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Prepping for the Obama Visit

Indo-US Relations: Need for the Right Setting

Ambassador Prabhat P. Shukla

The upcoming visit of President Obama as Guest of Honour for Republic Day 2015 is an occasion for stock-taking, and for laying the foundation for a more stable and productive relationship. This will be the first time that a US President will be visiting India for a second time. It reflects a willingness to engage substantively with India, and we must use this opportunity to define the parameters for the future development of the relationship.

Relations are stagnant at present, and are in need of direction from the top. The strategic setting is also relevant: India has a strong Government for the first time in decades, with prospects of a return to high rates of growth, and an active foreign policy. America is slowly coming out of the crash of 2008, and is seeking answers to the challenges it faces in its foreign policy, in the Asia-Pacific, in West Asia and in the AfPak region.

There is a third actor, China, which is working actively with both India and the US, especially under the leadership of President Xi Jinping. There is a third actor, China, which is working actively with both India and the US, especially under the leadership of President Xi Jinping. Its aim is also quite clear. On the Indian side, it would not like to see any kind of strategic accommodation between India and the US, especially with regard to the US Rebalance to the Asia-Pacific, and engagement with the Trans-Pacific Partnership [TPP] whose stewardship the US took over in 2009. The Chinese recognise, even if we ourselves do not, that India is the only country in the region that can match them in terms of comprehensive power. This apprehension is only strengthened by the recent formulations by the World Bank that Indian GDP growth will outpace China’s in the next couple of years.

The starting point of any narrative on these issues must be one clear postulate: the US is not in decline, not in absolute terms, not in relative terms. Its share of the global output is steady at around 22% since 1969, and its military spending is greater than that of the next ten countries combined. Its technology gap over the rest of the world remains unassailable, though with worrying symptoms of vulnerability to cyber-warfare. Its current economic outlook is also better than that of all the major economies, including China – that country remains excessively dependent on credit-fuelled investment, and exports despite years of effort at restructuring its economy. But for the US, China would run a deficit in its balance of trade with the rest of the world.

What is happening is that Europe and Russia are declining in relative terms, and Japan is stagnant. China and the other non-Russia BRICS countries are taking up this space. But the US enjoys greater freedom of action today than it did during the Cold War when it had, in the USSR, a genuine peer competitor.

The difficulty is that in America itself, the talk is all about American decline – and that is partly why so many outside take up the refrain. A common theme is that the US needs Chinese money to keep up its reckless spending. There are just two things wrong with this: China owns just about 7% of US sovereign debt, roughly the same as Japan, and if one adds Japanese holding of corporate debt in the US, there is no comparison – Japan outpaces China by far. As for profligacy on the part of the country, the US fiscal deficit is down to 2.6% of GDP, falling from $1.4 trillion to well below half that figure in the last fiscal year.

A second important reality, especially so for India, is that there are no conflicts of interest between India and the US. None, that is, but for one thing, and an admittedly significant one: Pakistan. Even on this, there seems to be some realism seeping into American policy-making, though it will probably take a new Administration for a real change in policy. Meanwhile, the intervening time can be used effectively for dialogue and substantive exchange of views. This has not really happened for some years, even at the top leadership levels.

This really is the crux of the matter. Unlike the way the Chinese handled the US opening in the early 1970’s, India never worked out the parameters of the engagement between itself and America. Thus, on hard issues of concern, both countries have evaded any of the commitments that should undergird a true strategic partnership.

From the Indian perspective, what is needed is clarity from the Americans on where they stand on the question of our border with China, and with Pakistan. In 1962, they had expressed their recognition of the McMahon Line, during the war with China. That needs to be reaffirmed, at least in private. There is also need for a clearer understanding with regard to the Ladakh border, where there is a pattern of frequent intrusions by the Chinese, all the way from Depsang to Chumar.

Then there is the question of the Line of Control [LoC] in J&K. Back in the 1970’s, when relations were far from good, the Americans had started depicting the LoC beyond where it is currently defined, up to NJ 9842, in a north-easterly direction to the Karakoram Pass – in contravention of the agreement of 1949 under which it should extend north to the glaciers.

