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'Indo-US economic bonds can fortify strategic ties'

Last updated on: November 30, 2009 20:43 IST

Raymond E Vickery, former assistant secretary of commerce for trade development in the Clinton Administration, who is now a senior vice president at Washington, DC-based strategic advisory firm Albright Stonebridge Group, has just completed a one-year tenure as a Public Policy Scholar at the Woodrow Wilson International Center for Scholars, working on a book titled The Eagle and the Elephant: Strategic Aspects of US-India Economic Engagement.

In an interview with rediff.com, he said that the thesis of his book is that economic engagement is a vital part of foreign policy and thus should be treated in a more integrated and systematic manner by policymakers, and in examining this thesis, Vickery draws on his years of experience with US-India economic engagement, which he believes has been the bridge to a broader strategic relationship between both countries that has created new realities.

At the time he was at the US commerce department, Vickery carried out the Clinton Administration's Big Emerging Markets Initiative, with particular responsibility with regard to India and was instrumental in planning and executing then commerce secretary Ron Brown's Presidential Business Development Mission to India and in organizing the US-India Commercial Alliance.

After his departure from government service, Vickery has been a leader in the US-India Business Council programs and served as President Clinton's policy adviser when he returned to India in 2001 with the America-India Foundation as a private citizen.

During the presidential campaign last year, he was a member of the Obama South Asia Policy Team and worked particularly on outreach to the South Asian American community.

Vickery served three terms in the Virginia General Assembly and was the Democratic candidate for Congress in the 10th District of Virginia on the Clinton-Gore ticket in 1992.

Before joining the Clinton Administration, he was the managing partner of the law firm of Hogan & Hartson's Virginia office, where his practice included international technology licensing.

An alumnus of Duke University and Harvard Law School, Vickery was a Fulbright Scholar in South Asia and spent a year in India during the mid-1960s.

What's with the title and what got you working on this particular project?

For the last 15 years as you know, basically, I have worked on US-India economic engagement. And, I've done this not only as a labour of love because I believe very strongly in the relationship, but because I believe that US-India economic engagement is key to cooperation on a whole range of strategic issues.

And, when I say strategic, I mean that in a broad sense. It's not just being able to cooperate on defense and security, but on economic development, on what happens in energy, what happens in climate change, what happens in health -- all of those basic issues -- that can't be solved by either nation alone, are informed and driven by what happens on the economic front.

So, the thesis of the book is that economic engagement is a vital part of foreign policy and should be treated in a more integrated and systematic manner by policymakers.

For the United States and India, economic engagement has been a bridge to a broader strategic relationship. Economic engagement has created new realities and these new realities have led to ever closer cooperation on strategic issues across the board.

And, so, what I've tried to do is pull together a number of case studies that come from my own personal experience either as a government official or private consultant and use these to illustrate how being able to engage positively has had an extremely beneficial effect on the relationship.

Conversely, though, I've also seen some aspects of this where things didn't work and it had a negative impact.

So, in looking at the relationship, I see it as really composed of what I call feedback loops and that is economic engagement affects the democratic electorate both in India and in the US, which in turn affects what happens with the government officials and then what the officials do, feeds back into how the electorate sees things and this political ability to cooperate driven by economic engagement, it seems to me is key to where we are going from here.

I don't think we would have gotten to the point we are in right now in US-India strategic relations if it hadn't been for what we started back in the 1990s -- you were there, you covered it. So, that's the basic thesis of it.

Over the years, even during the bad times, during the Cold War years, it was the economic engagement -- however small -- that was the anchor of much of the US-India interactions that took place. Now that US-India relations has reached this new level and (Secretary of State) Hillary Clinton talks about taking it to the next level -- US-India 3.0 as she describes it -- is what you are trying to get at in your book that besides just being an anchor, this economic engagement is going to be the indispensable catalyst in the envisaged US-India strategic partnership the likes of what we've never seen before?

