Alastair Newton and Ritika Sen -India And The US: "Natural Allies" Or Uneasy Bed-Fellows?

By Alastair Newton - 18 January 2011

For the first two years of his presidency, Barack Obama appeared to be paying little attention to India, certainly relative to his predecessor, George W Bush, who had overseen the unprecedented step of setting America actively to help India in its drive to attain major power status. However, for all its overt commercial objectives (ie to boost American exports) Mr Obama’s November 2010 visit to India may mark something of a shift in US policy back to that of the Bush era. If that is the case, it raises (at minimum) two related questions. First, how does India see its relationship with the US; and, second, will a (re-)emerging India prove to be the sort of power which the US is hoping for?
An Independent India In The International Community
Since its unsuccessful attempts in the 1950s to achieve major power status as the founder of the Non-Aligned Movement, India has invested heavily in space and atomic research (notably Pokhran I in 1974); developed its military prowess; and, since 1991, received a significant boost in the wake of then finance minister Manmohan Singh’s programme of economic reforms. [i]
It is clear in retrospect that the most important of these was India’s economic liberalisation, which addressed a significant balance of payments crisis and was a solution to India’s isolation following the demise of its most valuable ally, the Soviet Union. India’s consequent economic success story has been attracting attention since the beginning of this decade, as the initially soft power-based rise of Asia’s two economic giants – China and India – has been the principle driver in the ongoing long-term shift of the global economic centre of gravity from west to east. As expressed by Findlay and Rourke (2008), “… [this is] not only the best news for global human welfare in a generation, [but promises] to raise a variety of geopolitical challenges which … remain unpredictable.”[ii] Furthermore, and consistent with this economic shift and its geopolitical consequences, a report published in 2008 by the U.S. National Intelligence Council foresees a multipolar world which by 2025 will still have the US as the single most powerful country but where China and India, among others, will be major players.[iii]
The “Bush Doctrine”…
The events of 9/11 saw a shift in America’s foreign policy towards unilateralism, pre-emption and strong support for democratic regimes. In this latter context, US Ambassador to India (2001-03), Robert Blackwill was instrumental in developing and pursuing a US policy of close ties with India – probably the closest since Indian independence in 1947 – which was based on the principle of India as a “rising great power of the 20th century”.[iv] This approach saw the US retreat from considering India “a nuclear renegade whose policies threatened the entire nonproliferation regime” and regarding India as an ally for pursuing its “strategic opportunity” in Asia.[v]  This led to the lifting of sanctions imposed after India’s 1998 nuclear tests, increasingly close military cooperation, rapid deepening of broad ties and the watershed 2008 India/US civil nuclear agreement.
…And The “Obama Angle”
Mr Obama, who has a self-imposed target of doubling US exports by end-2014, placed the US economic recovery at the centre of his agenda for his November 2010 visit to India.[vi] He unveiled a deal for $10 billion of Indian investment in the US defence sector which will supposedly create 54,000 jobs in the US.
He also promised to back India for membership in the Nuclear Suppliers Group (NSG); and to remove Indian organisations from the “Entities” List, thereby eradicating barriers to the development of its space and defence capabilities. Furthermore, Mr Obama recognised India as an “emerged power” with a role to play beyond South Asia in West Asia (Afghanistan) and East Asia, as well as Africa; and he came out in strong support for a permanent UN Security Council seat for India – much to the annoyance of Pakistan even though there is little likelihood of this becoming a reality in the foreseeable future.
However, privately even Washington-based experts agree with our assessment that these political “sweeteners” should probably be seen in the context of the President’s first priority of boosting exports to aid the ailing US economy.
As Seen From India
For sure, that is the view of experts with whom we have spoken in India in the wake of Mr Obama’s visit.
There is no doubt that India has profited from the shift in US policy towards it over the past decade; and that, despite residual knee-jerk anti-Americanism among certain sections of the country’s political classes (highlighted by the then government’s near-defeat in a parliamentary vote of confidence over the civil nuclear agreement), it will look to continue to do so. However, it is already clear that, although Mr Obama has made a number of new commitments to India which would be much to the latter’s advantage, Indians are already questioning the extent to which those commitments are bankable and what India (as opposed to the US) really got from his 2010 visit. This sense is likely to reinforce what we see as a persistent questioning attitude in India towards US friendship and largesse.
