South Asia

"Increasingly, U.S. businesses are speaking out about their serious concerns about sophisticated, targeted theft of confidential business information and proprietary technologies through cyber intrusions emanating from China on an unprecedented scale,” said Donilon. “We have worked hard to build a constructive bilateral relationship that allows us to engage forthrightly on priority issues of concern.  And the United States and China, the world’s two largest economies, both dependent on the Internet, must lead the way in addressing this problem.”   

Donilon’s speech came in the wake of a widely cited report by the computer security firm Mandiant, which accused Beijing of sponsoring cyber espionage and theft of corporate secrets in the United States. During his annual State of the Union address on February 12, President Barack Obama presented an executive order to protect U.S. critical infrastructure from cyber threats. 

In his speech, Donilon outlined three requests for Beijing related to the cybersecurity issue. “First, we need a recognition of the urgency and scope of this problem and the risk it poses—to international trade, to the reputation of Chinese industry and to our overall relations,” he said.  “Second, Beijing should take serious steps to investigate and put a stop to these activities.  Finally, we need China to engage with us in a constructive direct dialogue to establish acceptable norms of behavior in cyberspace.”

In response, the Chinese government adopted a defensive posture, while emphasizing its willingness to cooperate with Washington. "China has always urged the international community to build a peaceful, secure, open and cooperative cyberspace and opposed turning it into a new battlefield," said Foreign Ministry spokeswoman Hua Chunying, who argued that China is also a major victim of cyber attacks. 

Hua added: “Cyberspace needs rules and cooperation, not wars. China is willing, on the basis of the principles of mutual respect and mutual trust, to have constructive dialogue and cooperation on this issue with the international community including the United States to maintain the security, openness, and peace of the Internet."

Hua’s response echoes earlier comments by outgoing Chinese Foreign Minister Yang Jiechi, on Saturday, rebutting accusations of Chinese hacking. “Anyone who tries to fabricate or piece together a sensational story to serve a political motive will not be able to blacken the name of others or whitewash themselves,” said Yang. 

Writing in The Washingtonian, Shane Harris argued that Donilon’s remarks, which evoke “carefully tuned language,” bring “the private sector into the problem as a key player, not a bystander.” 

Speaking to CNBC, Michael Chertoff, a former director of Homeland Security and EastWest Institute board member, said he hoped that the Chinese business community could put pressure on Beijing to rein in cyber attacks. “I’ve been in a number of public events recently, where people including myself have been very outspoken to audiences that include Chinese investors and businessmen about what is going on with intellectual property theft,” he said.

Chertoff continues: “I think what may happen is that these business people will go back home to China and they’ll start to tell their government, ‘Look, we’re going to be pushed out of global markets, we’re going to be global pariahs, if we don’t agree to reining in what’s been going on.’ So I’m hoping some business pressure may be part of the solution here.” 

James Lewis, a senior fellow and director of the Technology and Public Policy Program at the Center for Strategic and International Studies, told the Christian Science Monitor that Washington’s message to Beijing was unusually straightforward. “This is really the first time a senior U.S. official has come out and given Chinese officials three specific steps on what we need to do to work on this cyber spying problem,” he said, adding that “no one has ever publicly come out and said this directly to the Chinese before—that we want recognition by them of the scope of the problem, we want direct investigation of these cases—and direct dialogue on international norms.”

While Chinese hacking of U.S. computers remains a pressing challenge, it is important to keep the background of this issue in mind, especially in the wake of the Mandiant report and Obama’s executive order on cybersecurity. As EWI’s Franz-Stefan Gady pointed out in US-China Focus, the Mandiant report, “did not reveal anything new to experts in the field”; many nations, especially the U.S. and China, are known to already engage in significant cyber espionage, he added. 

Beijing’s efforts to that end will likely “continue and intensify regardless of what the United States does,” EWI Professorial Fellow Greg Austin argued in the The International Herald Tribune. “The real issue,” wrote Gady, “is how to avoid that these sort of [cyber] attacks lead to escalating tensions between the two great powers on a strategic level.”

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.

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.

National security can be undermined because of the socio-political environment prevailing. The critical elements are: (1) the state and the political system, representative democracy, basic values, ideology, economy and the decision-making process. Because they impact beyond the boundaries of a single society, socio-political issues require ethical and responsible solutions.

