politicians and commentators continue to treat the nuclear deal, and any basic cooperation with the United States, as a form of gift or concession to the US.”
Schumer added insult to injury by not just mentioning Indian companies, but calling a highly-respected one a “chop shop” American slang for a sleazy place that deals generally with stolen cars, stripping them for parts.
Where Are India’s Schumers?
Kiran Karnik TIMES OF INDIA 19 August 2010
http://timesofindia.indiatimes.com/home/opinion/edit-page/Where-Are-Indias-Schumers/articleshow/6331888.cms
Work on Democrat B-U-F-F-O-O-N-E-R-Y
Jeff Smith wrote: “There’s some work to be done on the U.S. side, too.”
Democrats seeking to regain footing among middle-class voters are putting trade anxiety at the forefront of new campaign messages, challenging free-trade deals backed by the White House and linking Republicans to corporate outsourcing.
Perriello’s new ad depicts a dark-suited U.S. businessman standing in front of an Asian factory, thanking the Republican challenger, state Sen. Robert Hurt, for “protecting the tax loophole that gives a company like ours a kickback for sending jobs overseas.”
Hare’s spot shows a picture of his GOP challenger, Bobby Schilling, alongside the image of an Asian woman wearing a head set—an apparent reference to an Asian call center.
The White House is rallying unions and other core Democrats with calls to curb companies’ abilities to shift jobs overseas.
Democrats Use Trade Anxiety As Campaign Tool
Elizabeth Williamson And Peter Wallsten WALL STREET JOURNAL 13 September 2010
http://online.wsj.com/article/SB10001424052748704621204575487652698261476.html
B-U-F-F-O-O-N Schumer
Lawmakers passed an emergency bipartisan measure to spend $600 million to help secure the U.S. border with Mexico by funding new unmanned aerial drones and adding 1,500 new border enforcement agents.
The law calls for fees for the H-1B and L-1 visas to increase by $2,000 and $2,250 respectively for companies with 50 or more employees in the U.S. — if more than half of the company’s employees are on H-1B or L-1 visas. Schumer inserted the visa provision, enabling him to claim that it does not add a dime to the deficit.
Without explicitly saying so, the law clearly targets India. Indians received about half of all H-1B and L-1 visas in 2009, and comprise most of the roughly 50% of all H-1B and L-1 recipients who work in computer-related occupations in the U.S.
Despite Obama’s endless declarations that the U.S.-India “strategic partnership will continue to grow,” this is a direct snub to India’s most powerful domestic advocates of economic liberalization. India’s commerce minister has already lodged a complaint with the U.S. trade representative about the new visa bill.
The Obama administration should tread carefully. If India shifts its economic orientation away from the U.S., the costs would far outweigh any of the political benefits or fiscal revenue from this visa fee policy. India could choose to retaliate by buying more Airbus planes from Europe, importing more cars from Japan, or moving toward a trade agreement with the E.U. that discriminates against U.S. exporters.
So when Obama lands in New Delhi on his upcoming trip this fall, he could find himself in the middle of an ugly trade skirmish with a rising Asian superpower.
Taxing American Competitiveness
Why is Congress slapping fees on the most productive sectors of the U.S. economy?
Jacob F. Kirkegaard and Arvind Subramanian FOREIGN POLICY 15 September 2010
http://www.foreignpolicy.com/articles/2010/09/15/taxing_american_competitiveness
___________________________________________________________________________
What Schumer and his colleagues don’t know about business and economics could fill another Library of Congress.
http://online.wsj.com/article/SB10001424052748704164904575422293810650232.html#articleTabs%3Dcomments%26commentId%3D1445891
Indian Politicians “chop shop” Princeton?
David M wrote: “For India’s part, they need to get that nuclear liability law passed and out of the way. There is no reason to hold it up, it’s just politicians trying to earn brownie points with their constituencies.”
One of the key modalities of the draft bill is that, barring a very insufficient “right of recourse,” it indemnifies suppliers of nuclear plants and channels liability for a nuclear accident to the operator of the plant.
The point of this clause is to insulate these foreign companies from the consequences of accidents including those that occur because of a design failure. While all multinational suppliers, including those from France and Russia, would prefer such a clause, it is the U.S. that is most insistent on this issue.
Protecting suppliers from lawsuits creates a classic example of, what in insurance parlance, is called a “moral hazard”: insulating a party from risk has a distorting effect on its behaviour. In particular, indemnifying suppliers is likely to make them pay less attention to safety and encourage them to take greater risks.
Moral hazard of indemnifying suppliers
Suvrat Raju and M. V. Ramana THE HINDU 20 August 2010
http://www.thehindu.com/opinion/lead/article584336.ece
Suvrat Raju is physicist at the Harish-Chandra Research Institute and M. V. Ramana is physicist at Princeton University
vtpcnk
Arguments against India china seem to be like :
1. china is the biggest trading partner etc so Usa/japan/Korea would not side with India.
2. India is a flawed democracy, corrupt etc.
With regards the first point, it is to be noted that china’s current prosperity comes from taking away the manufacturing sector of the west. but the west is growing poorer – so how long can that prosperity be sustained? also by doing that and neglecting its internal development china has become too dependent on the west for its prosperity. won’t the decline of the west affect china’s prosperity then?
India’s democracy might be flawed and its leaders corrupt etc – but at least Indians have that. they can freely express their views, do what they want etc. is that possible in china? also 50% of the china’s territory is disputed (Xinjiang and Tibet) – how long can china keep that from boiling over?
and china is way ambitious – the way india isn’t. China will challenge America’s position – sooner or later. so all talk of a relationship between America and china doesnt take into account hard geo politics.
tomorrow is not today. things change always. and only alliances based on shared values will last.
David M
It’s good to come across the occasional thoughtful article such as this one, amidst all the noise. It makes some good points. We need to remember that our long term strategic interests lie with an alliance with India, and we need to be careful to not let the demands of the moment (such as fighting terrorism in Pakistan and Afghanistan) divert us too much from the longer term goal of gaining the alliance and friendship of India.
I think US politics by nature comes in cycles. Democrats have historically favored Pakistan, while Republicans have favored India. Clinton was the one exception – a Democrat who made a significant positive impact on Indo-US relations. Obama has good intentions but he is tied by his party affiliation and ideology as well in this regard. It’s a shame.
I think it’s important to keep the process moving. The US should continue to involve India in South Asian matters, such as Afghanistan, and needs to pay more attention to India’s concerns about Pakistani aid money ending up being used against India. For India’s part, they need to get that nuclear liability law passed and out of the way. There is no reason to hold it up, it’s just politicians trying to earn brownie points with their constituencies. India has already agreed to it in principle, now they need to deliver.
Both countries should take a more active role in promoting better ties. India is naturally wary, having been at the receiving end of fallout from US favors to Pakistan. But in relationships between countries, too much caution for too long is silly. This is not a matter of holding a grudge against a person who did ill to you. These are bureaucracies where people come and go and policies change, and blaming the current administration for all the misdeeds of the past gets you nowhere.