It's much more than an anchor or some have said it's like ballast in a ship that keeps it on course. But, I see it as much more important that that. Let's just take what you talked about in terms of the Cold War years.

I was there because I was a student -- a Fulbright Scholar in India, 1964-1965, and what I saw taking place was the Green Revolution and cooperation economically on increasing yields and providing food security -- Rockefeller Foundation, PL-480, on the US side, and on the Indian side, some of the finest scientists in the world, working on these.

And, that enabled us to push forward on and to get to the Rajiv Gandhi times when things started to come together again in US-India relations diplomatically and strategically.

So, it has been much more than an anchor or ballast and of course, then this leading case study, which I start with of course, is civil nuclear. There is no question in my mind, that if we hadn't had economic engagement and economic interests to be served on both sides, we'd never have gotten this thing through the Congress and we'd never have gotten it through the Parliament on the Indian side.

But people saw that on the Indian side there was a need for energy, clean energy, and on the US side, people had technology and they wanted to work together.

And, on top of that that we could address what was an age-old question of misunderstandings, misconnections with regard to nuclear policy and nonproliferation. And, so, those things worked together and they can still work together, but that's just one of about 10 case studies that I have taken from in my book to illustrate this point.

But isn't the nuclear deal the major case study that you have in your book -- the kick-off one?

It's the leading one. It's the epitome really, because it combines so many factors. It combines obviously the security and strategic at the highest levels of the most sacred technology that you can have in terms of defense, but it also has a very strong energy, economic development component and it has a very strong climate and environmental component.

So, it puts together these factors and we can see already that it has pushed the relationship to a level that many wouldn't have anticipated.

If you talked about doing this 15 years ago, we would say, you are crazy. But, because of the economic engagement, we were able to do this and then that builds on itself. Now, the other side of it though, as you well know, is it puts increased pressure on making it a success. . .

That's what I was coming to -- the full implementation of this undisputedly major, positive symbol to the strategic relationship in all of its facets?

That's exactly that, because now that it has become so emblematic, if we don't move forward and have it successfully implemented, then it becomes a symbol of something negative.

And, if you remember, you and I went through the Minister Salve fast track projects in which we had not only a Secretary of Commerce going over but a Secretary of Energy and we have a tremendous opportunity to bring the two countries together on the question of energy and we built it up and we built it up, but it didn't have a strong foundation and for reasons on both sides -- Enron on the US side, perhaps misunderstanding about the cost of power -- it all cratered and what happens is, we have less cooperation in terms of conventional energy now than perhaps ever.

People have pulled out and a lost of hard feelings and all that. We can't let that happen with civil nuclear.

And, so you feel that after the experience of Dabhol, after the other negative experiences of several other energy giants who pulled out, it is imperative that this nuclear deal transition smoothly and not have history repeating itself if new US companies are to go into India and invest in nuclear energy and help India meet a part of its acute energy requirements?

Absolutely. You don't want it to become a reverse symbol. You look at what happened. CMS, Cogentrix, all of those projects . . .

And behind those stands a whole community on both sides of people who were involved in finance, in planning and once it craters, it has an effect not only in terms of energy production for India and selling technology, it affects the ability of the two countries to work on climate change, on further technology transfers, and the same sort of thing could happen with civil nuclear unless we get this actually implemented and a success.

If we do, it's sort of like gambling you double down and if the stakes get higher and higher -- and we want them to be higher because we think this is going to be successful. But that's important.

The other lesson is for US and Indian policymakers, and that is not to concentrate on what is necessarily the conventional wisdom that the US and India are going to cooperate on climate change or terrorism or one of these high profile subjects in and of itself. You have to have the foundation built for it.

I think of what happened in terms of the negotiations that (former Deputy Secretary of State in the Clinton Administration)Strobe Talbott was conducting (with then Indian External Affairs Minister Jaswant Singh). These negotiations for the milepost had no economic foundation.

So, you can't talk in the abstract about CTBT (Comprehensive Test Ban Treaty) or FMCT (Fissile Material Cut off Treaty). There has to be a community of self-interest on both sides that can come together.

