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The United States and India: A Shared Strategic Future

Speakers: K. Shankar Bajpai, Founding Chairman, Delhi Policy Group; Former Indian Ambassador to the Unietd States, Tarun Das, Founding Trustee, Aspen Institute India; Former Chief Executive, Confederation of Indian Industry, Stephen J. Hadley, Senior Advisor for International Affairs, United States Insitute of Peace; Former Assistant to the President for National Security Affairs, John D. Podesta, President and Chief Executive Officer, Center for American Progress; Former White House Chief of Staff, Ashley J. Tellis, Senior Associate, Carnegie Endowment for International Peace; Former Senior Director for Strategic Planning and Southwest Asia, National Security Council, and Nirupama Rao, Indian Ambassador to the U.S.
Presider: Robert D. Blackwill, Henry A. Kissinger Senior Fellow for U.S. Foreign Policy, Council on Foreign Relations
September 19, 2011, Washington D.C.
Council on Foreign Relations

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ROBERT BLACKWILL:  I think we'll begin here.  Friends, colleagues, welcome to the Council on Foreign Relations. 

Could you first turn off your magic machines?  Because they confound the sound system.  So if you'll all do that -- and most of you will, and a phone will ring, as we know, empirical evidence suggests.  So if you'll do that.

Second, this is on-the-record, this session.  And I'm Bob Blackwill, the Henry Kissinger senior fellow at the council.  And as you know, we're here this evening to discuss the report that if our logistics worked, you found on your chairs a report on the U.S.-India relationship writ large -- just a few words about that.  And we hope you'll look at it carefully when you have time.

We established this partnership with Aspen Institute India in the late spring and began this report with the 17 people, some of the five or six of the 17 up here, in May, and finished it at the end of August.  It was quite intense.  We met in New Delhi in May to discuss it, its broad parameters.  And then we went through, by my count, five iterations of the text in which everybody was chiming in with the way they saw the issues that are addressed in the report.  And we're going to get into the substance of that in the course of this evening.

I would like to say on behalf of the Council on Foreign Relations what a delight it has been to work with Aspen India and my old dear friend Tarun Das.  We really have established, through this group, a very, very close comradeship both between us, the Council on Foreign Relations and Aspen India, but also among the 17 participants in this endeavor.  And I'm delighted to let you know that it's been such a success that we're going to continue this collaboration in an organizational sense over the long term.

We had a kick-off in New York at the end of last week.  We had a gala dinner with Henry Kissinger as our keynoter last Thursday night.  And the report is also on the CFR website if you wish to get it in that way rather than the hard copy that you have in front of you.

So with those brief opening remarks, let me ask Tarun to give the Aspen India perspective on the report and on the endeavor.

TARUN DAS:  Thank you, Bob.  And just to say that we did a similar event in Delhi on Saturday morning, so half our team stayed back for that -- in fact, the leader, Naresh Chandra, and Dr. Raja Mohan and Mr. Brajesh Mishra -- which went well.  There's been wide reporting of the report in India over the last two days.

For us, from Aspen India, it's been a great experience working with the CFR and the outstanding team on the U.S. side.  I need to pay tribute to one member of the Indian team who is here, Ambassador Shankar Bajpai, that though Naresh Chandra was the leader of our team, the real driver and the person who hit everybody on the head, on the Indian side, was Ambassador Shankar Bajpai.  And he's good at that; he's particularly good at hitting everybody on the head and getting work done.  And we are all terrified of him.  (Laughter.)

And as Bob Blackwill said, we hope to continue this relationship.  We've had conversations about that with Richard Haass and Bob in New York, and more of that will emerge later.

Key issue:  deep commitment to a strong Indo-U.S. relationship.  And that's where we are coming from.  We hope this report is debated, questioned, discussed, criticized, commented upon and whatever.  And we look to you to ask questions.

One member of the team I see in the audience eating.  And I thought I just mentioned Pramit Pal Chaudhuri, who is there, way back in the hall.  Pramit, you're not supposed to eat now.  (Laughter.)  You're supposed to listen.

Back to you, Bob.

BLACKWILL:  Well, thank you.  And let me just be a little bit more specific.  Send all of your criticisms to Tarun and all of your salutes to me, if you could just proceed in that way.  (Laughter.)

We are especially honored tonight to have the new Indian ambassador to the United States, Nirupama Rao, here with us.  She is a Washington hand?? from the past.  She knows the crazy Americans quite well.  We couldn't be more happy that the Indian government has sent her here.  I think most of you know she comes here from being foreign secretary of the Indian Foreign Ministry, the highest civil servant in the ministry.  So I'd like to ask her, if she would, to come to the podium and say a few words.  But we're very honored that, busy as she is, I think she's only been here two or three weeks, she's joined us tonight.

So, Ambassador.

DAS:  I want to add -- (applause).  Nirupama, I just want to add to the ambassador:  The Indians welcome.  We're delighted that you're here, and great to have you.  Thank you.

AMBASSADOR NIRUPAMA RAO:  Thank you.  Thank you very much. 

