Towards Further
Strengthening the Indo-US
Strategic Partnership

The Great Expectations
- By Dev Varam

When the world's most powerful democracy interacts with its largest counterpart, expectations are bound to be sky high. The outcome of the March 2006 Indo-US Summit between visiting President George Bush and Prime Minister Manmohan Singh will have a bearing on the long-term relations between India and the United States. The two sides will be discussing a number of issues, ranging from bilateral trade to global terrorism, science and space to Information Technology and the key issue of civilian nuclear energy. While the pros and cons of nuclear cooperation between the two countries are still being hotly debated in media, diplomatic and scientific circles, it must be noted that the issue will not sideline the other equally important matters encompassing the whole gamut of Indo-US economic relations. However, with some adjustments between both the sides, a nuclear deal will certainly be worked out, on an understanding that the differences left could be ironed out in the near future. And surely, Bush will board his Presidential Jet, Air Force no.1, waving cheerfully to Indian leaders, led by Dr. Singh, bidding him a fond farewell.

Strategic Partnership
The development of relations between any two nations depends upon the sound principle of convergence of their interests. Based on this foundation India and the United States signed a “Strategic Partnership Accord” in July 2005, during Prime Minister Singh's visit to that country. The Singh-Bush joint declaration resolved to transform the relationship between the two countries into a global partnership. Such a strategic global alliance, the declaration said would enhance the ability of India and the US to work together to provide global leadership in the areas of mutual concern and interest. The bond between the two countries has since grown stronger. The revitalized US-India Economic Dialogue has redefined the relations between the two countries.
The CEO Forum formed at the initiative of Prime Minister Singh and President Bush to harness the private sector's energy, ideas and creativity has given a new thrust to the Economic Dialogue. The private sector initiatives have since carried forward the agenda set by the two leaders at various forums. For instance, the Indo-American Chamber of Commerce, the apex organization that promotes Indo-US bilateral trade held its second Indo-US Economic Summit in November 2005, which identified the areas of opportunities in bilateral trade as well as irritants that were hindering its growth. Captains of the Indian industry were confident that Indo-US bilateral trade could double to $ 40 billion by 2008 from the present $21 billion. Sending out a clear signal to US investors, Minister for Industry and Commerce Kamal Nath said India would need a massive investment of about $150 billion in the next 5-10 years to build its infrastructure. Then he threw in the bait. Quoting a survey of foreign companies operating in India, Kamal Nath said that 77 percent of them made profits while 14 percent were about to make profits and the rest 9.0 percent approached the break-even point. The optimism of the speakers from the US too was evident. Michael Carter, Country President, World Bank said India's policies governing Foreign Direct Investment did not permit full ownership by foreign players and needed further liberalization. India should also allow global retailers to participate in retail trading. Further reforms in banking and insurance and removal of trade barriers were called for. The Indian government has been working on the issues raised. And hopefully, most of the impediments will be removed. Also in November 2005, the Indo-US High Technology Cooperation Group held its public-private forum on biotechnology, nano-technology and defense trade.
A few days ahead of his India visit, President Bush said, he “is absolutely committed to building an enhanced, comprehensive relationship" with India, and looks forward to working with Prime Minister Singh. During his forthcoming talks in Delhi, he will strive to promote the concept democracies and democratic values, improve economic ties, work for health, environment and climate control and civilian nuclear energy co-operation.



On the issue of democracy and democratic values, Bush is all too aware of India's strengths. India is a multi-ethnic, multi-lingual and multi-religious democracy. The country is also a leader in the realm of knowledge, and is emerging as an economic power. The US companies will need India's domestic market, which boasts nearly 300 million middleclass consumers with rising incomes. India has already demonstrated its purchasing power by placing orders with Boeing for aircraft worth $ 11 billion.
President Bush realizes India's purchasing power and how it is helping the US companies. In a speech to Asiatic Society in Washington, recently he said: “We must also recognize that India's growth is creating new opportunities for our businesses and farmers and workers. India's middle class is now estimated at 300 million people. Think about that. That's greater than the entire population of the United States. India's middle class is buying air-conditioners, kitchen appliances, and washing machines, and a lot of them from American companies like GE, and Whirlpool, and Westinghouse. And that means their job base is growing here in the United States of America. Younger Indians are acquiring a taste for pizzas from Domino's and Pizza Hut. And Air India ordered 68 planes valued at more than $11 billion from Boeing, the single largest commercial airplane order in India's civilian aviation history. Today India's consumers associate American brands with quality and value, and this trade is creating opportunity here at home.”