However, if the aim of the rulers is only to make money for themselves and manipulate the system to enhance their own rule, the resultant endemic bad governance endangers the state as well as the safety, comfort and welfare of the people.

Nations seldom abide by moral codes when their national security is threatened. Consider the debate within the US about the legality of drone strikes in the territory of another sovereign nation, well knowing that innocents will be killed along with militants. Such a ‘doctrine of necessity’ glosses over the public conscience about ‘collateral damage’ in a country where normally it would be condemned as morally repugnant.

Chief Justice Iftikhar Chaudhry very rightly maintains that national security in modern times cannot be confined to aggression or external threat. Conversing with a study group from the National Management Course in Islamabad, he said: “Gone are the days when stability and security of the country was defined in terms of missiles, tanks and armoury as a manifestation of hard power available to the state.”

He went on: “States are now bound to provide its citizens security and protect their civil rights at all costs. Progress of the state is impossible without eliminating anarchy from the system. Failure of administration and implementation structure is visible everywhere, steps against the law and the constitution will push society and the environment towards turmoil and unrest.”

Bemoaning the present state of governance in Pakistan, Justice Chaudhry posed the following questions: “Do we reward merit and hard work? Are the term principles of rule of law and the supremacy of the constitution being strictly enforced? Do the citizens of the country trust the system and think it provides them fair opportunity to realise their driven in a transparent manner?

“Does the present system have the capacity to discourage the corrupt? Do we have a system where civil and property rights are protected and contracts are fully enforced?” He added: “Unfortunately, the answer to the above questions is no, the system is distorted and does not provide a level playing field for the people to achieve in life whatever they are capable of.”

The chief justice’s concerns about threats to national security are very much commensurate with the remedy given in the First Amendment to the 1789 U.S. constitution derived from the 1776 U.S. Declaration of Independence (holding true for all democracies everywhere): “Whenever any form of government becomes destructive of these ends, it is the right of the people to alter or to abolish it, and to institute a new government, laying its foundation on such principles and organising its powers in such form as to them shall seem most likely to effect their safety and happiness.”

The armed forces cannot remain blind to the deliberate mis-governance, but this must not be misconstrued as an exhortation for military intervention. Armies have no business to be in the business of running the country, nor are they capable of that, at least not for an extended period. Power is only handed over under judicial cover in ‘aid to civil power’ when it becomes impossible for civilian rule to function. This extreme stopgap short-time measure resorted to restore civilian authority is to enforce rule of law and avoid anarchy.

How does one balance the equation between avoiding military intervention, while ensuring that the rulers do not use the convenient cover of democracy and the constitution to deliberately criminalise society? Can the armed forces remain oblivious if national security linkages with the social-political environment erode the basic foundations of society? When it is threatened, it becomes not only the moral duty but an obligation for the men in khaki to act in the spirit in which the constitution evolved.

Precedents in Pakistan exist for such recourse under judicial cover, successfully implemented for a short period in Karachi in 2010 when the Rangers, armed with police powers and acting under the direct authority of the Supreme Court, caught many target killers across the political divide. By preventing them from laughing their way out of the police stations within hours due to the inordinate influence of their political handlers, the Rangers brought a modicum of peace and harmony to Karachi for a short period.

After years of heaping insults and hurling dire threats at each other, the PML-N and the PPP are clearly in cahoots as partners manipulating the electoral process to remain in power, as Imran Khan has been claiming for years. Can this country survive five more years of misrule and bad governance?

Without resorting to overthrowing the government, what modus operandi must the army employ to ensure that the system does not dissolve into anarchy? The correct way is to give quiet counsel to the rulers to rectify the wrongs themselves. To his credit, Kayani has done just that for the last five years. Unfortunately, it has been effective only selectively when the rulers felt their hold on power was threatened. This had no effect on the government’s transgressions vis-a-vis nepotism and corruption.

Because these impact on national security, whenever hard evidence comes before the COAS he is duty-bound to refer it to the heads of state and government, verbally at first and, if that does not evoke remedial measures, in writing. Whether the COAS has raised his concerns strongly enough with the rulers one does not know, but the rulers have certainly shown no inclination to correct their blatant wrongdoing.

According to the Oxford Dictionary, ‘redress’ means to “remedy or set right (an undesirable or unfair situation).” A petition for ‘redress of grievances’ is to “make or present a formal request (petition) for such to (an authority) with respect to a particular cause.” Ruling only by the consent of the people, the government has a constitutional obligation to correct such wrongs.

