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Rediff.com  » Business » 3 sticky issues that hamper Indo-US ties

3 sticky issues that hamper Indo-US ties

August 07, 2009 16:48 IST

As the recent visit by US Secretary of State Hillary Clinton underlined, US-India bilateral ties are on a firm footing today, probably the strongest they have ever been.

Clinton announced a six-pillared bilateral strategic dialogue covering issues ranging from defense and non-proliferation to education and agriculture, the most wide-ranging and comprehensive dialogue "that has ever been put on the table" between the two countries.

Yet as Clinton found during her talks in New Delhi on climate change, the divergence between the two democracies is growing on three critical issues of global significance, all priority areas for the Obama administration:

Climate change: With a new United Nations climate treaty due to be agreed in Copenhagen in December, Washington and New Delhi are trying to bridge their differences on how to curb greenhouse gas emissions.

The United States wants developing countries such as India and China to agree to control the emissions being produced by their rapidly growing economies, setting time-bound targets to this effect.

Yet India argues that this would hurt its economic growth and wants the industrialised world to curb its pollution as well as fund new technologies in the developing world by underlining that it has one of lowest emissions per capital.

Though the ruling Congress has come back to power with a stronger mandate, there is no appetite to concede on this issue. It would not only find it politically difficult to agree on binding targets but it will also be near-impossible for the Indian government to abide by any such targets.

For the Obama Administration, on the other hand, it is important that India takes some meaningful steps on climate if it is to have any hope of persuading the skeptics in the US Congress of its own domestic climate change agenda.

Even as both agree on the need for an agreement at Copenhagen, India has made it clear that it cannot accept legally binding limits on carbon emissions. Though around 80 per cent of world growth in carbon emissions is coming from fast growing economies like India and China, the government has argued that even if India's economy continues to grow at current levels for the next decade or two, its per capita emissions would still be below those of the developed countries.

A recent bill passed by the US House of Representatives seeks to impose tariffs on products from countries that do not undertake emission-cuts targets. This has elicited a strong negative reaction in India which views such tactics as non-tariff barriers.

This is largely viewed as a protectionist measure imposed by the developed world to shield its businesses from the costs of its own national emissions targets. One of the major stumbling blocks in global negotiations on climate change has been the reluctance of the developed world to make adequate transfers of finance and enabling technology to the developing world, thereby helping the developing world reduce emissions without incurring as many out-of-pocket costs.

India is seeking a bilateral arrangement with the US on this issue with an understanding that this can serve as a model for an agreement between the developed and the developing world at Copenhagen. India and the US are also likely to undertake joint collaboration on environmental regulation and management, something that is more doable than more high-profile gestures.

Trade negotiations: The World Trade Report 2009 has suggested that global business may shrink by an unprecedented 10 per cent this year. Given this bleak outlook a revival of the Doha round of trade talks can send the right kind of signals to various stakeholders in global economy. Both the United States and India have hinted that they are ready to re-launch efforts to reach a new global trade deal under the Doha negotiations.

The Doha talks had collapsed last year after coming very close to an agreement primarily because of differences between Washington and emerging economies, led by India, over proposals to help farmers in poor nations.

The US and India have serious differences on the level of protection that can be given to farmers as and when the global market for farm products is opened up. The US has suggested that developing nations such as India need to provide greater market access for the talks to advance.

India argues that it cannot compromise on food security and livelihood concerns even as the US and the EU remain resistant to scale down their own agricultural subsides for fear of offending their well-entrenched domestic farm lobbies.

It is possible that a bolstered, re-elected UPA government would be more willing able to make unpopular concessions at home for the sake of collective economic gains that benefit the world while incurring the wrath of the Indian farmers, something that its predecessor could not afford to with an election looming. But this can happen only if the developed world provides reciprocal concessions by phasing out its own agricultural subsidies, something that is highly unlikely in the present climate of economic turmoil in the developed world.

Officially, neither the US nor India has provided any specific details about its plans to break the impasse over agricultural sector that has been the bone of contention. Though the dismal state of global economy and the need to revive global trade might be prompting the US and India to rethink their earlier strategies, the domestic political constraints remain as strong as ever.

Non-proliferation: The recent G-8 statement at the L'Aquila summit on non-proliferation committing the advanced industrial world to implement on a "national basis" the "useful and constructive proposals" towards strengthening controls on enrichment and reprocessing items and technology "contained in the NSG's 'clean text' developed at the 20 November 2008 Consultative meeting" came as a major surprise for India.

It underscored the importance of the Nuclear Non-Proliferation Treaty towards the pursuit of nuclear disarmament by insisting upon those states that have not yet signed the treaty to become a part of it. It was just last September that the Nuclear Supplier's Group had agreed to grant a clean exemption to India, thereby allowing nuclear exports of sensitive technology under safeguards to India.

The latest G-8 agreement on banning the ENR items to countries that are not signatories to the NPT effectively puts the future of the landmark US-India nuclear deal of 2005 in jeopardy.

While India will still be able to buy nuclear fuel and reactors from the G-8 or NSG countries, questions will inevitably arise about the intention of the Obama Administration regarding the future of the deal and if it would try to further dilute the bargain contained in the 'India exemption' of the NSG waiver of last year.

The Obama Administration cannot make meaningful progress on its non-proliferation agenda unless it brings India into the fold of the global non-proliferation regime. With the Obama Administration probably trying to make a push towards the Comprehensive Test Ban Treaty and the Fissile Material Cut-off Treaty, the trouble for India might just be beginning.

Though Washington has made it clear that it will honour the commitments of the nuclear pact, the text remains open to interpretation and Delhi fears that it will be a particularly restrictive reading of the text under the present political dispensation. For India, the fact that it is already negotiating with the Russians and the French does mitigate some of the impact of this uncertainty. There is also hope that the American private sector will not allow any dilution of the text for fear of becoming less competitive.

In many ways, the G-8 fiasco underlines the unique position that India holds in the global nuclear hierarchy. It is an outlier in every way. While the non-nuclear weapon states resent the special treatment that the US-India nuclear pact gave to India, the nuclear weapon states are reluctant to allow another nuclear state from emerging.

The Bush Administration recognised the importance of resetting the terms of global nuclear discourse and of bringing India into the larger non-proliferation framework as a responsible nuclear state with advanced nuclear technological base.

The Obama Administration has decided to take a more traditional view of the problem by linking the problem of nuclear proliferation to the strengthening of old treaties, including the NPT, CTBT and FMCT and in doing so has once again put India on the defensive.

A defensive India surrounded by two nuclear adversaries who have been colluding on nuclear issue for last three decades is never going to be a part of the nuclear non-proliferation regime as designed in 1968.

The US-India ties will be entering a difficult phase in the next few months as pressure will increase on India to make 'positive' contributions to the three critical global issues.

This will be happening in the larger context where the broader geo-political framework of US-India relationship has changed rather dramatically over the past few months. From being viewed as a great power in the making and a balancer in the Asia-Pacific, India has reverted back to the status of a regional player for the Obama Administration whose main utility is in dealing with Pakistan. This has increased apprehensions in Delhi about Washington's agenda vis-a-vis India.

On none of the above-mentioned critical issues, the US can get a global agreement without first taking Indian concerns into account. India can play the role of a 'spoiler' very effectively and it has wielded its veto power on these global issues so far.

It is important for the Obama Administration to get India on board before proceeding with its global agenda. Clinton's recent visit notwithstanding, the divergence between the US and India remains as stark as ever.


The writer teaches at King's College London and is presently a Visiting Professor at IIM-Bangalore.

Harsh V Pant