Strategic Trust-Building

In the kaleidoscopic world of power politics in Asia, the United States’ pivot to that region may yield the unintentional consequences of fostering closer strategic ties between the two Asian giants - China and India – which could result in a strategic alliance ostensibly hostile to Western interests in the region. 

Analysts will be quick to point out that the ‘all weather friendship’ between the two countries, has hit a natural ceiling due to the strategic competition between the (re)emerging powers. For example, China is deepening its ties with Pakistan militarily (both countries signed a military cooperation agreement in September 2012), provides nuclear support, and has finally taken over management of the port of Gwadar on Pakistan’s Makran coast. India on the other hand is trying to counter China’s influence in Asia by fostering closer ties with the countries of the Association of South East Asian Nations (ASEAN), especially in the field of naval cooperation, which adversely affects China’s position in the Indian Ocean and South China Sea. Both countries’ increasing energy demands also put the two giants on a collision course. 

Yet, a ‘diplomatic revolution’ may be in the making should the United States decide to overplay its hand during President Obama’s second term. The United States assigns a key role to India in its turn towards Asia, which in almost its entirety is aimed at balancing China’s influence in the region. Nevertheless, as India’s former Foreign Secretary, Kanwal Sibal, points out: “India is already distancing itself from the pivot by the notable friendly discourse towards China…”. The reasons for this are complex, yet they are in large part based on the gradual waning of US influence in the region and the fact that geographical proximity between India and China mandates some sort of rapprochement for the sake of both countries’ economic development.

The original ‘diplomatic revolution’ occurred in 1756 on the eve of the Seven Year’s War between France and the Austrian Empire. In a reversal of alliances, Austria abandoned its long-term ally, Great Britain, for its most formidable continental rival, France, thereby breaking with its traditional foreign policy doctrine. The principal reason was Austria’s gradual realization that Britain, primarily a sea power, could or would not adequately be able to support its ally militarily in a new European war. Great Britain’s real diplomatic ambitions were overseas. 

The Austro-French alliance was in many ways counterproductive and an unhappy experience for both countries. Because of their divergent interests and continuing rivalry, both parties paralyzed each other, and they could not effectively cooperate during the Seven Years War (1756-1763). Dr. Marco Cesa in his book “Allies Yet Rivals – International Politics in 18th Century Europe” referred to the Austro-French alliance as a “deadlocked alliance”, in which both parties decided to “preserve their union, since their alliance gave each a means with which to control the other, and also because without such an alliance they would probably have ended up fighting each other…”. Paul W. Schroeder called this a “pact for management and mutual restraint of one’s partner, not for capability aggregation and aggrandizement.” 

Similar to Austria’s realization in 1756, India may think that she is better off seeking closer ties to a continental military power and a neighbor, rather than an Asia Pacific sea power such as the United States, which may not have the stomach to compete with China’s power projection capabilities on mainland Asia. However, should China and India move closer together, the result in all likelihood will be a form of a deadlocked alliance in which both countries, similar to Austria and France, will be at loggerheads with each other. 

Yet, there are very good strategic reasons for both countries to move closer. As D.S. Rajan points out: “…Beijing and New Delhi share the same views on two key factors forming the basis for partnership – multilateralism and economic cooperation.” Both are interested in peace in their respective peripheries and a ‘peaceful rise’. Both depend on each other for economic development. For example, 80 percent of China’s total oil import passes in proximity to India’s southern coast through the straits of Malacca. More importantly in the short run are China’s deteriorating relations with Japan and the United States’ grand strategy for Asia during President Obama’s second term, both of which will weigh heavy on Beijing’s motivation to create a Indo-Sino alliance. Already in 2005, China and India have formed a "strategic and cooperative partnership for peace and prosperity” and held various bilateral discussions on their future strategic partnership. In January 2013, during the fifth annual Indo-Sino defense dialogue both countries agreed to resume joint military exercises. 

There are a host of issues that could undermine closer Indo-Sino relations in the years to come such as unresolved border issues, China-Pakistan relations, energy security, cyber-espionage, Tibet, India’s eastward expansion of its economic ties and Myamar just to name a few examples, where both countries’ interests are at variance. For the sake of stability, the United States should encourage closer Indo-China ties. Austria and France were at peace between 1756 to 1792, not a small achievement given the volatility of European power politics at the time. Once the alliance dissolved in 1792 both countries were involved in a life and death struggle, which lasted until 1815. Closer Indo-Sino ties mean a more stable Asian security environment based on mutual restraint, and – because of the inherent nature of a deadlocked alliance – little growth of both Indian and Chinese power. 

Ambassador’s Kanwal Sibal’s mollifying prediction about US-India relations in the next four years should be seen as good news to US Foreign Policy makers:  “All in all, therefore, India and the US will neither enter into an embrace nor disengage; they will continue to shake friendly hands as Obama’s second term unfolds.”

Click here to read this piece at China-U.S. Focus.

