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Why America Needs India
February 02, 2004
How good bad music and bad reasons sound when we march against an enemy,' said Friedrich W Nietzsche. But sooner or later one must confront reality. The post-war mess in Iraq has made it clear that military power in a unipolar world has limitations, even for the sole superpower. The neo-conservatives in the US may still speak of pre-ėmptive action, but this is merely to get hurrahs from their arch-nationalist constituency for electoral purposes. The biggest lesson of Iraq is the importance of building partnerships in pursuit of strategic interests.
Given this, economic power becomes more important than ever in international relations and diplomacy. The future in the post-modern world is about industry and education, and in the American strategic vision of it, partnership with India is essential for several reasons.
There is an unfolding contest between nations for leadership of technology. The US is weakened due to its monumental annual trade deficit of $500 billion, and an equally large federal budget deficit. Right now, the rest of the world is paying for the good life in America, but as the effects of the twin deficits come into play, America's power to control technology will wane, and it will need strategic partners to offset the increasing power of China, its presumptive challenger.
In this transition period, one battleground is the standards for new products in information technology. For example, future discs will hold four to five times the data of those currently on the market. If most of them will be sold in China, will the Chinese decide on the technology that becomes the industry standard?
Pursuing its own national vision, China, while taking advantage of its access to Western markets, is developing its own software standards for wireless computers, and introducing exclusive technology formats for future generations of cellphones and DVD players. It is also developing a tax regime that favours computer chips made in China and sold within the country.
China has also an ambitious agenda for space exploration, including landing an unmanned vehicle on the moon by 2010. China's manned space program is under the control of its army, and it is partly driven by a desire to catch up with the US in 'information warfare' of the kind that was used in Afghanistan and Iraq.
The American difficulty with China is particularly acute because of an ever-widening bilateral trade deficit that is currently $100 billion. But since China has become the manufacturing and assembly hub for consumer goods for Western companies, America can little but complain. The deficit has been sometimes blamed on China fixing its currency in relation to the dollar, but that is not entirely true. If the Chinese were to raise the prices of their products, it would disrupt the American economy, perhaps sending it into recession.
The Chinese, wishing to reduce the tightness of their economic embrace with America, are expanding their trade with other nations. During the last year, when the euro gained about fifty percent in value against the dollar, the European imports into China went up substantially, while American imports remained stagnant.China already has the world's most cell phone users, and half of the world's DVDs are made there. Its plans to develop its own technical standards appear partly to avoid royalty payments to Western companies. The conflict between the US and China will be most severe over the future of Wi-Fi (that is devices that connect hardware using short-range wireless), that is becoming increasingly popular in the market place. The Chinese want their own encryption standards for these wireless signals.
The Americans have in the past controlled the standards for encryption in the interests of their national security. The Chinese are giving the same reason for their insistence on their standards, but the Americans counter that Wi-Fi encryption could not serve any conceivable national interest, since these signals travel only a few hundred feet.
The Chinese are right in the sense that the adoption of their standards worldwide would benefit their industry and further Chinese national interest. As the world's biggest potential consumers of electronics, they would like to have a big say in the future of information technology.
The Chinese also want the Westerners to co-produce their goods with Chinese partners, as was successfully demanded by them in the aerospace ventures of the 1980s. But now that China has already become a powerful competitor, the Westerners are afraid that this will compromise their trade and manufacturing secrets.
The Americans will naturally do their best to see that the Chinese do not succeed. There will be a lot of arm-twisting and it remains to be seen whether the Chinese will remain steadfast in their policy. The Chinese assert that the Americans, if they were in their place, would do exactly what they are asking for.
In this fight over standards, which is really a fight for leadership of the information technology industry, the Americans needs a strategic ally who can help them counter the Chinese advantage of the size of their market. The only country that can offset this is India, with its own equally huge market. Furthermore, India has a vibrant entertainment industry, partnership with which will help the Americans maintain their domination of this sector. India also has its own space program that, the Americans hope, could be made to complement their own program.
According to historians, Britain was helped by the captive market of its empire to maintain its economic power after Germany's industry became more efficient in the 1860s. (Of course, the shutting out of Germany from the international markets was partly responsible for the World Wars later.) Britain in the 19th and the US in the 20th century got to decide most of the technology standards and this helped their companies. The Chinese wish to do the same with their information technology strategy in the 21st century.By having India as an ally, the United States hopes to curb Chinese ambitions.
What should India do? India's and the world's interests would be served by supporting such standards that make technology more accessible. This principle should guide India's posture in the conflict over adoption of new standards in the DVD and Wi-Fi areas. In some technology fields, the choices are quite clear. India should work towards the adoption of the free Linux platform as against the Microsoft Windows. Here India can join hands with China and the Linux forces in the West to make technology more affordable for the common man.