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Home > News > PTI

Nuke deal hogs limelight in Indo-US relations

Sridhar Krishnaswami in Washington, DC | December 21, 2007 10:39 IST

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A year which saw India and the United States chart a new course in hi-tech and defence cooperation and technology transfer was dogged by the controversy around the civil nuclear deal.

The year 2007 did not turn out to be much different than 2006 in that much of the time was spent on figuring out whether Washington and New Delhi will come to terms with the so-called 123 Agreement that would formalise the Henry J Hyde Peaceful Atomic Energy Cooperation Act that the President George W Bush [Images] signed into law in the closing days of 2006.

For a full six months or a little over after the 123 Agreement or the HR 5682 of 2006 was signed into law the governments in Washington and New Delhi saw negotiators on both sides wrestle with the intricacies of the subject that was not merely pegged to technical or legal aspects of an agreement but interjecting quite forcefully in the realm of politics as well in India.

In the realm of defence cooperation the hot transfer of the USS Trenton, the Landing Platform Dock to the Indian Navy on January 17 was seen as a significant event. With a displacement of approximately 17,000 tons, the LPD is set to be the second largest ship with the Indian Navy, after the aircraft carrier Viraat.

The ship will add punch to India's maritime forces with its capacity to participate in naval, peacekeeping and tri-service operations and humanitarian relief.

It has an unrivalled capacity to carry close to a battalion-strength troops and sustain them over a long duration. Ambassador Ronen Sen commissioned the ship as the INS Jalashwa on June 22, 2007.

The legislation to facilitate a new and expanded era in bilateral relations between India and the US was passed on the last day of the lame duck session of the 109th Congress in the final days of 2006 did not mean that lingering suspicions were removed with the thumping nods from the House of Representatives and the United States Senate.

Some law makers in the United States remained unconvinced as did a section of the political and scientific community in India on what it is that the Hyde Act did or did not do with the Joint Statements of the Political leaders of India and the United States of July 18, 2005, and March 2, 2006.

But the outgoing chairman of the Senate Foreign Relations Committee, Senator Richard Lugar, has hailed the bill as advancing the President's "most important strategic diplomatic initiative" and throughout 2007 the business and the economic communities saw the Hyde Act and the aftermath as the first major step in the process of moving towards bilateral nuclear commerce.

The essence of the disagreement between specific communities in India and the United States was captured very eloquently by the Under Secretary of State Nicholas Burns, one of the key players in the Bush administration on the civilian nuclear initiative who argued that in any democracy there is bound to be dissent and people on the opposite sides of the barricade.

"In any large democratic society like ours two, you are always going to have people who are on the opposite sides of the barricade. But I think we have really won the mass majority of opinion in both India and in the United States," Burns said in one of his many sessions with reporters on the subject.

The breakthrough that negotiators from India and the United States had over the 123 Agreement in July 2007 was truly an achievement for there was in a five-day period every indication that either Washington or New Delhi was simply going to walk away. But stubborn persistence and valuable inputs from the highest political echelons enabled the two sides to achieve what the political leaderships had aimed for.

The excitement in Washington soon gave way to a sense of disbelief to how soon sections of the political community in India would hammer away at an accord that had been so meticulously worked through to the point of raising fundamental questions about the very survivability of an initiative that has been laboured through the two political systems for two and a half years.

For the record the Bush administration has maintained that the civilian nuclear initiative has to work through the Indian democratic process but few in America including prominent members of the Indian American community are under any illusions of what is in store for the accord should it be dragged through aimlessly in the second session of the 110th Congress.

Given the way the bill has been written the nuclear deal must once again be approved by Congress after India and the IAEA have worked out an accord on the safeguards and the 45 Member Nuclear Suppliers Group giving its stamp of approval.

It is not an exaggeration to say that all eyes of the administration, the business community and the Indian American community are on whether Congress is presented the opportunity to look at the civilian nuclear deal once again in the early months of 2008 for after which law makers will be so engrossed in the intricacies of the Presidential and Congressional elections of November 2008 that floor managers and schedulers will find the going difficult, to say the least.

Some in the Indian American community are also not convinced of the argument in certain political quarters in India that somehow a "better" deal could have been extracted out of the Bush administration or somehow that an incoming Democratic administration would offer something better.

The known baggages of the Democrats aside, a leading Democratic contender for the 2008 Presidential fray Senator Hillary Rodham Clinton has said that her administration will attempt to resurrect the Comprehensive Test Ban Treaty, the CTBT, as a way of strengthening the Non Proliferation Regime.

The Bush administration has lost an opportunity to remind New Delhi that some of the top defence firms of America will be keenly bidding for some of the high profile requirements of the Indian defence establishments for Washington very early on in the Republican administration had made the dramatic departure of offering its top hardware to India.

The present depth and future scope of United States-India defence relationship could not have been summed up any better than by a top Pentagon official, James Clad, the Deputy Assistant Secretary of Defence for South and South East Asia who also happens to be an avid India watcher.

"The U.S.-India strategic potential is very, very profound," Clad said.

"India is seen as a potential power with global reach. It has been slow in coming. I think it will be slow in coming in the future - but it is steady. The trend lines are unmistakable."

As many as 52 US defence corporations, including Boeing, Lockheed-Martin, Ratheon, Honeywell [Get Quote] and General Electric have set up offices in India, signalling the interest they place on the growing Indian arms market.

"It is about maintaining a type of equilibrium, about accepting India's rise into a type of maturity and power and prowess. We are coming into something that is naturally there. It is like a seat which is already at the table, and we are sliding into it," Clad remarked.

In all the talk of the future of India-United States relations analysts have not forgotten to remind the fact that bilateral trade and investments are growing and that increasingly the US is an important destination for Indian investment and through this in the generation of local employment -- all this at an election year where rhetoric is still rampant on the subject and issues pertaining to "outsourcing".

Indo-US bilateral trade grew from USD 13.49 billion in 2001 to USD 31.917 billion in 2006. India's major export products include gems and jewelry, textiles, organic chemicals and engineering goods. US exports to India grew by 26.31 per cent in 2006 to reach USD 10.091 billion, while Indian exports to the US increased by 16.07 per cent to hit USD 21.826 billion.

The United States is one of the largest foreign direct investors in India. The stock of actual FDI increased from USD11.3 million in 1991 to USD 5708 million as on January 2007. FDI inflows from the U.S. constitute about 11 per cent of total actual FDI inflows into India.

Statistics have it that the United States is the leading portfolio investor in India. As in December 2006 US-based Foreign Institutional Investors have made a net investment of USD 17.8 billion of a total of USD 51 billions in Indian capital markets accounting for about 33 per cent of the total.

The US is also the most important destination of Indian investment abroad. Between 1996 and July 2006, Indian companies invested USD 2619.1 million in the US largely in manufacturing and non-financial services.

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