Prospects for Indo-US Partnership
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- Published: Thursday, 01 June 2006 00:00
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The topic of Indo-American partnership elicits strong reactions - either optimistic sound-bites of shared economic and political values at the political level or pessimistic dismissals and accusations of double-standards at the level of Indian commentators, particularly in the shadow of the US Congress’ attachment of extraneous conditions to the Indo-US nuclear partnership, the proposed arming of Pakistan to the tune of $5 billion and the high-level penetrations of the Indian intelligence service by its American counterparts. Despite these acts of bad faith on the part of the Unites States, neither the Indian government nor market nor society has abandoned its engagement with it. Since the US is the larger and more powerful partner in this duo, it is worthwhile to examine its strategic outlook and to look at India’s potential through its eyes. One may then see the emerging contours for India’s participation more clearly and maneuver accordingly to safeguard our interests. This Op-Ed examines two possible trajectories in the US’ engagement with the world and seeks to extrapolate the implications for Indo-US partnership in either case.
Scenario I
Since the collapse of the Soviet bloc, the strategic dilemma for the US has been whether to focus on the threat from failed states or to focus on preparing for the next near-competitor, a la the Soviet Union. Thomas Barnett’s book, “The Pentagon’s New Map – War and Peace in the 21st Century” 1 provides a ringside view of this debate and its seeming tilt towards the former threat scenario. Barnett, a professor at the US Naval War College, is a respected voice in the American strategic community 2. He contends that:
(a) The threat of true global wars between large powers has effectively died with the end of the Cold War. This is due to the fact that there are no longer two competing economic ideologies jostling for supremacy.
(b) The incumbent political powers – the West – have bought into the idea of economic globalization and do not seek to replace it. The emerging political powers like Russia, China, India and Brazil also have bought into the idea of globalization. The increase in the issue-focused working groups among the G-7/8 and strong emphasis on compliance 3 with agreed-upon benchmarks, illustrate this trend of co-operation vividly. While there may be specific disagreements that reflect their society’s needs (farm subsidies, import tariffs on steel/timber/textiles, patent rights on life saving drugs etc.), they are willing to use their membership in world bodies like the WTO and regional trading blocs like the EU, ASEAN and NAFTA to negotiate their demands, instead of breaking those bodies. Thus, competition between the world powers has moved one rung above to supra-national entities or to the “system” stage from the level of nation-states. Therefore, the challenge of accommodating new members like India, China, Russia and Brazil into “the Core” will be dealt with in peaceful ways, not by war.
(c) The progress of globalization has been highly uneven and has resulted in a many exclusions, like Africa, the Middle East, parts of Latin America and the CAR region, which form “the Gap”. The exclusions are so severe that entire societies and nations in “the Gap” can be mobilized to fight the process of globalization, with Islamic fundamentalism being one example. The level of violence has now moved one rung below that of nation-states to the level of individuals or networks.
(d) The challenge for the US military is not to defeat a competitor in full-scale war; no real military competitor exists or is likely to in the medium term. The recurring burden for the US military, one that it is not equipped to handle, is the continuous deployment of US troops in regions of “the Gap”, from Iraq to Afghanistan to the Korean border. As Barnett points out, the number of American military’s crisis deployment days increased 70% from the 1970s to the 1980s, although the number of incidents increased only 20%. From the 1990s to 2003, the US military engaged in 140 military responses, 80% of them concentrated in Haiti, Yugoslavia, Iraq and Somalia.
(e) The American response should be to bridge the divide between “the Core” and “the Gap”, not merely to keep “the Gap” from intruding into “the Core”, like it did on 9/11. In this endeavor, it cannot go it alone, because the burden is too enormous for any one country to shoulder. The scale of political and economic investment required will need the buy-in of Europe, Russia and Asia.
In the first scenario, we accept that this will be Washington’s worldview, and extrapolate the prospects for Indo-US relations, as viewed by Washington, in the next 25 years or so.
(1) India’s value to the US will lie in functioning as “the Core” for South Asia that pulls “the Gap” – Pakistan, Afghanistan, Bangladesh, Nepal, Sri Lanka and Burma - into the orbit of globalization. In this regard, the US is helped immensely from India’s own acceptance of this methodology of dealing with its neighbors, even the troublesome ones like Pakistan and Bangladesh. In other words, India didn’t need to be convinced of this responsibility; we have already donned that mantle. The best-case scenario is the recreation of the economic transformation of the Far East in the 1980s that was driven by the engine of Japanese economy; in other words, economic integration without erasing political boundaries. One could argue that the US could instead invest directly in the development of “the Gap” countries in South Asia and reap the political rewards, rather than act via India. However, the way to secure India itself within “the Core” is to strengthen the process of globalization here and share the burden of integrating the South Asian “Gap” with India.