Ambassador Blackwill and dear friends, thank you so much for inviting me to the launch of your report, the report of the study group that you, Ambassador Blackwill and Ambassador Naresh Chandra, have co-chaired.  I know this report is a distillation of the wisdom, the knowledge and the experience of a very distinguished group of strategic thinkers in both our countries who have made an invaluable contribution to the transformation of the India-U.S. strategic partnership.  And it is therefore an honor and a privilege for me to speak before such a distinguished gathering.

I know that you are well-aware that the India-U.S. bilateral engagement has witnessed a remarkable evolution, a remarkable transformation in recent years.  And it has, indeed, matured into a strategic partnership of global dimensions.  And this is a fact that you acknowledge in your report also.

This is a multifaceted strategic partnership based on our converging strategic and economic interests on a number of issues, vibrant ties between our peoples, our businesses and of course our shared values as two of the world's largest democracies.

This report, which I've glanced through, identifies several such converging strategic, geopolitical and economic interests, including our common desire to promote peace and security in Asia, combatting the threat posed by terrorism, preventing the proliferation of weapons of mass destruction, issues relating to climate change and the linked issue of energy security which is vital for India's development, and our shared interest in maintaining stability in the global economy.

It's not my intention to comment on the policy prescriptions that the report advocates on various issues, but I'd like to share with you briefly the advances that we have made in promoting cooperation on some of the strategic issues mentioned in your report.  For instance, we have intensified our dialogue and our consultations on the strategic situation in our neighborhood.  Given our shared interest in a stable, a democratic, prosperous and independent Afghanistan, we have agreed to have regular consultation, cooperation and coordination to achieve that objective.

We are also looking, India and the United States, at joint projects in Afghanistan in areas such as capacity building, agriculture and women's empowerment, in addition to our independent and individual assistance programs that are already under way.

Both our countries, India and the United States, have a shared interest in ensuring that the rapid changes in the Asia-Pacific region promote overall peace, security and prosperity.  We have therefore strengthened our strategic consultations on developments in the Asia-Pacific.  We will soon have our first trilateral dialogue between India, the United States and Japan.

We in India have always advocated an open and inclusive security architecture, regional security architecture and economic cooperation framework for Asia-Pacific.  In this context, we have welcomed the inclusion of the United States in the East Asia summit process.  We have launched new dialogues, both our countries, to exchange views and perspectives on developments in Central Asia and in West Asia.

Terrorism remains a common challenge to our peace and security.  To meet this challenge, we have intensified our counterterrorism cooperation, including through intelligence sharing, information exchange, operational cooperation and capacity building.  The launching of the Homeland Security Dialogue earlier this year provides an overarching framework to further deepen such cooperation.

Additionally, we've taken measures to strengthen our partnership in clean energy, including solar energy, advanced biofuels, shale gas and smart grids.  This leads me to the question of:  How do we ensure the security of our energy supplies?  Both our countries have a shared interest in promoting maritime security cooperation to ensure unimpeded commerce, freedom of navigation and ensuring safety and security of sea lanes of communications.  India has demonstrated its willingness and its capability to work with other international partners, including the United States, as a net provider of security.

Our commercial and economic ties have also grown steadily in a mutually beneficial manner, creating jobs and prosperity in both our countries.  Clearly, we've made good progress, but we are determined to do better.  And in this context, I feel that this report, which focuses on important geopolitical and geo-economic issues that both our countries face today and lays out a practical agenda to promote our shared interests, is very timely and makes a valuable contribution to the wider discourse that is ongoing in both our countries on how to further deepen and strengthen our strategic partnership.  It would, I am sure, be helpful to policymakers in both our governments.

I'd also like to make a few additional points which I believe are important to ensure the healthy development of our relations.  It is evident that we have converging interests, but it is likely and natural that in some instances we would have a difference of views in our approaches to achieve those interests.  There is a tendency sometimes to perceive such a difference of views as a reflection of old habits.  As the report also points out, our relationship will register a healthy growth only if there is an acceptance of such differences -- and willingness, if I may add, to deal with them and to reduce these divergences.

And sometimes there is an exaggerated sense of disappointment because we tend to focus on one or another issue on which we perceive a lack of progress.  We have made such tremendous progress in adding content to our partnership in such a short time that we tend to have higher expectations.  While it is good to have such expectations, at the same time, we should not look at our relations from the prism of only one or two issues, or fall victim to the demands of 24/7 news cycles.

We are the world's two largest democracies, and each of us has its own domestic dynamic to deal with.  It is therefore natural that sometimes the pace of our progress might seem slow; but equally, at other times we have made rapid strides.

What is necessary is that we don't lose sight of the fact that fundamental reasons -- that the fundamental reasons that have led to transformation of our ties not only still remain in place, but have actually become more compelling.  I therefore firmly believe that the future of the India-U.S. strategic partnership is very promising.

Thank you.  (Applause.)

BLACKWILL:  Thank you very much, Ambassador Rao.  And thank you again for joining us this evening.

All right, we're going to now get into the substance of the report.  Let me just say to start, we were determined, the 17 of us, that the report not be mush because of the objective of consensus.  And I hope as you read it you don't think it's mush, because I believe that it does have both analytically (sic) and prescriptive power.

Let me, before my colleagues address more specifically several of the issues, just, for those of you who haven't had a chance to look at it, give you in two minutes some of the analytical and prescriptive points, and I'll do this very epigrammatically.