Petitioning for “redress of grievances” means that when the people find either the federal and/or provincial governments exceeding the authority granted to them under the constitution, and not inclined to listen to their grievances affecting their fundamental rights, they have the right to approach the Supreme Court for redress (remedy) of the constitutional wrongdoing. Such a petition of public importance relating to the enforcement of fundamental rights guaranteed under the constitution can be filed virtue of Article 187 (I).

If the government continues to ignore his submissions about bad governance, the COAS has an obligation like any other citizen to bring this before the Supreme Court in the form of a petition. Given the chief justice’s deep concern about the impact of bad governance on national security, why not use the given constitutional ways of seeking "redress of grievances?"

Democracy’s fail-safe line is the legal barrier of the Supreme Court, but when bad governance makes democracy delusional, do we have the moral courage to cross that line to save the country from the predators in control?

Click here to read this piece at The News International.

Sehgal expressed cautious optimism on the future of the U.S.-Pakistan relationship, maintaining that "as long as Pakistan understands that the U.S. has got its own interests in this area...I think the US-Pakistan relationship is going to get better."

Looking at the coming election, Seghal held that "if there is a free and fair election, then Imran [Khan] definitely has chances of becoming a third large force."

Sehgal will host an event on the topic of Pakistan's political and economic future at the EastWest Instiute's New York City headquarters. Visit the Facebook event to learn more.

According to a report from AFP, Ahtisaari offered this assessment of the reformist government after Finnish President Sauli Niinistoe announced a pledge of 6.5 million euros in development aid to the country.

Beginning in 2011, Myanmar has continued to take steps towards embracing democratic institutions, such as rolling back press censorship and freeing political prisoners.

Click here to read the AFP article at The West Australian.

Zafar Adeel, director of the United Nations University, Institute for Water, Environment and Health, moderated a distinguished panel of experts who helped identify and address global action points for water dialogue and partnerships.

“The time for silo thinking is over,” Ursula Schaeffer-Preuss, chair of the Global Water Partnership, said in her remarks which focused on sustainable approaches. She urged nations to think outside of the traditional ways of tackling water management issues. “This is a global issue that cannot be addressed from one vantage point.”

Olcay Ünver, coordinator of the United Nations World Water Assessment Programme of the UN-Water and director of the UNESCO Programme Office on Global Water Assessment, echoed that sentiment. “Many of the challenges to water security and management come from other sectors and water managers are seldom consulted when dealing with these challenges,” said Ünver.

“Water must become part of the equation,” he continued, stressing that water impacts a huge number of issues in any nation—including public health, jobs, energy, food, sustainability and many women’s issues.

Sanjay Pahuja, senior water resources specialist at the World Bank, stressed the importance of education as key to water cooperation, illustrating his point with an example of Indian farmers, who moderated their own water use after learning pertinent elements of hydrogeology.

“Let the farmers be the scientists,” Pahuja stated, as he elaborated on this bottom-up approach.

Panelists address the crowd at the UN.

He explained further that these farmers did not have much formal education, yet they were able to develop a proficiency that increased their profits and positively impacted their standard of living. “This is how we can alter the course of people’s lives,” Pahuja added.

An additional panelist, Christian Holmes, USAID’s Global Water coordinator, stressed the importance of data exchange as a key catalyst to change. “Bilateral and regional development provide replicable opportunities,” he said.

EWI President John Mroz emphasized that water is key to nation building and that nations must act on it. “We are all aware of this. Now, it’s no longer enough to name the ball, now we have to move the ball down the playing field,” he urged event participants.

The International Year of Water Cooperation is intended to unify all efforts, both undertaken and planned by the UN system, other international and regional organizations, governments, civil society and entrepreneurs, in order to increase people's awareness of freshwater-related problems and ways to resolve them. This follows the 2012 UNGA adopted resolution (A/Res/67/204) on the implementation of the IYWC through convening a series of global high-level events.

A member of the institute's international network for two years, Munn met with Vice President Amb. Beate Maeder-Metcalf and Program Coordinator Agnes Venema to discuss progress in the institute's work on advancing the rights of women in Afghanistan.

Speaking about the program, Munn said she was "encouraged that the conference I attended has led to positive outcomes for women MPs in countries that are experiencing conflict and terrorism."

Click here to read about this event at Munn's web site.

Click here to learn more about the Parliamentarians Network for Conflict Prevention.

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.