October 16, 2013

From Romance to Realism in U.S.-India Ties

By Richard Fontaine

Blink and you might have missed the U.S.-India summit earlier this month. Sitting in the Oval Office, Indian Prime Minister Manmohan Singh watched as U.S. President Barack Obama began his remarks – by talking about Syria. Later that day, the president reappeared before the press, not to tout a burgeoning partnership with New Delhi but rather to announce his telephone diplomacy with Iran and to press Congress ahead of the government shutdown.

It was an inauspicious last visit to Washington for the Indian prime minister, who will likely relinquish his post no matter which party wins parliamentary elections next spring. But it highlighted the nature of ties between the United States and India. Those relations, which are still undergirded by compelling strategic logic, have visibly evolved from romance to realism.

Romance quickened the pace of progress for a number of years. Beginning in the Clinton administration, there emerged a desire in both India and the United States to put aside decades of mutual distrust and divergent Cold War sympathies in favor of warming ties between the world’s oldest and largest democracies. The Bush administration oversaw a revolution in relations with India, carving out an exception for India in global nonproliferation rules and paving the way for international recognition of the country’s anomalous nuclear status. Military to military ties increased, trade expanded, and Indian leaders spoke of America as a “natural ally.” Obama the endorsed India’s permanent membership in the U.N. Security Council, relaxed export controls that impacted Indian entities, and restarted bilateral investment talks.

And yet, as the quiet Singh visit demonstrated, there remains today a sense that relations between the United States and India have reached a plateau, with high-level meetings producing few “deliverables” and even fewer big ideas to propel ties forward. More serious still, both Washington and New Delhi express deep-seated doubts, not only about the nature of bilateral ties but also the trajectory of Indian and American power.

Consider first American doubts about India.

Until quite recently, high economic growth rates were moving millions of Indians into the middle class, attracting foreign investment from the United States and around the world, and giving the country heft in the G20 and other economic forums. Indian leaders expressed profound confidence in their economic model, and drew a none-too-subtle distinction with China’s brand of export-led state capitalism. Yet as the economic reforms Singh helped midwife as finance minister in the early 1990s ran their course, the Indian political system has proved unable to generate successive rounds that would unleash further growth. The result has been a plunge in the rate of expansion; growth this year has slowed to four percent, less than half the rate in 2011. The rupee has lost value as well, putting upward pressure on the prices of imported goods.

The result is that American policymakers have begun to express misgivings about the economic engine of Indian power. At the same time, economic differences, rather than convergences, have characterized bilateral engagement in recent months. In the run-up to the Singh visit, a number of American businesses took out advertisements and lobbied Capitol Hill to call for “fair trade” with India and criticized India’s “buy local” rules, caps on foreign investment, inconsistent treatment of foreign patents and insufficient protection of intellectual property. Bilateral investment treaty negotiations have stalled and negotiators have not met since last year.

The “big idea” in U.S.-India relations for several years was the civil nuclear cooperation agreement. That agreement, hammered out between the Singh government and the Bush administration, was to pave the way for India to rely on American technology for its civilian nuclear reactors and would bring India into the global nonproliferation fold. Then the Indian parliament passed a liability law that would hold the suppliers of nuclear technology and materials liable for decades. The result was that for five years after the agreement was signed no American companies did business in India’s civil nuclear sector. The Singh visit to Washington coincided with a deal in which Westinghouse would supply nuclear reactors in Gujarat, but it remains to be seen whether this is a one-off arrangement or will lead to further American investments in Indian nuclear power.

American policymakers have maintained that a strong India – working in close cooperation with the United States – is good for America and the world. Yet, divergent approaches to some key international issues have risen to the fore. New Delhi and Washington have differed, for instance, over whether to apply additional sanctions on Iran in response to Tehran’s nuclear program. Following the Assad regime’s chemical attack in Syria, Singh emphasized that there is “no military solution” to the situation there. There are questions about precisely what kind of global role Indians envision for themselves.

The truth is that today many American observers see in India a reflection of the problems that plague their own system. Indian politics is fragmented, and any government’s ability to push through needed reforms – especially in the economic sphere – is under serious question. All of this puts a premium on the outcome of the country’s elections, which are to be held by next May. The BJP, led by Gujarat Chief Minister Narenda Modi, appears at this distance to have a solid shot at forming the next government. Modi is a controversial figure, dating to the 2002 riots in his home state; how effective he – or a new Congress Party leader – would be in bringing about reform and working with the United States remains unknown.

While Americans express doubts about the trajectory of Indian power, and about the nature of the Indian relationship with the United States, Washington itself has handed New Delhi no shortage of issues to worry about.

With the government shuttered and Washington deeply divided over basic governance, many in India wonder aloud whether this is any way to run a superpower. The possibility of debt default has prompted concern in financial quarters about America’s economic reliability. Indian high-tech companies worry about provisions in the immigration bill under debate in the U.S. Congress that would tighten H1-B visa rules, to Indian firms’ possible detriment, and wonder whether the United States is turning inward.

These doubts layer over previous worries about American policies in Asia. Open musing about the possibility that the United States would withdraw all of its troops from Afghanistan after 2014 has rattled policymakers in New Delhi, who fear the return of the Taliban and a safe haven for terrorists who would attack Indian soil. The Obama administration’s vaunted pivot to Asia is increasingly questioned in light of Washington’s focus on diplomacy with Iran and chemical weapons in Syria, and Secretary of State John Kerry’s significant investment in the Middle East peace process. And some wonder about the U.S. willingness and capacity to balance China in light of a struggling economy and declining defense budgets.

As these doubts pile up on each side, anyone looking for near-term challenges in the U.S.-India relationship needn’t search long. Yet it would be wrong to conclude that the game isn’t worth the candle. The existing doubts do not negate the underlying strategic logic of Indo-American ties; they merely leaven what had too often been a romantic approach to this relationship with a dose of necessary realism.

The United States and India share interests, such as ensuring a stable Asian balance of power, expanding economic relations, preserving access to the global commons, countering terrorism, expanding access to energy sources and promoting human rights. Despite India’s currently fading economic growth rates, it is enjoying a tremendous demographic dividend and will become a central driver of middle-class growth. New Delhi is the world’s largest arms importer and the United States is its top military training partner. And India and the United States view similarly the challenge posted by China’s rise, seeking strong economic ties with China and good diplomatic relations with Beijing while hedging by strengthening relations with other Asian powers – including each other.

Over the past decade, the United States has made a long-term bet on closer partnership with India, a wager rooted in shared values but based on a calculation of strategic interest. Drawing closer together will not be easy for Washington and New Delhi, but it will be all but necessary. Despite the challenges – indeed, in some cases because of them – the United States and India are better off together rather than apart. Realism, not romanticism, should guide these two ships of state closer in the coming months and years.

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