China notably opposed military action against Libya and a UN resolution condemning Syria. Could this newfound cooperation signal a new phase, perhaps a reset in U.S. relations with China, which you have called “America’s single most consequential diplomatic partner?”

I wouldn’t characterize China’s position on North Korea in the United Nations Security Council as an effort to demonstrate cooperation with the United States, per se; China doesn’t view North Korea principally as a bilateral issue with the United States. China views North Korea’s pursuit of nuclear weapons and the ballistic missile capability to deliver those warheads more as a regional issue that requires a multilateral, diplomatic approach.

China recognizes, from the standpoint of its own security interests in Asia, that a nuclear North Korea is highly problematic; and because that is so, it has been willing to work with the United States and the other U.N. Security Council members to adopt this latest and toughest round of sanctions.

Bear in mind that, when China looks at this issue of North Korea, it’s using a very different prism than the United States. If things deteriorate on the Korean peninsula – if the North Korean regime were to collapse, or God forbid, there were an actual breakout of war between the North and the South and the various other players – that would affect China in very direct and profound ways.

What strategic considerations are at play for China here, especially in light of the U.S. “pivot” to East Asia and tensions in the South China Sea?

When countries like China, the United States or other players in the Asia-Pacific region take actions, on the one hand, they’re doing so on the merits of the case – in this case, the issue of North Korea itself; on the other hand, they’re doing so in a broader context.

The driving considerations for the Chinese with reference to this particular U.N. action are pretty much self-standing. China doesn’t want nuclear weapons anywhere on the Korean peninsula. China views nuclear weapons on the Korean peninsula as antithetical to its interests. What drives this particular assessment is a cool, rational analysis of China’s own security interests.

More broadly, China does feel some sense of apprehension and wariness concerning the United States’ long-term objectives in the region. China sees the U.S. pivot to Asia in terms that are more sinister than anything the United States has described publicly. Chinese scholars and sometimes officials in off-the-record statements have made the point that there seems to be a kind of containment-like element to this policy.

These two issues, the North Korea situation and the U.S. pivot, do come together. In the back of the minds of the Chinese leadership, there must be the idea that China doesn’t want to see developments that give the United States any further cause to beef up its military presence in the region. It’s in that context, as well, that China looks at the region and looks at what’s happening in North Korea.

Do you believe this recent activity signals a lasting policy shift in China’s stance on North Korea?

I don’t think that China’s position vis-à-vis this current round of sanctions represents anything qualitatively new. The United States and China have always had a common interest with respect to the question of North Korea’s pursuit of a nuclear program. Both sides want a non-nuclear Korean peninsula. Where they have at times differed is in how far you go with the use of sanctions to try to coerce behavior, with the U.S. historically taking a tougher posture.

I think there’s been broad continuity in China’s position over quite a few years, where the basic interest is a non-nuclear Korean peninsula and peaceful resolution of these issues in diplomatic and multilateral ways. None of those things have changed, notwithstanding the fact that China has now accepted a significant intensification of sanctions toward North Korea.

So why accept the tougher sanctions this time? I think the Chinese leadership is beginning to recognize, even if begrudgingly, that previous international efforts to influence North Korea’s behavior have not had the desired effect. I think China has concluded that it has to try something a little different.

In recent history, the failure of sanctions looms large: Saddam Hussein’s Iraq during the 1990s, Iran and North Korea, which has been under sanctions for most of its existence. Do you think these sanctions will actually work?

If I were a betting man, I would say no. Is this round of sanctions a positive development? Yes. As a human being on the planet earth, I’m happy to see that these sanctions have been adopted with the unanimous support of the Security Council. But the thing about sanctions that you have to understand is that the very premise of sanctions – or of any carrot-and-stick scheme – is that the actor whose actions you’re trying to influence is a rational actor, someone who will respond to cues and inducements rationally.

If you’ve got an actor that doesn’t necessarily respond to these kinds of prompts rationally, then, in a sense, all bets are off.

There have now been four rounds of sanctions on North Korea that have passed the U.N. Security Council; and yet, so far at least, we haven’t seen the kind of change in North Korean behavior that one would hope to see. So my judgment is that North Korea is not the kind of nation that would appear to respond to these kinds of prompts or inducements in a way that other countries would look at and regard as rational.

The U.S. ambassador to the United Nations, Susan Rice, has said, “These sanctions will bite,” meaning bite the North Korean leadership, “and bite hard.” And I think that’s a fair assessment. But again, if history is an indicator, I don’t think there’s a lot of evidence to suggest that the North Koreans will react in any readily predictable way to these types of international community actions – except, perhaps, to proceed with further nuclear and missile tests and ratchet up their rhetoric to even more craven heights.

Thanks so much for your thoughts on this subject. Any other comments you’d like to put on the table?

I think everyone’s now watching North Korea. North Korea’s leadership has some decisions to make. It’s very clear that the international community is quite united in its sense that North Korea’s pursuit of a nuclear weapons program is dangerous and destabilizing. It’s good to see the United States, China, Russia and the other members of the Security Council unanimously agree on this. I certainly hope that we’re entering a phase where the North Korean leadership realizes that the stakes are rising steadily with each round of these sanctions. Hopefully, it will do what’s in the interest of the North Korean people and peace on the Korean peninsula.

