Agree to disagree

Differences have emerged between US and India… partners, as distinct from allies, must have disagreement. It gives them something to work on.

The recent storms over adverse American media reporting on the performance of our Prime Minister — notably in Time and the Washington Post — have been amply compensated for by the US President’s own considerable regard for Dr Manmohan Singh, whom Barack Obama even publicly described as the first of the three world leaders he most admired and had good relations with.

The fact is that both countries have a fairly comfortable view of each other. Both believe they can afford to take a benevolent view of the pursuit by the other of its own interests, secure in the belief that that pursuit would not fundamentally be incompatible with their own core national objectives on the world stage.
As far back as 2005, Prime Minister Manmohan Singh had declared: “I believe we are at a juncture where we can embark on a partnership that can draw both on principle as well as pragmatism.” That practical benefits are available to both sides in the relationship is readily apparent; as the Canadian diplomat, David Malone, observed, “US demand for information technology and other services has been extremely helpful to India, and India’s capacity to absorb American exports has greatly strengthened American commerce (at a time when much militates against continued unfettered global US economic dominance).” The question is how to build on those basic trade-offs in order to accomplish a more substantial partnership.
President Obama’s 2010 visit to India resulted in significant new agreements across a wide range of subjects, from civil nuclear cooperation to issues of food security. The two governments have followed up by developing a collection of consultative mechanisms to improve and strengthen the trade and investment relationship. To take an illustrative list, there are meetings of the US-India Economic and Financial Partnership at finance minister level, the US Trade Representative’s Trade Policy Forum and the Department of Commerce’s Commercial Dialogue; perhaps most important to India, a High Technology Cooperation Group has been working to reduce barriers to trade in sensitive, cutting-edge high technology.
But governments do not determine every aspect of the economic relationship. US-India business ties have emerged as particularly crucial drivers of the relationship; despite the bureaucratic and domestic political impediments to faster growth, delays in upgrading India’s shoddy infrastructure and the unavoidable transaction costs of doing business in India (including the prevalence of corruption), American firms rightly see the country’s long-term potential as one worth being invested in. According to the McKinsey Global Institute, 80 per cent of the Indian infrastructure of 2030 has yet to be created, and US businesses will have the opportunity to provide the goods and services needed to build or upgrade India’s railways, airports, power plants and IT infrastructure (laying fibre optic cables, for instance).
The trade figures are already impressive, and reveal a pattern of increasing economic interdependence. Between 2002 and 2009, US goods exports to India quadrupled, growing from $4.1 billion in 2002 to over $16.4 billion in 2009, while US services exports to India more than tripled, increasing from $3.2 billion in 2002 to over $9.9 billion in 2009. More striking than absolute numbers is the fact that US exports to India grew faster than exports to almost all other countries in the world. In 2010, US exports of goods to India shot up 17 per cent and US goods imports from India went up 40 per cent, making India, at $48.8 billion in goods trade, the United States’ 12th largest goods trading partner. Preliminary figures for 2011 confirm the positive trend.
Nor is the traffic all one way. The overall trade relationship is a balanced one, and there are some departures from the norm: While overall foreign direct investment into India declined over 2009-11, Indian companies continued to invest in the United States, growing at a compound annual growth rate of 35 per cent between 2004 and 2009. In addition to India’s role in providing services to US businesses and consumers — from medical transcriptions to call centres — India has also become a significant source of tourist revenue for the United States, with some 650,000 Indian visitors in 2010, making India the 10th largest source of tourism to America. And we mustn’t forget that multinational giants like GE and Philips are employing more researchers in India than in the United States or Europe, and Indians are doing cutting-edge work designing aircraft parts for Boeing and doing biotech research for US and Indian pharmaceutical companies.
Where are things not quite so amicable? One sometimes fraught area has been cooperation on security issues of vital importance to India. The United States was understood to have been initially helpful in the aftermath of the 26/11 terrorist attacks in Mumbai, both with intelligence sharing and in placing pressure on the Pakistani military establishment to back off from the militants it had sponsored. But subsequent revelations that a US citizen of Pakistani descent, Daud Gilani, calling himself David Coleman Headley, had visited India several times to reconnoitre the terrain for the attacks, and that he may have been a US double-agent, led to a great deal of recrimination. Indian commentators alleged that, in effect, the United States had allowed the 26/11 attacks to happen, rather than revealing information in their possession to India, merely in order to protect Headley’s cover.
Indians are chronically suspicious that US dependence on Pakistan over the years — as a staging base for attacks on Soviet troops in Afghanistan earlier, now as an ally and logistical partner of US troops in Afghanistan — vitiates its broader strategic interests in India. Differences have also emerged between Washington and New Delhi in recent years over a number of issues: the two nations’ different reactions to the Arab Spring, in particular the revolts in Libya and Syria; incompatible views about the implementation of one key follow-up provision to the nuclear deal, the Nuclear Liability Law, where American companies are seeking exemptions from liability in the event of accidents, which New Delhi judges politically impossible to push through our Parliament (where memories of the Bhopal disaster caused by an American multinational have not faded); significant disagreements about sanctions on Iran for its nuclear programme, given India’s dependence on Iranian oil supplies; and India’s rejection of the US’ bid to supply multi-role combat aircraft.
Just as well. Partners, as distinct from allies, must have areas of
disagreement, too. It gives them something to work on.

The writer is a member of Parliament from Kerala’s Thiruvananthapuram constituency

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