(2) Another Indian trait that is of great value to the US and to “the Core” in general is our willingness to be part of and strengthen the “system” i.e. the supra-national entities that will govern rules of conduct in the future. During the Cold War, it was possible to construct two ideologically different “systems” for the world and still maintain the credibility of the both, because both the Soviet bloc and the West invested in their respective economic and political models. In the current set-up, the credibility of the surviving “system” depends on the participation of an India that hosts one-sixth the world’s population and an economy that is progressively integrating with the world’s. India has never sabotaged international agreements or bodies, even those that it has not been party to e.g. NPT. As a corollary, it is in our interests to refrain from making commitments that will run contrary to our core interests in the future in the mistaken belief that we can jettison them at a later time. As a unified, consensus-based response becomes the norm among the G-7/8 countries, Indian reneging on commitments risks attracting more than bilateral sanctions; it could result in damaging our relations with other powerful countries. In this context, India must negotiate its commitments to the Indo-US nuclear agreement very carefully before it is signed into law from both sides.
(3) India is the only country, other than the U.S., that is capable of projecting power in the Indian Ocean Region (IOR) and capable of securing the commercial sea-lanes from the Persian Gulf to the Malacca Straits. This becomes a critical factor in the US’ calculations on the number of ships and refueling ports required to enforce the Proliferation Security Initiative (PSI). Going forward, the co-operation of the Indian, Australian, South Korean and Japanese navies will be essential to the success of this security paradigm and only the Indian navy has the combination of location, force structure and political commitment to policing the IOR.
What should India ask of the US?
(i) In order to successfully become “the Core” in South Asia, India’s own citizens in “the Gap” need to brought into the fold and therefore, we need to keep our economic growth on path. In this regard, it is in US interests to ease India’s quest for cheap, reliable and plentiful power, like nuclear fuel.
(ii) The US should increase co-operation in areas of science and technology (meteorology, geology, new materials, electronic fabrication, instrumentation and alternate fuels) agriculture (water management, crop variety development, storage and food processing), infrastructure development (urban planning, roads, ports, airports, water treatment facilities and telecommunications) and medicine (combating pandemics and preventable diseases) on favorable terms to India. It is interesting to note that there has been an enduring engagement at the academic level, spanning nearly 40 years, between the US and India on a majority of these projects. What is now required is the financial investment in these sectors to transform the scientific and technological knowledge gained through this partnership into solutions to real-world problems. This is already happening in the form of FDI and Portfolio investment 4. However, there is a need for the US government to step in with bilateral or multilateral aid in these sectors so that financial investment by American companies seeking new markets in India is partly buffered from the short-term, high profitability requirements dictated by their stock ratings. Currently, of the top 9 US companies investing in India, 6 are in the power sector (taking advantage of the recent deregulation) and one each in the passenger cars, soft-drinks market and cellular phones sectors – all serving the needs of a rising middle class. There is a need for India to balance the investment in other sectors mentioned above and here it requires the developmental assistance of the US government. If investment in India is left entirely to market forces, it will continue to remain unaffordable for the majority of the population, trigger off a protectionist wave in India in response to increasing social disparities and set the clock back on co-operation in securing the “system”. In any case, such assistance will still be much less than its investment in post-WWII Japan and Germany, for example, because India is not war ravaged and has already made significant progress in these fields and is in a position to provide economies of scale to the US market.
(iii) The fact that India is taking a significant domestic political risk by identifying with the US’ economic and political agenda (a consequence of our lop-sided economic development, multi-religious society and fragmentation of political authority among various parties) must be reflected in the US’ treatment of India. While the US has been quite understanding of our inability to contribute troops to post-Saddam Iraq, such a sensitivity has been completely absent in its prescriptions on how India must deal with Iran, in the run-up to the US Congress’ debate on the Indo-US civilian nuclear co-operation bill. The US government and legislature must be made to understand that such pressure on the Indian government undercuts its ability to align with their goals, even if it wishes to.
