September 20, 2012

Don't give up on India

By Richard Fontaine

Throwing 10 percent of the world’s population into darkness is not a good way to advertise one’s “great power” credentials. India’s late-summer power outage, political dysfunction and slowing economic growth have engendered doubts among U.S. observers allayed only partly by the government’s recent announcement of economic reforms. For nearly a decade, India has represented Washington’s major strategic bet in Asia, a “natural ally” that was emerging as a strong, globally active and increasingly prosperous partner. Was this bet misguided?

We don’t think so. The short-run challenges to Indian power and progress in the relationship are daunting, and realism about the pace of both is in order. But the pursuit of a closer partnership with India has always represented a rarity in U.S. foreign policy: a long-term calculation of strategic interest, rooted in a foundation of shared values. The logic underlying U.S.-India relations remains sound.

It is easy to see why pessimists are riled. The government’s announcement last week that it would liberalize foreign investment in Indian retail, aviation and other sectors occurred only after growth had tanked — rates approached 10 percent annually early in the 2000s but are likely to be below 6 percent this year — and global investors had largely soured on India. The blackouts were another example of an economy plagued by inadequate infrastructure and bureaucratic sclerosis. Opposition to reform by parties in the governing coalition — including parliamentary allies of the government who pledged this week to bring down the coalition over the new measures — does not augur well for bold change at the center.

The U.S.-India relationship is suffering as well. After Washington took unprecedented steps — loosening export controls to allow greater technology transfers, expanding counterterrorism cooperation and endorsing New Delhi’s pursuit of U.N. Security Council membership — a number of initiatives stalled on the Indian side. Key defense agreements have gone unsigned, and the long-awaited civilian nuclear cooperation agreement has run afoul of India’s anomalous liability law. Nor do the two countries agree on whether to sanction Iran to prevent it from developing nuclear weapons.

A longer-term perspective, however, reveals a different picture. In a forthcoming report, the U.S. National Intelligence Council projects that, by 2030, “India will be the rising economic powerhouse that China is seen to be today.” India enjoys a rich demographic dividend that is creating the world’s largest pool of prime workers. As India’s economy becomes the world’s biggest driver of middle-class growth, Indian attitudes will continue to evolve, fueling what the intellectual Shekhar Gupta calls a “politics of aspiration” rather than a “politics of grievance” that will transform society.

These changes will make India an attractive and rewarding partner for many countries — starting with the United States. Already, India is the world’s largest arms importer, and the United States is among its top defense suppliers — notwithstanding American disappointment last year that India did not choose a U.S. fifth-generation fighter jet as part of its military modernization. The United States is India’s top military training partner, a remarkable development for two countries that were on opposite sides of the Cold War divide. Intelligence sharing is at historic highs, senior officials from both countries say, as is cooperation on counterterrorism efforts. As a result of the degeneration of the U.S.-Pakistan alliance over the past three years, India and the United States are also more closely aligned regarding Pakistan. Perhaps most important, India and America see eye to eye on the immense strategic challenge posed by China’s ascendance. The Indo-American dialogue on East Asian security has been richly rewarding for both sides, and India is cultivating American partners such as Japan in ways that strengthen, rather than erode, the U.S. alliance system in Asia.

The success of U.S. and Indian policy over the past 12 years lay in creating, for the new century, a transformed basis for relations between the world’s largest democracies. It seemed like a good deal: The United States would secure not an ally but an independent partner that could help anchor an Asian balance of power. Washington would be able to point to India’s model of democratic development as an alternative to the “Beijing consensus” of authoritarian development that otherwise might appeal to swaths of the developing world. The complementarities between the high-tech U.S. economy and India’s rich human capital would spur growth in both countries. India would secure as a sponsor for its rise and development the international system’s predominant power. This seemed like a good bargain — and it remains one.

Richard Fontaine is president of the Center for a New American Security and worked in the State Department’s South Asia bureau during the George W. Bush administration. Daniel Twining is senior fellow for Asia at the German Marshall Fund of the United States. He was a member of the secretary of state’s policy planning staff during the Bush administration.