This was done at a time when they wished to spite India, after the Bangladesh War and the first nuclear test. They were, therefore, following the China-Pakistan position that the Indian border began at the Karakoram Pass, and west of the Karakoram was Pakistani territory. Today, the situation is different, including the ground situation. It is to be hoped that the Americans will be willing to adopt a more realistic position on this depiction, and depict the Line along the Saltoro Ridge all the way to Indira Col. This is also the recommendation of the Kargil Review Commission.

The issue of the land boundaries becomes important from another angle as well when it comes to addressing the US desiderata. Very clearly, they are keen for India to play a more active role in the maritime disputes in the western Pacific. India is doing so already, but perhaps not at the level that would satisfy the Americans and some of the countries in the region. While India is committed to the freedom of navigation and overflight, an active presence will invite pressure from the Chinese and the Pakistanis on the land borders. What could India expect from its Pacific region partners in such a contingency?

These are the sorts of issues that demand a serious dialogue, and understanding, at the highest levels on the two sides. Without this, relations will continue to swing between ups and downs, of the kind we have seen over the last few years. This is not to downplay the significance of the operational issues that also becloud the relationship – defence cooperation, civil nuclear cooperation and other matters. But they will become more manageable once the strategic settings are in place.

There is also the problem of internal politics in India that needs to be addressed. There is, among some policy-makers, a persistent attachment to non-alignment which now transposes the original article on to the emerging US-China rivalry. Not only is this extremely odd – being non-aligned between a putative partner, and a country that is in occupation of Indian territory is to be non-aligned with our own most basic interests; it is also a false choice. This is so, for the compelling reason that there is no contradiction in having good relations with both countries. Indeed, there is a good case to be made that China is more closely, and more positively, engaged with the US than is India. In this regard, the situation is very different from that which existed between the USSR and the US in the 1950’s and 1960’s.

Actually, many of the votaries of non-alignment in today’s context are in fact using the term as a cover for ideological opposition to better ties with the US. It would be good to remind them that, as far back as 1948, Sir Girja Shankar Bajpai, then Secretary-General in the Ministry of External Affairs, had approached the State Department for a long-term strategic tie-up. It is worth clarifying that Nehru was his own Foreign Minister, and thus Sir Girja was, in effect, the second senior-most person in the foreign policy establishment at this time. He had assured his interlocutor, Acting Secretary of State Lovett, that he was making the offer with the knowledge and approval of Prime Minister Nehru. It was the US that did not respond positively to this opening.

Also, it was on Nehru’s watch that India had entered into its first and only defence-related agreement with the US, in 1962, during the entire Cold War. This was the Air Defence Arrangement signed shortly after the India-China War. Nehru was not about to let ideology – and this was the time of the real non-alignment – get in the way of the country’s defence requirements.

This would imply that India needs to be more forthcoming on the US Rebalance to the Asia-Pacific, something we have been conspicuously holding back on. The former Defence Secretary, Leon Panetta, had described India as the lynch-pin of the Rebalance, but the new Obama foreign policy team has itself been playing it low-key over the past few years.

That illustrates another danger: Chinese President Xi has been offering to the Americans what he calls a “new model of Great Power relations”, which, in effect, boils down to establishing a G2, and for which there are enough takers in America as well. So far, however, the US leadership has refused to be drawn into any such relationship. But, equally, there are enough hints of a desire within the US to place China in a position of playing a role in managing South Asia to make this a serious concern for India. This was most evident in the joint statement issued by the two countries during President Obama’s visit to China in 2009.

The fact is that in the triangle, India-US-China, the ties between the latter two have been close and productive [until about a decade ago], whereas India’s engagement with both has been relatively less intense. Fortunately, that is changing, and both America and China appear to be keen on closer cooperation with India. This is what we need to make the most of, with the clear understanding that with China there are structural hurdles, the most important of which is the boundary dispute. Until that is settled, we should understand where our interests lie.

There is one other angle that needs to be addressed, and has been mentioned above. That is the one area where Indo-US interests diverge: Pakistan. Even a cursory glance at the history of the Indo-US engagement will show that this was the factor that got in the way of good relations even when the leaders of India and the US wanted this outcome. Kennedy was the most pro-active in seeking a new foundation for ties. But even he was unable to push the far-reaching decisions that he wanted to, because there were entrenched views in the different branches of the US Government – State, CIA and the Joint Chiefs of Staff principally – that would not allow any weakening of US-Pakistan ties.

