Larry Downing / Courtesy Reuters Obama and Modi at the White House, September 2014.

Passage to India

What Washington Can Do to Revive Relations With New Delhi

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In the century ahead, U.S. strategic interests will align more closely with India’s than they will with those of any other continental power in Asia. The United States and India both seek to spread democracy, expand trade and investment, counter terrorism, and, above all, keep the region peaceful by balancing China’s growing military power. As Washington expands its presence in Asia as part of the so-called pivot, New Delhi will be a critical partner. In the Asia-Pacific region, especially, India joins Australia, Japan, South Korea, and others in a U.S.-led coalition of democratic allies. And as the most powerful state in South Asia, India will exert a positive influence on a troubled Afghanistan, as well as on Bangladesh, Nepal, and Sri Lanka.

The Obama administration should therefore use its remaining two years to make India a greater priority, especially since the country has not yet figured prominently in the rebalancing of U.S. attention and resources to Asia. In President Barack Obama’s first term, many Indians complain, the United States devoted less attention to India than to its rivals China and Pakistan, pursuing economic links with the former and counterterrorism ties with the latter. That appearance of neglect, however fair or unfair, has rankled Indian officials and eroded some of their trust in Washington.

With the election of a new government in New Delhi, the Obama administration has a chance to repair the relationship. In May, Indians voted into office Narendra Modi, a Hindu nationalist from the western state of Gujarat who has signaled that he wants to build a more ambitious partnership with the United States. That will happen only if Obama pushes India to the top of his foreign policy agenda and Modi implements a series of reforms to enable stronger economic and political ties between the two governments. The leaders are scheduled to hold their first meeting in Washington this September, and before they do, both should begin thinking about rebuilding the U.S.-Indian relationship in five key ways: by expanding bilateral trade, strengthening military cooperation, collaborating to combat threats to homeland security, stabilizing a post-American Afghanistan, and, especially, finding greater common ground on transnational challenges such as climate change. It is an ambitious agenda, but pursuing it would put India where it belongs: at the center of U.S. strategy in the region.

FALLING OUT

Many Indian officials look back on the presidency of George W. Bush as a special moment in U.S.-Indian relations. From his first days in office, Bush made India a priority, arguing that its flourishing market economy, entrepreneurial drive, democratic system, and growing young population were crucial to U.S. aims in the region. He saw that the two countries, far from being strategic rivals, shared many of the same views on how power should be balanced in the twenty-first century. He believed that the United States had a clear interest in supporting India’s rise as a global power.

The results of his emphasis were dramatic. The volume of trade in goods and services between the United States and India has more than tripled since 2004. Also since then, the two governments have dramatically strengthened their military ties and launched new cooperative projects on space, science and technology, education, and democratic governance.

Bush also engineered one of the most important initiatives in the history of the U.S.-Indian relationship: the civil nuclear agreement, which for the first time permitted U.S. firms to invest in India’s civil nuclear power sector. (I served as the lead American negotiator for the deal.) This agreement helped end India’s nuclear isolation, allowing New Delhi to trade in civil nuclear technology even though it is not a party to the Nuclear Nonproliferation Treaty. In return, India opened up its civil nuclear industry for the first time to sustained international inspection. The agreement’s real import, though, lay in its message to the Indian people: the United States took their country seriously and wanted to leave behind the previous decades of cool relations. More broadly, it was a signal of U.S. support for India’s emerging global role.

When Obama took office, he followed Bush’s lead. After all, Bush’s India policy had enjoyed rare and strong support from Democrats -- including then U.S. Senators Joseph Biden, Hillary Clinton, and Obama himself -- throughout his second term. In 2009, Obama hosted then Indian Prime Minister Manmohan Singh and his wife as the administration’s first official state visitors. During his own successful state visit to New Delhi in 2010, Obama became the first U.S. president to endorse India’s bid to become a permanent member of the UN Security Council.

Yet despite this promising start, Obama’s India policy never hit full stride. Although Clinton, as secretary of state, collaborated with New Delhi on development and women’s issues, the administration was understandably preoccupied with the more urgent short-term crises it had inherited on taking office: the global financial meltdown, the wars in Afghanistan and Iraq, and the threat of a nuclear Iran. It was a classic Washington story of near-term crises crowding out long-term ambitions. As Obama’s first term ended, India slid down Washington’s priority list, and Indian officials complained privately about what they saw as a lack of attention from their American counterparts.

