US needs to work harder to lift India ties: Kanwal Sibal

As India and the US hold their fifth strategic dialogue, Kanwal Sibal, well-known foreign policy analyst and a former foreign secretary of India, strikes a cautionary note. In this interview with Manish Chand, Editor-in-Chief, India Writes Network (www.indiawrites.org), Sibal speaks about problematic issues that have impacted the India-US relationship and underlines the need for the US to invest more diplomatic attention in nurturing and building what President Barack Obama has called “the defining partnership of the 21^st century.”

(Excerpts from the interview)

Q) India and the US are holding their fifth strategic dialogue in New Delhi July 31. What is the importance of this dialogue, and what will be the issues on the table?

A) This strategic dialogue is particularly important because of the change in government. The Americans would like to size up the thinking of the new government on all the issues on the table. For the new Indian government, it would be their first direct experience to deal with high-ranking US diplomats and grasp what the US has in mind in terms for what they call “the defining partnership of the 21^st century.”

At the same time there is serious background of misunderstanding between the US and Prime Minister Modi because of the visa denial; the Americans should be even more cautious and curious to see if there is unhappiness from the Indian side. This is an issue that should concern them.

In far as issues are concerned, there is really no issue that was not being dealt with the previous government. There is the larger issue of giving meat and substance to the strategic relationship and building up the convergence in foreign policy which was in the background when this strategic partnership was built. There is the whole issue of the American pivot toward Asia, and what India’s role could be in that. In that context, the India-Japan-US political and security dialogue becomes important. China and its rise will be another issue. There was a dialogue at the foreign office level between the two sides, but that seems to have been discontinued after the change of the assistant secretary of state in the US state department. The American will be curious to understand what India’s thinking and views are about China, because under the new government there has been a very intensive engagement with China. From this engagement, it would not appear that India is treating China a threat; in fact, India it’s treating China as a serious economic partner.

And then, there are issues relating to the nuclear liability act. The government in power, then in the opposition, was responsible for opposing the deal and imposing certain clauses in the act which are now obstacles. The American side would like to know whether the new government has some ideas on how, even if it is not possible to amend the nuclear liability law, whether some arrangements can be made under which the scope of the liability is limited.

Q) Does this dialogue promise to mark a new beginning in the India-US relations?

A) I am not too sure. In the previous prime minister, they had a politician, generally considered pro-American. He had a team around him who were very liberal. Despite that we had a period where people were saying we’ve reached a plateau, President Obama has lost interest in the India relationship, and there was no direction from the White House. If that was the case with a presumably pro-American prime minister, then with Mr.Modi, who has no reputation of being particularly pro-American, the US side will have to work extra hard to build a personal relationship with him. Mr Modi is very pragmatic, he seems to have forgiven the Americans for the insults regarding the visa ban and he is willing to engage with the US in mutual interest. It may not be easy to develop the personal chemistry between President Obama and Prime Minister Modi, therefore I don’t see it as a new beginning.

If the US side has decided to pay more attention to a relationship which has drifted and get over some of the issues that have negatively impacted the relationship, it is possible that we can make a new start. But apart from the rhetoric and the fact that Prime Minister Modi received an invitation to visit the US and he’s going, it is not very clear what this might result in other than renewed engagement between India and the US.

Q) How do you look at the course of the India-US economic relationship?

A) There are also tricky and problematic bilateral issues on the economic side. The Americans have toughened their position on many Indian economic trade and IPR polices. The US International Trade Commission which is conducting an inquiry into India‘s trade investment and IPR policies and India officially has rejected any form of cooperation with the US ITC, who are otherwise free to come to India to interact with business lobby and others. India wants also to be excluded from the priority watch list of section 301. There are issues that both are fighting in the WTO.

On the Indian side, there are issues relating to H1B visas and the immigration reform bill which will impose additional liability on Indian IT industry. There is the totalisation agreement which the Americans are resisting, and we have not had satisfaction for a long time. There is the issue of bilateral investment treaty, which could be entail very complex negotiation with the US. The Americans have been demanding we raise the FDI limit in the financial sectors and the defence sector. The decision to raise the FDI cap in insurance to 49% actually meets the US expectation of opening up or liberalising these sectors. Labour reform is a tough nut. There are issues relating to export of US agricultural products.

These may appear as commercial trade issues, but from the American point of view, as former US Secretary of State Hilary Clinton said publicly, the US regards these issues as a part of its strategic engagement with India.

Finally, there are multilateral issues relating to climate change, and WTO issues where India and the US are pitted against each other. On the whole, there are a broad range of issues, both positive and less positive, on the agenda.

Vice President Biden said a couple of weeks ago that India US trade should get scaled up to 500 billion dollars from the present 100 billion dollars. So if a five-fold increase is envisaged, then both sides have to change their thinking. It can’t simply be that India has to make the concessions that the US wants; the US, too, has to move forward and not target India and its companies at the behest of certain corporations looking to advance narrow interest.

