Analysis: Don't underestimate the shift in US-India economic relations.
By Jason Overdorf
GlobalPost - November 8, 2010
NEW DELHI, India — A scant 10 minutes after U.S. President Barack Obama arrived in India, he'd already made a few foes with his emphasis on jobs for Americans and reluctance to talk tough on Pakistan.
Though he stayed at Mumbai's Taj Mahal Hotel as a symbolic gesture, his speech commemorating the victims of the Nov. 26, 2008, terrorist attacks on India's financial capital neglected to mention "the P-word."
And though he mentioned Pakistan during his visit, it was not until his speech to the Indian parliament today that he struck the right note for Indians, saying "We will continue to insist to Pakistan's leaders that terrorist safe havens within their borders are unacceptable, and that the terrorists behind the Mumbai attacks be brought to justice."
Meanwhile, his advocacy of a permanent seat for India on the United Nations Security Council was probably not aggressive enough for Indian leaders, saying only, "In the years ahead, I look forward to a reformed United Nations Security Council that includes India as a permanent member."
But the economic achievements of the so-called "salesman-in-chief" may wind up meaning more for U.S.-India relations than tough talk or a host of promises of strategic partnerships. The reason: This time it's America asking India for help, and that may change the dynamic between the two countries.
Calling India "indispensable to addressing the challenges of our time," in a joint press conference with Prime Minister Manmohan Singh in New Delhi today, the U.S. president outlined a raft of political moves intended to complement the business deals his delegation cemented in Mumbai. Yet even the biggest agreements — such as the removal of barriers preventing the sale of sensitive technologies to Indian space and defense organizations — appeared to be at least partially concessions to facilitate trade.
"There's a perception that there is a little less asymmetry in the relationship," said Pratap Bhanu Mehta, president of New Delhi's Center for Policy Research. "This is the kind of give and take you expect between two powers who are mutually dependent on each other. In that sense there's a psychological shift that's significant."
Obama will take home about $10 billion in deals ranging from $1 million to $4 billion in size that are estimated to create more than 50,000 jobs in the United States. And according to the Confederation of Indian Industry, that's just the tip of the iceberg. India's buying of U.S. military and nuclear hardware and civilian aircraft could create more than 700,000 jobs in the U.S. over the next 10 years, the business lobby claims in a recent report.
And what is the U.S. giving? Apart from the lifting of export controls and supporting India's membership in the Nuclear Suppliers' Group, Obama and Singh announced that the two countries had agreed to expand cooperation in space exploration, clean energy research, health, agriculture and higher education. Among the concrete steps to emerge from the bilateral talks will be a new joint research center in India focused on alternative energy, a joint disease detection center and agricultural initiatives designed to rejuvenate the fading gains of India's "green revolution" — which was fueled in part by American scientists.
But the most important step forward in the India-U.S. relationship might be in the subtext. By coming to India primarily as the leader of a business delegation — and in the supplicant role of seller, rather than buyer — Obama recognized India's global ambitions, and its ability to attain them. As Harold McGraw, chairman of the McGraw-Hill Companies, put it, "He was selling. Yesterday, he was salesman-in-chief." And that, more than the public statement he made in his joint press conference with Singh, is proof positive that the U.S. president doesn't "think India is emerging. It has emerged."
That's likely to spark a debate in Indian policy circles about how far India can push America, said Indiana University professor Sumit Ganguly, especially as rival political forces within India grope for ways to unseat Singh's Congress Party. Hardly 10 minutes after Obama finished his first speech on Indian soil on Sunday, for instance, Bharatiya Janata Party spokesman Rajiv Pratap Rudy launched a withering attack against him for failing to act against Pakistan — though the BJP later disavowed his comments.
But can India expect to use its new economic clout, and the promise of access to its huge market, to extort the kind of concessions that China wrestled out of the U.S. in the 1990s? Or should New Delhi instead concentrate on further enmeshing the American and Indian economies to create a balanced, healthy and symbiotic Indo-U.S. business partnership that contrasts with Sino-U.S. codependence?
Obama and his delegation worked hard to prove that India-U.S. business relations have similar potential to the relationship between China and the United States. But India's emergence is coming in a different era from China's late-1990s hardball tactics on technology transfer and World Trade Organization concessions.
"What makes India-U.S. different from the Sino-U.S. relationship is partly that the security dynamic is much more important in our context," said Mehta. "India has to balance three things — the economic relationship, the immediate security context, where frankly the U.S. thinks India is not moving fast enough and India thinks the U.S. is not doing enough, and the U.S. general support for India playing a bigger role in global affairs, [such as in] the U.N. Security Council."
That means even if India has a lot to offer, it also still has a lot to gain, and focusing on the single issue of Pakistan is likely to prove unproductive — at least based on the way local observers are reading the U.S. president's oblique statements. "The truth is that its economic relations with the U.S. dwarf all others in terms of its importance to India’s economic emergence," the editors of the Hindustan Times wrote on the morning Obama was to deliver his speeches in New Delhi.
At the same time, it's clearer than ever that U.S. policy on Pakistan is not going to change, "despite the evidence of Pakistan's duplicity," said former Indian Foreign Secretary Kanwal Sibal, who was not persuaded by Obama's statements to the Indian parliament about pushing Pakistan to dismantle terrorist camps and prosecute the perpetrators of the attacks on Mumbai.
"These are the right points to be made," Sibal said. "There's no indication as to what are the specific steps behind the scenes or otherwise that would push Pakistan to actually bring [the Mumbai perpetrators] to trial and punish them. It remains at the level of a statement of desire. Insofar as safe havens in Pakistani territory are concerned, saying it on Indian soil is important, and its importance should not be minimized. But again, the problem is not so much in saying what needs to be said, but what is concretely intended to be done to coerce Pakistan to get rid of these safe havens. That road map is not clear."
In that context, building "win-win" business ties with America may be India's best shot at changing U.S. foreign policy, even as its increasing power makes the relationship more and more complex. As Obama pointed out in his address to parliament, "with increased power comes increased responsibility," and the U.S. will in the future be looking to India for support on issues like enforcing U.N. sanctions and criticizing corrupt dictatorships like Burma.
"As you rise, the range of things in which you begin to matter and the things which matter to you also begin to increase," said Mehta. "India has always played hardball, but now it has to play it when a lot more balls are in the air."
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