To be fair to Obama, however, the Indian government played an even greater role in the relationship’s decline. In 2010, the Indian Parliament passed an ill-advised nuclear liability law that placed excessive responsibility on suppliers for accidents at nuclear power plants. The legislation, which gained support after the 25th anniversary of a horrific chemical spill at an American-owned plant in Bhopal, shattered investor confidence. By deterring U.S. and other firms from entering the Indian market, the law made implementation of the civil nuclear agreement impossible, undermining what should have been the centerpiece of the two countries’ relationship. Washington and New Delhi haven’t managed to resolve the impasse.

The relationship suffered further when Indian economic growth slowed markedly in 2012 and 2013, depressing foreign investment, as the government, led by the Indian National Congress, was rocked by corruption allegations and failed to implement promised reforms in retail, insurance, energy, and infrastructure. New Delhi unwisely imposed discriminatory taxes on foreign investors and enacted protectionist measures that impeded trade. A series of bitterly fought U.S.-Indian trade disputes took center stage, overshadowing the political and military ties that had been the glue of the growing partnership and preventing the two countries from being able to strike any major new economic agreements.

Then came two severe diplomatic tempests. Over the course of 2013, as Modi emerged as a front-runner in the upcoming election, the Indian press revived the story of Washington’s earlier decision to bar Modi from entering the United States on the grounds that he had failed to suppress deadly anti-Muslim riots in 2002, when he was chief minister of Gujarat. Bush administration officials, including me, believed this to be the right decision at the time, but many Modi supporters charged that the visa ban was yet another example of American disregard for Indian dignity.

Then, in December 2013, U.S. federal agents arrested Devyani Khobragade, India’s deputy consul general in New York, for lying on her housekeeper’s visa application, infuriating the Indian press and public. It was a perfect but avoidable storm. The United States should have handled the visa issue at the core of the dispute in private to avoid inflaming India’s bruised ego, and the Indian government, which made matters worse by downgrading security at the U.S. embassy in New Delhi and refusing to renew teachers’ visas at the American Embassy School, should have reacted more calmly. Instead, both governments fanned the flames, and anti-American furor dominated the news in India for weeks.

By early 2014, the collapse in confidence was all too visible, and this is what Obama and Modi must begin working to repair when they meet. At the same time, U.S. Secretary of State John Kerry, Secretary of Defense Chuck Hagel, and Secretary of the Treasury Jack Lew must act, in effect, as project managers, steering the relationship past the inevitable obstacles, just as then Secretary of State Condoleezza Rice did so capably in Bush’s second term. Top-down government leadership is essential to motivate the vast U.S. bureauc-racy to put India back at the center of Washington’s attention.

Obama, meanwhile, will find a willing partner in Modi. Remarkably, the prime minister has exhibited no public signs of resentment over the visa issue and, in a show of good faith, decided in May that he would visit Washington instead of insisting that Obama first visit New Delhi. Modi has already demonstrated himself to be an unusually strong Indian leader, who will use his executive authority in a more hands-on fashion than did his predecessors. His clear intent to jump-start New Delhi’s relationship with Washington has created a unique opportunity for Obama to reciprocate.

IT'S THE ECONOMY, STUPID

Obama should focus first on Modi’s main priority: reviving the Indian economy. Modi’s Bharatiya Janata Party won a landslide victory in the spring in large part because voters had grown frustrated by India’s slow growth, crumbling infrastructure, and pervasive government corruption. Through Modi’s landslide win, the Indian people sent a compelling message about the need for dramatic economic reform, and Modi promised to deliver.

But in the past two years, U.S.-Indian trade disputes have hampered economic cooperation. The United States has made legitimate complaints about Indian protectionism, and the two governments have filed World Trade Organization cases against each other involving such goods as solar panels, steel, and agricultural products. Invoking safety concerns, the U.S. Food and Drug Administration has also banned imports from more than a dozen Indian plants, mostly in the pharmaceutical industry.