Q) Given the new economic reforms, do you see the India-US relations galvanizing in the days ahead?

A) I hope so. This is what both sides should work towards. Even raising the insurance and defence cap in insurance to 49% doesn’t necessarily mean a huge inflow of FDI. I read figures to the extent that this may mean an additional $7 billion. But our biggest need is infrastructure; there we are talking of 1 trillion dollars in the next 5 years. Even the best of circumstances, I can’t see the US with its own financial problems, coming in to build India’s infrastructure. I can’t see that happening; therefore, one need to look at these things more realistically and in proportion and not get carried away. I think the US will never be strong in terms of contributing to the development of India’s infrastructure, what they are good at is technologies and skill transfer and education, and new technologies in the energy sector. Those things India needs and we should focus on those.

Q) Leaving aside politics, could you tell us about the importance of the India-US relationship to India’s vital national interest?

A) In empirical terms, the most important relationship we have with any country is the US. There is no doubt about it. If we have the look at the number of dialogues with the US, I don’t know how many there are, 20 24 30, but the range is so vast that we have no parallel of that with any other country. It shows that in terms of what the two sides can give each other and expect from each other, it has a huge potential. How to translate that into actual results on the ground, given the Indian political functioning, our decision-making processes, our bureaucracy, and on the US side their eagerness to focus on short-term benefits and not long term relationships where returns may come after some years. So given these, whether this relationship can produce the kind of dramatic results that are potentially possible I am not too sure. But I think it is a given thing that India’s relations with the most powerful nation in the world, which shapes the global agenda is extremely important. That is one aspect.

The other is, unfortunately, that many of the US global policies, as a global power, impinge adversely on Indian interests. Even if we have an energy dialogue with the US, their policies towards Iran constitute a huge problem for us. We’ve had to reduce our oil offtake from Iran by over 50%. We can’t move forward in projects that of interest to us, in terms of oil fields and gas fields in Iran where we can invest. So our energy security has been badly affected. Their invasion of Iraq and its aftermath became a problem for us, as Iraq became the second largest supplier of oil to India, and with this Islamic Caliphate and the instability there we are not sure how we are going to protect our interests. When it comes to the general fight against radical Islam and extremism, the US policies, on the one hand, have actually given oxygen to these forces and on the other hand they combat these forces. They have destablised Syria, Libya and Iraq with the result that radicalism and extremism have grown, and the potential spillover effects of that should be a cause of concern for us.

In Afghanistan they are not able to control the situation, they are withdrawing, and in the process they want to have an understanding with the Taliban. They will inevitably give a role to Pakistan, which is geo-politically so placed that Americans cannot do without Pakistan’s cooperation. In the process they will give them a role in Afghanistan which again is a huge problem for us. For now the instability of Ukraine, and sanctions on Russia, the cornering of Russia disturbs an international balance. They are throwing Russia more and more into the arms of China –- we have a problem with China, so if you look at it geopolitically, it doesn’t serve our interest.

Even on climate change, it’s not a bilateral India-US issue; they have converted it into a bilateral issue, where they will not sign unless China and India come into this agreement and this is a problem for us. So I suppose one has to expect the reality, that when you deal with the global power which wants to fit India into the zig-saw puzzle of its global interest; where we don’t fit into their global interest we will have a problem with that. They are not going to sacrifice their global interests for the sake of Indian interests. This is the challenge to our diplomacy. To answer your question in a nut-shell: this relationship is very vital, and I think it is sensible on our part to engage the United States and move the relations forward.

Q) Do you think in the days to come there will be a concrete movement forward on the issue of technology access?

The technology in the United States is in the private sector, there is virtually no way in which the US government can direct the private sector to share technology. The US private sector will be most reluctant to share the technology with the Indian public sector, so it has to be a private sector to private sector relationship. The Indian private sector has to discover the dynamism and profitability of entering into a relationship with the US private sector, which includes the transfer of these technologies in skill development, or defence or health sector. At best the governments of India can, through policies, create conditions, that the US industry gets attracted to invest in India.

The other thing is the US Congress, which is very difficult when it comes to transfer of sensitive technologies because the US funds a great deal of private sector research in India, especially sensitive dual technology areas. So whenever there are contracts signed, they look very carefully at what kind of technologies are being transferred. The US generally is very possessive of its technologies; this is an additional challenge that one has to face.

Q) Do you see the defence relations bolstering in days to come?

A) From the US side their expectation from the strategic relationship is sale of more US arms to India. At one time, when the previous Assistant Secretary for Defence was in India, he had proposed several joint development programmes, one of which is the anti-tank Javelin missile programme, which the Americans seem to want to pursue and they will look for more orders for the heavy-lift aircraft C-17, or more C-130s.

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