EastWest Direct is an ongoing series of interviews with EWI experts tied to breaking news stories.

The successive visits of French President Hollande and UK Prime Minister Cameron to India this month can be viewed from different angles. Both countries clearly attach increasing importance to the India relationship. Opportunities in India are considerable even now despite the current economic slowdown, and will grow vastly as India continues to rise. Interest in India is also part of the wider reality of economic power shifting steadily towards Asia, with France and the UK, therefore, needing to retain and expand their share of a market that is fostering linkages eastwards. UK’s share of the Indian market has dropped to 2 1/2 % from 10% at one time because they have admittedly not been pro-active enough. The fact that Europe is in crisis and the French and British economies are in trouble explains also the enhanced attention to India.

For India too, relations with France and the UK are of major importance bilaterally and within the framework of our relations with Europe, which remains India’s largest trade and investment partner. The Eurozone crisis has impacted more on the Indian economy than the US financial crisis. France and the UK as the fifth and sixth largest economies in the world with advanced technologies to offer are very valuable partners for India. We are appealing to both to ensure a “fair, balanced and forward looking” India-EU Trade and Investment FTA.

Both leaders were accompanied by large business delegations, 45 with Hollande and over 100 with Cameron- the largest delegation to leave UK’s shores. The target of doubling bilateral trade with France set up in 2008 (Euros 12 billion by 2012) has not been met. That set up with Britain in 2010 (Pounds 24 billion by 2015) is not likely to be met either given present conditions.

On the investment side, the UK is well ahead of France, with Cameron pointing out that 50% of Indian investment in Europe was in the UK and the latter was the biggest European investor in India. He promised to remove barriers to Indian investment in the UK further, asking in return that India remove its barriers too, especially for British legal, accountancy, architecture and other services.

India wants investment for upgrading its infrastructure. Hollande laid stress on cooperation in sustainable urban planning, including infrastructure, transport, water, waste management as well as railways. The UK has shown interest in the Bangalore-Mumbai industrial corridor, but the joint statement on this is couched in very tentative language, with the leaders agreeing “to examine and evolve the modalities and content of a feasibility study of this project concept through mutual discussions and to work out a roadmap for a possible partnership in this area”. British participation in India’s National Manufacturing and Investment Zones has been mooted. This, it is felt, would attract British SMEs to India. A lot of focus during Cameron’s visit was actually on potential opportunities for them.

Cameron singled out health care and education as highly promising areas. In education, the especially strong India-UK relations have been impacted by changes in the UK visa regime. However, Cameron has indicated these will be reversed- there will be no limit on visas and graduate jobs, he said. He has promised the same day visa service to Indian businessmen. France is far behind in education, but is keen to expand student exchanges through an ambitious education plan, including twinning of higher education institutions, mutual recognition of degrees, exchange of doctoral students, along with an enabling agreement on “people mobility and migration”.

Second, there is the advanced technology angle. France, unlike the UK, is a privileged partner for cooperation in nuclear energy with India. The agreement on the Jaitapur nuclear power project could not be signed during Hollande’s visit but the commitment of both sides to its early implementation “as soon as the commercial and technical negotiations, which have made good progress, are completed” was reiterated. India and the UK have now decided to open talks for a civil nuclear cooperation agreement. In space, cooperation with France has been longstanding and an agreement to launch a jointly developed satellite was announced during Hollande’s visit, but this area is absent from the gamut of India-UK ties. India concerns about easier access to hi-technology were addressed by Hollande by the signature of several memorandums of understanding between institutions to broaden the scope and depth of future engagements in science, technology and innovation. Cameron too stated UK’s commitment to make available to India the cutting edge British technologies, civil and military, that the UK currently shares with its top international partners, but in accordance with “international obligations”. Cameron supports greater cooperation betwen DRDO and the UK Defence Science and Technology Laboratory. Both Hollande and Cameron supported India’s membership of the NSG. MTCR, Australia Group and Wassenar Arrangement, the four non-proliferation and technology control regimes.

Third, there is the defence angle. Both France and the UK have been longstanding defence partners of India, but France has a record untainted by participation in sanctions. Cameron has expressed his disappointment publicly at losing the contract for the Medium Multi-role Combat Aircraft (MMRCA) to France. During Hollande’s visit it was noted that “the projects for the Scorpene submarine and upgrade of the Mirage 2000 are moving forward and steps are being taken for early finalization of the Short Range Surface to air Missile project. Both sides noted the progress of ongoing negotiations on the MMRCA programme and look forward to their conclusion.” This should dampen speculation that the Eurofighter might re-enter the fray if the negotiations with Dassault run into difficulty. The Augusta-Westland controversy cast its inevitable shadow on the Cameron visit.

