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Clinton's Challenge in India

Author: Evan A. Feigenbaum
July 16, 2009

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For fifty years until the late 1990s, the United States mostly ignored India, treating it as a South Asian regional power with little weight on the global stage. India's anemic rate of growth gave it little stake in the global economy. Its nonaligned foreign policy made diplomatic coordination difficult. To the extent Washington focused on India at all, too often its spotlight shined solely on the India-Pakistan relationship: their rivalry, military competition, dueling nuclear weapons programs, and their several wars.

But this week, Secretary of State Hillary Clinton visits a very different-and transforming-India. More than a decade of rapid growth has made India a major world economy, on track to be a top-five global economy by 2030, and the world's fourth-largest oil importer by 2025, behind only the United States, China, and Japan.

As important, Clinton's visit comes at the close of a transformational decade in U.S.-India relations. India has acquired the capacity to act on issues of primary concern to the United States, most notably a new climate convention at December's Copenhagen conference and the Doha round of international trade talks.

In both cases, the United States needs to forge consensus with an emerging, and increasingly assertive, India whose footprint now extends from East Asia to Africa but which remains burdened by considerable unrealized potential, not least as a result of its crushing poverty at home.

A New Era in Relations

The good news for Clinton is that the United States and India have already cleared away the three principal obstacles that prevented closer relations in the past: the Cold War, a long stagnant trade and investment relationship, and disagreements over India's nuclear program.

Take the Cold War. Locked in a strategic and ideological struggle with the Soviet Union, Americans sought partners and asked countries to choose sides. With roots in the policies of India's first prime minister, Jawaharlal Nehru, India's nonalignment (which many Americans saw as a quasi-alignment with the Soviet Union) did not fit easily with that worldview. As India has reassessed its own priorities and strategic options in the wake of the Soviet collapse, the United States has found common ground with India amid the geopolitical and geoeconomic changes that have flowed from the end of the Cold War.

Likewise with the second long-standing obstacle: the almost complete lack of economic content to U.S.-India relations until very recently. India was not, until it launched economic reforms in 1991, well integrated into the global economy, and certainly not into the global supply chains that have linked so many Asian economies to the United States. In many ways, it still isn't. And India pursued policies that made trade with Americans difficult. As recently as 2002, the U.S. ambassador in New Delhi, Robert Blackwill, complained that U.S. trade flows to India were "flat as a chapati."

But India is now among America's fastest-growing trading partners: annual two-way trade nearly doubled between 2004 and 2007, from just under $30 billion to just under $60 billion. And investment has begun to flow both ways: for instance, an Indian company, Mumbai-based Essar, bought Minnesota Steel to develop that state's northern "Iron Range."

But the thorniest obstacle was India's nuclear program, a hurdle finally cleared away last year by the Bush and Singh administrations' historic civil nuclear agreement. In the three decades after India's 1974 nuclear test, U.S. sanctions proved to be the highest hurdle to relations. From an Indian perspective-and on a bipartisan basis between India's two main contending political coalitions-there was a perceived contradiction between U.S. efforts to pursue a strategic partnership with India, on the one hand, while, on the other, making India a principal target of nonproliferation sanctions. The desire to overcome that limitation joined environmental, energy, and commercial rationales (and India's solid nonproliferation record and commitments) in pushing both sides toward a deal.

Initiated and negotiated by a Republican administration, the deal passed a Democratic-controlled Congress with overwhelming bipartisan support, including the votes of then-Senators Obama, Biden, and Clinton.

Clinton visits India this week in a position to reap the harvest of an utterly transformational decade

So Clinton visits India this week in a position to reap the harvest of an utterly transformational decade. She can capitalize on several pieces of good news:

As Congress' civil nuclear vote implies, support for strengthened U.S.-India relations is bipartisan in the United States. At the same time, the United States and India developed habits of cooperation through their civil nuclear negotiation that were unthinkable just five years ago. To complete the deal, which required the approval of some four dozen other countries, the United States and India coordinated diplomatic and political efforts more closely than ever before. Partly as a result of that experience, they can now work together in unprecedented ways on issues from counterterrorism to intelligence cooperation to defense sales. And the joint response to terrorist attacks in Mumbai last November, so resonant of September 11, 2001 attacks in the United States, helped to further build mutual trust.

Clinton's challenge is to build on this legacy. To do so, she will need to do three things in Delhi:

Unfinished Business

First, she needs to complete a handful of initiatives on which the clock ran out on the Bush administration last year. These include defense and civil space agreements that the Obama administration has picked up from its predecessor.

