U.S. and Indian flags fly on Rajpath in front of India Gate in New Delhi, India. (Manpreet Romana/AFP/Getty Images)
Former U.S. Ambassador to India Frank G. Wisner joined the Asia Society Policy Institute on Monday, January 27, to discuss the U.S.-India relationship following the arrest of Indian diplomat Devyani Khobragade. The briefing was the latest installment in the Institute’s monthly AsiaConnect teleconference series. This blog post presents a condensed and edited version of Ambassador Wisner’s remarks, along with an audio recording of the conversation.
Frank G. Wisner is a Foreign Affairs Advisor at Patton Boggs LLP. During his U.S. diplomatic career, which spanned four decades and eight American presidents, he served as Ambassador to India, Egypt, the Philippines, and Zambia. He also served as Under Secretary of Defense for Policy and Under Secretary of State for International Security Affairs. He is a member of the Advisory Council of the Asia Society Policy Institute.
How has the Khobragade case affected the tone and substance of the U.S.-India relationship?
The incident was a deeply regrettable event. As it unfolded, very different cultural perspectives came into play, producing very different reactions. I’m pleased to note that in Delhi, the temperature surrounding this affair is beginning to lower. And it’s becoming much calmer in this country too.
Now is the time for diplomats to talk about how to avoid this kind of issue in the future. They need political cover to do that, and they have it. The U.S. Secretary of State conveyed his view to India that he wished the affair hadn’t happened. The Indian Prime Minister made similar remarks a couple of weeks ago, and no senior leader from any party has jumped on the stump to politicize the affair.
I look at the Khobragade affair as a squall on an otherwise reasonably calm sea. In the short run it has upset the relationship and diverted attention. Now our diplomats must meet and negotiate consular privileges and immunities on a reciprocal basis so that future incidents can be avoided. I think the real task for American and Indian diplomats is to make it a priority to focus on the big strategic questions in our relationship.
Looking beyond the Khobragade incident, what are the bright spots in the U.S.-India relationship?
The Indian-American relationship has undergone a sea change in recent decades. Where little understanding existed twenty years ago, today there is a willingness to cooperate. High-level ministerial visits are a constant feature in the dialogue. Delhi and Washington have formal strategic dialogues, and there have been economic exchanges at senior, governmental, and corporate levels. Every President since Bill Clinton has visited India, and India’s Prime Ministers now regularly come to Washington.
In business, there is now a tremendous amount of cross-border investment. Indians are among the leading foreign investors in the U.S. economy, and the same is true for Americans investing in India. Foreign institutional investors have poured liquidity into the Indian financial markets, giving them more depth.
It’s also worth remembering how much strategic perceptions have changed over the past 20 years. I can’t emphasize enough how consequential this change has been. In the U.S., we recognize that India’s needs matter to us and that a strong India is a boost for the U.S. Both sides also recognize that rising Chinese power is a matter of great importance, and that the two countries must think together about how to manage that rise so it doesn’t disrupt stability in Asia. Maintaining the balance of power in Asia is important to both countries.
What are the key weaknesses in the relationship?
Sadly, over the last four years, we haven’t seen real movement in the relationship. There is no fundamental flaw, but there is a sense that economically and politically we are not moving ahead and fulfilling the promise of the relationship. And we have to be honest that a lot of things have gone wrong.
On the Indian side, there’s a fairly long list of grievances. The U.S. Senate’s draft of an immigration bill discriminates against Indian IT firms; it is rightly a big bone in India’s throat. There are continuing disputes over intellectual property rights, as India tries to access cheaper medicines for its population. The consequences of the American drawdown of troops in Afghanistan have India worried. Other issues crop up. The Federal Aviation Authority’s certification of Indian airports is a recent problem.
On the U.S. side, there are issues as well. Unfortunately, those affecting the private sector have weakened the hitherto strong pillar in the relationship. American corporate interest in India has waned. No more nettlesome issue exists than the tax treatment of American companies. Tax inspectors have brought crushing levies against American companies—as well as Indian ones. The drug companies are concerned about protecting their intellectual property rights: Pfizer has been affected; Bayer’s cancer drug is a huge issue. Manufacturers are facing threats of new laws requiring production to be localized, even when such fabrication is unprofitable or inefficient.
Between the two governments, there have been many disappointments. We’ve seen no development of Indian-American cooperation on nuclear energy because of the absence of an Indian law on civil nuclear liability. And the bilateral investment treaty is stuck.
Looking ahead, what should the India-U.S. diplomatic agenda cover?
With India’s general election this spring and a U.S. Congressional election later this year, this is the time for the two sides to reflect on how to drive the relationship forward and refocus on the strategic ties which bind us. In a word, how to maintain peace and stability in Asia and the region and how to promote the economic well-being of our peoples. I have thoughts about process as well about substance.
On the process, I think a few things need to happen. Even in the waning days of the current Indian government, we should push forward to settle some of the day-to-day problems I mentioned above. Meanwhile, U.S. diplomats should reach out to the major Indian party leaders to discuss bilateral relations and begin to bring them into the culture of the relationship. We want them to understand the issues before they enter a new government. And once the new government in India is formed, there should be a renewal of strategic dialogues involving the U.S. Secretary of State, the Secretary of Defense, and senior intelligence figures to work out the common strategic agenda for the next several years.
There are three significant strategic issues. The first is Afghanistan, and what happens after the American withdrawal. The U.S. needs India to understand how we believe the situation can be managed, and how India can protect its national interests. Second, the U.S. and India need to talk about Pakistan’s future: how both countries can manage relations with Pakistan at a time of tension and danger, and what to do if things go wrong. Finally, India and the U.S. need to discuss China, with real frankness, and figure out how to position ourselves to cope with the growth of Chinese power.
We also should aim to set a big economic goal, lest we become bogged down and angered over routine problems. Our economies are a great pillar in the relationship. India is not part of the Trans-Pacific Partnership talks nor the Transatlantic Trade and Investment Partnership—India runs the risk of falling between two blocs, excluded from their benefits. We and India should begin to think about how to achieve a bilateral free trade agreement that would serve both the U.S. and India’s interests.
How do you see the upcoming election playing out? And how might the electoral results change the prospects for India to get its economy back on track?
It’s much too early to predict the electoral outcome, but it’s now absolutely clear that there will be major changes in the Indian political landscape.
Narendra Modi has dominated Indian politics and the Indian political conversation over the past year, and Indians now look at him as a national leader. He has a strong record of economic and administrative achievement and a demonstrated ability to win elections. I think U.S. businesses and key Indian constituents have accepted that they will have to do business with him. The relationship with India is too important to be held up on the issue of one man. Narenda Modi is an able man; we’ll have to see how he conducts himself if he rises to the top. But doing business with him will be an imperative, assuming of course his party is able to form India’s next government.
No matter what’s promised during the campaign, the next government must have one key priority: how to put India back on a path toward growth. The rate of inflation is among the highest of any G20 nation, and it’s sapping business initiative and causing popular discontent. To restore growth, the government will have to check inflation. India will have to bring the fiscal policies under control, monitor government spending, and decide how revenue will be raised in the future.
The good news for Americans and foreigners is that India needs more investment—a huge amount. There will be pressure on India’s government, no matter who is in office, to relax restrictions on foreign investment. Relaxation of investment rules will also open the way to more domestic investment.
Listen to the AsiaConnect call with Frank Wisner using the audio player below.