The tasks of reigning in Pakistan or facing down China are glaring, but deliberate, omissions from this wish list. As far as Pakistan is concerned, we believe that the sun is setting on its ability to wage war on India in any form, conventional or sub-conventional. It retains the ability to go down in a blaze, but India has offered enough incentives to prevent that from occurring – by not encouraging the break-up of Pakistan and by even supplying lifelines to Musharraf in the form of a composite-dialogue process. Pakistani rulers in the medium term will have to be content with an India that does not ignore them.
While India must protect its interests from a rising China, it must do so in a way that does not turn the Sino-US competition into a Sino-Indian one. The competition for energy supply, for political influence in neighboring capitals and for naval presence in the IOR will continue, but can be balanced by expanding bilateral trade 5 and stabilized by the strengthening of India’s strategic deterrent in the form of an Agni-III arsenal and a nuclear submarine fleet.
Scenario II
We now discuss the alternate scenario to Barnett’s i.e. one in which there will be increased emphasis on preventing the rise of peer-competitors at the expense of enforcing a rule set that finds global consensus. The discussion so far has rested on the assumption that the US is truly ready for a globalized world. Does that assumption hold?
(a) There are indications that the US, having successfully faced down the Soviet Union, is not ready to share the spoils of uni-polarity with other partners in a first-among-equals setting. The US handling of the UNSC, in the run-up to the Iraq war does not warrant the conclusion that it will be bound by the need to build consensus in “the Core”. Another example is the US’ opposition to the International Criminal Court (ICC), resting on the belief that American military forces take on a disproportionate burden of maintaining global order through interventions and therefore, must be exempt from the legal implications of such actions. A third example is its lack of support for the Kyoto Agreement based on fears of its impact on the US economy.
(b) The form of globalization that the US currently champions still keeps the US as the pre-eminent power in the world, primarily due to the fact that the currency of trade in essential items is the US dollar. The choice of the US dollar as the world’s trade currency gives the US a time-cushion, which other countries lack, to adjust its economy to adapt to the changing world. It also enables the US to spend beyond its means because it attract its trade deficit dollars back to the US economy as an investment in US Treasury Bonds, thereby keeping interest rates low. The pre-eminent position of the US dollar is due to trust-worthiness of the US economy, which in turn is linked to the ability of the US government to force changes, via military means if necessary, in various parts of the world in order to sustain its economical position. Thus, it is not in US interests to encourage such a democracy of globalization that its own ability to remain supreme is reduced. In other words, the US will continue to act unilaterally to maintain its pre-eminent position, that will put a natural limit on the cohesiveness of “the Core”, and hence to its effectiveness to maintain a peaceful global order.
What can happen to derail the proposed American-authored and enforced world order of “systems”? A partial list includes:
(a) Lack of a common vision of the future and lack of trust among the current economic powers, the G-7/8. There has to be a sustained period of more give than take from the G-7/8 if “the Gap” is to be incorporated into “the Core”. With declining economic and population growth in G-7/8 countries, governments may be less inclined to favor measures like liberal labor movements, expanding trade deficits or inclusion of less developed economies into regional groupings. In return, such lack of co-operation will cause developing countries to place less trust in mechanisms like IPR and will effectively freeze globalization at its current limits.
(b) The inability to defeat Islamic fundamentalism. This will continue to deny cheap energy sources to the world in the medium term and will produce fissures among the grouping of nations that want to expand the process of globalization on the right way to deal with this threat, particularly as many West European countries grapple with the domestic implications of a clash of civilizations.
(c) The resurgence of Marxism, albeit in a different incarnation than Communism. Marxism came to the fore as a result of socio-political turmoil during the industrial revolution and was a direct byproduct of rapidly changing technology and its impact on the world. A rapid pace of technological change accelerates the emergence of economic ideologies, and technological change has never been more rapid than it is today. If globalization continues to exclude countries and indeed, entire continents, from its benefits, the resurgence of an anti-Capitalist social movement cannot be ruled out. It can be argued that globalization as it exists today, as an overseas province of the Capitalist system, forces exclusions into “the Gap” because it is, by definition, exploitative. Whether it is search for Middle Eastern or CAR energy resources or African mineral resources, the institutions that govern relations within “the Core” require the existence of “the Gap” wherein a no-holds-barred competition for such resources can take place. There is thus a conflict of interest between “a Core” that seeks to assimilate entire nations and societies in the interest of a peaceful world and “a Core” that is founded on competitive capitalism, and by its actions fosters underdevelopment, war and social malaise on nations which become easier to exploit under those circumstances. However, absent a strong state sponsor, it is unlikely to result in a worldwide challenge to Capitalism; at best, it can deny “the Core” access to the natural wealth needed for continued economic growth and thereby exacerbate tensions within “the Core”.