So, what I am trying to do in this book is say, particularly to the US, Look, lets get your policy coordinated between the economic side and the military security side, because if you don't, it's isn't going to work in the longer run.

I think that's true in terms of what happens with defense procurement. Unless we get the economics right -- that is that India has an interest in building up its own defense capability, the US has an interest on being able, both to license and to sell -- then it doesn't work because it goes of on factors which are not sustainable.

While the US-India civil nuclear deal is the major case study in your book, you also have case studies that fall under the rubric of military-political, economic development, environment and energy and health security and intellectual property. But, interestingly in the category of economic development, you dwell on the H-1B visa issue and its ramifications?

With regard to economic development, what happens with H-1B visas and outsourcing offers a glimpse into how the future will develop or not in this sphere.

Thus, if you look at the case study, it has had both a positive effect and a negative effect. Positively, in the sense that it's what kind of what got the ball rolling because in Bangalore you had Motorola, Texas Instruments down there, they got the word out to GE and others so that there was investment.

Then US companies were benefiting, they were able to employ more people over here because they were more efficient. Conversely, now the H-1B arises again. We kind of beat back this Benedict Arnold approach of John Kerry in 2004, but with jobs being scarce, it's raising its ugly head again in the United States.

And, so, we have to be able to integrate what happens on H-1B visas, trade in services, with what we want to do strategically in terms of economic development. And, what does that mean. That means how do you cooperate with India at the G-20, what happens next in terms of the financial crisis.

And, if you don't get H-1B visas right, you don't get the relationship on services, and then you don't have a basis for the kind of cooperation of putting India into a more prominent role in the IMF (International Monetary Fund), the World Bank -- those sorts of things need to be done.

Another imperfect example is what happened December 2001, in which there was the day of course, when there was the attack on Parliament. Everybody thought that India and Pakistan were going to go to war.

But people who saw what the economic consequences would be, took a more productive stand in terms of trying to moderate that. So, it has an effect in terms of the ability to cooperate on terrorism.

So, you believe US-India economic engagement is also an important component in how India responds to acts of terrorism and is a ballast in this area, going by the imperfect example you cited?

Not a ballast. It's going to be a driver, because if you are going to fight terrorism, one of the things you need is modern technology to be able to do it. And, who has most of that modern technology, the United States of America. And, who really needs it?

Both the US and India really needs it. So, it will have an effect on the ability to cooperate on terrorism. And, in this particular instance that we are looking at in 2002, what happened was the US and India came to some great understanding on how to deal with Pakistan because in part their doing business on technology basis.

And, so you have a community of interests, who then say to policymakers, Now wait a minute, instead of just shooting rockets off and killings a bunch of people, let's see if we can work together, let's get the FBI involved, and it's had an impact on the approach with Mumbai.

What happened in 2001, 2002, which was very much influenced by the fact that there was an economic engagement between the United States and India has borne fruit now in regard to what happened in 26/11 in Mumbai and the approach. So, that's a case study we have looked at.

You also emphasize energy security engagement between the US and India with global foreign policy implications that could drive policy on concerns over Iran for example?

There is no question that energy and the sources of energy is one of the great strategic issues of the 21st century and if the United States and India cooperate economically -- have engagement on it -- it could have global policy implications.

If we are involved, let's just take hypothetically in what Reliance is doing in terms of their refineries. If conversely, what's happened with Indian refineries has an impact on what the gasoline availability in the US, then you are going to get a very much more constructive approach as to what you do on the Iran pipeline issue, or what happens in West Africa, in Nigeria, or in US-India cooperation in regard to the Sudan.

All of those issues are impacted by the economic engagement factor. And, so it behooves somebody who is sitting over in the State Department and thinking about the Iran pipeline to look at what the economic aspect of the strategy is.

