Indo-US relations: A big chill descends

The Barack Obama administration seems to be losing the plot on India. Otherwise why would it burn India-US relations over a nanny’s wages?

But that in a nutshell is the current state of play. It threatens to destroy years of hard work behind this important relationship, one that was meant to reconfigure the geopolitics of Asia.

The unexpected and entirely avoidable crisis was triggered by the humiliating treatment of an Indian diplomat at the hands of the US law enforcement officers. It provoked massive outrage in New Delhi but Washington doesn’t understand why.

The American surprise and bafflement at the extent of the Indian anger shows a curious lack of political insight. It also shows a failure to understand the basic governing principles of good relations.

The public arrest and strip-search of Devyani Khobragade, India’s deputy consul general in New York, on December 12 last year has the Indian establishment fuming. And for good reason. A diplomat embodies the sovereignty of a country and must be treated with dignity. More so because the US diplomats in India and other countries enjoy benefits far in excess of what they grant in return.

But their complete disregard for diplomatic conventions, norms and courtesies in Khobragade’s case has put a knife through bilateral relations. They have ensured that 2014 will be spent mostly fixing what should never have been broken.

A defining partnership

President Obama, who has called India-US relations the “defining partnership of the 21st century“, has kept his distance. The White House political managers too are missing in action.

Surely, they understand the need to box the problem before it spreads through the entire system. Hard work and political acumen are required in American-style extra-large helpings.

Washington must consider the long-term implications: India-US relations are important for regional stability in South Asia, for the security of Afghanistan as US troops depart and for the long fight against the forces of religious conservatism. Above all they are important for ensuring a fair balance of power in Asia and China’s peaceful rise.

Questions have been raised whether the Khobragade episode was a symptom of a deeper disease afflicting Indo-US relations.

It is true that the relationship has been losing traction under the Obama administration. The Democrat came to office with the 2008 economic crisis darkening almost everything on the American horizon.

His focus was on improving the domestic economy but the fallout was an economically beleaguered America beating up on India on a variety of issues – market access, taxation, intellectual property protection and limits on foreign investment in insurance and retail sectors.

Meanwhile, the cornerstone of transformed relations – the civil nuclear deal – was unravelling because of a nuclear liability law passed by India which US suppliers could not work with.

The remarkable breakthrough achieved by the US administration under the former President George W Bush was dying a slow death, mainly because of New Delhi . The nuclear deal was supposed to lead to commercial contracts for the US companies, but the Indian liability law was deemed unacceptable by Washington.

Disappointment with the UPA government grew in the US establishment for the opportunities missed and the roads not travelled.

Prime Minister Manmohan Singh, who championed the nuclear deal, watched quietly as the Congress Party old guard set about undermining relations with the US. They pursued economic and trade policies that were deemed “unfriendly” by the Obama administration.

Before the Khobragade affair lit the big fire, Washington was keenly awaiting India’s national election for a new leadership to emerge to bring the relationship out of its funk.

Shifting equations

If Narendra Modi from the nationalist Bharatiya Janata Party becomes India’s new prime minister, the Obama administration may have another problem on its hand.

Washington blacklisted Modi in 2005 and revoked his US visa because of the anti-Muslim violence in Gujarat, which claimed more than 1,000 lives. Even though he has been cleared by Indian courts of complicity in the riots, Washington has made no overtures to Modi.

US officials cannot hope that Modi will forgive and forget the insult.

But no matter who is at the helm in India, 2014 will be a difficult year for Indo-US relations. The departure of US troops from Afghanistan will loom large over South Asia. Their absence will likely boost armed groups, affecting India’s strategic calculations.

New Delhi’s chagrin will multiply in direct proportion to Washington’s dependence on Pakistan to facilitate the troop withdrawal. The current impasse between Kabul and Washington on a Bilateral Security Agreement to allow for a continuing US presence beyond 2014 is a further complication.

The guessing game on the US exit strategy in Afghanistan can muddy India’s own outlook.

Contradictions between the interests of Washington, Kabul, New Delhi, which broadly want to contain armed groups and those of Islamabad, which creates influence through those very forces, are real and challenging. Managing these requires more engagement between the US and India not less.

Challenges ahead in 2014

A bigger and more abiding challenge is China and its restless quest for supremacy.

India, itself at the receiving end of China’s aggressive moves, has quietly watched the US take one step forward and two back in dealing with Beijing’s provocations in South and East China Seas.

China’s recent declaration of an air-defence identification zone prompted Washington to first fly B-52s through it only to reel back days later.

The Obama administration’s cautious response to China’s slow but sure territorial creep in Asia doesn’t raise confidence levels in New Delhi. This in turn lowers enthusiasm for an American embrace.

Thus the perennial question: can performance match the promise of Indo-US relations? The short answer is yes because the fundamentals are solid. The inherent logic for stronger ties remains unchanged.

The US sees India as an anchor in Asia, a lynchpin of stability against the threat of armed groups from Pakistan and Afghanistan. India’s population and size, its democratic system and legal tradition present a welcome alternative to the Chinese model. Americans have no fears about the “rise” of India – in fact, they eagerly await its true unleashing on the world stage.

Strengthening ties

A recent survey showed that more members of the Council on Foreign Relations, a prestigious think tank, named India (37 percent) as an important US ally of the future than any other country.

Also worth noting is that far fewer see India as a key partner than did four years ago when 55 percent named it as the partner of choice.

India sees the US as a guarantor of peace against an unpredictable China and a stabilising force in Afghanistan. Bluntly put, the US is the preferred hegemon. The links between the three-million-strong Indian American community and the mother country add another layer of texture to the relationship.

A new Indian government can start by first addressing the hostility of the American business community triggered by India’s policies. Renewing the confidence of the Wall Street and the Main Street about India’s economic prospects is key to regaining lost ground.

The US too must attend to India’s concerns, including the targeting of Indian IT companies by the US Congress in various immigration reform bills under consideration. It must also conclude a “totalization agreement” with India and stop pocketing $1bn annually in social security taxes from temporary Indian workers – a blatant American power play if there was any. The agreement would end double taxation on income of Indian professionals who pay US social security taxes but return to India without enjoying any benefits in return.

The year of living dangerously must give way to a year of fence mending and re-engaging. Given the larger interests of both countries, that is the best option.