With forty airplanes, six armored cars, 200 CEOs, top government functionaries, it is the biggest and the longest visit by any US President to this part of the world. By sheer numbers and scope, it is, to say the least, a promising trip by any head of the state to India ever. There is bound to be much enthusiasm, media coverage, glowing tributes to democracy, grand dinners, charm offensives by the Obamas et al. But a simple question for a reality check would be this: Why is Barack Obama coming to India and what should be expected of him?
As an Indian, one would wish he relaxes the controls on hi-tech equipment, nuclear commerce, agricultural exchanges; we would hope he would do something to prop up India in the face of a rising and threatening China and, most importantly, would penalize Pakistan for being anti-India and stop selling them tonnes of arms.
We would wish.
It is therefore important to pinch ourselves and look at the hard realities about this Presidential visit.
He starts his trip from Mumbai, India’s financial capital and that is saying a lot. It is a clear recognition of India’s economic weightage in global affairs that began with President Obama’s courtship of PM Manmohan Singh during the G-20 summit last year. Obama means business no-doubt, but mostly for US companies.
The US has recognized that India’s track record in the use of hi-end technology including nuclear has been clean and its stand is pro-non proliferation. But India is not a signatory of various US agreements like the Communications, Interoperability and Security Memorandum of Agreement and other export control regimes. This is high on US agenda though no body expects Manmohan Singh to sign on the dotted line just as yet.
The 200 CEOs that accompany him include bigwigs like Jeff Immelt of GE, Terry McGraw of McGraw Hill, Indra Nooyi of PepsiCo, Jim Mcnerry of Boeing and an SME delegation accompanying secretary of commerce, Gary Locke. These officials will scout for bigger opportunities and have the full backing of the President. Energy sector is a major business area as Reliance has invested billions of dollars in various US projects and is expected to purchase General Electric’s heavy duty turbines worth USD 500mn.
An agreement on cooperation in shale gas technology will be signed as well. A large number of contracts in the fields of infrastructure and even Railways have been worked out and will be announced. It is expected that deals worth USD7bn will be signed in favour of US companies like the Boeing.
The White House, while announcing Obama’s trip, declared that expanding exports was priority number one. India is the second fastest growing investor in the US (UAE being the fastest) and Obama will look at ways to expand that aspect. He will cajole leaders to ease restrictions in retail, banking and insurance. Though he has been hawkish on outsourcing, Obama will encourage deals that would add to the 57,000 jobs that Indian companies have created in the States. That will be a major help to him at a time when his popularity has dropped and Republicans are gaining ground.
A total of seven bilateral agreements are to be signed by the two sides.
Defense ties are the bulwark of the India-US story. In the last couple of years alone, India has bought equipment worth USD 4bn from the US. Obama will push for American companies like Lockheed Martin which are in the running for the biggest defense deal ever – a USD10bn worth purchase of 126 fighter jets. Talks are in the final stages on various deals like the USD 1bn P8I planes, six C-130J Super Hercules aircraft and Boeing C-17 Globemaster III military transport aircraft. In its quest for strategic base, Obama will push for India to sign Basic Exchange and Cooperation Agreement and Logistics Support Agreement that will facilitate the use of India’s bases for US troops and warships.
It is hard to predict if Obama would have come a-calling were it not for the much celebrated and debated civil nuclear deal signed between George W Bush and Manmohan Singh. With the Parliament finally passing a modified Nuclear Liability Bill and India signing the IAEA’a Convention on Supplementary Compensation for Nuclear Damage just prior to Obama’s arrival, the road to India-US nuclear commerce has been made smooth and toast would be raised to its completion. And after that, Obama will try to bring India on to the CTBT and the non-proliferation bandwagon in the spirit of quid pro quo.
In terms of strategy, Obama’s visit to India is the first on his four nation tour of Asia which includes Japan, Indonesia and South Korea. All of these are democracies and Obama’s visit is a signal to China at a time when it has got aggressive towards all these countries and others in its neighbourhood. An unprecedented area of cooperation that has emerged in this regard is joint activity in Africa. With China’s USD108 bn worth trade in the dark continent, India and the US have decided to push their investments and influence together. They plan a major agriculture initiative which will see Indian companies like IFFCO, MMTC Ltd etc vying for a piece of Africa with US support.
While that may be a plus, Obama is in the process of gathering support for his drive for a better international regime on currency, targeted at China. This will be a test for PM Singh as he has joined hands with Premier Wen on international economic issues at G20.
Obama is staying at the iconic Taj Hotel in Mumbai which was the centerpiece of 26/11 attacks. This is a major statement of solidarity as well as indication of support to India in its fight against terror. Obama is scheduled to discuss counter-terror mechanisms with PM Singh in Delhi. This will encompass the events in Afghanistan and Pakistan and what will India’s role be in the near future in this region. Though he will not make any move on Kashmir lest he touches any raw nerves in India, Obama is expected reiterate the public US stand that it is a bilateral issue which Pakistan and India must resolve peacefully. Backdoors, however, there are expectations of some major push for a restart of peace process as Obama has realized that Kashmir is vital to deal with Pakistan and its support to extremists.
