The South Asia Channel

Why the U.S.-India Relationship Is Far from “Oversold”

With national elections in India taking place this month, the health of the U.S.-India relationship is under the spotlight, and the early prognosis is relatively grim. The sudden resignation of the U.S. Ambassador to India and a rocky start to relations with favored prime minister candidate Narendra Modi are symbolic of a broader malaise that has afflicted Indo-U.S. relations since 2008.

After years of lofty rhetoric and ambitious diplomacy, the energy and enthusiasm that drove the Indo-U.S. partnership in the mid-2000s was noticeably diminished during the first term of President Barack Obama. By 2012, prominent thinkers on the bilateral relationship began wondering aloud whether the US-India relationship had been "oversold" in articles in American and Indian newspapers and conferences held by US think tanks like the American Enterprise Institute. Some, like Dan Twining of the German Marshall Fund, stood to defend the relationship on these very pages, but other DC insiders, like George Perkovich of the Carnegie Endowment for International Peace, argued for the oversold view.  

With few positive headlines to count in the two years since, the oversold narrative has assumed an aura of authority in Washington. At a conference on Capitol Hill this month, for example, Rick Rossow of the Center for Strategic and International Studies lamented how the optics of the relationship had reached their lowest point since India's nuclear test in 1998.

The oversold narrative, and the broader distress in bilateral ties, was born of three complementary dynamics. The first is the natural maturation of the U.S.-India relationship. The initial opening to India under the George W. Bush Administration was sustained by grand gestures like the 10-year defense partnership agreement (which will expire soon) and the historic civil nuclear deal signed in the summer of 2005. During this honeymoon phase, which paralleled strong economic growth in both countries, the occasional irritant was casually dismissed in service of grander strategic objectives.

Nine years later there are no longer ideas with "transformational potential" on the table. The two countries are, as S. Jaishankar, India's new Ambassador to the United States, notes, victims of their own success, "busy coping with the challenges of normalcy" and "the less exciting chores of maintenance, upkeep, and progress."

The second, more powerful, dynamic is the untimely faltering of growth in both countries following the 2008 global financial crisis, and the resulting inward turn toward domestic concerns in Washington and Delhi. The phenomenon has been more acute in India, where a ruling party paralyzed by corruption allegations has compounded the problem. But the consequences have also spread to the U.S. business community, once powerful and enthusiastic backers of stronger Indo-U.S. ties when India was growing at or near 9 percent. Now sluggish growth in India and fatigue in Washington have provided them an opening to lobby Congress and the Obama Administration on outstanding trade and investment grievances -- and they are being heard.

The final dynamic is a litany of real and perceived disappointments. These range from the failure of U.S. companies to win a multi-billion dollar tender for Indian fighter aircraft in 2012, to the two sides' inability to capitalize on the U.S.-India nuclear deal after the Indian parliament passed restrictive nuclear liability legislation. Add to the list the recent diplomatic scandal over the arrest of Indian diplomat Devyani Khobragade for violations of U.S. labor laws and a general recognition that, on a range of global issues, Delhi and Washington remain leagues apart. 

The sins of the oversold crowd

Despite these considerable headwinds, the fundamentals of the U.S.-India relationship remain strong, and the oversold narrative withers under scrutiny. We should begin by asking: Who oversold the relationship? Indian officials were clear from the outset that, although they were eager for a fundamental reorientation of relations, a traditional alliance was off the table. Delhi has long been wedded to the principles of non-alignment; even during the Cold War, India's "special relationship" with the Soviet Union was based on the foundation that arms sales and tactical cooperation did not imply strict strategic alliance. 

That's probably why no credible U.S. analyst or official predicted India would suddenly be leading the charge on Iran sanctions, support an intervention in Syria, or become a vocal critic of Russian expansionism. What they did expect was practical, technical cooperation on a wide range of issues, including an acceleration of trade and investment ties, a more intimate defense and intelligence relationship, cooperation on space and cyber security, an expansion of joint military exercises and training, growth in people-to-people exchanges, and a more determined effort to find ways to disagree without being disagreeable.

On most of these counts, progress in the U.S.-India relationship has been remarkable. From estranged democracies little more than a decade ago, last year India became the largest purchaser of American arms and conducted more military exercises with the U.S. than any other country in the world.

