Defense Trade to be the Driving Engine

Contrary to the forecasts of doom and gloom and the skepticism surrounding his visit to Washington, the third Manmohan- Obama Summit meeting on September 27 has been quite productive. With hindsight, one can say that media reports about growing impatience of US NSA Susan Rice, impact of the comprehensive immigration law, lobbying in the Capitol Hill by Microsoft, IBM and American drug manufacturing giants against Indian IT and drug manufacturing companies and differences on Afghanistan, Iran, Syria, nuclear liability Act etc were highly exaggerated. An honest and dispassionate assessment of India-US relations in the last decade clearly shows that they have been transformed beyond recognition; India-US strategic partnership is for real and it is in for a long haul in spite of serious differences on some issues in the short run. Nothing demonstrates this better than the exponential expansion of defense trade; US exports of defense and military hardware to India in the last five years have crossed US$ 9bn; with the long shopping lists of the Indian Army, Air Force and Navy this is bound to expand further.

If the promise of transfer of defense technology, joint research and co-production mentioned in the joint statement is taken to its logical conclusion, this collaboration could become the driving engine of closer Indo-US strategic partnership. In this regard, the US decision to supply offensive weapons to India will be the leitmotif of this burgeoning relationship. Notwithstanding these positive signals, well-known strategic analyst Brahma Chellaney feels that India-US strategic relationship is somewhat “lopsided and unbalanced” on account of structural and strategic limitations of India. A lot is made out of the flattering phrases such as the “defining relationship of the 21st century” (used by Obama and John Kerry) which might transcend into the 22nd century and India being the “lynch pin” of the US policy in Asia (used by Leon Panetta) and optimistic projections made by the heads of think tanks such as Ashley Tellis of Carnegie Endowment. Visiting American dignitaries seldom fail to stress the commonalities between India and the US: democracy, rule of law, human rights, and multi-ethnic, multireligious, multi-lingual, plural societies. These are, no doubt, important factors but must be taken with a pinch of salt.

In the real world, so long as it serves their national interests, countries don’t mind doing business with other countries where these factors don’t hold water. The US-China relations are an obvious example of this phenomenon. While the US IT companies might continue urging the US government to apply some indirect brakes on the Indian IT companies, the fact is they have been receiving “great service, great quality at low costs” from Indian companies and it has enabled them to operate efficiently and profitably. The misperception created by media reports that the US wishes to “contain” China and hence is trying to warm up to India warrants closer scrutiny. The US-China economic, financial, trade, business and investment ties are so huge and millions of jobs in the US depend on this collaboration that the US will never risk them. As a matter of fact, the US has been quite careful not to hurt China’s sensitivities; it’s decision to call its new approach in Asia now as “Asia Rebalance” instead of “Asia Pivot” is a “course correction” keeping China in mind. On the issues of alleged incursions into Indian territories by the Chinese troops and the India-China spat regarding the ONGC-Vietnam offshore oil drilling collaboration, the US has maintained strict neutrality.

Conversely, it is also a fact that the US won’t like to see a China-dominated Asia. This, apart from the economic considerations, explains its concerted efforts to come closer to India, ASEAN and beyond to shore up its influence in Asia-Pacific and maintain pressure on China to keep trade routes through the South China Sea open to international trade according to international laws. Some recent developments have eased the alleged “drift”, “wrinkles” and imaginary or real “plateau” in relations. The preliminary contract between the US nuclear companies, Westinghouse and NPCIL for setting up a nuclear plant in Gujarat is a welcome beginning. The establishment of “an American India- US climate change working group” and convening the “India-US Task Force on HFCs” are viewed as positive developments. And the reiteration of US support for a place for India in the reformed UNSC should be music to Indian ears. Besides, a temporary postponement by the US Federal Reserve to end the stimulus package should give countries like India some breathing time to put their finances in order. Though nothing concrete has been promised, some negotiated compromise on the new Immigration laws shouldn’t be ruled out.

In the field of foreign affairs, the biggest relief has come from Iran. There is thaw in the air in the US-Iran relations thanks to the speech of the newly elected President Rouhani in the UN General Assembly and his wishes on the Jewish New Year on his Twitter which prompted Obama to make the historic Presidential phone call for the first time in 30 years! Unless, this process is cut short by the Iranian supreme leader, US-Iran relations should see some further easing of tension and resolution of the nuclear issue which has led to the imposition of crippling UN sanctions on Iran. This thaw has the potential of lightening India’s oil import bill if more Iranian oil comes on the market. India’s expectations from the US to put further pressure on Pakistan to bring the perpetrators of 26/11 Mumbai attack to book and rein in the terrorist groups like Al-Qaida and LeT and dismantle terror infrastructure and go slow on co-opting the Taliban in the talks on the future of Afghanistan aren’t likely to be met fully because of the US priorities to exit from Afghanistan smoothly. In the meanwhile, India should brace itself for a Taliban-dominated Afghanistan after the withdrawal of the American troops in 2014.

What role India could play in Afghanistan after the US exit can’t be guaranteed by the US; it will have to work out a strategy with countries like China, Russia, and Iran and, of course, the US. As the economies of India and the US aren’t doing as great as they would have expected, there are domestic pressures in both countries which impact negatively on the bilateral relations. The IT and pharma MNCs in the US and the constituencies in India which didn’t favor FDI in retail and pressed for a more stringent nuclear liability Bill are manifestations of such domestic pressures. As both India and the US have strategic partnership with a number of countries, in crises situations each country will take a decision based on its strategic interests. From this perspective, KS Bajpai, a former Ambassador to the US, injects a reality check: “If ever India finds herself in an open conflict with another country, she will be just by herself; none will come to her help”. That should give us a wake-up call to mend our fences with our neighbors and create an environment of goodwill and warmth without lowering our guards and ignoring defense preparedness.