The United States and India have long antagonized each other in global trade talks. Their fight over agricultural protectionism ultimately caused the Doha Round of international trade negotiations to collapse in 2008. Since then, the two countries have been unable to bridge their ideological divide. The estrangement is so great that India has been excluded from one of Obama’s most ambitious trade initiatives in Asia: the Trans-Pacific Partnership. Washington and New Delhi must now prevent the inevitable trade disputes from overwhelming the political and military cooperation that binds the two countries together.

Obama and Modi will have no choice but to rebuild their economic ties brick by brick. When they meet in Washington, they should focus first on setting a 2015 deadline for completing the two countries’ bilateral investment treaty, which the United States and India have been negotiating for more than a decade. Obama should also encourage Modi to undertake the necessary trade and financial liberalization that would help India gain acceptance into the Asia-Pacific Economic Cooperation forum, a regional trade group that has denied New Delhi membership for over two decades because the member states consider Indian trade policies to be too protectionist. Support from the United States could help Modi distance his new government from the statist policies of his predecessors.

To encourage Modi to further boost confidence in India’s economy, Obama should counsel Modi to enact clearer regulations governing taxation and foreign investment. The two leaders could also announce a high-priority effort to resurrect the moribund civil nuclear deal. Modi would need to exercise his considerable political muscle to push a revision of the law through a reluctant Indian Parliament, but doing so would address a major American complaint: that after the Bush administration’s Herculean effort to lift nuclear sanctions on India, New Delhi never reciprocated by actually implementing the agreement and opening up its market to U.S. firms.

GANG OF TWO

As a second step, the United States and India should continue to strengthen their defense and political coordination in the Asia-Pacific region. India’s greatest national security concern is its competition with China for regional military dominance: when U.S. officials visit Indian government offices these days, their counterparts invariably rank China as a greater long-term concern than Pakistan. Modi has already begun to build a close relationship with Japanese Prime Minister Shinzo Abe. The United States should welcome stronger Indian-Japanese defense coordination, since it would further the U.S. goal of strengthening its regional security network of Asian democracies as China expands its own power base.

More broadly, Washington and New Delhi should enhance their already robust collaboration on defense. The United States has conducted more military exercises with India than with any other nation in recent years, but the two can do even more to fortify their growing air and naval cooperation. For instance, Obama could make India a more prominent part of the pivot to Asia by including its forces in all the military training and exercises the United States conducts in the region. The United States should also continue its trilateral security talks with India and Japan, and the three countries should work through the East Asia Summit to align their counterterrorism and maritime security policies more closely. Above all, the United States and India must agree on a clear strategic plan to cement their military and political cooperation in Asia.

Even as the United States and India tighten their military ties, Obama and Modi must be careful to avoid creating the appearance of an anti-China coalition; looking for common ground on other issues with Beijing would help this cause. Washington and New Delhi could, for example, advance joint programs with Beijing to combat piracy, drugs, and crime, as Clinton suggested in 2011. When it comes to China, Obama and Modi must achieve a delicate balance between cooperation and competition, and they should do what they can to reassure Beijing. But they should also recognize that the most effective way to keep the peace in Asia is to maintain their countries’ military strength in the region.

As a third priority, Obama should strengthen U.S. cooperation with India on counterterrorism and homeland security -- areas in which U.S. and Indian interests align particularly closely, especially due to the insidious growth in the last decade of terrorist groups based in Pakistan, such as Lashkar-e-Taiba. The United States should support India’s determined efforts to combat the Naxalite insurgency, a violent Maoist movement active in more than half of India’s states. The two governments will also want to collaborate even more closely on cyber- and missile defense. Given that India is home to one of the world’s largest Muslim populations, the Modi government wants to consult more closely with the United States on the rise of extremism in Syria and Iraq and the potential danger to India’s large population of workers in the Middle East.

Fourth, Obama and Modi should work together to promote stability in India’s South Asian neighborhood, an area the prime minister has already signaled is a priority. Obama should support Modi’s efforts to push the Sri Lankan government on its lamentable human rights situation, guard against Islamic extremism in Bangladesh, and promote greater political stability in Nepal.