The oversold crowd's cardinal sin is not unrealistic expectations, however. It is a fundamentally misaligned cost-benefit analysis. That is, they hold an inflated perception of the costs of the U.S.-India relationship, and erroneously conflate costs with unrealized benefits. (Hint: Failing to win a tender to export fighter jets is not a "cost" of our partnership.)

So what great cost does Washington bear from its move toward India? A more antagonistic relationship with Pakistan? Hardly. Islamabad needed no assistance from its neighbor to achieve that. A tremendous financial burden? No. From 2000 to 2013, U.S.-India trade has grown exponentially, from $14.5 billion to $64 billion in goods and from $4.5 billion to $30.5 billion in services. Has the partnership hurt American interests in Asia? Quite the opposite: India has taken an interest in opposing Chinese expansionism in the region and promoting freedom of navigation in the South China Sea. It has been a strong political and financial supporter of the Afghan government and has begun integrating itself into the U.S. security architecture in the Indo-Pacific.

The truth is, there has been no great cost to Washington's move toward India -- just ample recrimination about missed opportunities (i.e., the fighter jet deal) and unrealized benefits (the nuclear deal). The only real cost to speak of is the tangible frustration felt within the U.S. government at the glacial pace of doing business with India. Delhi has tried the patience of policymakers with frequent demands for special exemptions, and often appears less enthusiastic about the relationship than Washington does. To sustain that enthusiasm moving forward, Washington will need more help from Delhi.

The next phase

There should be hope on the horizon if, as the overwhelming consensus of early forecasts predict, the opposition Bharatiya Janata Party (BJP) returns to power in this month's elections.  After all, they were the architects of India's initial opening to the United States during their last stint in power from 1998 to 2004. But the U.S. government has so profoundly mismanaged a decade-long visa ban on BJP prime ministerial candidate Narendra Modi that it may have squandered a surplus of goodwill with the party.  

Recognizing the futility of the visa policy, in February the Obama administration approved the first ambassador-level contacts with Modi, and last month a congressional report confirmed that Modi "would automatically be eligible for an A-1 (diplomatic) visa as head of state." This is welcome - if long overdue - news. 

Numerous interactions with senior BJP officials in recent years suggest the party still prioritizes a robust strategic partnership with the United States. And if Prime Minister Modi proves as pragmatic and results-oriented as Governor Modi did, we may well avoid an unnecessary diplomatic rupture.

Whichever government is brought to power in Delhi, its first challenge will be to put India's economic house back in order. The good news is the BJP should have ample opportunities to restore momentum to the economic relationship and get the business community again serving as a lubricant to bilateral relations. They can achieve this by meeting the United States in the middle on insurance sector or retail reform; reinvigorating the defense relationship with a more forward-leaning defense minister; pursuing energy cooperation, particularly in Liquid Natural Gas (LNG); revising a nuclear liability law universally derided as untenable; creating a more secure and predictable investment climate; and partnering with U.S. companies to tackle India's massive infrastructure needs. All are long overdue, and all have the virtue of being in India's national interest.

Washington's task is simpler, yet more elusive. The halls of American power must rediscover a long-forgotten concept -- patience. The 2008 financial crisis demonstrated the folly of focusing on short-term gains at the expense of sound, long-term investments. Even if Delhi sometimes proves an intractable partner and the benefits of the relationship are more elusive than hoped, India remains a low-cost, high-value, long-term bet. 

The thriving Indian-American community, by some counts the most successful expatriate community in the United States, has planted the seeds of deep interpersonal links between the countries. And common concerns over China's rise, instability in Afghanistan and Pakistan, Islamist fundamentalism, maritime and cyber security, and a shared democratic tradition will offer India and the United States a healthy supply of arenas to cooperate -- if we find the patience and fortitude to see this partnership through.

Jeff M. Smith is the director of South Asia programs at the American Foreign Policy Council in Washington, D.C. He is author of Cold Peace: China-India Rivalry in the 21st Century (Lexington Books, 2014), and contributing author to India-US Partnership: Asian Challenges and Beyond (Wisdom Tree, 2014).

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