Pakistan:  The obvious point that the United States and India have vital national interests in the future of nuclear weapons and material in Pakistan, which I think, as you know, is the largest producer of fissile material in the world today, and which is moving toward a nuclear doctrine of battlefield capability.  The report says that Pakistan may well be in secular decline, and that the U.S. strategy followed by the last two administrations has failed to bring Pakistan to act against the terrorist groups that kill Indians and Americans in Afghanistan.  And it calls for a new strategy, and part of that new strategy, it indicates, should be heavily -- a heavy condition on all future arms transfers to Pakistan, of the Pakistan military moving against these terrorist groups.

Afghanistan:  The report recommends that the United States keep troops in Afghanistan beyond 2014, and also that there should be no de facto Pakistan veto regarding Indian involvement in Afghanistan.

On China, the report emphasizes the very great equities that both the United States and India have in good relations with China, but also points out worrisome Chinese behavior in the last several years in some ways, and has a variety of prescriptions.

On the economic trade side, the report recommends an urgent negotiation of a bilateral investment treaty between the United States and India and preliminary discussion of a free trade agreement, although we all recognize, at least in the United States, the domestic impediments.

On climate change, we recommend the establishment, among many other recommendations, of a monsoon center in India, a U.S.-India joint monsoon center in India.  And on defense cooperation, we recommend that the United States should treat India as equivalent to a U.S. formal ally with respect to technology transfer in the defense area.

What we're going to do now is my colleagues will just go through one and -- after another of these major issues.  They'll do five minutes or less on each one.

MR.    :  Or more.

BLACKWILL:  Or less -- (laughter) -- on each one, and then we'll turn to you.

So first Shankar Bajpai I think all of you know, former ambassador to the United States to China, to Pakistan, will now talk about the group's recommendations and perspectives regarding Pakistan.

SHANKAR BAJPAI:  How does this --

BLACKWILL:  You don't have to turn it on.

BAJPAI:  Oh, I see.

Well, thank you very much, Robert.

Thank you, Tarun, for your very kind remarks.

For once I will lay the flattering unction to my soul without immodesty.  Yes, I did work very hard to try and get this project going and to see it to fruition for one very simple reason:  It is an extraordinary coincidence that the day this report was released in New York was exactly 70 years to the week, if not to the day, since I landed in New York to accompany my father for the initiation of our diplomatic relations.  And if you had asked me then that I would have lived to see this day, I wouldn't have believed it.

For one thing, during those 70 years I've seen Indo-American relations animated by the hope that made me want to do this kind of swan song, which is that we ought to be close to each other.  We ought to work to each other -- with each other.  But we can't for a variety of reasons, from ignorance to indifference to actual conflicts of interest.  But the real problem was the issue I've been asked to address for most of that period:  Pakistan.

The American interests in regard to Pakistan and Indian interests in regard to Pakistan seemed -- and I emphasize "seemed" -- to be so in conflict that they came in the way of our broader cooperation.  What this report brings out is that not only has all that changed, but the whole worldview in which we hoped to be looking at our potential for making some reality out of the -- (inaudible) -- of our shared strategic partnership has also changed so much that there's a broad range of issues on which we should be cooperating, as has been pointed out.

But on that, the perhaps fortuitous, (unfortunate ?) but certainly driving element is that from being an element of division between us, Pakistan now is functioning or not functioning in ways that make it necessary for us to share our efforts.  We have a common perspective and a common objective.  I know that there will be people in my -- among my friends in Pakistan who will view this as very critical of them.  It is not meant to be critical.  It is just pure objective realization that the way they are managing their internal affairs and the way they're conducting their relations with terrorism is posing immensely difficult problems, especially for India, but more broadly for the world as a whole.

And what this report tries to bring out is first of all that India and America will continue to have differences of perspective and priorities in regard to Pakistan, how to handle it.  But for the first time as far as I know we have publicly brought out the fact that we accept each other's constraints and inhibitions.

We recognize that each of us has a dilemma in dealing with a state like Pakistan or a regime like Pakistan's.  But it is so vitally important, particularly because of the nuclear issue, to have a commonality of activity as well as objective in order to try and make, A, those nuclear weapons -- (inaudible) -- and B, bring into being -- I won't -- to be presumptuous to say Pakistan, do that.  We want to create regional and bilateral between India and America -- and -- I'm sorry, between India and Pakistan and India -- America and Pakistan -- bilateral framework with which -- within which Pakistan can feel encouraged to break away from some of its past paranoia, if I may put it bluntly, and bring about the kind of Pakistan that the rest of the world needs so badly.

I think that about summarizes what we need to say.

BLACKWILL:  Thank you, Shankar.

Next, Ashley Tellis is going to describe the group's analysis and recommendations regarding Afghanistan.  Ashley was a senior staff member of the National Security Council -- has been, as we all knew, deeply involved in U.S.-India relations for many years.  So Ashley.

ASHLEY TELLIS:  Thank you, Bob.

Thank you, Tarun.