(d) The negotiation of American national identity. Thus far, the success of melting pot culture in the US has rested on controlled immigration and linguistic unity combined with economic growth and opportunity. The shifting demographics towards Hispanic populations and pressure for a bilingual society have caused a debate on national identity and the American role in engaging with its neighbors. If such divisions increase over time, they can combine with economic downturns, to result in an American withdrawal from its role as the global enforcer of “the Core’s” rules.
What forms will the contours of increased competition among “the Core” take?
Between the EU and the US, competition 6 will be focused on whether the Euro or the US dollar will be the world’s reserve currency and the choice in international financial transactions. Within three years of its introduction, the Euro has become the world’s most used and stable currency, backed as it is by the combined strength of Europe in the form of the European Central Bank and anchored in the Stability and Growth Pact’s strict standard of requiring all participant countries to maintain a budget deficit below 3 percent of their GDP. The European Union is also the world’s largest market. The impact of this unified market on the dominance of American business entities is being felt in many ways – most household American brand names are under European ownership, and American companies have had to comply with tighter European regulations on anti-trust laws, environmental and labeling standards. What is perhaps most galling to American policy makers is the fact that American taxation policy could be set by the EU – the repeal of American Foreign Sales Corporations and Extra-Territorial Income Exclusion Act being a case in point. The American response to the EU’s rising clout is likely to remain politically oriented – it would seek to split the EU bloc in support of its political agenda as it did in the run-up to Iraq’s invasion and would push for the EU to share a greater burden of NATO expenses.
The competition between the US and leading EU member states like France and Germany, Russia and China appears to be a race towards rehabilitating critical “Gap” states like Iran, Iraq (for its oil) and North Korea (for its implications for the American military presence in the Far East) into “the Core” on terms profitable to each. Thus far, the US has the upper hand in Iraq with respect to this geopolitical goal, despite its difficulties in stabilizing the situation there. In North Korea, China has the advantage, thanks to its nuclear and missile proliferation as well as to its increasing closeness to South Korea driven by trade and the common distrust of an assertive Japan. In Iran, the coming years will see an intra-Core arm-wrestle and the pendulum is not in the US’ favor because, given its adversarial relationship with Iran, it will have to impose a regime change in order to achieve its objectives. In contrast, Russia, China, France and Germany, needing only to moderate American pressure, have less ground to make up in the race for influence in Teheran. Russia and China, concerned at the US presence in the CAR region, have deflected American pressure to ostracize Iran by granting it observer status in the SCO.
What are the prospects for Indo-US partnership in this alternate scenario?
We believe that co-operation with India will assume added importance for the US government in this scenario, because the US will be primarily interested in fending off the second-rung challengers to its authority, namely the EU, Russia and China and so, makes it imperative to co-opt third-rung competitors like India.
The US effort at co-opting India as an ally will be categorized by greater co-operation at the political level like leaning towards India on the India-Pakistan scale, military sales directly and allowing third party transfers and increased joint military exercises, greater sensitivity in commenting upon Indian domestic issues like freedom of religion, communal relations, human rights issues and less overt pressure on Indian foreign policy choices, rather than at the economic level like those outlined previously.
India must summarily reject such co-operation! The reasons are two-fold - such inducements are designed to attract political allies, not economic partners and they can be reversed anytime, depending on the prevailing political climate or wisdom in Washington, DC.
The Indian response must be geared towards discerning and deflecting American inducements or pressures without causing political estrangement. A classic example is the US’ proposed arming of Pakistan and its impact on Indian and American defense modernization plans. The Pentagon needs to support its hi-tech military transformation plans because it does not trust a truly multi-polar world when it comes to military power, unipolarity being the pre-eminent prize of the Soviet collapse. That transformation requires costly and protracted weapons development, which means that defense contractors must be able to generate more money for development instead of relying on federal assistance that must pass through a skeptical Congress intent on cashing in the “peace dividend”. On the other hand, US military involvement in the troubled spots of the world has been steadily increasing over the past 20 years under both Republican and Democratic administrations as Barnett has shown, which brings added pressure on manpower and operational expenses, further eroding the capital expenditure budget for big ticket items like theatre missile defense. The US government’s logical course of action is to help defense contractors generate their own income through weapon sales and India is a lucrative market in this respect. The nature and timing of the Pentagon’s defense relationship with Pakistan is intended to prey on Indian insecurity and garner the arms market. For example, the sale or even notification of the sale of Harpoon missiles is intended to provoke an Indian order for the P-3C Orion aircraft and that of the F-16 sales is intended to tip the Indian MRCA order towards the F-18. That is why India must completely ignore it and carry on with business as usual.
