Recharging relations- India Afghan Relations

Afghan President Ashraf Ghani’s first visit to India is part of his effort to win the support of immediate neighbours to stave off the military challenge posed by the Taliban.

Ashraf Ghani came to New Delhi in the last week of April on his first visit to India after taking over as the President of Afghanistan more than seven months ago. His predecessor Hamid Karzai had nurtured close ties with India, much to the chagrin of Pakistan. Ghani, on the other hand, seems intent on charting a different path for his country taking into account the ground realities in the region. Unlike Karzai, Ghani has been reluctant to get into a tight embrace with New Delhi.

During the hotly contested presidential election in 2014, India’s preferred candidate was Abdullah Abdullah, a fact that may have no doubt riled Ghani. The two signed a power-sharing agreement under which Ghani was made President and Abdullah, who reluctantly conceded defeat, was designated as the Chief Executive Officer. The political cohabitation, brokered by the United States, continues to be uneasy. In recent months, Ghani has emerged as the man calling the shots in the government.

With the bulk of the U.S. troops exiting Afghanistan in December last year, Ghani has realised that he needs the support of his immediate neighbours to stave off the military challenge posed by the Taliban. The President postponed his visit to India by a day because the Taliban had launched an offensive in Kunduz. The annual fighting season in the country has started with the winter coming to an end. The emergence of the Islamic State (I.S.) in Afghanistan has further complicated the security situation. Counter insurgency experts agree that the I.S. has become active in some parts of Afghanistan and Pakistan, having managed to attract Taliban fighters and a few tribal leaders on both sides of the border. Indian intelligence agencies have conceded that the rise of the I.S. in the region poses a threat to the country’s security.

China’s plans

China was the first country Ghani visited after assuming office, signalling the priority his government was giving to ties with Beijing. In fact, it is for the first time that China is playing an important role in the ongoing efforts to broker peace between the government in Kabul and the Taliban. China is investing heavily in its efforts to ensure a comparatively peaceful political transition in Kabul after the U.S. troops finally leave Afghan soil. Stability in Afghanistan and Pakistan is the primary objective of China. The recent visit of Chinese President Xi Jinping to Pakistan was illustrative of the importance it is giving to the region. During his visit, Xi laid the foundations of the Pakistan-China Economic Corridor Project, which will allow China to directly transport goods from West Asia through a more secure and shorter land route. The Chinese government has pledged to invest $46 billion for developing the infrastructure for the project and implementing it. A 3,000-kilometre network of pipelines, roads and railways will link the Pakistani port of Gwadar to western China. Pakistan has now become a key component of China’s ambitious “new silk road” initiative. The investment pledged by China is by far the biggest Pakistan has received so far. It surpasses the $31 billion Pakistan has received from the U.S., its long-standing ally, since the latter began its “war on terror” in 2002. Most of the U.S. money, around 70 per cent, was earmarked for the Pakistan Army to ensure its commitment to U.S. policies in the region, including drone attacks on the civilian populace in Afghanistan and Pakistan.

China does not want Islamic radicalism to spill over to its territory from Afghanistan and Pakistan. Uighur extremists are known to be active along the Afghan-Pakistan border. In recent years, there has been a surge in terror attacks in the Uighur dominated region of Xinjiang. China is using its considerable influence in Afghanistan and Pakistan to fast-track talks between the Afghan government and the Taliban. According to reports, Beijing recently hosted a Taliban delegation. The Barack Obama administration is also not averse to the idea of talks between the Taliban and the Afghan government. After all, it had tried to do the same last year. The Taliban was given quasi-diplomatic status in Doha, Qatar, where it continues to function openly. The international community, barring a few holdouts like India, now believes in differentiating between the “good Taliban” and the “bad Taliban”. Sections of the “bad Taliban” seem to be now metamorphosing into the I.S.

After his trip to Beijing, Ghani visited Saudi Arabia, Pakistan, the U.S. and Iran. His visit to Pakistan seems to have resulted in a sea change in bilateral relations. The adversarial nature of the relations, during the Karzai era, now seems to be a thing of the past. During the visit, Ghani praised the Pakistan Army’s counterterrorism efforts. He took the unprecedented step of visiting its headquarters in Rawalpindi where he held talks with the Army chief, Gen. Raheel Sharif. Afghanistan’s decision to not avail itself of India’s offer to supply heavy weapons has been appreciated in Pakistan.

In his speech at the summit of the South Asian Association for Regional Cooperation (SAARC) in Kathmandu, Ghani said that his country should not be used as a stage for proxy wars between regional powers. For the first time, Afghan Army officers are being sent to Pakistani military institutions for training. According to reports, Pakistani officials are now allowed to interrogate suspected terrorists in Afghan jails. Unlike his predecessor, Ghani is not accusing Pakistan of supporting crossborder terrorism. His priority is to get the Taliban to the negotiating table. He knows that the Pakistani intelligence services are capable of persuading important sections of the Taliban to start talks.

The Taliban has been saying for some time now that it is amenable to talks, but only after all the foreign troops have left Afghanistan. Ghani is aware that the Afghan Army is not in a position to defend the country on its own as yet though it has been doing much of the fighting since the beginning of the year. During his visit to Washington in March, Ghani urged the U.S. government to keep some of its troops in Afghanistan, citing the threat posed by the I.S. as one of the reasons for his request. At present, there are around 10,000 U.S. troops. By the end of the year, their numbers are supposed to be halved.

India, a major donor

It is not that the U.S. needs much encouragement to stay on. It was Karzai’s reluctance to sign a Status of Forces Agreement with the U.S. that led to tensions with the Obama administration. Almost immediately after taking office, Ghani signed an agreement with the U.S. for stationing a small contingent of U.S. troops beyond 2015. The U.S. has been continuing with its air assaults on Taliban targets. According to a recent report in The New York Times, the top U.S. Army commander in Afghanistan, Gen. John F. Campbell, justified the targeting of Taliban fighters posing a threat to either U.S. or Afghan troops. According to the report, Gen. Campbell meets Ghani every day and he “has in many ways outsourced much of the running of the war to General Campbell”. Afghanistan has been without a Minister of Defence since Ghani took over the presidency.

In New Delhi, Ghani reaffirmed his commitment to the strategic agreement signed between the two countries in 2011, though there were no new announcements on the steps being taken to strengthen it. India did hand over three helicopters to

Afghanistan before Ghani arrived. He emphasised the need for regional cooperation in fighting terrorism. He thanked the Indian government for its continuing support and aid to Afghanistan. India is among the major international donors to Afghanistan, having contributed over $2 billion. The joint statement released during the visit reaffirmed the commitment of the two governments “to the full implementation of the strategic partnership objectives”. Ghani invited Indian companies to invest in Afghanistan. “We see the Indian private sector as a key partner in transforming Afghanistan from an area shadowed by conflict to a hub—where goods, ideas, people flow in all directions,” Ghani told Indian businessmen in New Delhi. He said his country was blessed with significant mineral deposits, including lithium and oil. Indian industry was also urged to invest in the hydroelectric and petrochemical sectors, which Ghani said had a big potential.

China has invested heavily in the exploitation of copper mines in Afghanistan and has emerged as the top investor in the country.