Afghanistan, Iran and Syria figured in discussions, as well as enhanced counter-terrorism and cyber-security cooperation. Both leaders called for an expeditious trial of those responsible for the Mumbai terrorist attacks. Both reiterated support for India’s United Nations Security Council permanent membership.

The recent tendency in India to belittle the importance of Europe in our external ties is ill-considered and ill-informed, suggesting a discomforting hubris on the part of some of our opinion-makers.

Click here to read this piece at WorldPolicy.org.

Tensions between the United States and China over cybersecurity appear to be coming to a head. A recent U.S. National Intelligence Estimate singled out China as the country most aggressively engaging in commercial cyber espionage against the U.S. private sector. Shortly thereafter, President Obama, in his State of the Union address, stressed the need to strengthen U.S. defenses against various cybersecurity risks including theft of corporate secrets by “foreign countries and companies” and announced an executive order to protect U.S. critical infrastructure.

Granted, the President didn’t name names, but these developments follow years of media, government, and private sector reports alleging systematic Chinese-backed misappropriation of valuable and proprietary information from the computer systems of American government, commercial, media, and academic organizations.

The latest report, by security firm Mandiant, states that an overwhelming percentage of the attacks on such American entities—commercial and non-commercial alike—can be traced back to hackers affiliated with the Chinese military.

There are many aspects of cybersecurity that beset U.S.-China relations, including on the military front. But commercial cyber espionage remains one of the most—if not the most—intractable, despite attempts by the two governments to address this problem at the last two rounds of the Strategic and Economic Dialogue. The back-and-forth between both sides has generally played out in several stages. The United States alleges incidents of commercial cyber espionage by Chinese actors. China reacts by denying those allegations. It reiterates its opposition to hacking, emphasizing that it, too, is (only) a victim of such activities. Then, at times, it accuses the United States of using cybersecurity problems (along with several other issues) to demonize and contain China.

The result: Each side is dug into its position and no progress is made.

Clearly, America’s patience is running thin. Speaking before her departure as secretary of state, Hillary Clinton said, “We have to begin making it clear to the Chinese—they're not the only people hacking us or attempting to hack us—that the United States is going to have to take action to protect not only our governments, but our private sector, from [these kinds of] illegal intrusions.”

China, for its part, might want to rethink its standard response to the situation. One has no reason to doubt that, in a country with the largest number of Internet users, Chinese entities have themselves been subject to illicit cyber activities. China also has a right to dispute any allegations against it, but the fact that report after report says the same thing suggests, at the very least, a perceptual problem for China, if not that some or all of those reports may actually be true.

An inability to acknowledge the problem doesn’t help China’s already battered image on cybersecurity matters and will continue to doom the prospect of any real dialogue on this issue. More broadly, it has real implications for China’s attractiveness as a trade and investment partner, and undermines strategic trust between the world’s two largest economies.

Recognizing the potential harm to the bilateral trade relationship, the U.S.-China Business Council has urged the American and Chinese governments to address the cybersecurity problems faced by companies. Meanwhile, these problems only add to a host of policies and practices in China that continue to frustrate the ability of American and other foreign companies to do business on a level playing field, including inadequate protection of intellectual property rights and industrial policies favoring Chinese firms and technologies.

All these only serve to increase the costs of doing business in China, relative to its benefits, over the long run. That would be antithetical to the Chinese leadership’s efforts to boost investor confidence, particularly at a time of slowing economic growth.

Likewise, repeatedly playing the victim will only serve to reinforce perceptions in the United States—and elsewhere—that China isn’t being totally upfront about its role in cybersecurity. As it is, Chinese investors face a major image problem in the United States, especially in the aftermath of the October 2012 report by the House Intelligence Committee referring to Huawei and ZTE as cyber espionage threats to American telecommunications networks.

The leaders of China and the United States have endorsed the notion of building a new type of relationship between the two powers. This new relationship entails not only working on shared interests, but also having the honesty and courage to work on difficult and divisive issues. In that regard, acknowledging the commercial cyber espionage problem for what it is would be a good start.

President Obama registered his serious concern in the State of the Union address over cyberespionage by what he called “our enemies.” His remarks on Feb. 12 came two days after leaks from a U.S. intelligence estimate named China — again — as the most serious menace in the cyberdomain.

Some Obama advisers have recommended harsh action to send a clear signal to China to change its ways. But even if the Americans retaliate, China is unlikely to respond as they might hope. The spying will continue and probably intensify regardless of what the United States does.

One of the two main complaints against China’s espionage is that organizations, both private and governmental, are stealing design secrets from Western corporations on a massive scale.

Click here to read the rest of this piece at The New York Times.

“As the global community is facing unprecedented challenges, we need to begin to marshal expertise in new ways and make sure it has the necessary influence,” said Austin. “EWI is perfectly situated to do that by working with leading figures from around the world on these critical issues.”

