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Strengthening ties amid differences

Wisdom on building the India-U.S. relationship dictates that a good supply of patience and an equal measure of flexibility be banked before the two sides meet.

American enthusiasm for reviving the relationship is markedly up now than it was before the Indian elections. The Obama Administration sees a chance to move things up a notch or two with the new Indian government.
It is looking for “economic convergence” to match the fairly good strategic convergence between India and the U.S.

Official Washington is unfazed by the chatter in New Delhi that India might do more with China and Japan for the time being until a new U.S. president comes along. It believes in the “strategic and economic heft” the United States brings to the table, and New Delhi’s ability to recognise that.

In meetings preceding the 5th Strategic Dialogue, Prime Minister Modi and his advisors made it clear to the Americans they wanted more, not less with the United States – especially more engagement of U.S. companies. The truth is that when it comes to directing U.S. corporations in a certain direction the American government pleads helplessness, but when it comes to voicing their discontent the U.S. administration is vocal. Therein lies the biggest irony and frustration of the relationship.

The Obama Administration will have sent three cabinet-level officials to India in less than three weeks. As Secretary of State John Kerry and Commerce Secretary Penny Pritzker depart, Defence Secretary Chuck Hagel will be preparing to fly in to Delhi. How much they can do in terms of firming up an impressive menu for Modi’s visit to Washington in September is uncertain.

It won’t be easy. Kerry’s pre-departure comment that much “homework” remains to be done before jump-starting the stalled relationship was telling.

The differences in perspective, especially on economic and trade policies between India and the U.S., are apparent. Can they be overcome in time for a couple of solid announcements for the Modi-Obama meet?

More likely, progress will be in gradual, incremental steps. The Strategic Dialogue, which concluded this week, showed a clear recognition of the gulf but also a spirit of eminent pragmatism.

Foreign Minister Sushma Swaraj minced no words when standing next to John Kerry.  She said bluntly that friends don’t spy on friends in response to a question about the National Security Agency spying on India, and in particular her party the BJP.

Kerry was equally open in criticising India’s decision to block the Trade Facilitation Agreement at the WTO. He said on Indian television that India could be in violation of the WTO rules for its refusal to sign the pact which it had earlier agreed to.

India’s decision to stick to its guns certainly cast a shadow on the meetings. U.S, trade officials in Washington have begun blaming India for putting the WTO itself in “uncertain” territory with its last-minute refusal.

But those in charge of putting relations back in order say it’s still early days, and the Modi government is a five-year proposition. And herein lies the other problem – different U.S. agencies have different agendas and you need the White House to stitch it together. And experience tells us that neither Obama nor Kerry is nearly as seized of the matters relating to India as some others might have been.

That Kerry was conducting Israel-Hamas ceasefire negotiations during the India-U.S. dialogue hardly went down well with the Indian side.

For all his excessive enthusiasm before the trip to Delhi, Kerry is now likely downsizing the “ambitious” agenda he planned to recommend for the Modi-Obama summit.

His admission that “we all have a lot of homework to do coming out of this meeting” is an honest comment on how far the two countries have drifted. Of the nearly 30 bilateral dialogues started to showcase the breadth of relations, many haven’t been held regularly.

But the good news is that the Trade Policy Forum – a bilateral talk shop to air differences — will be revived. The two sides can deal with the most contentious issues, including protection of intellectual property, investment climate in India and taxation policies. There is also an agreement to expand the commercial dialogue.

Do Indian complaints fit any of these formats? India has two big issues — the H1-B visas, and the lack of any U.S. interest in starting talks about a “totalisation agreement,” which would return money to hardworking Indian men and women who pay social security taxes here but never see a penny back on their return to India.

On the other problematic issue – India’s nuclear liability law – it appears Kerry did not get an opening either. U.S. companies see the law as too onerous because it places unlimited liability on the suppliers. The Americans had hoped that a government with a strong mandate could fix the law with an amendment. Except they forget that BJP, while in opposition, was consulted on the formulation and gave its approval.

The lack of movement on the liability law may affect American enthusiasm and willingness to spend political capital to get India into the Nuclear Suppliers Group and the three other export control groups in the face of opposition from China. American politicians go nuclear when reminded of the 2008 India-U.S. civil nuclear deal, which is yet to materialise into big contracts for U.S. companies.

Bureaucratic finessing may not be the answer here, but nor has the Modi government shown any eagerness to accommodate the Americans.

The joint statement issued at the end of this fifth dialogue was a reaffirmation of the previous four – to continue working on high technology, homeland security, clean energy, trade issues, capacity-building in Afghanistan and in several African countries. It touched on the “steep escalation of violence” in Gaza and Israel, called for Iraq’s territorial integrity, and expressed concern about the deteriorating situation in Syria.

A huge international crisis absent from the list was Ukraine and the recent downing of a Malaysian airliner over that country. Both Kerry and Swaraj chose to leave Russia out and when asked by journalists, declared their discussions were purely “bilateral.”

In the end it is important that the two sides met and got a realistic sense of the other. It appears that Modi is currently concentrating on winning the upcoming state elections, and foreign policy is but a vehicle to take him in that direction. The Indian blocking of the WTO deal may also be a part of that game.

At the end of the day, political reality is as intrusive in New Delhi as it is in Washington.

Seema Sirohi is a Washington-based analyst and a frequent contributor to Gateway House: Indian Council on Global Relations. Seema is also on Twitter, and her handle is @seemasirohi

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