Throughout the Kennedy period, there was relentless pressure on India to settle the Kashmir issue with Pakistan in order for security relations to be able to go forward. And the Pakistanis used this leverage to demand terms of settlement that no Government in India could agree to. Similarly, while Rajiv Gandhi and Ronald Reagan enjoyed good personal ties, the question of Pakistan kept the two leaders from being able to reach any worthwhile understanding.

It is instructive to recall these matters because things have not changed much in this regard even today. A genuine understanding between the two countries on how to jointly address Pakistan-sponsored terrorism continues to elude the two countries. The last joint statement, issued after Prime Minister Modi’s visit in September, did suggest some forward movement, but the real test will come later in 2015. The Kerry-Lugar Act, under which Pakistan gets funding of $1.5 billion each year, will expire. There are also the Counter-insurgency Support Fund and the Coalition Support Fund, all of which together account for close to, sometimes over, $2 billion per year. There are conditions attached to these subventions, but each year, the US has waived these – an implicit acknowledgement that Pakistan was not fighting terror, or maintaining civilian control over the security forces. It would be interesting to see if the US proposes to renew some or all of these funds once it draws down its forces in Afghanistan. The hard fact is that the US cannot indefinitely sustain this flawed reading of, and policy towards, Pakistan. Few in India would have any difficulty with economic support for Pakistan; the trouble is with the military component.

This US policy is to be seen in the context of the other major re-arrangement that it is seeking to work out in the broader Asian region, apart from the Rebalance to the western Pacific. This is the strategy of linking the Central Asian region with South Asia, what they are calling the New Silk Road [Silk Roads are much in vogue in these times – the Chinese, the Russians, even the Turks have their own, frequently conflicting, versions]. In 2008, the State Department reorganised its Bureaus to include South Asia and Central Asia in one Bureau. The idea was to pull Central Asia out of the influence of both Russia and China. It is not clear what Indian interest is served by this. We have no interest in challenging Russian influence in the region, assuming we have the capacity to do so – itself quite questionable. More important, any such links will increase our dependence on Pakistan. That country will not be party to any such scheme anyway; but even if it were to happen, it would be unwise in the extreme for India to allow such dependence to grow.

The most high-profile symbol of this strategy is the gas pipeline proposed from Turkmenistan to India, through Afghanistan and Pakistan, or TAPI. The effect of this would be to place Pakistan astride our energy lifeline, and we may be sure that that country will use its leverage against India. All such pipelines are unviable without India as the end-buyer, because the other countries are bankrupt, and cannot afford to pay for either the transit or the actual gas. Therefore, India also enjoys a unique leverage in deciding the fate of such a project. For all these reasons, India must turn away from any such policy towards Central Asia, and must persuade the Americans that there are better ways of promoting stability and cooperation in the region.

The Americans are not easy to dissuade, and are better at being heard than at listening. Nonetheless, it is worth the effort, because the reality is that no strategic objective of ours is achievable without US understanding. In the past, we have too easily given up in the face of initial US reluctance. Here, we would do well to borrow a leaf from the Pakistani book: they have been turned down, publicly, in their demand for a civil nuclear deal, but for ten years they have persisted. If we have set goals for where we want the relationship to be over the next few years, we must persevere, and seek to do a better job of public persuasion in the US.

None of the foregoing is to downplay the significance of the more operational bilateral issues – trade and economic cooperation, defence, investment or civil nuclear cooperation. Nor is it to minimise the importance of issues like climate change or the other matters on the international agenda that we are working on. These are always the nuts and bolts of any relationship, and answers need to be found to some of the persistent hurdles that have kept the relationship stagnant in the past few years.

But these problems will themselves become more amenable to solution when the broader framework is stable and provides the foundation for mutually acceptable outcomes. America’s relations with European countries, or India’s with the USSR, provide examples where the strategic understanding made it possible to find solutions to vexed problems; contrary to popular belief, it was not all sweetness and light in these relationships, but there was a deeper commitment that made it possible to work around differences.

These, then, are some of the issues where a serious conversation between the Indian and US leaderships would pay rich dividends. India is on the cusp of substantive changes, which will return it to the high-growth path of the first decade of this century, and has a stable government, mindful of both the security and economic dimensions of its engagement with the outside world – an attractive interlocutor and partner for all the major powers in the world. It is to be hoped that this reality will be leveraged effectively during the Obama visit.

New Delhi,

December 2014.

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