Pitfalls on Indo-US bilateral road

The third US-India Strategic Dialogue is only a few weeks away. To prepare the ground for a meaningful set of talks US secretary of state Hillary Clinton was recently in the country. Despite the attention lavished on her first official visit to West Bengal pitiably little is known about what transpired in her meetings in New Delhi beyond continuing disagreements about how best to deal with Iran and its apparent pursuit of nuclear weapons.
Yet, a host of critical bilateral issues continue to hang fire. This may not be the place to construct an exhaustive list. However, a handful of these do merit enumeration. American concerns about the legislation pertaining to foreign investment in the civilian nuclear sector have yet to be fully addressed. There is continuing disappointment within the US corporate world about the failure of the UPA to tackle the nettlesome issue of foreign investment in multi-brand retail.
In a related arena, despite finance minister Pranab Mukherjee’s attempts to assuage the misgivings of the US and other foreign investors about retroactive taxation, US firms remain mostly unconvinced. Finally, India has yet to express a clear position on the US pivot to Asia even as it faces a range of problems with the People’s Republic of China. None of these matters bode well for the US-India strategic partnership.
Indian apologists have ready responses to all these apprehensions. They would argue that New Delhi is attempting to address the worries of potential US investors in the civilian nuclear sector. That the issue of multi-brand retail will be tackled in due course, that the question of retroactive taxation is overblown and that India simply cannot be expected to trim its sails to meet US strategic imperatives. With the possible exception of the last issue, every one of the other responses are flawed. Without the dramatic expenditure of both domestic and international political capital on the part of the Bush administration India simply would not have seen a consummation of the US-India civilian nuclear agreement. Under the circumstances, it is downright galling for the US nuclear industry to watch other players step into the breach while the US is effectively kept at bay, thanks to the vagaries of the existing legislation.
The ineptitude with which the multi-brand retail matter was handled was simply breathtaking. Specious arguments about the adverse impact on small shopkeepers aside, the greatest loser remains the Indian consumer, not to mention a host of farming communities across India. The most chilling development, however, is the subject of retroactive taxation.
At a time when foreign investors are already shying away from the Indian market, thanks to widespread evidence of rampant corruption, poor infrastructure and dilatory procedures, the decision to seek additional revenues through this retrograde device was a disastrous choice.
Given this spate of unwelcome news is it any wonder that a number of individuals and groups are openly wondering if the Indo-US strategic partnership was oversold in the first place? Some of them, of course, were inherently hostile to the partnership and in any case saw the nuclear deal as a fundamentally flawed decision. Even if one discounts those self-serving voices that are privately gleeful of the current stasis in the relationship, there is no gainsaying that even the staunchest believers in the value of the partnership are now beginning to have their doubts. These forebodings have recently been expressed in a series of opinion articles in influential newspapers, in panels at prominent think tanks and even, on occasion, by government spokespersons. They, quite reasonably, have argued that the partnership appears bereft of reciprocity.
Unless there is a realisation in New Delhi that the US-India strategic partnership is worth kindling, it will inevitably peter out. Such an outcome, without question, will have greater adverse consequences for India than for the US. Despite the current economic woes that the US confronts, assuming its imminent decline amounts to a tragic fallacy. In the 1970s, and again in the late 1980s, doomsayers had all but predicted the terminal waning of US power. On both occasions, the latter-day Jeremiahs were proved wrong. There is every reason to believe that they will be shown to have been too hasty in their pessimism about America’s future.
Given that the US is likely to remain both economically and militarily the dominant power for at least the bulk of this century, that it shares the same liberal democratic principles as India, and that the strategic exigencies of the Cold War are long gone, it makes sense for New Delhi to make common cause with the US. Such a strategy, contrary to the ardent proponents of the empty slogan of “strategic autonomy”, does not mean subordinating India’s national interests to those of any particular US administration. Such an argument, though a deft debating tactic, is ultimately polemical and meaningless. Instead it means making conscious attempts at policy coordination for mutual benefit. To pursue a strategy that can help place the partnership on a firm footing it is necessary to jettison much of the antiquated Cold War baggage that clutters the pursuit of adroit diplomacy.
There is little question that for a variety of complex reasons the two countries were at odds during the Cold War. There is also no doubt that a series of decisions that the US took during those years had adverse consequences for India. Today, however, in a dramatically transformed global order, a robust partnership with the US could give India the necessary leverage that it so urgently seeks to emerge as a power of some consequence in its own right. Whether India’s policymakers can display the necessary
sagacity to so recognise and act on the matter remains an open question.

The writer holds the Rabindranath Tagore Chair in Indian Cultures and Civilisations at Indiana University, Bloomington and is a senior fellow at the Foreign Policy Research Institute in Philadelphia