Their most important regional project, however, should be Afghanistan. India is currently the fifth-largest provider of economic assistance to Afghanistan, and Indian firms have been active in rebuilding the country’s infrastructure. In the past, the Bush and Obama administrations tried to limit India’s involvement in Afghanistan out of deference to Pakistani opposition. But with the bulk of U.S. forces set to withdraw from Afghanistan by the end of 2016, the United States should encourage India to become a leading partner of the newly elected Afghan government, including taking on an active role in training the Afghan army. Washington should also reach out to Indian officials to include them more actively in its long-term planning to stabilize a shaky Afghanistan.

Stability in South Asia will continue to depend, first and foremost, on the always troubled Indian-Pakistani relationship. Obama should support efforts by the Indian and Pakistani governments to commit to greater cross-border trade. India will continue to resist, unfortunately, any overt attempt by the United States or others to mediate between India and Pakistan over Kashmir.

The Obama team should also reaffirm Rice’s policy of “dehyphenating” the U.S. relationship with India and Pakistan. For decades, successive U.S. administrations treated India and Pakistan policy as a single unit. But Rice did away with that in 2005 by pursuing independent and quite different policies with the two countries. That permitted the Bush administration to initiate the civil nuclear agreement, for example, without feeling obligated to negotiate an identical deal with Pakistan. (That would have been impossible, of course, given Pakistan’s disastrous record on proliferation of its nuclear materials.) Although the United States needs to maintain an effective relationship with Pakistan, building a more durable partnership with India will bring much greater strategic benefit in the long term.

Finally, the United States and India must find a way to work together more effectively on leading global political challenges. U.S. officials have long felt frustrated by the fact that although the two countries have a close bilateral friendship, they are more often than not sparring partners at the United Nations and in other multilateral bodies. Obama and Modi can change that dynamic by looking for common ground this year on two big challenges: climate change and Iran, two issues on which India has been a historically weak partner to the United States. This will not be quick or easy. For nearly its entire existence as an independent country, India has been a proud and insistent advocate of nonalignment and of resisting what its diplomats often view as overbearing pressure to conform to U.S. policies. It is not even clear that the pragmatic Modi, with everything else on his plate, will want to take on the Indian bureauc-racy to revise decades of Indian foreign policy. But the two governments ought to be able to work more effectively to curb climate change and pressure Iran over its nuclear program.

THE PATH AHEAD

As Washington and New Delhi work more closely together, each will have its own hurdle to overcome. Indian leaders, for their part, must meet the United States halfway on trade. If India continues to oppose meaningful global trade liberalization, the two countries will remain fundamentally at odds. Indian officials should understand that U.S. trade complaints against New Delhi are not part of a politically driven campaign to weaken their country, as they sometimes allege. Obama can point to the vigorous trade wars between the United States and Canada and between the United States and the European Union as evidence that Washington aggressively contests the trade policies of even its strongest allies.

The United States will have its own challenge in learning to work effectively with India, and that is to recognize the unique nature of this great-power relationship. The United States has no other partnership quite like it. India is too big and too proud to become a formal treaty ally of the United States, as Germany and Japan are. India will insist, for instance, on retaining its strong military ties to Russia and continuing its trade with Iran. The United States is accustomed to calling the shots with its allies in Europe and East Asia. That won’t work with India, which will insist on equal standing with United States. To be effective in dealing with New Delhi, American diplomats must therefore pay special attention to Indian sensitivities, maintaining a realistic sense of what is and what is not possible with modern India.

This enhanced partnership will not be warmly welcomed in Pakistan or China. But the United States can manage whatever resentment results: India will likely be a more reliable and trusting partner than Pakistan has ever been, and a stronger military link to India will also send a useful and important message to Beijing -- that the democratic countries of the region will remain strong and united.

Luckily, Washington’s renewed emphasis on India should not be a hard sell in the United States. Obama can count on enthusiastic backing from the growing and highly successful Indian American community. The American and Indian publics consistently support the relationship in opinion polls. Most important, perhaps, Obama can also rely on one advantage he does not enjoy on nearly any other major foreign policy issue: bipartisan support. Bill Clinton, Bush, and Obama have co-authored the rise of U.S.-Indian ties over the last 15 years. This rare Democratic-Republican consensus that the United States ought to pivot its attention to New Delhi should allow India to remain at the forefront of U.S. strategy in Asia for decades to come.

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