It shouldn't be surprising to any of you to hear that the report clearly affirms a very high degree of congruence between the United States and India on Afghanistan.  It shouldn't be surprising because both the United States and India have suffered greatly as a result of terrorism that has emanated from Afghanistan over the years.  And so the fact that both countries see the acute importance of preventing Afghanistan from ever going back to being a base from which terrorism emanates in the wider region is something that was a point of consensus among all the members of the group and finds very clear reflection in our discussions.

The United States and India in the report very clearly come down on the same side.  We want to make certain that whatever future Afghanistan (works?) for itself, it must be a future which has absolutely no room for terrorist groups to operate out of and to work out of against the common interests of the United States and India.

Now, India would prefer that the U.S. maintain very substantial military forces in Afghanistan over the long term until this objective is achieved.  The United States, for a variety of reasons, has set itself a deadline that a security transition will take place by 2014 and that the United States, as it works towards the security transition, will conduct military operations in order to force the Taliban to very seriously consider the prospect of reconciliation, simultaneously work with the government of Afghanistan to build its institutional and strategic capacity while at the same time building up the Afghan national security forces so that a capability to provide local law and order will survive long after the United States transitions to a different kind of strategic role in the country.

As the U.S. works this tripartite strategy towards Afghanistan, where India is concerned, the United States has very clearly affirmed that New Delhi will be a strategic partner in this enterprise.  And despite misgivings in Islamabad, the United States has encouraged India to continue its contributions, particularly in the realm of economic assistance and political reconstruction.  And the report strongly affirms our support for this continued U.S. policy.  We see India as a partner in this enterprise, and we recommend that the U.S. government encourage India in the course that has been under way for the last several years.

There are seven specific recommendations that the report flags on Afghanistan.  I'm just going to go through those very, very quickly.  As Bob mentioned early on, we do affirm the need for a residual U.S. military presence in Afghanistan beyond 2014 because it is our judgment that the threats relating to terrorism will still persist.

Whatever gains we make in the interim, they will likely not suffice to warrant a complete departure from Afghanistan, and so a long-term U.S. presence in Afghanistan in some form, to be negotiated with the government of Afghanistan, is in our common interest.

As Bob also mentioned, we affirm that the U.S. should not allow Pakistan to have a veto over the kind of partnership that India and the Afghans together decide that they want to embark upon. 

In the same breath, however, we do encourage the government of India to maintain a degree of transparency that it has so far with respect to its activities in Afghanistan.

We urge India to support the United States with respect to the goal of reconciliation, because we believe that this is the course the U.S. government has embarked upon and both Indian interests and American interests, not to mention Afghan interests, would be served if such kind of a reconciliation can be actively effectively brought about in practice.

Now remember, reconciliation is not simply an American preference.  It is fundamentally an Afghan preference.  And as long as it is an Afghan-led process, and as long as this process achieves its aims, which is to integrate the opposition into a regime in Afghanistan that provides stability and the prospect of decent governance, this is a goal that we all ought to support.

The report also strongly endorsed -- endorses the idea of creating a regional contact group in which India will play a role along with Pakistan, Iran and other key states that surround Afghanistan, and the report makes a very strong argument for expanding trade and integration within the subcontinent, to include Afghanistan -- in a nutshell, to in a sense enlarge the Afghan-Pakistan transit partnership to include India and integrate it into a larger form of economic integration that encompasses the entire Indian subcontinent.

The report also suggests that both the United States and India ought to explore the viability of India offering training to Afghan national security forces, either in situ or in India, taking into account, obviously, Pakistani sensibilities, because the Indians have certainly extensive capacities with respect to training and on many occasions have offered to train, should such requests be forthcoming from the government of Afghanistan. 

And finally, the point that Ambassador Rao made -- the report strongly endorses what is actually a novel development in U.S.-India relations, which is the trilateral conversation between the United States, India and Afghanistan.  We see this trilateral conversation as providing one of the building blocks for the kind of partnership that all three countries can build in the years ahead.

Thank you.

BLACKWILL:  Thank you, Ashley.

Next John Podesta, former White House chief of staff, will talk about the group's recommendations regarding climate change and technology.

John.

JOHN PODESTA:  Thank you, Bob, and thank you, Tarun.

I want to begin by saying that given the differences in the U.S. and India energy systems, the energy needs and particularly their emissions profiles, this -- one might think of this as an area for confrontation rather than cooperation.  The ambassador mentioned that this has become a place of continued and deepening cooperation between our two governments, and so I want to explain why we saw it as a real opportunity for enhanced cooperation.

Both countries face enormous energy and climate challenges.  In India the problem really starts with demand.  The economy of India expanded by over 10 percent last year, will likely grow nearly 8 percent this year.  It'll expand by 6.3 percent a year, on average, over the next two decades.  And yet today 400 million Indians still lack access to basic electricity.  Blackouts remain a serious problem in urban areas. 

To expand access and reliability while powering its growing economy, India's energy production needs were -- will need to quadruple -- quadruple -- over the next 20 years.  But India already imports a worrying amount, in my view, of its energy supply -- nearly 30 percent.  And demand already outpaces production for every class of fuel.