EWI Chairman Ross Perot, Jr. welcomed the appointment and the return of Austin to the EWI staff. He noted: “Few experts out there are as practical yet visionary as Greg. His new unit brings a long-needed focus to better using our global network to promote solutions to seemingly intractable problems that threaten peace, stability and the ability of nations to grow their economies and create jobs for their people. We are excited to see the impact that the Policy Innovation Unit will bring.”

Prior to his current position at EWI, Austin served for five years as a vice president of the institute. He is also a senior visiting fellow in the department of War Studies at King’s College London. Prior to joining EWI, Austin served as director of research at the Foreign Policy Center in London (2004-2006) and as a consultant to the UK Cabinet Office and four other government departments (2003-2004). He was the Asia program director, then director of research at the International Crisis Group (2000-2002). He is the author, co-author and editor of several books on China’s strategic policy. He has a doctorate in International Relations and master’s degree in International Law. He is currently writing a book on China’s cyber policies for publication later this year.

What went wrong? Predictably, the two sides blame each other. But, without a doubt, the trigger for the now seemingly endless exchange of mutual recriminations and tit-for-tat punitive measures were two key events: the U.S. Congress’s passage of the Magnitsky Act, despite efforts by the administration to prevent such an outcome, and Putin’s continued crackdown on dissent at home.

All of which is already making people forget that the reset was far from a complete failure. The policy was effective in improving the tone of discourse and widening the areas on which U.S. and Russian policymakers met and talked regularly, especially through the mechanism of the Bilateral Presidential Commission (BPC). Both the United States and Russia could point to some significant accomplishments. Obama got New START, cooperation on Afghanistan, and initial if fleeting cooperation on Iran. Russia got its long sought-after WTO accession, graduation from Jackson-Vanik, the 123 agreement on civil nuclear cooperation, and the foreign policy attention that it thought it deserved.

The price the U.S. Congress imposed for graduating Russia from Jackson-Vanik and granting permanent normal trade relations was the Magnitsky Act. The Russian Duma responded with the Dima Yakovlev Act, which barred the adoption of Russian children by U.S. citizens. The linkage by the U.S. Congress of the economic relationship to human rights was, for some, “weird,” as U.S. Ambassador Michael McFaul described it. It was not, however, unprecedented as the Jackson-Vanik amendment made the same linkage.

But linking the fate of Russian children stuck in orphanages to the overall bilateral relationship was a new twist, which critics claimed was unusually cruel. The Yakovlev Act is named after a Russian child adopted by American parents and forgotten in a car for hours—an absolute tragedy. But the parents in this case, and the parents in the other cases where adopted Russian children have been abused and mistreated, were not government officials. Many Russian protesters charge that the Yakovlev Act is a desperate and cynical ploy, as were Foreign Minister Sergei Lavrov’s tweets about child abuse in the United States.

Even before the Magnitsky Act was passed, the Kremlin had extended its domestic crackdown to any groups with foreign ties. NGOs that accept foreign funding are now required to register as foreign agents, a loaded term in Russia; USAID was expelled from Russia; and the International Republican Institute and National Democratic Institute are moving their staffs out as well. In utter frustration at the fragile state of civil rights and liberties in Russia, the United States recently pulled out of the Civil Society Working Group of the BPC.

The policy repercussions of the weakening bilateral relationship have extended beyond the human rights sphere: Russia recently declined to renew Nunn-Lugar and halted some counternarcotics cooperation governed by a 2002 agreement (although other avenues of counternarcotics cooperation, especially in regard to Afghanistan, are ongoing).

There still are areas where both sides can continue cooperative efforts. Arms control, nonproliferation, narcotrafficking, and expanding bilateral economic ties are all areas where there was good cooperation in the first term and overlapping interests going forward. But in Washington, the view that Russia is simply not serious about being constructive in the international arena seems to be gaining more traction and policymakers are finding it impossible to overlook Russia’s domestic politics.

If Russia continues respond to U.S. “meddling” in Russian domestic affairs by targeting NGOs, opposition leaders and orphans, it is hard to see how the relationship can return to the effective working relationship of Obama’s first term. At that time, Washington and Moscow agreed to effectively disagree on some issues while pursuing cooperative policies on others where their interests coincided. But Putin may not want to return to the same level of cooperation. The United States’ policy responses have become a convenient rallying cry for trying to build support for continued tough measures against domestic opposition forces, invoking the classic claim that Russia must defend itself against its external enemies.

Four years ago, the reset was supposed to ensure that Russia returned to what it saw as its rightful place as a key concern of U.S. foreign policy. Today, the domestic circumstances in Russia have changed significantly and so has the mood in Washington. Neither Russia nor the United States looks either willing or able to invest in a vigorous bilateral relationship at the official level.

Click here to read this article in The Telegraph.

Looking ahead, what could President Barack Obama’s second term mean for relations between India and the United States of America? Will the relationship stay more or less at the level that it has already reached or will it see a surge in the years ahead? Can it begin to wane?