The Afghan leader said he would insist that Pakistan allow the transit of Indian goods to Afghanistan. Only Afghan goods are allowed to be trucked up to the Wagah border crossing on the Pakistani side of the border with India. Ghani said that if Pakistan did not relent on the issue, his government would stop the transit of Pakistani exports to Central Asia passing through Afghan territory. There is a lot of goodwill for India among ordinary Afghans. India’s “soft power” diplomacy will continue to pay dividends.

It has expended its $2 billion in aid on the construction of hospitals, schools and roads and institution building. Every government in Kabul since the 1950s invariably had problems with Islamabad in the long run. Pakistan has a tendency to view Afghanistan as its backyard and has tended to interfere in its domestic affairs. Then there is the question of the border. Many Afghans still refuse to accept the “Durand Line” demarcated by the British in the 19th century as the boundary between the two countries.

Published in Frontline.in

‘Expose U.S. hypocrisy in WTO talks’- Interview with Deborah James

DEBORAH JAMES IS A LEADING VOICE IN THE fight for just rules in the global trade order. She is the director of International Programmes at the Centre for Economic and Policy Research, a Washington, D.C.-based think tank that was founded in 1999 as part of the alter-globalisation movement. Deborah James had previously worked at Global Exchange, where she was an expert in the unfair trade policies that emerged out of the “globalisation” era of the 1990s. As the director of the World Trade Organisation Programme at Public Citizen’s Global Trade Watch, she participated in the debates leading up to the WTO’s Doha Round, which began in 2001. Deborah James also served as the first executive director of the Venezuela Information Office in Washington, D.C., an organisation that sought to intervene in the public debate on the progressive social transformation under way in Venezuela. In this interview, Deborah James spoke about the ongoing tussle in the WTO around the question of food security. This debate is germane to India, whose government played a role at the last WTO meeting. Excerpts:

Currently, there is an open-ended negotiation on global food security that must produce some kind of consensus for the WTO by December 2015. What divides the WTO member states over the idea of food security?

The WTO has a myopic focus of merely increasing trade. There are many downsides to holding a discussion on food security at the WTO as a result. It would be better to hold these negotiations in the Committee on Food Security at the Food and Agriculture Organisation [FAO], which has a better track record of being sensitive to the need to guarantee food security. No member is proposing to take the WTO out of the discussion on agriculture, however. There are many who argue that to remove agriculture from the WTO would only make global agricultural trade much more unfair.

The problem is that it is the WTO, not the FAO, which regulates agriculture and trade. Thus, WTO obstacles to food security must be removed. Developing countries should be allowed to invest in their own agricultural production and feed their own populations. This would allow these countries to no longer be dependent on global food aid. Public stockholdings for food security should be welcomed, as should protection for markets against import surges through a workable special safeguard mechanism. Countries that subsidise agriculture, as many developed countries do, should not be able to export that food at subsidised prices because it competes unfairly with local farmers and prices them out of their own markets, diminishing local production in the long run.

The process under way should revise WTO rules in line with the global consensus on agricultural investment and food security. Millennium Development Goal no. 1 called for the eradication of poverty and hunger. The current rules at the WTO work against this goal. They need to be revised urgently.

You talk of the “global consensus on food security”. Could you elaborate on this?

Every international body that deals with agriculture has come to recognise the need to prioritise food security over simply promoting trade. While the original Rome Declaration on Food Security in 1996 emphasised ensuring food security through market-based mechanisms, the 2009 World Summit on Food Security placed emphasis instead on national investments in agriculture. The African Union announced in the “Maputo Declaration” in 2004 the commitment by each country to invest 10 per cent of national budgets in agricultural production; 2014 was the African Union’s Year of Food Security. Olivier de Schutter, the former United Nations Special Rapporteur on the Right to Food, has detailed how WTO policies are incompatible with the right to food. He wrote a paper on this, which caused a massive uproar at the WTO [de Schutter’s 2011 paper is entitled “The World Trade Organisation and the Post-Global Food Crisis Agenda: Putting Food Security First in the International Trade System”]. De Schutter highlighted the importance of developing countries maintaining food reserves, as well as the importance of protecting their markets from international market volatility.

The policies that people like de Schutter talk about amount to subsidy regimes and other kinds of protective measures. Does not the United States, which is opposed to such regimes, have a subsidy regime in place for its domestic food production?

Yes, this is the case. The U.S. is the world’s largest agriculture subsidiser. In 2011, it spent over $139 billion for domestic support, double the subsidy paid out in 1995. Most of this is for food stamps for the poor, something similar to the public distribution system in India. But $15 billion of this was for overtly trade-distorting support. The European Union [E.U.] also provides domestic support—to the tune of $79 billion in 2013.

No wonder that the U.S. is often taken to the WTO on charges that its farm subsidies distort the level playing field. It has lost many of these cases. U.S. cotton subsidies alone have so depressed global cotton prices that Brazil has twice won WTO cases against the U.S. But rather than change the subsidies, the U.S. pays off Brazil to the tune of hundreds of millions of dollars.

Sadly, this leaves less politically powerful small farmers in Benin, Burkina Faso, Chad and Mali in the dust. In 2013, despite having its own domestic food security provisions, the U.S. blocked negotiations in the WTO. It specifically argued that India was trying to “roll back commitments” or that its distribution of poor farmers’ produce to poor citizens

would somehow distort global markets.

Could you explain how the U.S. and the E.U. get away with their subsidy regimes?

First, the WTO rules allow countries that had subsidy regimes before 1994 to continue these polices, with the idea of reducing them over time. At the time of the inception of the WTO, almost all the countries that were engaging in subsidies were developed countries. Over 100 developing country members are not allowed these subsidies. Ten years ago, the U.S. and the Europeans agreed to phase out the tens of billions of dollars -worth of legal subsidies. They have not lived up to their bargain. Second, even with all this latitude, they do get fined, which they prefer to pay off rather than participate to change the rules for the benefit of all countries.

There is one more problem, which relates to the “reference price”. To calculate the “trade-distorting” subsidies, countries have to figure out the difference between the minimum support prices [MSP] and the WTO “reference price,” which is the average world price from 1986 to 1988. The WTO prefers to use this archaic method rather than calculate the difference between the MSP and the current market prices. Since developing countries have experienced terrible inflation, the gap between the MSP and the WTO “reference price” is ludicrously high. India’s Ambassador to the WTO, Jayant Dasgupta, has been a vocal critic of this “reference price” system. It disadvantages developing countries. Developed countries, by the way, don’t have to use this system because their food security programmes are considered “non-trade-distorting” by the WTO rules.

Could you describe what happened regarding food security at the WTO meeting in Bali, Indonesia, in December 2013?

The Bali meeting was very contentious. The U.N. Special Rapporteur on the Right to Food again called for developing countries to be granted the freedom to use food reserves to help secure the right to food without the threat of sanctions by the WTO. He said that states that must provide food security polices should not have to “tiptoe around WTO rules”. Indian farmers, I recall, wanted the Indian government to hold fast. This pushed India to lead the food security coalition in the WTO, which fought a hard battle against U.S. intransigence.

