Sol Sanders Archive

China and the changing
U.S.-India equation

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It's worth trotting out Menon's old bromide for the visit of President Obama with an accompanying huge business delegation later this week. They hope to consolidate a stuttering realignment of U.S.-Indian relations launched some two decades ago. But they likely will be stymied, at least temporarily, by these contradictions.

When the Soviet Union's implosion weaned New Delhi away from Marxist economic modeling, long-frustrated workers in the vineyard of Indian-American understanding thought a revolutionary turn was at hand. But the Soviet ghost, along with India's vast native cultural overload and 350 years of British colonialism, continues to throttle policy turns.

There has indeed been a repositioning of U.S.-Indian relations. Not least, this has been because the Indian-American community, now approaching 3 million, has doubled in the past decade. With the highest median income of any U.S. ethnic group, almost half have graduate degrees. One in three engineers in Silicon Valley is of Indian descent. That the ties run deep is evidenced by recent gifts totaling $60 million by two Indian industrialists to Harvard's endowment.

This relationship has helped two-way trade to triple in the past decade. But at $50 billion, bilateral trade is only one-tenth of American trade with China, though far less troublesome as a political matter than Beijing's huge payments surpluses. Ironically, India's 2010 trade with China will surpass $60 billion, making Beijing New Delhi's largest partner as well. An Indian industrialist's $10 billion purchase of Chinese electrical generating equipment just capped it. No wonder an avalanche of cheap Chinese imports is raising New Delhi's protectionist hackles.

Optimists hope new agreements will boost the U.S. prospects. Washington, swallowing hard, pushed through a detour around nonproliferation constraints permitting India access to worldwide nuclear technology — although the Europeans and the Russians may take the biggest slice of the new market. The Bush administration moved despite New Delhi's refusal to sign the nuclear Non-Proliferation Treaty and offering only fuzzy promises of voluntary compliance.

Washington won't offer the same deal to Pakistan, its critical ally against terrorism, because of Islamabad's history of nuclear transgressions. That has opened the door for China to complete a second power plant there and sign for two more despite Washington's five-year, $10 billion aid program. But for the moment, everyone publicly will ignore the 800-pound gorilla in the Subcontinent: Pakistan's "all-weather" alliance with China targeted at India.

Yet it's certainly no secret that the Obama visit is linked to increasing Washington-Beijing friction. Geopoliticians the world over speculate on the likelihood of U.S. collaboration with China's Asian neighbors — led by Japan and India — to contain Beijing's growing economic and military assertiveness.

India's near double-digit growth in gross domestic product is important to any such strategy. Although far from matching the gains of China's state capitalism, New Delhi's increasingly free-market policies, some hope, will produce steadier long-term growth. But this month's long-awaited sale of a mere 10 percent stake of government-owned India Coal — even at $3.4 billion — typifies the country's "babu" (government clerk) mentality and the protectionist drag on government privatization hopes.

India waffles, too, over relations with China, engaged in endless "make nice" negotiations. Border conflicts still fester a half-century after India's nose was bloodied in a brief clash. India deploys aircraft at both ends of the 1500-mile border. But China continues Tibetan colonization and military buildup, bringing roads — and perhaps railroads — right up to India's border and bringing fresh instability for Nepal and Bhutan. New Delhi also sees China's construction of Indian Ocean ports — notably Pakistan's Gaidar at the Persian Gulf entrance — as a growing backyard threat.

Nor does India lack for other problems. Side by side with Mumbai's gleaming new skyscrapers are some of the world's most horrific slums. Its 600,000 villages — even though now invaded by cell phones and TV — still lack safe drinking water. A wave of suicides by debt-ridden farmers has just been compounded by a freeze in the much-touted $133-million-a-week "microfinance" lending system. While a dozen Indian billionaire businessmen have become international stars, poverty, particularly among those at the bottom of the still-rigid caste system, is exploited in a dozen states by self-proclaimed Maoist guerrillas. Prime Minister Manmohan Singh characterized the guerrillas as the country's principal security threat. And for New Delhi to demote archrival Pakistan to second place in the security pantheon takes courage. A $32 billion armaments program — Mr. Obama will sign a $3.2 billion deal for 10 C-17 transports, hoping to give U.S. companies a leg up in the upcoming $11 billion fighter contract — is also part of the current strategic mix.

Yep, Menon got that one right.

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