President bush further said: “The growing affluence of India is a positive development for our country. We welcome the growing prosperity of the Indian people, and the potential market offers for America's goods and services. As India economy expands, it means a better life for the Indian people and greater stability for the region. It means a bigger market for America's businesses and workers and farmers.”
Civilian N-energy
On the proposed civilian nuclear energy pact with India, Bush said it was a "good policy" for America to encourage emerging economies to use clean energy like nuclear power.
"I continue to encourage India to produce a credible, transparent, and defensible plan to separate its civilian and military nuclear programs," Bush said in a recent press interview. "By following through on our commitments we will bring India's civil nuclear program into international mainstream and strengthen the bonds of trust between our two great nations, he added." Both countries realize that it is not an easy decision to make and implementing this agreement will take time and patience.
A few days ahead of Bush's visit to India, a senior Washington official said the US was "90 per cent of the way there" on formally working out Indo-US civilian nuclear arrangement.” Under Secretary of State for Political Affairs Nicholas Burns said, "We've just got 10 per cent to go."
"This has been a uniquely complicated negotiation between two equal parties. But we are committed to it. And as long as both of us show flexibility in the details, I'm confident that we will come to an agreement," he added.
In another context, President Bush said the deal was in the interest of the United States, adding the US "got to get off of hydrocarbons. We just do. And I'm a believer in nuclear power".
In New Delhi, sources in the Prime Minister's Office and the Ministry of External Affairs admitted "substantial movement" over the nuclear deal. Already, three India-US working group meetings have discussed the issue, making both sides aware of the practical and political problems.



Prime Minister Singh put the issue in perspective. In a statement to the Indian Parliament, he explained that the civilian nuclear energy cooperation with the US is about security, but not the kind that comes from nuclear weapons. It is about assuring energy security for the country. India needs energy if its growth rate is to be stepped up from the present 8.0 percent to a double digit or more.
President Bush understands how desperately India needs power. He told the Asiatic Society: “The United States and India will work together to help India meet its energy needs in a practical and responsible way. That means addressing three key issues: oil, electricity, and the need to bring India's nuclear power program under international norms and safeguards.”
President Bush is aware that India imports more than two-thirds of its oil requirements. And India will need more oil as its economy grows.
The Bush government has proposed an Advanced Energy Initiative to make the country less reliant upon oil. Under this initiative, the US is spending money on R&D to develop cleaner and more reliable alternatives to oil, alternatives that will work, alternatives such as hybrid vehicles that will require much less gasoline, alternatives such as new fuels to substitute for gasoline, and alternatives such as using hydrogen to power automobiles.



“We will share these promising energy technologies with countries like India. And as we do so, it will help reduce stress on global oil markets and move our world toward cleaner and more efficient uses of energy,” President Bush said. .
India's growing economy is also creating greater demand for electricity. Nuclear power is a clean and reliable way to help meet this need. Nuclear power now accounts for nearly 3 percent of India's electricity needs, and India plans to increase the figure to 25 percent by 2050. And America wants to help.
The Bush administration is also working on another initiative called the Global Nuclear Energy Partnership. Under this partnership, the US will work with nations that have advanced civilian nuclear energy programs, such as Britain, France, Japan, and Russia, to share nuclear fuel with nations like India that are developing civilian nuclear energy programs.
The supplier nations will collect the spent nuclear fuel. And the supplier nations will invest in new methods to reprocess the spent nuclear fuel so that it can be used for advanced new reactors. The strategy will allow countries like India to produce more electricity from nuclear power, and enable them to rely less on fossil fuels. It will decrease the amount of nuclear waste that needs to be stored and reduce the risk of nuclear proliferation.