No final agreement was reached, only a commitment to further negotiations. The WTO members gave themselves four years to reach a settlement. The interim agreement was what was called a peace clause. It came with concessions to developed countries in the guise of a Trade Facilitation Agreement, which would force developing states to put resources towards making trade easier rather than health care and education. Transnational shipping and logistical corporations won out over “development”. This was called the Bali Package.

Could you elaborate upon the peace clause?

Under the peace clause, countries that have existing subsidy programmes cannot be subject to legal cases by other WTO members if they comply with onerous reporting requirements and prove that their subsidies do not distort markets. By the way, the U.S. does not need to follow these requirements. No new programmes may be implemented, and there was no guarantee that a permanent solution would be agreed on the end of the four years. However, there was a wrinkle. Legal ambiguity in the text meant that it was not clear whether the peace clause would be in effect until a permanent solution was agreed on, or only for four years—and would then expire. Thus, when the new Government of India came to office last spring, they requested a clarification that the peace clause would be in effect until a permanent change in the rules was agreed on. Again, the U.S. refused to make this clarification, demonstrating that indeed it had been planning on allowing the peace clause to expire without a new deal in place.

India then countered that it would not let the other aspects of the Bali Package come into effect until it had received this simple clarification. And while the U.S. spent the summer blaming India for supposedly scuttling the Bali Package, it refused to make the clarification. Indian farmers and Indian Left parties, supported by global civil society, kept the pressure on their government. Months dragged on. U.S. corporations didn’t want their trade facilitation deal imperilled. Because of the trade facilitation gift, the U.S. agreed to allow the peace clause to remain in place until a permanent solution is agreed upon. WTO members agreed to make “all concerted efforts” to find a permanent solution on public stockholding for food security by the last day of 2015. They moved up the date for the expiration of the peace clause by two years. This means that the decision would have to come out of the upcoming WTO ministerial meeting to be held in Nairobi, Kenya, from December 15 to 18 of this year.

Thus, there is a short window of time in which to expose U.S. hypocrisy in the negotiations and work to build global pressure to ensure that the most damaging rule in the WTO can be brought into line with the global consensus in favour of developing countries engaging in the global best practice of strategic food reserves, for the benefit of farmers’ livelihoods, rural development and the right to food.

Published in Frontline,in

Links with the West- Modi government in one year

Prime Minister Narendra Modi’s three-nation tour has been significant, with a rich haul of agreements signed, understandings reached, and diverse constituencies touched. By RAJIV BHATIA

PRIME MINISTER NARENDRA MODI’S THREE-nation, nine-day tour (April 9-16) brought remarkable glimpses of Paris, Berlin, Ottawa and several other Western cities into millions of homes in India and around the world. It was an opportunity for the country to see how its government was projecting India in advanced democracies and an occasion for those developed economies to judge for themselves the potential and future trajectory of the world’s largest democracy.

The subtle shift in the portrayal of the Indian economy from a slow-moving elephant to a powerful lion on the prowl (remember the logo of the “Make in India” campaign) is significant. While speaking at the inauguration of the Hannover Fair, Modi thanked the host for “allowing us to unleash our lions in the city”. Media reports on Modi’s tour seemed to highlight defence, the economy and the diaspora as its defining facets respectively in France, Germany and Canada. But, contemporary India practises a multilayered diplomacy that addresses the concerns of various constituencies, ranging from the political to the strategic, business to cultural, and the elite to the common people.

Referring to the big picture, Foreign Secretary S. Jaishankar observed that the visit’s overarching theme was to deepen cooperation with key members of the G7, the grouping of the world’s most prosperous democracies. They are “relevant” to India’s development programmes and enjoy “political convergence” with it. With the government having already invested much in advancing India’s neighbourhood and “Act East” policy and the relationships with the United States, Russia and China, it was time to focus on other power centres in today’s multipolar world.

France

For long, post-War Europe was managed through a close alliance between France and Germany, but of late, the power balance seems to have tilted in Germany’s favour. Yet, the critical synergy between the impulses and interests of France and India remains unchanged. The strategic partnership, established in 1988, has witnessed significant progress. The importance France attaches to its relations with India was reflected in President Francois Hollande’s visit in 2013 and the visit of Foreign Minister Laurent Fabius in mid-2014. Modi’s visit helped showcase and strengthen the multifaceted partnership.

This visit resulted in the signing of 20 memorandums of understanding (MoUs) and agreements. Two issues that had become quite intractable were tackled head-on and resolved, at least partially. For years, the two sides strove to find a way to finalise the deal for the Medium Multi-Role Combat Aircraft (MMRCA). Agreement on pricing and indigenisation of the aircraft’s production in India had proved elusive. Against this backdrop, an understanding was reached at the government level for the purchase of 36 Rafale fighter planes in “a fly-away condition as quickly as possible”. This arrangement has apparently been made on “better terms” than were offered before. New Delhi has faced some flak for compromising on its “Make in India” policy, but defence experts have justified the agreement as being essential to meet the urgent needs of the

Indian Air Force.

The second issue concerns the setting up of four nuclear power reactors in Jaitapur, Maharashtra. After years of protracted negotiations following the framework agreement of December 2010, the companies concerned—Nuclear Power Corporation of India Limited and Areva, and Larsen & Toubro and Areva—reached agreements during Modi’s visit, which should pave the way for the project. How much time will be needed to commission the reactors remains unclear. Paris and New Delhi are close partners in the battle against terrorism. In the light of the terrorist attacks on the French weekly Charlie Hebdo in January 2015 and the release, in Pakistan, of the mastermind of the 2008 Mumbai terror attacks, the two governments articulated their identical approach to counterterrorism.

In a 42-paragaph joint statement, the two governments “reaffirmed” their commitment to the strategic partnership and announced their intention to “consult and support each other”. They spoke of “their independence and strategic autonomy” and stressed that they were committed to continuing their joint efforts to tackle “global challenges”. France voiced its support for India’s candidature for a permanent membership of the United Nations Security Council “without further delay”. They also agreed to commence bilateral dialogue to develop “ways and means of their cooperation in the maritime domain”, especially in the Indian Ocean region.

Significantly, India has welcomed “closer engagement” of France in the affairs of the Indian Ocean Rim Association. The document also spells out the governments’ plans to deepen mutual cooperation in diverse areas: climate change, smart cities, security, space, nuclear energy, the economy, people-to-people contacts, heritage and culture, education, science and technology, sports and health. France would provide a credit line of €1 billion over the next three years for sustainable infrastructure and urban development projects. Agreement was also reached on working together to upgrade the Delhi-Chandigarh railway line to a 200 kmph line and to redevelop Ambala and Ludhiana railway stations.

Germany

At several public appearances and interactions with German business and industry, Modi made a powerful pitch for India as an ideal investment destination. Stressing that there was a natural fit between Germany’s capabilities and India’s needs and expectations, he repeatedly plugged for “a strong partnership between the king of the earth, the lion, and the king of the skies, the eagle”.