There is no reason for the relationship to wilt, even if it has not lived up to its promise in the eyes of some Americans. India’s nuclear liability law and the ouster of US suppliers from the 126 fighter aircraft deal are cited as evidence. The other areas of disappointment are the lack of convergence in views on developments in the Gulf and West Asia, India’s reluctance to accept burden-sharing in upholding the international order as it is obliged to do by its rising global status, as well as its inadequate bureaucratic expertise and capacity to deal with the expanded scope of the India-US engagement.

A less transactional assessment of the state of relations would highlight the great shift in Indian perceptions about relations with the US—from strategic distrust to strategic cooperation. This is best manifested in the $9 billion worth of defense contracts won by the US in the last seven years, with more to come as India diversifies its sources of supplies, as well as the numerous joint military exercises conducted with strategic objectives in view. Counter-terrorism cooperation is acknowledgedly much better than before, as is the quality of exchange of views on regional and global issues. India-US relations are now stable, with a remarkably rich bilateral agenda whose implementation will occupy both sides in the years ahead.

The chance of any dramatic upswing in relations in the next four years, however, seems unlikely. For one, the economic backdrop is not very favourable. With US economic recovery still sluggish, unemployment high and the debt problem unresolved, Obama will remain preoccupied with the domestic agenda. He is anyway not seen as a ‘foreign policy’ president temperamentally. In India, too, growth rates have fallen and investor sentiment, both domestic and foreign, remains unenthusiastic in spite of some reform measures by the government. Regulatory, taxation, environmental, land acquisition, and implementational issues in general remain to be addressed. With growth rates high, market sentiment buoyant and optimism in the air, countries can deal with each other in a more positive spirit than when they are preoccupied with protecting their own interests first — and those of others become even more secondary.

This means that on issues of concern to us relating to the hike in visa fees and the denial of visas to our information technology professionals, making US companies which outsource work ineligible for federal government grants and loans and the totalization agreement that would address the problem of Indian professionals in the US having to compulsorily contribute to social security, the US, already unresponsive, is unlikely to give us satisfaction. Apart from the populism of opposing outsourcing at a time of high domestic unemployment, Obama seems to have an ideological bias against the transfer of jobs abroad even if that improves the competitiveness of US firms.

India-US economic ties are not as dynamic as some may suppose. In the last three to four years our negotiators feel that we have not been able to secure any tangible concessions from the US for our merchandize and services exports. The Trade Policy Forum has not met for two years, although it should do so in a couple of months. The US has dropped to third place as our trading partner, down from 17 per cent to a 10 per cent share of our trade. Investment levels are also low. The US Consumer Protection Act, the extension of the US Foreign Account Tax Compliance Act of 2009 to foreign companies currently under Congressional consideration, the foreign manufacturers liability bill, the ‘Buy America’ campaign and so on are all potential hurdles for building a stronger trade partnership with the US.

Some US trade initiatives would need to be watched closely for their impact on India. The Trans-Pacific Partnership that the US is promoting does not include India, or, for that matter, China and Japan. India’s focus is on the East Asia-centred Regional Comprehensive Economic Partnership. The contemplated trans-Atlantic free trade area between the US and Europe, if established, will affect Indian interests. Bilaterally, regulatory issues on our side need resolution for allowing trade in US agricultural products. In the education sector there are complementarities but legislation on foreign universities operating in India is languishing in Parliament. The stipulation of local content in the solar power and telecommunications sectors has raised US objections. Internet governance is a contentious issue ahead. Our energy dialogue continues, with India hoping to obtain exemption for importing liquefied natural gas from the US. If that happens on a significant scale, it can change India’s energy equations and concomitant strategic calculations. The ambitious goal ahead is to finalize a bilateral investment treaty with the US, the prominent sticking issues being US demands on intellectual property rights (India is on the US watchlist on IPRs), environmental and labour issues and pre-establishment rules. In our strategy, an India-US FTA, for which we discern no appetite in the US as of now, should follow the BIT. All said and done, in spite of issues, it is well to keep in mind that our economic cooperation with the US generally builds our strategic capacities whereas that with China erodes them.

The US envisages a key Indian role in its pivot towards Asia, but we are not clear about its scope given the complex texture of trade and financial interdependence between the US and China. Moreover, the US financial downturn will inevitably lead to a reduction of the country’s defence budgets, whereas any credible pivot will require enhanced US military presence in Asia with a concomitant increase in defence outlays. Obama’s domestic priorities could also over-ride any robust Asia pivot. India is already distancing itself from the pivot by the notable friendly discourse towards China by the foreign minister, Salman Khurshid. During the Australian foreign minister’s recent visit, both countries poured cold water on the idea of a trilateral India-Australia-Japan dialogue, not to mention any quadrilateral dialogue involving the US in addition.

The contours of Obama’s policy towards Afghanistan turning on the accelerated and effectively complete withdrawal of troops, the offer of a share in power to the Taliban, the use of Pakistan as a facilitator — entailing greater deference to its ambitions in Afghanistan — are all causing concern in India. India could be pushed into an opposing axis in Afghanistan. India and the US will need, therefore, to reconcile their respective visions of Afghanistan’s future in the period ahead. Pakistan’s renewed agressiveness towards India is complicating the situation further.