In -- if India's growth is fueled by conventional fossil fuels alone, it'll result in near certain climate disaster.  Seven hundred million Indians and Indian livelihoods are dependent on climate-sensitive sectors, particularly monsoon-dependent agriculture.  Millions are dependent on melting glaciers for their water supply.  India has long coastlines that are endangered by rising sea levels.  And climate-related migration is -- has the potential to place enormous stress on India's densely populated urban areas, both internally and externally.

Obviously India per-capita emissions are low, but it's already a large emitter of greenhouse gas pollution.  Investments, therefore, in clean energy are investments not only in its own growth but in its own resilience to climate change as well.

The United States, on the other hand, also has a big energy problem.  In 2010 the U.S. spent almost a billion dollars a day to buy foreign oil.  That's $337 billion (dollars).  And it counts for nearly half of our trade deficit.

Forty percent of the oil we bought comes from countries that are hostile or unstable regimes.  The U.S. is the -- historically the largest emitter of greenhouse gases.  It's the second-biggest carbon emitter now and historically the largest emitter. 

Domestically we see that we're beginning to take a toll from the effects of predicted extreme weather events.  And I think internationally the United States has -- the failure to deal with its energy system is a drag on U.S. foreign policy and economic policy influence around the world.

Meanwhile, I think the world is expanding investment in clean tech at a much faster pace than we are, and we risk falling behind in a number of clean energy technologies, which will be important parts of the global economy going forward. 

So we both have big energy problems.  We both have enormous opportunities to collaborate to solve them.

The U.S. and India's strategic partnership over the past several years has been anchored in energy, particularly the U.S.-India civil nuclear cooperation agreement, spearheaded by Bob and his colleagues, that President Bush negotiated in 2008, and it's been brought forward by the new administration.

This -- but the relationship is ripe, I think, for further cooperation on energy, for all the reasons I just outlined.  Clean energy, in our view, should be a strong pillar of an expanded partnership between the U.S. and India.

We in the paper that CFR has released -- and I see people underlining in the audience, so that's either a good sign or a bad sign -- outlines about a -- more than a dozen ideas for fostering deepened and deeper cooperation, building on the success of the agreements that currently exist.  They include -- I won't go through them all, but they include lowering tariffs and other trade barriers on environmental goods and service; bringing forward the work that's been done in Doha, either through a multilateral venue or through a bilateral venue.  We recommend the U.S. and India develop a joint center for open source clean energy innovation to coordinate clean tech development and transfer in a way that avoids a number of IP concerns.  We recommend, as Bob mentioned, building out the work that's already being done on collaborative monsoon research to create a joint monsoon center in India to support India's agricultural sector.  We support a climate technology center, one of the outcomes of the Cancun negotiations, to be based regionally and one in India, and to continue to work together to strengthen our diplomatic relationship around energy, energy security and the drive for global climate change finance.

I think these collaborations are in both our countries' interests.  They support clean tech development in both countries and the trade of ideas and goods between us, and fit importantly into the overall economic picture.

BLACKWILL:  Thank you, John.

Next Steve Hadley, former national security adviser at the White House, will talk about the report and China.

Steve.

STEPHEN HADLEY:  In the policy prescriptions that appear on page 24, I'm going to stick fairly close to the language because I think it's important and I want to highlight some things.

The list begins with -- that the United States should persistently express its strong support for India's peaceful rise as a crucial component of Asian security and stability.  It's in the United States' interests that there be a strong India in Asia.

It talks about how India should greatly expand its diplomatic and military engagement with all states in the Indian Ocean Littoral, as well as East Asia.  We want India not just to look east but, as the report says, to be east.

Indians, in turn, should welcome the continued U.S. presence in the Asia-Pacific as a source of stability, peace and security.  We both -- both of our countries recognize the importance of China's emergence.  Both countries want good relations with China.  And we believe both countries should jointly and individually enlist China's cooperation on matters of global and regional concern, because there are few global problems these days that can be solved without China's participation.

The report recommends that we forge a global framework of intergovernmental institutions designed to engage China and attain its integration into Asia and the international system.  It talks about India and the United States needing to work more closely together to brief each other on their respective assessments of issues involving China, and intensify the dialogue between the United States and India on Asian security.

Now, what is the logic behind this?  The logic is actually quite simple, and it's summarized on page 20.  There is a lot of -- you know, the big story in Asia are India and China's emergence.  There's a lot of uncertainty about China's emergence.  As the report says, to the extent that China wants to be economically successful, respected in the international community and increase the well-being of its people, it's in our interests to support that objective.

That kind of interest does not threaten China or the -- the United States or India.  And as the report says, opposition to hegemony is by no means opposition to the expansion of Chinese influence concomitant with its growing power.  So it's not about China and India -- sorry, India and the United States working to confront China or contain China, but both countries have major interests that are served by having good relations with China.

But because of the uncertainty, is it -- it is important for our two countries to cooperate as we develop our independent relationships with China, both to encourage China to have congenial relations with us and the international community, and to be prepared to respond to China to the extent it tries, as it has from time to time, to advance its own interests at the expense of others.  And working for this kind of international framework in which to embed an emerging China is one of the key recommendations of our report.

Thank you, Bob.

BLACKWILL:  Thank you, Steve.