Continuing with his crusader for environment image, Obama is sure to press for some action on the climate change front, especially since he managed to win PM Singh’s confidence at the very end of the Copenhagen talks of last year. In areas of science, education, healthcare, culture etc no major announcements are expected though a slew of MoUs are slated to be signed by the two sides.
Every coin has two sides to it unless you are Amitabh Bachchan in Sholay. Likewise, every issue on the US President’s to-do list has an Indian version or equivalent to it – or at least it should have. India has its own set of agendas that it would – or should – like to follow and get something concrete out of Obama’s visit.
If business is on top of Obama’s mind, let us not forget he is dealing with India’s top economist who he calls ‘Guru’. Manmohan Singh will have a host of economic issues on which to corner Obama and seek leverage for India Inc.
First would be the issue of hike in H1B/L1 visa fee which has been done to ostensibly deal with – not the problem of outsourcing – security on the US-Mexico border! A steep hike of USD2000 will cost Indian companies an additional USD250 mn per year. That has hit the Indian companies, particularly IT ones, who have been at the receiving end of the anti-outsourcing wave as well.
While thousands of jobs have been created by Indian companies in the US, the reciprocation of it by US companies by way of off shoring has been objected to by Obama. Singh is sure to take up this protectionist attitude of the leader of the market-based global economy.
Indian companies are forced to pay for the social security contributions of their Indian workers in US who can’t even avail of its benefits. Called the Totalisation Pact, this issue is expected to figure in the demands by Indian honchos in Mumbai.
A major demand of India for the past few years has been the loosening of US export controls and dual-use licensing policies to foster high-tech and defense industry trade. This will mainly take the removal of Indian firms from the dreaded Entity List which makes it difficult to trade freely. That will make India a true ‘strategic partner’ as envisaged by the architects of our bilateral ties. This should logically lead to the US pushing the case for inclusion of India at important forums like the Nuclear Suppliers Group, the Missile Technology Control Regime etc. It is the cost that India will levy on the US in return of opening up its defense and nuclear arenas for the latter’s companies.
With little movement on the Doha trade talks, India has signed bilateral trade pact with various east Asian economies. At some level, it would be better for the US to sign a similar pact with India because the other choice entails wasting some more years in Doha.
The US looks at India as a source of billions of dollars in the defense sector and India has no problems with it if the deals on the table are competitive. But India has a serious problem if same or better deals are offered to Pakistan in the name of counter-terrorism. As USA’s own reports have shown, millions of American dollars have been channeled to fund anti-India weaponisation programs by the Pakistan Army. But still, the US has announced a healthy USD 2bn package for its ‘most trusted ally on terrorism’ this year.
In fact the USA’s attitude towards Pakistan is a major irritant in India-US ties. While the US is constantly pressurized by the Pakistanis to mediate on Kashmir, India insists that the US should use its good offices to end terror against it emanating from Pakistani soil. And of course not even think about meddling in Kashmir. In this quagmire lies another dimension – Afghanistan. India will seek a prominent role in USA’s Af-Pak policy especially in the light of Obama’s plans to pull out troops by next year. It has also expressed dissatisfaction with the US-led move of talking to what the latter calls the ‘good Taliban.’ PM Singh should make use of this opportunity to convey India’s point in detail.
The David Headley fracas emerged as a headache for both sides in the run up to the Presidential visit. Though a direct talk on the issue between PM Singh and President Obama has been ruled out, India must pose tough questions over why specific information was not shared on the Mumbai attacks. Obama’s stay at the Taj provides a perfect setting for such an exchange.
China is an area of foreign policy that India and the US have been cautious in dealing with. The US can’t do much in promoting India’s cause vis-à-vis China but it would be a good idea to make a mention of ‘US interest in a united India, from East to West and North to South’ in Obama’s statement that he will make in Delhi.
An important and crucial deliverable is, of course, the open US espousal of India’s claim to a permanent seat at the UN Security Council. PM Singh should use all his might to elicit a promise on this issue if not on anything else.
These are the major points that PM Singh will raise or should be raising. The fact of India-US ties under Obama is that they are sober in comparison with the rush of the Bush years. There is no big idea, so to speak. But this opportunity can be used by the leaderships to consolidate numerous ongoing initiatives as well start the ground work for the next step in strategic advancement.
This will take some hard self questioning on both sides because both countries have different opinions on many matters of current international importance. It is a tightrope that needs a careful balancing act. It is perhaps time to get a little realistic as far as Indian approach goes and a little bold as far as the US policies go.
One thing is for sure, neither of the two sides can afford to lose the momentum when they have a chance to make equal gains from each other.