India and Germany have been bound together by a strategic partnership since 2001. Heads of state/government have exchanged visits regularly, the last visit being of Prime Minister Manmohan Singh to Germany in 2013 and of German President Joachim Gauck to India in 2014. Germany is India’s largest trading partner in Europe and the second most important partner in terms of technological collaborations. Bilateral trade was worth over €16 billion in 2013. As an important development cooperation partner and as a country with a long tradition of cultural and academic exchanges, Germany has consistently shown high interest in nurturing its relations with India.

Modi’s visit to Germany concluded with a joint statement, issued in the name of “the Prime Minister of India and the Federal Chancellor of Germany”. They spoke of a common objective to encourage “synergies” between German expertise and new opportunities available in India. “Our strategic partnership is entering a new and more intensive phase,” they noted and agreed on a 10-point list of collaborations in specified areas. Further, they committed themselves to renew their efforts to hold negotiations for “an ambitious” free trade agreement between India and the European Union (E.U.). The two governments would now prepare for the third round of intergovernmental consultations, due to take place during Chancellor Angela Merkel’s visit in October.

Canada

The decision to add Canada to the Prime Minister’s itinerary, which in the normal course would have instead included London and Brussels, was innovative. It reflected Modi’s expanding world view. Significantly, he portrayed Canada as “a major Asia-Pacific power” and depicted India-Canada relations as “a natural partnership of shared values”, “an economic partnership of immense mutual benefit”, and “a strategic partnership” that should address “global challenges”. Prime Minister Stephen Harper conveyed, through special gestures such as his decision to travel on Modi’s special aircraft to Toronto and Vancouver, that Canada accorded high importance to its ties with India and to the growing clout of the 1.2- million-strong Indian community in Canada. A senior Canadian diplomat in New Delhi to whom this author spoke referred to Modi’s “rock star status” in North America, stressing that Canada had to wait for 42 years for a stand-alone visit by an Indian Prime Minister.

The visit’s immediate achievements included the signing of the agreement on long-term supply of uranium to India and 13 agreements on skill development. There are indications that the Comprehensive Economic Cooperation Agreement may be signed by September. The failure to sign a bilateral investment promotion and protection agreement, however, was “a marked disappointment”. Writing in The Globe and Mail, David Malone, a former Canadian High Commissioner to India, advised Canada to play “the long game” in order “to court India”. He noted: “Canadian capital could help new India’s economic expansion.” Canadians were urged to engage more meaningfully with India.

Glaring omission

A glaring omission in Modi’s Europe tour was the absence of interaction with the E.U. leadership. The fault seems to lie with Brussels, which failed to accommodate New Delhi on the proposed dates. Even so, South Block could have fitted in at least a brief, symbolic visit to the European Parliament or the E.U. Commission to show its respect for the 28 nation grouping. The E.U. may be inward-looking at present, but its significance for India cannot be ignored. Joao Cravinho, E.U. envoy in Delhi, stated that the E.U. could be the biggest source of advanced technology to India and the No. 1 platform to get the country integrated into the global economic chain. Both sides now need to work earnestly to organise the next, much-delayed India- E.U. summit soon.

Modi’s visit has been rich in the haul of agreements signed, understandings reached, diverse constituencies touched, and personal equations made. The image of India as a nation heading towards a positive transformation has been given a big boost. Let us ensure that there is no disconnect between image and reality in the future.

Rajiv Bhatia is director general of the Indian Council of World Affairs. The views expressed here are personal.

‘Building ties for the 21st century’

Interview with Le Yucheng, Chinese Ambassador to India

On the eve of the 65th anniversary of the establishment of diplomatic relations between China and India on April 1, 1950, the Chinese Ambassador to India, Le Yucheng, in written answers provided to a set of questions posed by Srinivasan Ramani, emphasised the need for a renewal of China-India ties in tune with the realities of the 21st century. Excerpts follow. Later, in an interaction in Chennai, the Ambassador identified several areas, which he suggested present new avenues for cooperation between India and China. These include infrastructure development and regional security apart from already expanding ties

At what stage are the two countries after the 18th round of talks on boundary negotiations

held recently? Can we expect a substantive breakthrough since the start of fresh talks?

On March 23, 2015, the 18th Meeting of the Special Representatives on the China-India boundary question was held in New Delhi. Yang Jiechi, State Councilor and Special Representative on the Chinese side, and Ajit Doval, National Security Advisor and the Special Representative on the Indian side, exchanged in-depth views on the boundary question and had strategic communications on bilateral relations and international and regional issues of common concern. This is the first boundary question talk since the new Indian government took office, and after the appointment of the new Indian Special Representative. The meeting was in a friendly and candid atmosphere. The two sides reviewed the positive progress achieved at the previous Special Representatives Meetings over the past years, and stressed the progress of the framework negotiation along the right track on the basis of the realised results and consensus, while taking the big picture of bilateral relations and the long-term interests of the two peoples into consideration. Both sides reaffirmed the need to properly manage and control conflicts and join efforts to maintain peace and tranquility in the boundary area before the boundary question is finally settled.

As Chinese Foreign Minister Wang Yi said in the press conference held by the Third Session of the Twelfth National People’s Congress recently, the China-India boundary question is a legacy of history. At the moment, the boundary negotiation is in the process of building up small positive developments. It is like climbing a mountain. The going is tough and that is only because we are on the way up. This is all the more reason that we should do more to strengthen China-India cooperation, so that we can facilitate the settlement of the boundary question.

The Chinese government has announced the Maritime Silk Route and Silk Road initiatives (also called ‘Belt and Road’) recently. Can you explain these initiatives and how they pertain to China-India relations?

The ‘Belt and Road’ initiatives put forward by China aims at achieving development and prosperity for the various countries along the ‘Silk Road Economic Belt’ and the ‘21^st Century Maritime Silk Road’ by linking the past with the present, landmass with seas, and development strategies of various countries. The Vision and Action plans of the initiative have just been issued by the Chinese government. The initiative will forge four billion people from more than 60 countries in Asia, Europe and Africa into a community of common destiny and interests. If I may use a musical metaphor, it is not China’s solo, but a symphony performed by all these countries. The ‘Belt and Road’ initiatives will observe the principles of discussing, building and sharing together, through policy coordination, road connectivity, unimpeded trade, monetary circulation, and mutual understanding. These initiatives have been put forward to promote economic cooperation, and are not driven by geopolitics, or an attempt to seek spheres of influence.

Since the launch of these initiatives, significant headway has been made in building new mechanisms and laying down new policy frameworks. More than 50 countries along the ‘Belt and Road’ have expressed support; China has either already signed or is in the process of signing agreements with several countries. A set of programmes involving building infrastructure, setting up of industries and boosting people-to-people contacts have already been started. The first Central Asia International Freight Train from Lianyungang (Jiangsu Province), China to Almaty, Kazakhstan, began operation on February 25. The construction of Line D of the China-Central Asia natural gas pipeline project has already begun. The eastern route of the China-Russia natural gas pipeline project will be constructed very soon and the agreement on the western route will be signed shortly.