There are some question marks in New Delhi about the new team in Washington, especially with regard to the naming of the senator, John Kerry, as secretary of state because of his perceived softness towards Pakistan and the expected departure of some India-friendly state department officials. The changes in the Pentagon and the Central Intelligence Agency, however, are not causing any particular unease. How much attention Obama pays personally to the India-relationship, which is fundamentally on track, is open to question too.

All in all, therefore, India and the US will neither enter into an embrace nor disengage; they will continue to shake friendly hands as Obama’s second term unfolds.

1. What were the successes and challenges in the first term in the U.S.-China bilateral relationship?

Miller:

After four years, we’re actually hard pressed to find concrete successes in the vital U.S.-China relationship. Perhaps the best that can be said is that the relationship did not deteriorate further, which is actually no small achievement. The few concrete successes have done little to overcome the mutual mistrust that still prevails. That is the most enduring problem that President Obama will face in his second term.

During his 2008 campaign, Obama offered tough talk about China. Once he took office, he dramatically moderated his tone. His administration initially tried to accommodate Chinese concerns in the hopes of generating good will and greater cooperation in dealing with many of the most pressing bilateral and global challenges. They included the global financial crisis, the currency dispute with China, climate change, and Iran and North Korea’s nuclear programs.

But Obama’s efforts at partnership did not lead to the desired results: China was slow to address concerns over its currency and industrial policies; it snubbed Obama at the Copenhagen climate discussions; it was reluctant to apply pressure on North Korea; and it adopted more assertive regional policies. There was some progress on Iran as China supported UN sanctions in 2010, but then China refused to support new sanctions designed to undermine Iran’s continued progress on its nuclear program.

After the conciliatory approach produced little success—a charge critics were quick to make about Obama’s “soft” approach—the administration adopted a tougher stance toward China while continuing to seek expanded opportunities for dialogue. That’s the approach that is largely in place today.

Kok:

I agree that the biggest achievement was that both sides managed not to escalate tensions. Cool heads prevailed in managing the tense confrontation between the Impeccable, a U.S. Navy frigate, and Chinese ships in 2009, offering a stark contrast to the loudspeaker diplomacy and ensuing crisis following a collision between a U.S. Navy EP-3 aircraft and a Chinese fighter jet in 2001. And while China has blamed U.S. involvement for exacerbating its maritime disputes with its neighbors, both sides have urged restraint in dealing with the heightening tensions.

One of the successes was the U.S.-China Joint Statement issued by Obama and Hu on January 19, 2011, which defined the U.S.-China relationship in more specific terms than previous joint statements. By describing the relationship as “both vital and complex” and recognizing differences as well as common interests, the Joint Statement laid the foundation for developing the “new type of big-power relationship” that U.S. and Chinese leaders espoused in 2012.

Another significant development was the addition of cybersecurity—an area of growing mistrust between the two countries—to the U.S.-China Track 1 agenda. Also, kudos to the Chinese leadership for showing an increased maturity toward U.S.-China military-to-military relations by not cutting off those contacts in response to the Obama administration’s announcement of a $5.8 billion arms sales/upgrade package to Taiwan.

But there were still plenty of strains, whether over trade, human rights, or Obama’s meeting with the Dalai Lama in the White House.

2. What are the new Chinese leadership’s main priorities vis-à-vis the United States and vice versa?

Miller:

The U.S.-China agenda is as crowded in Obama’s second term as it was in the first: climate change, non-proliferation concerns in Iran and North Korea, China’s military modernization, the global economy, trade, industrial policies, human rights and increasing tensions in the South and East China Seas. The administration’s overarching priority is to put the relationship on a new footing—all while trying to manage the change in the Chinese leadership.

Kok:

China’s new leadership under Xi Jinping has stated its commitment to continuing a foreign policy of cooperative engagement with the United States. Some top priorities include:

• Persuading the U.S. to play a more constructive role in facilitating peace and prosperity in the Asia-Pacific region, instead of, advertently or not, pitting China’s neighbors against it. China may want to “rebalance” the U.S. strategy in Asia, shifting away from a military focus to an economic agenda.

• Working with the U.S. and other countries to ensure stability and peace in Afghanistan and its surrounding regions after the U.S. withdrawal in 2014.

• Urging the U.S. to get its fiscal house in order, and pushing for the de-politicization of economic relations (especially with regard to Chinese investment in the United States and U.S. trade complaints against China).

3. Is the U.S.’s “rebalancing” strategy in Asia sustainable in the second term given continuing unrest in the Middle East and North Africa? And is it clear to China what this policy is?

