Indo-US Strategic Partnership: A Way Ahead

Session I

Chair: Ambassador Lalit Mansingh

At the outset Amb. Lalit Mansingh stated that the word “strategic” is of a problematic nature in the Indian context because India seems to use the word “strategic” to describe friendly relations with other countries. In his view only two countries have truly had a strategic partnership with India; the USSR in the past and USA over the last ten years. He suggested that for a strategic partnership to blossom, the presence of three factors is necessary. There must be 1) long term vision, 2) volume of exchange, 3) defense and security part or understanding.

Ambassador Shyam Saran

Ambassador Shyam Saran believed that the Obama visit was largely successful. He mentioned how the history of Indo–US relations had evolved since President Bush’s second term which started in 2004 when there was a serious effort by the Bush administration to start looking at ways of strengthening Indo–US relations. Former Secretary of State Condoleezza Rice was interested in operationalizing the strategic partnership, which would go beyond friendly gestures. To this end, Condoleezza Rice wanted to pursue an energy forum which had previously not existed, although some projects which were sector specific had been pursued. But no overarching energy forum existed. This paved the way for the Indo–US Civilian Nuclear Agreement.

Ambassador Shyam Saran stated that there has been a convergence of interests between India and the US. He mentioned various issues like: 1) counter terrorism, 2) intelligence sharing, 3) defence cooperation and 4) rising economic ties, which have brought the two countries closer to each other. However, he qualified his statement by saying that a formal alliance between the two countries was perhaps not possible. Furthermore, he mentioned that removing Indian entities from the entity list is a significant move.

In sum, he concluded that the Obama visit has been a successful visit, and struck the momentum which would take the Indo–US strategic partnership forward.

Professor Kanti Bajpai

Professor Kanti Bajpai started his presentation by identifying four principal variables that would drive Indo–US relations in the future:

1. China: India and the US together may not be able to match China economically in the years to come. China will be the biggest economy in the world, and will continue to rise and be the greatest power of the century. Professor Bajpai stated that its current domestic problems will not, in all likelihood, thwart its rise.

2. Pakistan and Terrorism: Pakistan will continue to be a problem for both the US and India. He did not believe that Pakistan was likely to implode, causing widespread chaos. He did mention that given Pakistan’s inability and/or reluctance to crack down on terrorist networks, terrorism emanating from Pakistan will continue to be a problem and a reason for concern in India and the US.

3. Economics/Trade and finance: Most of the trade, finance and technological issues are determined by private corporations and market forces, leaving a limited role for the government, although governments do have a role in how economic policies are formulated. Professor Bajpai believed that a Free Trade Agreement between the two countries was possible and impending.

4. Managing the global commons: There was ample scope for India and the US to work on issues such as global health, climate change, energy security, non-proliferation, and political emancipation and revolution of human affairs. These issues provide the opportunity to both countries to play a more proactive role on the global stage.

The aforementioned four drivers will provide the impetus for a very long term relationship as the interests of India and the US converge on these issues.

Professor Bajpai also listed variables that would prove to be impediments to the growth of the Indo–US strategic partnership in the future. He listed factors such as:

1. US domestic problems:
   1. There seems to be an opinion that demoralisation of US forces in Afghanistan and demoralisation of the US public may possibly affect their resolve to engage proactively abroad.
   2. Fear of China’s rise at the cost of US power
   3. Political disunity in the US with the divide between the Republicans and Democrats widening which may possibly affect the ability of the government to take decisions.
   4. Fears of a double dip recession may give a reason for some people to call for protectionism.
2. India’s domestic problems: Issues such as Naxal insurgency, corruption, bureaucratic delays and anti-American feeling among certain sections of the Indian polity are major challenges for India.

Professor Bajpai enumerated seven areas where India and the US would find convergence of interests. Economics, Ecology, Epidemics, Education, Ethnicity and emancipation, Energy, and Entente (coming together in the area of defence, space and technology).

Dr. Arvind Gupta

Dr. Arvind Gupta started his presentation by stating that after the Obama visit, the ‘glass is a little fuller than before.’ Dr. Gupta listed eight principal areas of Indo–US cooperation:

1. Possible support for India in UNSC: India has been warned about responsibilities on UNSC
2. US Entity List: removing entities from the US Entity List would certainly consolidate the relationship.
3. Economic aspect of the relationship will also be crucial. $10 b worth deals with various Indian corporations suggest that the US is looking for Indian investments which would create jobs in the US.
4. India getting US support for membership in four export control regimes: what are the criteria for memberships and how other countries react and whether US can push Indian claim.
5. Pakistan-US relations: US military aid to Pakistan would continue to be an area of irritation for India.
6. In the area of counter–terrorism, some good cooperation has happened between India and the US. But this cooperation needs to be deepened further given that the US is still reluctant to share intelligence about Pakistan with India.
7. India expects the US to advocate and support a greater role for India in Afghanistan. Pakistan’s efforts to exclude India’s role in Afghanistan has been voiced by India with the US.
8. Good relations with China are important for both countries and neither country wants to offend China.

There continues to be a divergence between India and the US on Iran and Myanmar. Convergence will take time to develop. There is anti-US sentiment in India in some political quarters. Finally, stronger Indo–US relations may alienate other countries and allies like Russia and China.