Nevertheless, despite the disappointing substantive gains for India out of the Obama visit, India does have a continuing opportunity to capitalise on its relations with the US in the context of both Sino-US tensions and America’s domestic economic circumstances. However, the US would, in our view, do well to consider carefully what sort of power a truly “emerged” India will be and whether the path India chooses to take is consistent with Washington’s expectations and aspirations. 
Empirical Evidence…
On the international stage, there is as yet little hard evidence of India’s likely direction. Notably:
·         In the WTO’s Doha Development Round (DDR), although India is a major player (alongside Brazil, the EU and the US), in protecting what it sees as its own interests, it is no more (and arguably less) responsible for the present impasse than others, including the US;
·         Progress with proposed bilateral free trade agreements (FTAs) with the EU and, more especially, the US is slow thanks to substantive difficulties on both sides of the table;[vii]
·         The G20, now with two years of summits under its belt, has still barely come of age yet and it is too soon to assess how (a to date largely watchful) India will play its cards there – though it is worth noting that Beijing and Delhi were able to find common cause at the November 2010 Seoul summit over the so-called “currency wars” following the US’s second round of quantitative easing earlier that month; and,
·         On climate change (where China and India are again looking to work together in international fora), at the 2010 Cancun summit India took a step forward in proposing a verification regime on carbon emissions; but caution is still called for in judging where India ultimately stands as it will not be to its advantage to forfeit its long held position of not signing up to the Kyoto Protocol.
…And Philosophical Pointers
Assessing the philosophical underpinnings of Indian international policy, Sagar (2009) cites four different (if not entirely mutually exclusive) “visions”, as follows:
·         “Moralist” which, based in part on the Nehruvian view of the world, sees India as “an exemplar of principled action”;
·         “Hindu nationalist” which favours the robust promotion and defence of Hindu culture and civilisation by the Indian state;
·         “Strategic” which wishes to develop India’s strategic (including military) capabilities to project power; and,
·         “Liberal” which aims to generate economic growth through trade and interdependence.[viii]
India’s economic transition owes much to the influence of the last of these visions, rooted in the – by the 1980s, increasingly apparent – failure of policy based on principles rather than pragmatism to achieve successive governments’ objectives either domestically or internationally. This is especially clear in regional policy where it has long been axiomatic that, in words often attributed originally to Henry Kissinger, “India lives in a dangerous neighbourhood”. India’s desire to bolster economic ties with other south Asian economies through BIMSTEC and SAARC is certainly driven in significant part by a (pragmatic) desire to enhance economic growth among its neighbours and, through that growth, peace and stability across the region as a whole to mutual benefit.
The (New) China Syndrome
Within south Asia, Pakistan in particular has the capacity to act as a “spoiler” in that regard. But, overall, China is likely to have even more influence in determining which vision India follows. Recent events such as China’s territorial spat with Japan and other border-related disputes (including with India) and its perceived stance on North Korean malfeasance have weakened the confidence of China’s neighbours as regards its ”peaceful rise”. Particularly, China seems keen to carve a stake for itself in the sub-continent which has generally been perceived as India’s sphere of influence. Recently, China sold a 1 gigawatt nuclear reactor to Pakistan and blocked the international community’s efforts to impose restrictions on Pakistani-based terrorist outfits.[x]
As things stand, India is currently aiming – most notably through its “Look East” policy – “to create an informal coalition of Asian states sharing an interest in stability and security, thereby balancing China’s influence in the region” (Sagar, 2009). But, if Sagar’s assessment is correct, one could equally argue that it would be in India’s geopolitical interests to conclude an FTA with China. However, there are undeniable signs of Indian foot-dragging on that front following the completion of a joint FTA feasibility study with China in October 2008.