Defense, in particular, is a growth area for the United States and India. Every U.S. military service now exercises with every Indian military service. The two navies have a shared interest in protecting the global commons, including sea-lines of communication.  And India is among the largest potential U.S. defense customers. But three bilateral defense agreements-on "end-use monitoring" or verification, logistics, and communications-languished in 2008 because of Indian political deadlock and domestic controversy about closer strategic ties with the United States. Likewise for two civil space agreements, one of which, though fully negotiated and agreed during the Bush administration, became caught in a wrangle about market access for U.S. companies.

In all of these areas, Clinton can reach final agreement, and then sign on the dotted line.

Other unfinished and possible new initiatives include education and agriculture cooperation. In 2008, the United States and India agreed to convert the American Fulbright program into a jointly funded "Fulbright-Nehru" fellowship that expands and extends higher education opportunities. But foreign investment in education remains restricted, and further openings in agriculture are politically explosive in rural India. So new initiatives, if they are to be more than symbolic, will require further Indian reforms.

Managing Disagreement

Second, Clinton needs to seek, but also be prepared to, compromise on global issues on which the United States and India have disagreed in the past.

These include the international trade regime and possibly some arms control treaties.  But the most pressing area will be climate change. Entrepreneurs in both countries may be developing green technologies, and that is a good thing. But there is a potentially contentious debate ahead about binding emissions reductions as both countries move toward Copenhagen.

The administration's challenge will be to manage these disagreements toward compromise and, ultimately, consensus without finger-pointing or the old acrimony reemerging.

One way forward would be to agree on innovative bilateral initiatives-for instance, a U.S.-India renewable energy partnership, or a U.S.-India Bilateral Investment Treaty-that could provide ballast if the United States and India continue to disagree on multilateral climate and trade arrangements.

[T]he goal must be to enhance the scope, quality, and intensity of the U.S.-India conversation—and to do so at every level—not just to rearrange the deck chairs.

Consider the investment treaty, initiated, then stalled, last year. Doha gets most of the media ink, but even bilateral U.S.-India trade isn't all it can and should be. The United States is India's number one trading partner in goods and services, but India is America's number 17 trading partner, putting it down the list and in a league with countries as small as Belgium, Singapore, and Malaysia.

If Washington and New Delhi find Doha negotiations a hard slog, a bilateral treaty with new investor protections would at least help to enhance trade. So, too, would ending some of the structural impediments on both sides: India worries about restrictions on technology export licenses, rising American protectionism, and U.S. visa policies, especially for skilled Indian professionals. The United States complains about high investment caps, including in sectors of greatest interest to American firms, such as insurance, retail, and financial services.

So a rich bilateral agenda on renewable energy, trade, and nonproliferation could provide ballast in the face of disagreements in multilateral negotiations.

A More Global Partnership

Third, Clinton must also seek a more global partnership, defined by cooperation with an India whose footprint now extends beyond South Asia: west to the Persian Gulf, south to Africa, and especially east to Pacific Asia, where three emerging powers-India, China, and Japan-are economic partners but, often, strategic rivals.

America's dialogue with India has been less global than with any other major power, even China, with whom the United States has held three rounds of dialogue on Africa, three on Central Asia, multiple rounds on South Asia, even a dialogue on Latin America. Not so with India, which last year declined a U.S. proposal for such regional dialogues. Nor do the United States and India coordinate their foreign aid, even though India has become a donor to Africa and elsewhere.

Clinton will announce a new high-level Strategic Dialogue, which she will lead once yearly with Foreign Minister S.M. Krishna, and also consolidate the more than thirty disparate existing dialogues into a few discrete baskets. But while reexamining and refashioning these dialogues, which have covered everything from agriculture to defense trade, makes good sense, the goal must be to enhance the scope, quality, and intensity of the U.S.-India conversation-and to do so at every level-not just to rearrange the deck chairs.

At the end of the day, the real test for the United States and India will be whether they can turn common interests into complementary policies around the world.

And the hardest challenge will be to do so amid a global recession and at a time when the trends in India's immediate region are very negative - in Pakistan, Afghanistan, and even Nepal. Only two things could substantially derail India from its current positive trajectory: a sustained global economic crisis, and anarchy in its immediate neighborhood. Even as Clinton seeks an enhanced partnership with an emerging India, then-and even as she hopefully resists the old American temptation to link U.S.-India relations to India-Pakistan relations-she needs to grapple with both possibilities, but to do so in close partnership with New Delhi.

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