Here lies the crux of the issue that is being sorted out by both the countries. To benefit from the US Initiative, India first needs to separate its civilian nuclear programme from the military one and bring its civilian energy programs under the same international safeguards that govern nuclear power programs in other countries. This was the understanding that India and the US reached last July, when they agreed to a civil nuclear initiative that will provide India access to civilian nuclear technology, and bring its civilian programs under the safeguards of the International Atomic Energy Agency.
Outsourcing
It goes to the credit of President Bush that he has not fallen prey to politicizing the issue of outsourcing, unlike his opponent in the Presidential poll, John Kerry, two years ago. He is also aware that outsourcing is the area that is receiving the most attention in Indo-Us relationship. “It's true that a number of Americans have lost jobs because companies have shifted operations to India. And losing a job is traumatic. It's difficult. It puts a strain on our families. But rather than respond with protectionist policies, I believe it makes sense to respond with educational polices to make sure that our workers are skilled for the jobs of the 21st century.
Several global studies have proved that outsourcing actually helps the companies back home in cutting down their costs and getting globally competitive. And it is applicable to most American companies, which have been outsourcing wok to Indian firms. And the US is the biggest market for Indian exports of Information Technology (IT) and IT enabled services (ITeS), accounting for more than 66 percent of the total exports, valued at $ 11.7 billion in 2004-05.

President Bush said on another occasion: “The right way for America to respond to the challenges of our growing and changing economy is not a retreat to economic isolationism, but a pro-growth economic agenda, a strong education system, and a helping hand for American workers to gain the skills to secure good jobs. I know that economic changes can cause painful dislocations for some workers and their families, and I am committed to help ease these transitions and assist workers in preparing for the global economy and the jobs of the future.



Economic Reforms
President Bush is also keen to see that the Indian Government carries out its reform process further to fully facilitate the flow of foreign investment.
“I believe there's a general consensus in India about the need to continue reforming the economy. This will benefit both our countries in the longer term. We will also continue to work hard together on moving forward the new initiative” President Bush said.
India initiated economic reforms 15 years back and is still in the process of continuing them. The country has opened its markets to foreign trade and investment. The US wants India to lift its caps on foreign investment and make its rules and regulations more transparent, at the same time further lowering its tariffs and open its markets to American agricultural products, industrial goods, and services.
“When trade is free and fair, it benefits all sides. As India's economy expands, it means a better life for the Indian people and greater stability for the region. It means a bigger market for America's businesses and workers and farmers., ” President Bush said.
The US is certainly going to seek assurances from India on its commitment to expedite the reform process. “We'll continue to work for agreements on these economic and regulatory reforms, to ensure that America's goods and services are treated fairly. My attitude is this: If the rules are fair, I believe our companies and our farmers and our entrepreneurs can compete with anybody, anytime, anywhere,” President Bush said.
The US is aware that India is not only an important market for American products, it is also an important a partner in opening up world markets. The US is aware that India is a key player in the Doha Round of trade talks at the World Trade Organization (WTO). The WTO members' aim is to complete the Doha Round by the end of this year, the implementation of which could spur economic growth across the world.
“We look to India to continue to lead as we work together for an ambitious agreement on services and manufacturing and agriculture,” President Bush said.
The US believes that global trade is vital to the success of its own economy and job creation schemes.



Expanding Trade with India
“We need to continue to expand trade and work to open markets for American goods and services. Millions of high-paying American jobs depend on trade. American farmers, who plant one in three acres for export, depend on trade. And foreign-owned firms in the US employ over six million Americans,” Bush said.
Indo-US trade is getting stronger and more diverse. In 2005, the US exports to India grew by more than 30 percent, posting a trade surplus of $1.8 billion in services. India is now one of the fastest-growing markets for American exports, and the growing economic ties between our two nations are making American companies more competitive in the global marketplace, which in turn, are helping them to create more jobs in America.

Support to Democratic Movements
India and the US have also been working together to support the democracy movement across the globe. In the aftermath of the July 2005 agreement between the US and India, both countries launched the Global Democracy Initiative and promoted the United Nations Democracy Fund.
The fund provides grants to governments and civil institutions and international organizations to help them administer elections, fight corruption, and build the rule of law. The US is also encouraging India to work with other nations that will benefit from its experience of building a multiethnic democracy that respects the rights of religious minorities.



Health
India and the US are certainly going to talk about such global problems as HIV/AIDS, bird flu and environmental issues. Latest energy technologies such as zero-emission coal-fired plants will figure in the talks.

Fight Against Terrorism
One of the issues that President Bush will insist on is the reiteration of India's commitment to fight terrorism. India will certainly agree to this. The Americans and the Indians are under constant threat from terrorists.
There will be renewed cooperation between intelligence and law enforcement agencies of both countries on a regular basis on various fronts. The two governments are expected to share vital information on suspected terrorists and potential threats.
Bush will also talk about Kashmir. But he has made it clear that the US would not mediate on Kashmir. Of course, America will support a resolution in Kashmir that is acceptable to both sides, Bush has made it clear.