All the above projects mark the early harvest of the initiatives. The founding of the Asian Infrastructure Investment Bank has not only been welcomed by the Asian countries, but developed countries, including France, Germany, Britain, Canada have also expressed willingness to join it. The bank currently has 41 prospective founding member countries. India enjoys a unique geographical location, was a significant country along the ancient silk roads and spice route, and is situated at the crossing point of the contemporary ‘Belt and Road’. India is China’s natural and significant partner in promoting the ‘Belt and Road’ initiatives. Last year, India became one of the first prospective founding members of the Asian Infrastructure Investment Bank and hosted its second chief negotiators’ meeting in Mumbai in late January this year. In the second half of this year, India will also host the third meeting of BCIM Economic Corridor Joint Working Group. All these reflect the cooperative attitude of India to the ‘Belt and Road’ initiatives. China is willing to strengthen communication and coordination with India, to link the ‘Belt and Road’ initiatives with India’s ‘Spice Route’ and ‘Mausam’ projects, and bring tangible benefits to the peoples in our two countries and throughout the region.

There is a trade imbalance between India and China, with India’s trade deficit being around

$37.8 billion in 2014. At the same time, bilateral trade in 2014 topped $70.6 billion. How do you think the imbalance can be corrected?

The Chinese side does not like trade surplus and prefers balanced trade. China takes the Indian concern of trade imbalance very seriously. Although the main reason for our trade imbalance lies in objective factors such as the differences in industrial structures of our two countries, we are willing to provide opportunities to increase India’s exports to China. Since 2008, the Ministry of Commerce of China has sent six trade delegations to boost imports from India. China warmly welcomes the Indian side to expand trade through various trading platforms, such as China-South Asia Expo and China Import and Export Fair (Canton Fair), and the Import Promotion Centres recently built in Shanghai, Tianjin and other cities.

In order to increase the popularity of Indian products, China also welcomes Indian Chambers of Commerce to conduct promotion events in China. Besides, China hopes that India would ease restrictions on exporting its competitive products such as iron ore, etc. to China, reduce tariffs, and encourage Indian companies to export more agricultural products. To encourage Chinese enterprises to invest in India and participate in the ‘Make in India’ campaign, the key is to reduce restrictions and streamline procedures on business visas. More Chinese businessmen will bring more investment, which will help improve trade balance.

There is a sense among Indian strategic thinkers and in the media that China’s cooperation

with other South Asian countries is part of a policy of encirclement. How would you answer

these concerns?

China adheres to peaceful development. China does not have any tradition of expansion, or any intention to expand. India suffered invasion and occupation by other major powers in history, while China as the largest neighbour always kept friendly relations with India, kept up communication and exchange between civilisations, and has never conspired against India or other neighboring countries. The cooperation between China and other South Asian countries is based on the foundation of common development. South Asian countries are willing to cooperate with China, and ride the Chinese express train of rapid development. China is also willing to share development opportunities with South Asian countries. Cooperation between China and South Asian countries is open, transparent, and beneficial to all the concerned countries. There are no ulterior motives and there is no need for India to worry. China is also willing to work with India to conduct trilateral cooperation and multilateral cooperation in the region, to achieve win-win cooperation and common development.

India US pact- A good look

Lack of definition and of transparency governed the entire trip. Deals were struck behind closed doors,

often to set aside parliamentary laws. By VIJAY PRASHADEMBLEMATIC of the visit of United States President 

Barack Obama to India was the single-file queue of major Indian CEOs

waiting to shake hands with Obama. There they were: the Ambani brothers, Gautam Adani, Sunil Mittal, Ratan Tata, men

whose names are embossed in gold. Not often do these CEOs wait their turn. They are known to seize the moment. The

concept of the VVIP—an extra V to enhance Very—is essentially an Indian term. It is a child of the liberalisation era. These

are VVIPs. But in the presence of Obama, they stood patiently in the most orderly queue seen that evening in India.

The bonhomie between Obama and Prime Minister Narendra Modi set the terms for the media coverage of the visit. This is a

crucial aspect of contemporary public relations managers for senior political figures. When Modi went to Australia, he was

said to be best buddies with Premier Tony Abbott (the Australian said that Modi is “like a brother”). Personal connections

are essential to highlight. Hugs and smiles, easy gestures and affection for each other on Twitter: this sets the mood for the

visit and governs the superficial media attention.

Behind the scenes, in the U.S.-India CEO forum and in the negotiations between the bureaucrats, the real business of these

trips is worked out. The CEOs complained about India’s loose adherence to intellectual property laws and worried about too

much regulation in Indian industrial and financial law. They longed for a looser regime so that they can, in Modi’s tortured

phrase, Make in India. “The government is taking initiatives to ensure ease of doing business,” promised Modi. His Niti

Aayog chief, Arvind Panagariya, had written in Foreign Policy (the journal of the U.S.-based Council on Foreign Relations)

that Indian labour laws would be the first to be reformed. “Highly rigid labour laws,” he wrote last June, “have made

entrepreneurs terrified of hiring workers.” Modi now promises these CEOs that he would lessen their terror. Soon, labour

laws will be eviscerated and investment will be able to operate untrammelled. Obama agreed, “Modi and I are interested in

smart regulation.” “Smart regulation” was left undefined.

The lack of definition and of transparency governed the entire trip. Deals were struck behind closed doors, often to set aside

parliamentary laws. In 2010, the Indian Parliament passed the Civil Liability for Nuclear Damage Act, which ensured that in

the event of any nuclear accident the liability vested with the suppliers. A year later, a terrible nuclear accident at

Fukushima, Japan, underlined the wisdom of such a law. Not only was public confidence shaken by the Fukushima accident,

but also public dismay was raised to fever pitch when the insurers refused to cover the damages. Inoculation for private

capital in the event of financial or industrial disasters has become common—this is what often passes by the name of

“reform”. Profits from these massive investments are guaranteed, but losses are to be borne by the public exchequer. “The

deal is done,” announced Foreign Secretary Sujatha Singh, indicating that the Modi government has been willing to set aside

the 2010 Act. U.S. firms General Electric and Westinghouse can comfortably enter, respectively, Kovada (Andhra Pradesh)

and Mithi Virdi (Gujarat) without worry. The India-Nuclear Insurance Pool, a vague mechanism in case of an accident,

should not provide comfort to those worried about a disaster.

The Modi government put the word about that the liability arrangement would put India “in conformity” with the

Convention on Supplementary Compensation for Nuclear Damage (CSC), a 1997 IAEA (International Atomic Energy Agency) framework that essentially shelters suppliers from liability. Only a handful of states have signed on to the CSC, whose payout in the event of a disaster is far less than promised by the IAEA’s Vienna Convention of 1963. The U.S., one of the signatories to the CSC, has made it clear that it would not be bound by its dispute resolution mechanism. This being the 30th anniversary of the Bhopal disaster, it is correct to be watchful about the promises of the U.S. government and multinational industrial firms, both of whom joined the Indian government to let down the victims of the 1984 Union Carbide gas leak.

Down the hall from the pomp of the dinners and the hushed debates around “Contracting Parties” and “Public International

Law”, sat the merchants of defence and the architects of geostrategy. They had two things before them—the push by the U.S. to draw India into its view of international affairs, and the push to encourage India to buy U.S. weaponry. Hardeep Singh

Puri, India’s former ambassador to the United Nations and an adviser to the Bharatiya Janata Party (BJP), wrote that the

discussions sought convergence related to “stability and security in the Asia-Pacific and Indian Ocean regions”. The

undercurrent here is to suborn India into the narrative of U.S. policy—to “Pivot to Asia”, which is a polite way of saying to

“Encircle China”. Modi and Obama released a “Joint Strategic Vision for the Asia Pacific and Indian Ocean”, which poked a

finger in Beijing’s eyes. In the anodyne language of such statements, it called for maritime security and respect for the U.N.

