The Bush Offering: Uninterrupted Power Supply

With President Bush having concluded, in the eyes of both governments, a highly successful visit to India, the time has come to take stock of developments and to assess whether, as has been asserted over and over again, the outcome has been a win-win for both countries.

In the course of his visit to the United States last July, Prime Minister Manmohan Singh and President Bush signed a landmark agreement whose intent was to “transform” the relationship between the two countries.

Was the relationship in such dire need of transformation? The “Next Steps in Strategic Partnership” or NSSP, initiated in 2004, seemed to be doing an adequate job of removing many of the irritants coming in the way of improved relations, many of them legacies from the Cold War era. But the NSSP, despite its nomenclature, was, at best, a mechanism for normalizing relations between the two countries. The leadership in both countries felt the need to accelerate the process of improving ties through an approach other than the slow step-by-step glide path envisaged by the NSSP.

Thus, the impetus to ratchet up ties and to address outstanding issues such as the nuclear technology denial regime was predicated on political, economic and strategic imperatives on both sides. Again, once the agreement had been signed, the momentum for following up on the Agreement was also provided by the very same imperatives. As a result, much has happened in the short span of seven months between the Prime Minister’s visit to the United States and the President’s reciprocal visit to India.

The main driver for improved relations on the Indian side was provided by economic compulsions. The Prime Minister, who was responsible for initiating India’s economic reforms in 1992, has been clear in his mind that India’s growth has reached an inflection point, and that further growth can be sustained only with an infusion of foreign investment to overhaul our decaying infrastructure and to increase competitiveness and productivity. India also needed access to the latest cutting edge technologies, largely available with the United States, to power its economic growth. Such access was largely limited by the US export licensing regimes, which barred the export of high technology with the potential for dual use, both in the civilian and military spheres. These restrictions also cast a further shadow over investment by American companies in India, already constrained by fears of bureaucratic hurdles and infrastructural shortcomings. Though the Indian economy has been racing along on the back of pent-up demand, speed bumps were already looming ahead because of the lack of adequate infrastructure. In the energy sector alone, as reported by Andy Mukherjee in the Wall Street Journal, the recent economic survey released by the Finance Ministry had computed that in the current fiscal year, goods and services worth $68 billion hadn’t been produced because of power shortages. According to the Prime Minister, India needed a yearly investment of $150 billion to shore up its infrastructure.

The economic logic for closer relations with the United States was amply supported by the changing geo-political situation. Though India was being courted by all the major powers and being offered a seat at various high tables, only the United States could offer an optimum combination of economic and strategic benefits. But relations could only take off if there was a revaluation of strategic equations on the American side, one that factored in India’s security challenges and foreign policy goals and aspirations. Hitherto, India had been on the margins of American political and strategic thinking, as a result of which much of the policy towards India was dictated by the predilections of the non-proliferation and pro-Pakistan lobbies within and outside the bureaucracy. Despite recognition at the political level for the need to reassess equations with India, the inertia of the pre-existing relationship came in the way of any meaningful movement forward. Only the political leadership in the two countries could work up the necessary momentum required to “transform” the relationship.

The considerations that played a part in convincing President Bush of the advantages in advancing US-India relations are only too well known but bear retelling. Economic considerations such as the huge Indian market that was 300 million strong and reducing global dependence on fossil fuels dovetailed with strategic goals such as that of propping up India as a foil against the increasing weight that China carried by virtue of its size and gargantuan economy.

India was also a shining example of the ability of democracy to scale up to provide representative government to a billion-plus people, nearly one-fifth of humanity. The cause of democracy promotion so ardently advocated by the President has undoubtedly got a shot in the arm with India’s participation.

There was also the bonus of drawing in the monetarily well endowed but politically unattached Indian American community into the folds of the Republican Party, a small but potentially significant step in Karl Rove’s goal of creating a permanent majority for the GOP.

This is the backdrop against which the strategic partnership was conceived and carried through. Beginning with the signing of the joint agreement on July 18, 2005, and notwithstanding the tortuous parleys that went into fashioning a break-through agreement that untangled the nuclear knot, the two sides have institutionalized the mechanisms for closer co-operation and signed a slew of other agreements. A back of the envelope count shows that no less than seventeen agreements have been signed and initiatives launched over the past twelve months in a wide spectrum of areas ranging from trade promotion, to agriculture, to space co-operation to defence co-production to AIDS prevention. During the current visit, one of the major criticisms of industry, that the two governments have to lead the way and focus on particular areas, has been addressed with the establishment of a $100 million project for agricultural co-operation and a $30 million project for co-operation in science and technology. In addition, 18 joint ventures were also agreed upon between the two governments. Many other projects are in the works, including a $500 million project to set up development laboratories where the latest cutting edge technologies will be used to develop products such as life-saving drugs. All these seek to replicate the US model of R&D where strong linkages are established between government, universities and the private sector, thus providing each with a stake in ensuring the success of the venture as well as a laid out path from the laboratory to the marketplace.

The major coup for the Indian government has been the signing of a civilian nuclear deal on terms largely favourable to it and addressing the concerns of the scientific community and others that it would affect India’s strategic nuclear programme. As Dr. M.R. Srinivasan, former head of the Atomic Energy Commission and a critic of the initial deal, put it: “From the Indian point of view it is a good agreement. The last minute hurdle was over acceptance of a clause regarding safeguards in perpetuity. But the compromise was reached with India getting a guarantee of uninterrupted power supply.”

In a sense, the Indo-US Strategic partnership is all about power supply, not just electricity to light up the villages or guaranteed uranium supply to feed the nuclear reactors, but also co-operation on the economic front that will ultimately feed all the other tangibles and intangibles that go into the making of a great power.