Miller:

This is not just a question of resources but of intentions. China views the rebalancing—with its concomitant expansion of the U.S. military presence in the region—as containment or military encirclement of China. The Obama administration argues that is not the case, but even a Department of Defense-commissioned assessment has pointed out that the strategy behind its force planning has not been “adequately articulated.” This has certainly contributed to Chinese unease about the rebalancing. But despite the lack of clarity about its intentions and questions about resource constraints, the United States recognizes that its long-term strategic challenges and opportunities will be in Asia: military, foreign, and economic policy will continue to reflect this.

Kok:

If China ever needed additional fuel to fan the already vibrant flames of suspicion over U.S. intentions, the “rebalancing” strategy was it. Chinese officials and experts have been particularly concerned about the U.S.’s moves to strengthen its security and military alliances in the region, despite the U.S.’s explanations that the “rebalancing” isn’t purely military but also encompasses diplomatic, political and economic policies. While I don’t think that anything the U.S. says or does will fully dispel the notion among the Chinese that the U.S. is out to contain them, the U.S. could do a better job of explaining itself.

The turmoil in the Middle East and North Africa will test Washington’s ability to effectively draw down its resources in that region, which is a prerequisite for the “rebalancing” strategy in Asia. That being said, I believe the “rebalancing” strategy in Asia will continue, since the U.S. needs to send a strong signal to its allies in the region—and to China—about its commitments to them.

4. What issues challenge the bilateral relationship most?

Miller:

It depends on who you ask. The Pentagon has serious concerns about China’s growing military capabilities that could threaten U.S. force projection capabilities in the region. Congress, which has become quite effective at inserting itself into foreign policy, would like to see more attention paid to Chinese human rights violations and to China’s currency and industrial policies. Human rights issues are one of the few areas where members of Congress have found common ground. And, of course, members of Congress will continue to press the administration on Chinese currency, trade, and industrial policies—an area where the administration also has significant concerns.

But the fundamental challenge to the relationship lies in the lack of trust on both sides—and this complicates efforts to address U.S. concerns vis-à-vis China. Whether dealing with Taiwan, China’s rapid military expansion and modernization, human rights abuses, the growing use of cyber weapons, intensifying territorial and maritime disputes, nuclear nonproliferation or Syria, the trust deficit undermines the ability of U.S. and Chinese leaders to make significant progress, whether in a bilateral or multilateral setting.

Kok:

Aside from China’s continuing concerns about the U.S.’s “rebalancing” strategy in Asia at a time of maritime tensions in the region, the other challenges will include U.S. arms sales to Taiwan. More specifically, the question is whether the Obama administration will announce more sales during the second term and, if so, how it will affect U.S.-China military-to-military relations. Trade, currency, and human rights concerns will continue to surface.

While not bilateral issues per se, the tensions over North Korea, Iran and Syria—and, in all probability, new hotspots in the Middle East and North Africa— will test the ability of the U.S, China and the international community to find common ground. With climate change back on Obama’s agenda, it will also be interesting to see how these two countries manage it—especially at the multilateral level—and avoid a repeat of Copenhagen.

5. Does the new Chinese leadership team offer a new chance to make progress on dealing with key irritants?

Miller:

The new team will not fundamentally alter China’s strategic priorities and concerns, so I don’t see this as a big new opportunity. Xi’s primary focus, like Obama’s, will be on meeting domestic challenges. Yes, Xi, like his predecessors, has noted the need for the U.S. and China to develop a strong cooperative relationship—comments echoed by Obama and his predecessors. But the challenges continue to grow.

Kok:

Xi has expressed a willingness, in principle, to develop relations with the U.S. in a positive and transformative way. However, this willingness is conditioned on China’s expectation that Washington respects its core interests and its status. Like Obama, Xi also faces domestic pressures. These emanate from nationalistic segments of the population, and competing political interests between China’s various policy bureaucracies and within the central leadership. He and his leadership team will feel the need to respond to any U.S. actions that may be seen as jeopardizing China’s domestic stability and territorial integrity.

6. What is the single biggest move that Obama or Xi could make to fundamentally improve the relationship? How likely is that to happen?

Miller:

If we’re dreaming big and thinking of transformative moves, China’s willingness to moderate its actions on the territorial and maritime conflicts in which it is currently embroiled would be a remarkable step in the U.S.-China relationship and regional security as a whole. China will never abandon its claims outright and the United States should not expect it to. But if China agreed to try to resolve these disputes within a multilateral setting rather than bilaterally, which gives China the upper hand, that could do a lot to stabilize the situation and lessen U.S. concerns about Chinese ambitions. I am not convinced another statement or communiqué could have a transformative effect, but it certainly would help to strike a more cooperative tone at this time of increasing tension in the region.

Kok:

In light of the ongoing tensions in the Asia-Pacific region, Obama and Xi might wish to consider signing a joint statement or even a joint communiqué on U.S.-China peaceful relations in that region. Both sides could reaffirm their commitment to peace, security, stability and development in the region; articulate their respective strategic interests and objectives; and outline principles for cooperation and open communication. While it will not eradicate the deep-rooted mistrust between the countries, such a move by the Asia-Pacific’s two largest powers would be a signal of assurance toward each other and to the rest of the region.