Convention on the Laws of the Sea.

What is fascinating about this is that the U.S. objects to the Convention on the Laws of the Sea on the grounds that the

protection of seabed exploration and mining impinges on U.S. strategic interests. Nonetheless, the “Joint Strategic Vision”

refers to this Convention to assert the need for peaceful waters, “especially in the South China Sea”. This is a direct challenge to Beijing. Visits by Modi to Australia and Japan—two other pillars of the U.S. strategy to build a ring around China—indicate that India has now drifted into a U.S. vision of Asian relations. China reacted as it would. The Chinese Foreign Ministry suggested that such mention of the South China Sea was a provocation. As an influential member of the Nuclear Suppliers Group, China has indicated that it might block India’s membership. The NSG, which controls the disbursement of nuclear material, was founded in 1974 in reaction to India’s test of a nuclear weapon. Allowing India into this group would not only ease access to nuclear materials, but also signal India’s removal from the nuclear pariah list. In aggravating China to please the U.S., Modi went some way to undermine his own objectives—namely to move India into the nuclear power club. India currently straddles two major international blocs—the U.S.-led alliance and the BRICS community. It is not going to be easy for the Modi government to balance the two, especially if the U.S.demands that India make inflammatory statements to affirm the U.S. position on world affairs (namely on China, Israel and Iran). Despite all the excitement about economic deals, the U.S. offers little to India apart from the import of U.S.-made goods into the Indian market. The BRICS bloc offers far more, including energy security and mutually beneficial trade. It will not be easy for the Modi government to navigate these waters, as the Chinese reaction to the Joint Statement indicates. More caution in foreign policy should be the watchword.

(Frontline.in)

Obama’s Visits and outcomes

The Obama visit has fuelled the government’s deep desire to woo foreign investors with major

concessions, possibly in bilateral investment treaties. Probably an indication of this is the decision not

to challenge the Vodafone judgment by the Bombay High Court on the claim made by the tax

department in the transfer of shares case. By C.P. CHANDRASEKHAR 

President Barack Obama has returned to the United States after his whirlwind visit to New Delhi. As the media and analysts pick up the pieces of real information concealed in the officialese in which the joint and separate statements released after the visit are written, the picture that emerges is one of a desire for a new strategic partnership that is still in the making. Even the joint statement described it as a Joint Strategic Vision. This is true in the economic sphere as well. The promise held out by the joint statement is to advance ongoing and often stalled negotiations on trade and investment, besides other important areas such as intellectual property and the digital space. No major “deals” have been struck.

There are two factors that would help this new effort at strengthening a tenuous alliance. One is the Narendra Modi government’s commitment to wooing American and foreign business. The second is the desire of both the U.S. and Indian governments to limit China’s growing influence over the region and elsewhere in the world. The thrust, therefore, is to project India as an alternative force in the region, with India expressing an interest in joining the Asia Pacific Economic Cooperation (APEC) forum and the U.S. welcoming that initiative, as well as to play on tensions between China and other

countries in the region. India seems pleased, even though few deny that there are no equal alliances in a world with wide variations in economic, political and military might. India can serve at most as a junior partner.

As of now, assessed in trade terms, India needs the U.S. more than the latter needs India. U.S. exports to India in 2013 were at $35.7 billion, and imports from India stood at $61 billion. The implied $25.4 billion trade deficit reflected a steep rise from $6.3 billion in 2003. Moreover, India’s services exports to the U.S. rose from $2 billion to $19 billion over this period, whereas India’s imports of services from the U.S. had risen from $3.7 billion to $13.5 billion. In the event, the U.S. recorded a deficit in its services trade with India as well, even though it had a surplus in that area vis-à-vis the rest of the world. In 2013, India ranked a low 18th as a market for U.S. goods, and U.S. trade with China was nine times as large as that with India. 

Thus, the American plea for more market access in India seems to be strengthened by the figures. This matters because for both leaders, strengthening a relationship, even if with strategic objectives, requires winning sanction from their domestic constituencies. The difficulty is that one set of forces, business in the U.S., is looking for new opportunities, markets and lucrative avenues for investment and growth, just as India’s business interests are. Those interests would be looking to see what they would gain from the quid pro quo that any restructuring of a relationship involves.

In his State of the Union address just before he left for India, Obama made clear what he expects from Asia in general and India in particular. “When ninety-eight per cent of our exporters are small businesses, new trade partnerships with Europeand the Asia-Pacific will help them create more jobs. We need to work together on tools like a bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped ‘Made in the USA’. China and Europe aren’t standing on the sidelines. Neither should we.” The United States rather than China should write trade rules for Asia, he added. Yet, there is a problem here because the main plank of Prime Minister Narendra Modi’s effort to accelerate lagging Indian industrial growth by making India a manufacturing hub is to urge foreign (besides domestic) industrialists to “Make In India” for export to international markets. The only way to reconcile this apparent conflict of interests would be to open India’s markets to U.S. business and provide investment opportunities to U.S. capital. Not surprisingly, besides demands for greater trade liberalisation, there is an effort at reviving negotiations on a bilateral investment treaty that began in 2008 but have not proceeded very far.

According to an official press release in New Delhi, the President (of the U.S.) and the Prime Minister (of India) affirmed their shared commitment to facilitating increased bilateral investment flows and fostering an open and predictable climate for investment. To this end, the leaders instructed their officials to assess the prospects for moving forward with high standard bilateral investment treaty discussions given their respective approaches.

Bilateral treaties

Herein lies an area, besides others like intellectual property, in which the Indian government would be under pressure to offer major concessions. Bilateral investment treaties have been seen as substitutes for the Mulitlateral Agreement on Investment that failed to get off the ground in the late 1990s. A subsequent effort on the part of the U.S. and the European Union to include it in the World Trade Organisation (WTO) agreement was also stalled, with India playing an important role in the process. The strategy since then has been to sign bilateral investment treaties (BITs), with more than 2,000 reportedly in place. These treaties seek to define what is considered foreign investment and include provisions for national and most favoured nation status to the signatories; the assurance of fair and equitable treatment; promises to compensate in case of expropriation; guarantees for repatriation of incomes and capital gains from sale of assets; and dispute settlement measures in case of any conflict between the investor and the host state.

Since these agreements are bilaterally negotiated, there are differences across agreements between different pairs of nations. But the tendency is for parties to define for themselves templates with which they approach each individual negotiation. As is to be expected, developed and predominantly investor nations try to win for themselves significant concessions and important guarantees that implicitly privilege foreign investors over local ones. One of the reasons why BITs have become controversial is that they are used as weapons to oppose various industrial and tax policies adopted by host governments and to demand large compensation on the grounds of violation of different

clauses when such policies are implemented. When this occurs, the difficulty is that BITs often include clauses that allow for arbitration under an investor-state dispute settlement (ISDS) system, where the dispute can be referred to an independentinternational arbitrator such as the International Centre for Settlement of Investment Disputes (ICSID) or the United Nations Commission on International Trade Law (UNCITRAL) or arbitration bodies run by private industry organisations. The experience from a large number of countries is that the system tends to be unduly biased in favour of the investor rather than the host state.