It doesn't do any good to say to India, 'Look, you guys can't deal with those Iranians because they are terrible people and they'll try to blow up the world.' You have to say, 'Look, what's our shared interest in terms of energy, and we have certain abilities and technologies may as far afield as how you are able to get coal out of the ground, and clean coal technology.'

It could be in terms of how we might work together in terms of building refineries. So, all of these factors need to be taken into account.

So, what needs to be done on both sides is to institutionalize the economic strand in terms of strategic planning.

In this regard, can this economic strand in terms of strategic planning you talk about, help to bring about let's say, cooperation that could bring about the completion of the Doha Round, where there has been subtle criticism of India as being intransigent and not carrying the developing countries with it?

It's very important and it feeds right into food security because if we had the proper relationship between US and India agro-business, then there would be a community of shared interests that could push forward in terms of solutions or to the main issue, which is subsidies and tariffs in the agricultural sector.

But, we don't have that relationship. We got a little bit -- I mean, Cargill's there, Pepsi is trying to do something. India has a view that it would like to have certain technologies, but basically we are trying to come at the whole question of food security with methods which are 40-50 years old.

And, as a consequence, when it comes time to talk about the Doha Round, people talk in apples and oranges. So, the way to do it is, you have agricultural interests now in India, which are very sophisticated really and it is possible to bring those together in a strategic relationship.

This Agricultural Knowledge Initiative hasn't amounted to a hell of beans so far. And, why hasn't it? It's because it's the old government to government approach.

And, it isn't trying to build economic engagement, it's trying to build some sort of injection of funds or technology. This doesn't work. But, if we could have engagement, then Doha becomes a lot easier to solve. We're talking about H-1Bs and services. We need a free trade in services. You can model on the Technology Free Trade Agreement that we already have, which I helped negotiate in 1996 and that it seems to me a way forward, because when people start to see that there's benefit on both sides, that people aren't losing jobs, then they'll say, Well, maybe, we can do something about this Doha Round.

You were one of the key authors of the Commerce Department's 10 Big Emerging Markets in the mid-1990s that included India, during the time of the Clinton Administration and following that then Commerce Secretary Ron Brown led the first presidential trade mission to India. That was also the time, current Indian Ambassador Meera Shankar, was minister, commerce, at the Indian embassy here. Now, that's she's the Ambassador in Washington, do you see her as someone who can be a vehicle to help push the strategic aspects of the US-India economic engagement that you emphasize in your book?

Ambassador Shankar and I had the privilege of working together in 1994 and 1995 on Secretary Ron Brown's Presidential Mission to India in January 1995, which was a transforming event in the use of economic engagement to create new realities in US-India cooperation.

I was part of that mission and Meera was there helping to provide the support of the Embassy and the Government of India for this effort. As you know, the Brown mission was wildly successful in focusing on a new US relationship with India -- a relationship of equals--and both Ron and I debriefed the President upon our return and many of the themes pioneered in the 1995 trip were furthered when President Clinton went to India in March 2000.

Ambassador Shankar understands the relationship between economic engagement and strategic cooperation better than anyone who has ever held the position that she has, and we've had great Indian ambassadors to the US.

But Ambassador Shankar was there at the time and she saw the benefits -- you remember when Ron Brown went out there, the fact that India was considered a big emerging market was big news.

And, then that was then a driver in terms of other people looking at India, not as a recipient of charity but as an equal partner in terms of building prosperity on both sides.

And in terms of the Indian American community, how significant has their role been in this economic engagement vis-à-vis their strategic value-add?

Indian Americans have played a key role in the promotion of US-India economic engagement and the strategic value-add they had brought are enormous -- from start-ups in Silicon Valley to a wide range of US-India ventures, they have been instrumental in building the economic engagement base for US-India engagement.

This Indian American role in economic engagement in turn has been a chief support of the triumphs crafted in civil nuclear energy, communications, space and other fields.

The Indian American role in this economic engagement is enabling the US and India to cooperate on strategic matters in ways earlier generations would have thought impossible.

Aziz Haniffa in Washington DC