Finally, Tarun Das will discuss the economic and trade dimensions of the relationship.  Introducing Tarun to a group like this that is interested in U.S.-India relations is like introducing the pope in the Vatican.  So I think all of you know the enormous contribution Tarun Das has made to the U.S.-India relationship and its transformation.

So, Tarun, both as the engine of Aspen India, as the leader on the economic and trade issues in our deliberations -- please.

TARUN DAS:  Thank you, Bob.  I don't think the pope would like to hear this.  (Laughs, laughter.)  Seven --

BLACKWILL:  He's not here tonight, so -- none of you tell him, please.  (Laughter.)

DAS:  (Laughs.)  Seven points on the economy.

The group felt that economic relations, which includes trade, investment, technology transfer -- it's still got huge future potential.  We have not reached anywhere near the real potential, and we need to work for that.

In that, at the structural level, we want to -- want to see the two governments integrate the economic dialogue with the Strategic Dialogue.  We want everybody to be in the same room.  When you're talking about the Strategic Dialogue issues, we would like you to please also discuss the economy in the same room.  And the players dealing with the economic dialogue, out of whichever different parts of government of the two governments, should be there also, so that it's given that attention, led by our external affairs minister and the secretary of state.

Next, we know this is maybe difficult for the U.S. to deal with right now, but India today have concluded comprehensive economic cooperation agreements and FTAs with the ASEAN, with Korea, with Japan; in the final stages of doing so with the European Union.  And we need to start talking, the U.S. and India.  However long it takes, and however long it takes for the U.S. economy to revive and to be ready for that, we must be ready to move and plan for an FTA or a comprehensive economic and cooperation agreement between U.S. and India because it gives a huge impetus to trade and investment between the two countries, as we have seen in our experience with other countries.  And very soon, the European Union and India agreement will be signed.

Third, the report says that the bilateral investment treaty which has been under discussion -- supposedly negotiation -- and which has not seen the light of day, must be given priority.  And the U.S. has some standard language in these BITs -- BIT agreements -- and we have recommended that please consider specific language for an India BIT; so that do not lump India with everybody else, whatever is going on.  We need to conclude this agreement.  It's important for our economic relationship.  It's important for two-way trade and investment.  So let's find specific language to fit the India-U.S. BIT.

Doha and WTO:  I think the two Cabinet-level members responsible for WTO affairs -- that is, Mr. Kirk here and Mr. Anand Sharma on our side -- meet regularly, and I -- probably will meet later this week.  But we would like to see in the group a clear road map of what we will do together bilaterally on world trade issues.  The group certainly did not find that clarity in the consultations and meetings that are held from time to time.

Both countries are known now very clearly for entrepreneurship and enterprise.  And the backbone of this entrepreneurship are mid-size companies in both countries.  But while we have a CEOs forum for the big boys on both sides, we have no program, no structure, no arrangement for mid-size companies to come together.  This was an idea proposed last year before President Obama went to India.  It did not surface; was not recognized.  And we recommend that mid-size companies must also be given a place in the sun between U.S.-India trade and economic relationship.

And the last one is the number of issues pending on the Indian side on the reform agenda, whether in the financial sector or retail or elsewhere.  And the report recommends that these be expedited.

Thank you, Bob.

BLACKWILL:  Thank you very much, Tarun.

OK, we're going to turn now to the audience.  We have 15 minutes, so I will call on you, if you will identify yourself and any affiliation you might have.  Please, no Fidel Castro speeches on the coffee crop here.  (Laughter.)  If you can ask a real question or make a brief comment, we'd be grateful up here.

We'll start way back at the back, and I think there's a mic that will appear magically.

QUESTIONER:  Hi.  Thanks for doing this tonight.  I'm Farah Stockman with the Boston Globe, and I have a question about Pakistan.  My first question is, how do you respond --

BLACKWILL:  Just one question each, please.

QUESTIONER:  OK.  How do you respond to Pakistan's complaints about being encircled, given India's consulates in Afghanistan and its activities there?  And do you think there's any truth to Pakistan's accusation that India is funding Baluch separatists?

BAJPAI:  Well, I can't change geography, but I must try to change the misconceptions that have spread, and I must blame my own people for not having dispelled them earlier.  This utter nonsense about Indian mischief in Afghanistan is so calculated to prevent any others from accepting the legitimate interests and role of India in Pakistan --

BLACKWILL:  In Afghanistan.

BAJPAI:  -- I'm sorry, in Afghanistan -- that I'm sorry I haven't -- we haven't been able to find a response to it.  I'm glad you raised that question, because there is nothing more, shall I say, unsubstantiated than this point that you mention.  We have had four consulates in Afghanistan since we became independent.  These have been multiplied from 17 to 70 in Pakistani propaganda.

Secondly, Baluchistan separatists have periodically turned to India.  And I don't think it would be unfair to say that if India knew how to play that game, we would have as much interest or justification for supporting it as Pakistan has for creating mischief in India.  But we don't do it.  We have -- if we wanted to do it, we didn't need to have four consulates in Afghanistan.

Third point which I'd like you to please bear in mind:  There are 60 years of history where India and Pakistan -- sorry, India and Afghanistan, since our independence, have had separate quarrels with Pakistan, but we have never supported each other on those quarrels.

BLACKWILL:  You mean Afghanistan.