Cochabamba protests

Among the most infamous of them is the case in which the water multinational AdT (formed by Bechtel and a consortium of investors) demanded $50 million as compensation from the Bolivian government in a case filed with ICSID, based on a BIT between Bolivia and Holland, where Bechtel had a paper-only registered office. The demand arose when the Bolivian

government was forced to reverse the privatisation of water supply in Cochabamba municipality in the aftermath of protests triggered by hikes in water rates that led to large sections of the population being deprived of access to water. The protests that followed worldwide finally forced Bechtel and its investor allies to settle for a token payment of around 30 cents.

Such incidents have made some governments wary. Thus, a positive feature in the case of a potential U.S.-India BIT is that in 2012 India developed a template for treaties it would negotiate, which sought to address the problems that arose with an earlier template, the use of which led to a series of arbitration notices and demands for compensation from companies such as Vodafone. Not surprisingly, India’s current template differs significantly from the model treaty favoured by the U.S.

In a guest post on Financial Times Beyondbrics blog, Kavaljit Singh has detailed these large differences. They begin at the level of definition of investment, with the U.S. model favouring an asset-based definition (that includes besides enterprises, financial instruments, real assets, and even intellectual property rights). That allows a variety of policies to be challenged in the name of BIT violation. The Indian template, therefore, focusses on investment by an enterprise with substantial and long-term commitment of capital (which is supposed to be the vehicle for stable, foreign direct investment).

Moreover, the U.S. template provides for pre-establishment national treatment, which precludes full scrutiny of foreign investors and their intentions, and for most-favoured nation status, both of which are not included in the Indian template. Finally, the ISDS in the Indian template can be resorted to after all domestic measures of recourse have been exhausted with the foreign investor barred from demanding arbitration if the domestic judicial system has ruled in favour of the host government.

On the surface these seem to protect India against predatory foreign investment. These are all only differences in the template and can be modified in the course of negotiations. It helps that the details of those negotiations are not subject to parliamentary or public scrutiny. Given the Modi government’s desire to accelerate neoliberal reform and clearly align with the U.S. to further its external economic and political goals, those concessions, like ordinances, could be pushed through

despite domestic opposition. The government has shown no reticence in revising policies adopted by the United Progressive Alliance (UPA). The changed and ambiguous stand of the National Democratic Alliance (NDA) after coming to power with regard to the civil liability of equipment suppliers in case of a nuclear accident illustrates its willingness to go back on its own positions. And the decision of the government not to challenge the Vodafone judgment by the Bombay High Court on the claim made by the tax department in the transfer of shares case points to its deep desire to woo foreign investors with major concessions. Tampering with an investment treaty template, which can be done by the executive bypassing Parliament, is no major challenge.

Deals and doubts- India and Recent Diplomacy

Deals and doubts

JOHN CHERIAN

It is the U.S. military-industrial complex that has gained the most from President Barack Obama’s visit. India is closer to becoming a member of a quadrilateral military axis involving the U.S., and a number of deals have been inked that may make India dependent on U.S. military technology in the long run. By JOHN CHERIAN

United States President Barack Obama seems to be a man in a hurry in his final two years in office. His critics, on the other

hand, say that lame-duck Presidents usually spend their last two years in office visiting foreign climes. Though Obama’s visit to India from January 25 to 27 was big news here, it did not get as much traction back home in the U.S. The U.S. media were more focussed on the Indian Prime Minister’s sartorial tastes and his propensity to address key Western leaders by their first names. Narendra Modi tried to convert the Obama visit into an Indo-U.S. love fest. Before the U.S. President’s visit, the Indian government asked Indian private companies to cut imports of oil from Iran. Industry experts in Dubai said that India was bowing to U.S. pressure. “India does not want the Obama visit to be overshadowed by some dispute over (American) sanctions on Iran,” Robin Mills, an oil consultant based in Dubai, told Reuters. To sanitise the capital before the arrival of the U.S. President, the government deployed over 50,000 security personnel and installed an additional 15,000 CCTV cameras.

In the last months of the United Progressive Alliance (UPA) government, relations between Washington and New Delhi had

become slightly frosty in the wake of the Devyani Khobragade incident. The U.S. Ambassador, Nancy Powell, had to leave

New Delhi without completing her term. Besides the Devyani Khobragade incident, Nancy Powell’s initial reluctance to meet

a politically ascendant Modi, who was denied a U.S. visa at the time, was a factor that could have hastened her exit from

India after the Bharatiya Janata Party’s (BJP) victory in the Lok Sabha elections. Now, with both the Indian Prime Minister’s Office (PMO) and the Foreign Office deciding to put the Devyani Khobragade incident on the back burner and Washington wholeheartedly embracing Modi, relations are firmly back on track. Many pro-establishment commentators are even saying that if Modi and his close advisers have their way, India will soon end up as one of the closest allies of the U.S. in the region, junking time-tested foreign policy principles like non-alignment and strategic autonomy along the way.

Brajesh Mishra, National Security Adviser in the first National Democratic Alliance (NDA) government, had talked about a

Washington-Tel Aviv-New Delhi axis emerging. Under Modi, a much wider axis extending all the way to Tokyo could

become a reality. There are reports that the Indian side is even willing to partner the U.S. in counterterrorism in West Asia

and Africa. America’s war on terrorism has led to much greater instability in India’s neighbourhood and many other parts

of the world. It has led to the emergence of more potent terror groups like the Islamic State (I.S.). Countries which have

joined the U.S. in the so-called “war on terror” have had to pay a heavy price.

The Indian Prime Minister broke with established protocol and went to the airport to receive the U.S. President. He promptly

greeted Obama with a hug, like a long-lost friend. Many more “hugs” were exchanged between the two leaders before

Obama left Delhi. When the Chinese and Russian Presidents were in New Delhi, they were received as per protocol. There

was only a formal shaking of hands. The Indian Prime Minister has reserved his “hugging” so far only to two other leaders,

the Prime Ministers of Japan and Australia, Shinzo Abe and Tony Abbot respectively. As The New York Times reported,

Modi’s action symbolised a “quadrilateral hug”.

India, the U.S., Japan and Australia conducted quadrilateral military exercises in the Indian Ocean in the last decade after

signing up for a quadrilateral military dialogue in 2006. That dialogue process has since lapsed after a previous Australian

government opted out of it. India, under the UPA government, was wary about the quadrilateral axis emerging against

China in the region. But now, Abe is back and Australia has a hawkish Prime Minster in Abbot. It has been reported in the

U.S. media that it was the Indian Prime Minster who was very keen during his talks with President Obama to revive the

quadrilateral security network. Abe and Abbot have been urging more intense defence and security cooperation between

the four countries since last year.

