Let’s talk business with Uncle Sam

In 2006, whilst in the Navy, I attended and spoke at an international seminar in Manama (Bahrain). I still recall the host country speaker, regaling the audience of politicians, military personnel and diplomats from over a hundred nations when he said, “The US is a great democracy. It always arrives at the right answer to global problems after having exhausted all other options”. This article examines the possibility of improving Indo-US ties, which have been on the back burner in recent times, though Indo-US trade has risen by 500 per cent to $100 billion in the last 13 years, and could potentially rise to $500 billion in the next 10 years.

Indo-US relations have never achieved their true potential, despite a few recent years of bonhomie during the Bush era, when the nuclear deal was signed. So happy were the Americans with the UPA-2 government that they not only refused to give Narendra Modi (then chief minister of Gujarat) a visa to visit the US, but also, as per media reports, Hillary Clinton had even got European NGOs to organise searches in Gujarat for imaginary graves of the 2002 riot victims. Now that Prime Minister Narendra Modi has come to power with a massive majority, the Americans are keen to restore economic and military ties.

Mr Modi has been elected on a promise of development, and he intends to kickstart the economy. The first step he has taken is to get back $1,500 billion black money from tax havens abroad, but this process will take time. India, in the meantime, urgently needs a $1,000 billion in foreign direct investment to modernise its creaking infrastructure, and the only two nations who can spare that amount of money are China (with foreign exchange reserves of  $3,500 billion) and Japan (with foreign exchange reserves of $1,000 billion). During the period that Mr Modi was chief minister of Gujarat, he made four visits to China and five to Japan.

Not surprisingly, China’s $900 million FDI is mostly for Gujarat. Now the Chinese foreign minister is coming, with a message for Prime Minister Modi, to increase economic co-operation, while Prime Minister Shinzo Abe of Japan has also spoken warmly of ties with India. Russia will remain a crucial partner for military hardware, space exploration, energy security and nuclear power plants. Further Mr Modi is expected to meet Mr Abe in Tokyo before attending the Brics heads of states summit in Brazil on  July 15, and will meet Barack Obama only in end September in US. So where does this leave Indo-US ties?

Despite decades of America backing Pakistan, India cannot ignore the fact that the US is still the world’s number one military and economic power, with the capability to help India and indeed the Asia-Pacific region against China’s numerous territorial claims and sabre rattling.

The Indo-US nuclear deal has been good for India, as badly needed uranium fuel is now freely imported for its designated civil nuclear power plants. The Americans are unhappy that no nuclear power plants have been imported from US because of the Indian Nuclear Liability Bill (NLB). The problem is not the NLB, as the supplier can always factor in the cost of the NLB in insurance and add it to the overall cost as the Russians and French are planning to do. American nuclear plant manufacturers (Westinghouse) have been bought over by a Japanese company (Toshiba), and Japan, despite Mr Abe’s friendly overtures to India, is still not willing to do “nuclear business” with India.

The US also needs to realise that given the Indian psyche of 150 years of British colonial rule, any strategic ties with India will need to be different from what the US has with its Nato allies, Japan and South Korea. India will never accept foreign bases on its soil, and Indian military personnel on global peacekeeping missions will operate only under the United Nations flag. America should stop equating India with Pakistan and stop raising the bogey of an “imminent nuclear war” in the subcontinent. Ukraine presents a far greater threat of a nuclear war given that the Americans have an estimated 200 tactical nuclear weapons (TNWs) in Europe and the Russians have 2,000 TNWs. The Asia Pacific too is a dangerous “nuclear arena”, with sabre rattling over territorial claims and the involvement of three nuclear powers (US, China and North Korea).

India expects to spend over $100 billion on its military modernisation in the coming 10 years, and if American companies want a piece of this pie, they need to be willing for ToT (transfer of technology) for indigenous manufacturing. However, there are some areas where ToT can be avoided, and this relates to permitting India to acquire, on 30 years’ lease, a few American Virginia class SSNs (tactical attack submarines) to provide blue water tactical capability at sea. In addition, 11 of the 22 American Ticonderoga class guided missile cruisers (of 9,600 tons) are due to be decommissioned, and these could be transferred to the Indian Navy on “friendship prices”.

A strong Indian Navy in the Indian Ocean, and a strong Japanese Navy in the Pacific Ocean could, by co-ordinating their activities, greatly help in keeping the global sea lanes safe and open for merchant shipping, by ensuring safety against pirates, maritime terrorists, and helping to deter war in areas of tension.

In PPP terms, China is expected to overtake the US economy by end 2014. India, which is already the third-largest global economy in PPP terms (Japan is fourth), has a vested interest in maintaining good relations with Russia, US, China and Japan. It, however, needs to have sufficient military and nuclear capability to deter its two nuclear armed neighbours, while accepting Chinese FDI. The United States, for its part, needs to be sensitive to India’s global interests and aspirations, and provide it with cutting edge technology in strategic fields of civil nuclear power, space and the maritime domain. Mr Modi and Mr Obama can begin a new mutually beneficial chapter in Indo-US relations.

The writer retired as Flag Officer Commanding-in-Chief of the Eastern Naval Command, Visakhapatnam