BAJPAI:  I'm sorry, Afghanistan.  We have not supported Afghanistan claims regarding the Durand Line, and they have never supported us on Kashmir.

So where is this great encirclement?  It has been deliberately projected, to try and justify Pakistan's ambitions to control Afghanistan.

BLACKWILL:  Thank you.  I just might -- and we'll get a chance to see this.  One of the prescriptions in the report recommends that India continue to reassure Pakistan that it has no interest in the destabilization of Pakistan.  And given where the report starts, which is a preoccupation with Pakistan nuclear weapons, you could see why logically India and the United States would not like to see a destabilizing Pakistan, given the effects of that, as the -- as the analysis of the report suggests, on the safety and security of nuclear weapons.

Over here.

QUESTIONER:  Tasie Schaffer, Brookings and McLarty Associates.  I looked very quickly through the Middle East portion of the report, and didn't see very much on Iran.  And I wondered whether the group discussed at all India's and the United States' different strategic analyses of what Iran is up to and different prescriptions for what one ought or ought not to do about it.

BLACKWILL:  Yeah.  Yes, we did, and the report suggests the consensus we were able to reach.  (Laughter.)

Yes, here.  I want to go back to the -- well --

QUESTIONER:  Abdul Latrak (ph), CSIS.  Just very quickly -- an admirable report.  What sticks out is that the Afghan portion is substantially less realistic.  I will quote Ashley Tellis:  "Absolutely No Room for Terrorists," as a name.  I mean, we're going to keep troops there.  We're going to be sort of Gurkhas in Afghanistan for India, with the aim of absolutely no room for terrorists.  Or indeed, to have any impact at all on terrorism is unrealistic, I think.  And also, decent governance?  I mean, what is there in the sociocultural structure of Afghanistan that would support decent governance, you know?  I mean, it's highly unrealistic.  And in regard to what you can build on that unrealistic basis, the ease with which the Pakistani services can sort of (bomb out ?) initiatives, particularly as the U.S. troop recedes.

So, a wonderful, balanced, admirable report.  I think on Afghanistan, the realism level declines.  Thank you.

BLACKWILL:  Elise (sp).

QUESTIONER:  Thank you so much.  Hi.  Elise --

BLACKWILL:  Maybe -- I think it would help if you would stand up, just so people can see where you are.

QUESTIONER:  Oh, sure.  Hi.  Elise Ayers (sp), with the State Department.  So, thank you for this report.  It's very timely, and I look forward to reading it cover to cover.  You've given seven different areas of recommendations, and in each there seem to be between seven and 12 recommendations.  So there's a lot that you're asking us to do.

I wonder, among the group, among the binational group, was there a sense of prioritization in each of these areas?  Some of them, like all policy issues, could be the sort of longer-term kinds of things that will cement the deepest possible partnership but may be difficult to focus on in the immediate phase.  There's always that trade-off between the urgent and the important -- although everything you listed is important.  But I just -- it would be interesting to hear your sense of prioritization.  Thank you.

BLACKWILL:  Well, we didn't seek consensus, if you can imagine, among 17 people on a hundred or so prescriptions -- or we would have had this event a year from now.  So we didn't do that.

I think that the narrative, the analytical narrative, makes clear -- you begin with Pakistan, you begin with its nuclear weapons and its terrorism and so forth.  But we didn't -- we didn't try to do that.  But in addressing these seven -- and of course, there are others.  There are people-to-people, there are university, there are so forth, other things.  We didn't want to write the "Waverley Novels" here, either.  We tried -- we had an objective to keep it to 50 pages of text.  We were able to do that.  So it doesn't address everything in the world, and it also isn't as exhaustive as it might be on one (section ?).

It is what it is:  17 Indians and Americans, all of whom have very wide experience in these matters, agreeing on the text.

MR.     :  Bob?

BLACKWILL:  Oh -- (inaudible) --

MR.     :  Oh, can I -- can I just add a word?  I think the other point of analysis and beginning was that, through three successive U.S. administrations and two Indian administrations, we have seen a trajectory going up between the U.S. and India.  And I think the -- when you -- particularly, when you get to the recommendation sections, what we were striving for were places that were concrete that we thought would continue that trajectory, continue to deepen and enhance the partnership and the relationship between the U.S. and India.

And so we think they're actionable, they're concrete.  You can take some; reject others.  But I think that these were the big areas, the big buckets, where additional activity could produce real reward.

BLACKWILL:  Yeah, that was -- and let me just say again the report says -- you might ask:  Well, why now?  All of us -- all on the Indian and American side -- worry that the relationship is drifting.  And the -- as the report ends, its intention is to try to give renewed energy to this bilateral relationship.

HADLEY:  Bob, one point?

BLACKWILL:  Oh, down here.  Steve.

HADLEY:  And as a priority -- for the reason Bob suggested, at a meeting we had yesterday it didn't get in our report -- but a number of Indians and Americans said, you know, it would be nice to have another impetus to the relationship, some signature project that will reaffirm the strategic partnership the way the nuclear deal did three, four years ago.  We think that is timely to restore the impetus to the -- to the relationship.

BLACKWILL:  Thank you.