‘Town hall’ speech

Modi and Obama also jointly recorded a radio programme, “Mann ki Baat”, in which the Indian Prime Minister waxed

eloquent about his friendship with Barack Obama. It was only on the last day of his visit that Obama addressed the question

which has been worrying civil society in India and human rights groups internationally. In his carefully choreographed

“town hall” speech, the U.S. President, in a none-too-subtle message to the Modi administration, said that it was important

for the Indian government and people to ensure the sanctity of Section 25 of the Indian Constitution, which guarantees the

freedom of religion. Obama warned against the dangers of dividing society on sectarian lines. “Every person has the right to

practise his faith without any persecution, fear or discrimination. India will succeed so long as it is not splintered on

religious lines,” Obama told his audience, comprising mainly young university students. The increasing number of atrocities

and the rise of religious fundamentalism in the wake of the BJP coming to power have not gone unnoticed in the wider

world.

One of the Obama administration’s major initiatives is the U.S. military’s “pivot to the East”. American policymakers have

calculated that a rising China can only be effectively contained if major countries like India lend a helping hand to the

project. It is no surprise that during talks in New Delhi with the Indian Prime Minister, the subject of more military

cooperation between the two countries was one of the key issues that came up for discussion. The U.S. has been working

overtime to ensure that India ends up as the southern anchor in its “pivot to Asia”.

The other important issue that the U.S. President had on his agenda was to persuade the Indian government to relax

provisions relating to the “nuclear liability Bill” so that U.S. companies could start building civilian nuclear reactors in the

country. Big U.S. companies like Westinghouse and General Electric had serious reservations about India’s “nuclear liability

law” and have so far refused to go ahead with projects in India. President Obama’s decision to make a second visit to India

and agree to be the chief guest at the Republic Day celebrations at short notice indicated that the Indian government had

signalled that it would be giving concessions to the U.S. on some key issues that have been irritants in the bilateral relations

between the two countries.

After talks with the Indian Prime Minister, Obama announced that a breakthrough had been achieved on the

implementation of the nuclear deal and that the U.S. would be committed to its “full implementation”. The George W. Bush

administration had lifted its moratorium on the sales of nuclear fuel and reactor components to India in 2006 after the

nuclear deal was signed between the two countries. Both sides have not been forthcoming about the details of the current

deal. In fact, there was no mention of the breakthrough figures in the joint statement released after the bilateral talks. The

Indian side has not formally diluted the “nuclear liability law” as initially demanded by the big American companies.

According to American officials, the Indian government will provide “extra security” to foreign companies involved in the

construction of nuclear reactors. Under the nuclear liability law, foreign companies would have had to pay hefty

compensation in case of accidents.

Indian officials have said that the government will help set up an insurance pool that will considerably minimise the

compensation to be paid by American companies in case of an accident. According to reports, the secretive deal to override

the “nuclear liability” clause involves Indian taxpayers and Indian insurance companies picking up the bulk of the tab in

case of a nuclear accident. The Bhopal gas tragedy is still fresh in the minds of the Indian public. The Fukushima nuclear

disaster two years ago has cost the Japanese government more than $20 billion. GE Hitachi, the American-Japanese company

bidding for a contract in India, has signalled that it will only start work after the Indian government “is in compliance with

the international Convention of Supplementary Compensation”, a global liability accord. In response to India diluting its

stance on the nuclear liability issue, the U.S. government has given up its claim to exercise control in perpetuity over all

nuclear equipment and parts supplied by U.S. companies. The Obama administration agreed with the Indian viewpoint that

the International Atomic Energy Agency’s (IAEA) supervision would suffice.

As expected, the two countries agreed to renew their defence framework agreement for another 10 years. The two

governments agreed to further step up cooperation between their militaries. The agreement will provide for more joint

military exercises, with particular focus on naval exercises to enhance maritime security in the Asia-Pacific region. The

maximum number of joint military exercises India holds annually is with the U.S. The two countries have laid out a vision

document that spells out the contours of a new alliance.

“As leaders of the world’s two largest democracies that bridge the Asia-Pacific and the Indian Ocean region and reflecting

our agreement that a closer partnership between the United States and India is indispensable to promoting peace,

prosperity and stability in those regions, we have agreed on a Joint Strategic Vision for the region,” the joint statement said.

The statement explicitly affirmed “the importance of safeguarding maritime security and ensuring freedom of navigation

and over-flight throughout the region, especially the South China Sea”. The joint statement reflected the U.S.’ world view on

most of the other contentious international issues, including Iran and North Korea. North Korea’s ballistic missile

programme was criticised. The joint statement said that it was up to Iran to prove that its nuclear programme was

“exclusively peaceful”.

The joint statement called on parties (read China) to “avoid the threat or use of force” and to pursue the “resolution of

maritime disputes through peaceful means”. Reports in the U.S. media said that Obama and Modi spent a substantial

amount of time discussing China during their talks. American officials were quoted as saying that with India now officially

coming on board, the two countries can do much more “to restrain China’s ambitions and preserve the post-war order in the

region”. As a quid pro quo for India’s open support for the U.S.’ rebalancing in East Asia, the Obama administration has, in

the joint statement, announced support for India’s bid to join the Asia-Pacific Economic Forum. President Obama also

assured India of the U.S.’ support in its bid to join the Nuclear Suppliers Group (NSG). Key members of the NSG remain

opposed to India’s membership. All members of the 48-nation group are signatories to the nuclear Non-Proliferation Treaty

(NPT).

The U.S. Deputy National Security Adviser, Ben Rhodes, told the American media in New Delhi that the Obama visit would

send a message to the world that India and the U.S. were going to be “closer partners going forward” and that the new

partnership was “consistent with the President’s focus on the India-Pacific region”. Both sides have indicated that the

number of joint military exercises to be held annually will go up significantly. Under the Defence Trade and Technology

Initiative (DTTI), the U.S. plans to sell to India “transformative technology” to co-produce military hardware like the Javelin

anti-tank guided missiles and MH-60 helicopters. The man credited with creating the DTTI is Ashton Carter, who will soon be taking over as the U.S. Defence Secretary. In the coming two years, India has indicated that it wants to buy 22 Apache

helicopters, 15 Chinook helicopters, four P-81 maritime patrol planes, six C-17 Globemaster III aircraft and other high-tech

equipment. The combined price tag would exceed $8 billion. The long-term goal of the American arms manufacturers is to

overtake Russia as the biggest weapons supplier to India.

The U.S. military-industrial complex will have sufficient reasons to be happy. Unlike the Russians, the Americans are

reluctant to “make in India” and part with their advanced technology. Agreement has been reached only to co-produce

relatively unsophisticated “Raven” drones, surveillance systems for Lockheed C-130 planes and jet engine technology. There

are fears that under the DTTI signed in 2012, India will become increasingly dependent on American military technology.

The Americans have indicated that meaningful transfer of technology will only happen if India signs the Logistics Support

Agreement (LSA). The LSA will give the American military access to “lily pad” bases on Indian soil. The previous Indian

government was of the view that the LSA would impinge adversely on India’s strategic autonomy. The Modi government

does not seem to have any such inhibitions as it has signed on to America’s strategic designs in the Asia-Pacific region.

(Published in Frontline.in)