However, even though there has been no easing of the strain on political ties, the building blocks were put in place for significant progress in the sphere of trade and economic relations during the Chinese Premier Wen Jiabao’s December 2010 visit to India. Both countries acknowledged the fact that economic cooperation between the two rising giants will help to drive and sustain their economies. Bilateral trade reached $60 billion in 2010, and the target of a $100 billion by 2015 does not seem unachievable under the circumstances.[xi] From an Indian perspective, many skeptics worry about cheap Chinese imports flooding Indian markets and Indian companies struggling to compete in China where Chinese State-Owned Enterprises have the backing of the political elite. But during his visit, Wen Jiabao announced initiatives to reduce the trade deficit (tilted against India by about $16 billion) by providing more access to Indian products (such as IT and pharmaceuticals) in the tightly controlled Chinese market. Mechanisms were also established to ensure the continued deepening of economic ties, such as the Strategic Economic Dialogue and the CEOs Forum.[xii] 
If follow-up to Wen Jiabao’s visit proves more substantive than was the case for Hu Jintao’s 2007 visit to India and the potential economic gains are realised, this could help build mutual trust which would ease political tensions between Asia’s two emerging giants. And that, in turn, would likely have at least some impact on India/US relations.
Wider Challenges To India’s Ascendancy
Citing the US as a potential barrier to India’s rise may seem odd in the light of the Bush Administration’s decision to aid India’s emergence as a comprehensive national power.[xiii] However, especially if there is a sustained up-tick in Sino-Indian relations, the rationale that India is America’s “natural ally” may yet prove somewhat simplistic and/or short-sighted. In particular, it is worth noting that the most enthusiastic statements about India/US relations emanated largely from Washington’s security and intelligence establishment in 2005 at a time when the NIC claimed that the America would “retain enormous advantages…that no state will match by 2020”.[xiv] While that claim may, overall, still be valid it is clear from its 2008 report quoted earlier that even the NIC’s view of the world is now much more nuanced than was the case four years ago. And at the heart of that shift lie the economic events of the intervening period which, as Findlay and O’Rourke (2008) highlighted, raise questions regarding the US’s willingness to continue to promote a pro-liberalisation global agenda.
Thus, despite the undoubted upward curve of the past decade in India/US relations, Washington needs to be careful not to be perceived as taking its “natural ally” for granted and to ensure that it takes full account of India’s legitimate aspirations. Listening to, and actively accommodating, India stands to reap considerable dividends. But failure to do so could have unpredictable – and probably negative – consequences from America’s perspective as India continues to look to be the principal driver of its own destiny.
Alastair Newton and Ritika Sen, both former students at the LSE, work for Nomura International plc. The views expressed in this article are those of the authors and do not necessarily represent those of their employer.



[i] Pokhran I, also designated as the ‘Smiling Buddha’ was India’s first nuclear test explosion, and also the first conducted by a country outside of the five UNSC members, in Pokhran on 18 May 1974.
[ii] “Power and Plenty: Trade, War, and the World Economy in the Second Millennium” by Ronald Findlay and Kevin H O’Rourke (Princeton, 2008).
[iii] Global Trends 2025: A Transformed World” (National Intelligence Council, 2008).
[iv]“Foreign policy guru tapped to aid Rice, a former employee” by Robin Wright, Washington Post, 23 December 2003.
[vi] “India Today Languages Editor Prabhu Chawla on Obama visit” , India Today, 4 November 2010
[vii] For more information on EU/India trade relations see
[viii] “State of mind: what kind of power will India become?” by Rahul Sagar, International Affairs, Volume 85, Number 4, July 2009 (Chatham House), pp801-816.
[ix] The original “China Syndrome” postulates a nuclear meltdown in which a molten reactor core in the US melts through the Earth’s crust and reaches China.
[x] “Wen Jiabao’s India visit exacerbates fault lines” by Rajeev Sharma, Eurasia Review, 2 January 2011
[xi] Wen brings Finance to Cement India Ties” by James Lamont and Jamil Anderlini, Financial Times (Asia-Pacific),15  December 2010
[xii] “2010-- India, China Engaged in Hectic Diplomacy” by K J M Varma, Outlook India, 29 December 2010
[xiii] See, eg, “In Spite of the Gods”: The Strange Rise of Modern India” by Edward Luce (Little, Brown, 2006) pp281-294.
[xiv] “Mapping the Global Future” (National Intelligence Council, 2005).
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