Despite these weapons for Pakistan, they lack a strategic context to wage war against India on the scale that these weapon systems become a factor. In responding militarily to a re-armed Pakistan, India would do well to take a leaf from Pakistan’s own defense procurement strategy of the 1980s. While India focused on developing a balanced war-fighting capability including a modern air force (at least in the regional context) and augmenting armored mobility, Pakistan focused on narrow and select purchases like the F-16s and artillery up gradation that served merely to mitigate the conventional force disparity but never to overcome it. India’s response to the rearming of Pakistan’s military should be focused on denying them the rationale to go to war e.g. by increasing the BrahMos inventory and their land, air and sea delivery platforms, upgrading our ECW capabilities, upgrading rocket artillery regiments and increasing our PGM and BVR missile inventory – all indigenous weapon systems. The intended message is clear – India will target Pakistani communication nodes from a range beyond Pakistan’s capability to respond. This, in conjunction with the terrain, our force structure, the state of Pakistan’s economy and the international pressure to avoid war, renders Pakistan’s acquisitions virtually useless – as long as India refrains from costly acquisitions from the US to offset them. Any big-ticket weapon imports should be sourced from Russia and Europe if need be. Similarly, India faced down the Kashmiri terrorist movement in the 1990s despite the US’ encouragement of the Hurriyat Conference and its questioning of the legitimacy of India’s rule in Jammu and Kashmir. There is no reason to surrender this victory for American pronouncements of solidarity with India’s position on this issue.
India can maximize its benefits by continually maneuvering to remain the “swing-vote” in this game of chess, never completely committing to or becoming estranged from either camp. In the coming show down with Iran, India’s value lies in its ability to communicate in a friendly manner with Iran. India should use it to convey the twin messages that while we do not support its nuclear weapons development, we will moderate the US threat of using force. The Indian reaction to Washington’s rhetoric should be to raise our own rhetoric for a peaceful resolution of the issue, so that it does not take our acquiescence in its game plan for granted. In return, India can offer to secure common interests in Afghanistan and reduce the American military deployment there. In the Chinese-American rivalry, India can compensate for declining American influence in South Korea by working more closely with its ally, Japan, and simultaneously expanding our influence in Vietnam, Singapore and Malaysia.
In return, India must hold out for the truly meaningful rewards of broad-based economic benefit because that is a sure sign that the US is invested in a strong and self-sufficient India. We must be wary of rewards that bring disproportionate and relatively short-term economic benefit to a particular class of our countrymen, as opposed to those that genuinely afford us the capacity to develop our economy as a nation.
Notes
1.T. P. M. Barnett, The Pentagon’s New Map. War and Peace in the Twenty-First Century, G.P. Putnam’s Sons, New York, 2004.
2. A. Chaikivsky, “The Strategist”, Esquire, December 2002, p. 163.
3. J. Kirton, ““Economic Co-operation: Summitry, Institutions, and Structural Change”, in John Dunning and Gavin Boyd, eds. Structural Change and Co-operation in the Global Economy, Edward Elgar, London, 1997. Also, see E. Kokotsis, Keeping International Commitments: Compliance, Credibility and the G7, 1988-1995, Grland Publishing, New York, 1999.
4. India-US Economic Relations, Embassy of India, http://www.indianembassy.org/Economy/economy.htm
5. Indian Trade Statistics, Department of Commerce, Ministry of Commerce and Industry, Government of India. As an example, the fastest growth in India’s imports, to the tune of 51% from FY 2005 to FY 2006 came with the PRC, which now makes up 7.5% of India’s total imports, while Indian exports in the same period grew 20% to make it the fourth fastest growing export destination that accounts for 6.5% share in India’s exports. http://www.commerce.nic.in/india_trade.htm.
6. T.R. Reid, The United States of Europe. The New Superpower and the End of American Supremacy, The Penguin Press, New York, 2004.
©Security Research Review Volume 2(2) 2006