I want to go way back in the back over there, just to go back and forth.  Then I'll come back to you.

QUESTIONER:  Hi.  Bart Szewczyk, at WilmerHale and George Washington Law School.  I wanted to get the panel's thoughts on India's bid for a permanent membership at the Security Council.  Is this a priority issue for India?  And what are the panel's expectations for this bid?  Thanks.

BLACKWILL:  (Clear ?) question, what is it for India?

BAJPAI:  I'm afraid you're asking the wrong man.  I have never put it as one of our priorities.  (Laughter.)  It is -- it's one thing that India deserves, ought to get, and must make part of its foreign policy objectives.  But we all know it's not going to happen, and I wouldn't waste too much energy on it.  (Laughter.)

BLACKWILL:  I hope that what we've just heard from Shankar will convince you we tried to be candid in the report.

MR.    :  Yeah, but I said I want to say something.

BLACKWILL:  Oh.  Yes, please.  (Laughter.)  Yes, all right.

RAO:  Well, I think it definitely is a priority for the -- (inaudible).  (Laughter.)  And we have expended a lot of effort in the United Nations on this and in consultations with partners, including the United States.  In fact, we have started a process of consultation on U.N.-related issues.  And obviously the expansion of the Security Council does find focus in that.

BLACKWILL:  Good, thank you.

And let me just say -- there's a useful point to be made here.  As you go through the prescriptions, we didn't include all of the ones that are in train now.  It's clear the administration supports India's permanent membership in the Security Council, so we didn't feel the need to say that again given -- trying to keep the report in a manageable size.

OK, now back over here.

QUESTIONER:  Barbara Slavin from the Atlantic Council.  Was there any consideration given to trying to encourage a process of arms control and detente between India and Pakistan, particularly on the nuclear issue, since this of course was a great feature of U.S.-Soviet relations and breaking through there?  And is that completely far-fetched to try to bring the two nuclear powers together to talk about this issue?

BLACKWILL:  We didn't think it's far-fetched.  And in fact, you'll get a chance, Barbara, when you have a chance to look at it -- that it recommends an effort by the Indian government to have a conversation with the Pakistan military -- defined in its many dimensions, but that's one of them.

Here, Stephen.  I think this will be the last question/answer.

QUESTIONER:  (Off mic.)  I'm not going to ask a question about Pakistan.  I know there's probably too much in here on Pakistan.  What intrigued me is the -- a sentence on page 42-43, and I'll just read it because I'd like to see -- hear the group discuss this:  The custodians of the relationship when senior attention is elsewhere -- is elsewhere are both nations' bureaucracies.  Here the organizational cultures of both systems sometimes brings out the worst in each other. 

Could you elaborate on that?

RAO:  (Very true ?).  (Laughter.)

MR.    :  You can answer that.

BLACKWILL:  Ashley, why don't -- why don't -- why don't you say something about that, and then I'll have -- I'll have Shankar do the Indian side about the Indian bureaucracy.  And then we'll -- so Ashley, just briefly here because we're just almost out of time.

TELLIS:  Well, the big challenge in the U.S. is that the leadership, both Democratic and Republican, has made the transformation.  There is a new vision of India and how India fits into American strategy and American priorities.  Translating that, however, in terms of implementation of policy, changes of regulation and the actual bureaucratic nuts and bolts is still a work in progress.  And that's something where in some areas, we have made progress.  In other areas, we are still lagging behind. 

But to my mind, you need two things to come together.  You need leadership direction, which I think there is.  And two, you need the bureaucracy now to respond to that, which I think we have lagged behind, certainly in the U.S.  But this is not the last word on the subject, and we have been plodding away.

BLACKWILL:  On the Indian side?

BAJPAI:  Well, may I put this in a broader context?  This is not just a matter of galvanizing the bureaucracies.  The report is based on the conviction that there is inadequate thinking in the entire range of policymaking and implementing instruments and organizations in both countries.  The world has changed.  Our perspectives and priorities have now started to converge.  But there is a vast baggage of the past.

And that is particularly effective, if that's the right word, in the bureaucracies in both countries.  We have said in part of the report that in India, there is still -- although it is no longer unpatriotic to think well of the United States -- (laughter) -- there is a lingering legacy of suspicion and mistrust.  And in America, if I may say it also candidly, for a long time you looked at us as a bloody nuisance, and a lot of people still wonder whether we can do anything for you.

So we have to overcome these impediments and constraints and inhibitions and, frankly, prejudices.  And nowhere are they more deeply lodged than in bureaucracies -- by definition are obstructions.  So we do need to find some ways of getting leadership in both countries to realize what this report is trying to say.  For God's sake, shed the past and think afresh.

BLACKWILL:  Thank you.

Well, first let me thank my colleagues on the panel and of course all of those who participated in the report.

Ambassador Rao, thank you very much for joining us this evening and making your comments.

Thank you all for coming.  And let me just say if you have, when you get a chance to really look at the report in detail, comments, please send them to us because as Tarun Das said earlier, we're not done with this.  We're going to keep working these issues -- Aspen, India and the Council on Foreign Relations.  So don't hold back if you have comments or criticisms or suggested improvements.

Thank you very much, and good evening.  (Applause.)

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