Vinod Kumar

Mr. Vinod Kumar suggested that President Obama’s visit was a largely successful visit. Strategic partnership is a long term interest in maximizing each other’s resources. While there have been issues on which progress has taken place, certain issues remain intractable and cooperation is not in sight. He listed the positives and negatives of the Indo–US strategic partnership over the last seven years. The positive aspects of the relationship were: 1) The civil nuclear cooperation agreement, 2) defence framework agreement, 3) endorsement of India for a permanent UNSC seat, 3) reduction in the number of Indian entities on the US Entities List, 4) major defence sales/acquisitions, 5) counter terrorism cooperation, 6) military interoperability, 7) investments in infrastructure, and the economy in general, and 8) significant people to people contact and exchange. The negatives of the Indo–US relationship were: 1) disagreements on certain issues regarding the NPT, disarmament and the CTBT, 2) disagreements about India’s nuclear liability bill, 3) lack of agreement on issues regarding LSA, CISMOA and BECA, 4) certain disagreements regarding counter terrorism, 5) limits to India’s role in Afghanistan, 6) America’s inability to pressure Pakistan to act against terrorist groups targeting India, 7) allowing a significant role for China in South Asia, and 8) disagreements on outsourcing.

Based on the positives and negatives of Indo–US relations, it was inferred that the their strategic partnership was in its formative stages and needed more time to blossom into a full-fledged strategic partnership. While there are common goals and values, strategic goals are yet to be synchronized.

Session II

Chair: Ambassador K.C. Singh

The second session was principally dedicated to the technology denial regime and to the US Entity’s List. Ambassador Singh started by saying that the technology denial regime’s deconstruction is a litmus test for the strategic partnership between India and the USA.

Dr. R. Ramachandran

Dr. Ramachandran explained the implications of the removal of the Indian entities from the Entity List in great detail. In essence he stated that there are five product groups that are the subject of export control: 1) systems, equipment and components, 2) test, inspection and production equipment, 3) material, 4) software, and 5) technology. Of the five reasons for control, four are also controlled by multilateral export control regimes:

• MT by Missile technology Control Regime (MTCR)
• NP by Nuclear Suppliers’ Group (NSG)
• CB by Australia Group (AG)
• NS by Wassenaar Agreement (WA)

Dr. Ramachandran mentioned that currently there are 507 items in the CCL, of which 374 are controlled for the above four reasons. The remaining 133 are controlled unilaterally for counter-terrorism, etc.

Dr. Ramachandran stated that “the removal of an entity from the Entity List removes only the additional license requirements imposed by the entity’s listing on the Entity List, and does not modify the license requirements that may be applicable under the EAR as a result of an item’s classification on the CCL and the proposed country of destination for the export, re-export or transfer (in – country) of the item.” Therefore, Dr. Ramachandran drew the following conclusions regarding the removal of certain Indian entities from the Entity List:

1. The overall impact of removing Indian entities from the Entity List is minimal.
2. It does remove the burden off the shoulders of US exporters in terms of applying for licences for exporting EAR99 goods of defence and DRDO units.
3. Import of EAR99 goods by the Indian end-user becomes easier; no time delays.
4. For all items on CCL, the normal controls of licensing requirements will continue to apply.
5. But “catch–all” provision, “know your customer” and “red flag” for entities once on EL will continue; this is a caveat for EAR99 goods.

Dr. Ramachandran also stated that “an export license is required even if it would not be otherwise necessary, if an exporter knows, has reason to know, or is otherwise informed by BIS that the item may be used in activities relating to WMD” – Part 744 of EAR.

Dr. Balachandran

Dr. Balachandran stated that removing the entities from Entity List may not help and may have little effect since US companies may be cautious and continue to apply for licenses as Indian entities were earlier on the EL. Therefore, the US administration ought to educate the US industry regarding the new amendment. Only then can it have some impact on the nature of trade. He also stated that the EL is a guide to exporters, not the licensing authority.

He also said that India until recently was on the list of NRC regulatory procedures, and needed presidential approval for exports. MTCR does not confer any licensing preference. Non-membership has penalties; US laws require a license fee for the export of MTCR item to a non-MTCR member. There is a provision in US laws which allows it to recognize a country as a MTCR adherent. Therefore any county can export goods without fear of US sanctions. So India should negotiate with US for MTCR adherent status for itself.

Dr. Rajiv Nayan

If an organization is on EL that means that licensing is required. There is no guarantee that denial will not be there, but the removal of Indian entities from the EL will be better for exports. India’s rising economy may force them to further liberalise their systems and procedures. Dr. Nayan stated that India should project its demands and create pressure on the US to further relax export controls.

DISCUSSION

Discussion during the question and answer session focused on the benefits of being a member of Wassenaar Agreement, the Australia Group or the NSG. It was agreed upon by all the panellists and participants that the principal advantage of membership of such institutions was purely to transform India from a “rule taker” to a “rule maker.” The principal benefit is the ability to influence policies, safeguard one’s own interests and perhaps use influence to deny others access to certain technology. These are all consensus based bodies which give members the veto power. Furthermore, membership to Wassenaar exempts US companies of license for NS 2 items [national security, level 2] and membership reduces time required to get such items. Additionally, membership to such organizations would help in harmonizing India’s system to international systems and best practices. It was also suggested that given that India’s membership to the NPT is ruled out, membership to other bodies would be desirable if India aspires to be an exporter of high technology equipment someday.

Prepaped by Prashant Hosur, Research Assistant, Institute for Defence Studies and Analyses, New Delhi.