India-US 2018: Ties on steroid despite trade tiffs, Afghan shock
India and the United States joined Japan to hold their first tripartite summit with Prime Minister Narendra Modi meeting President Trump and Prime Minister Shinzo Abe on the sidelines of the sidelines of the G-20 summit in Argentina in December.india Updated: Dec 28, 2018 18:43 IST
Indians woke up in the New Year, on January 1, to a tweet from President Donald Trump that ripped into Pakistan, accusing it of giving the US only “lies and lies” in return for the billions it had received over the years for counter-terrorism and other purposes. The sound of that slap rang out the loudest in India.
Year 2018 closes, however, on a note of uncertainty for India, over the US president’s south Asia policy and the reported decision late December to cut the presence of American troops in Afghanistan by half, from 14,000. Though prepared for an eventual pullout, Indians felt betrayed.
“It seems like a reversal of the South Asia strategy that President Trump had unveiled in 2017 — that US’s presence will not be determined by a timeline but conditions on the ground,” said a person familiar with Indian thinking on the issue.
In the 12 months in between, however, India-US “ties picked up at a speed not seen before in recent years”, including the eight years of president Barack Obama, which had been marked by a few indifferent years in between before ending on a robust note, according to someone who has had a ring-side view of the relationship for years and who spoke only on condition of anonymity to be able to point out the lows as well, such as difference on trade despite growing bilateral trade and immigration, actually just H-1B, which is more of a trade issue for New Delhi than immigration, a bipartisan position held by both the BJP and Congress governments in Delhi.
The United States accorded India the status of Strategic Trade Authorization-1 (STA-1) in August to allow it to import the most sensitive dual-use technology (both defence and civilian) from America, something the US has only allowed to its NATO allies and key partners.
They held their first 2+2 ministerial — of defence and foreign ministers from both sides — in September, after a series of misses that frustrated both for months, and signed the Communications, Compatibility and Security Agreement (COMCASA), a foundational agreement that will allow India access to sensitive US defence systems.
India and the United States joined Japan to hold their first tripartite summit with Prime Minister Narendra Modi meeting President Trump and Prime Minister Shinzo Abe on the sidelines of the sidelines of the G-20 summit in Argentina in December. And the Quad, the three above three countries and Australia, held two meetings during 2018, June and in November.
There were the usual scares along the way. Would India get waivers, for instance, from US laws sanctioning trading with Russian and Iran? The decision regarding Russia is awaited — for India’s planned purchase of S-400 missile defence systems — but exemption from crude imports from Iran came through, along with one for the use of Chabahar port in Iran that India built and operates to access Afghanistan and Central Asia.
Year 2018 marked “growing convergence on a whole host of issues”, beginning with Pakistan in January. Islamabad lost $1.6 billion in US aid on account of its failure to act against terrorists operating from its soil, something India has been pointing out to the rest of the world for a long time. The Trump administration did not stop there. It designated many Pakistan-based terrorists and their groups, including fronts, that targeted India, as well as Afghanistan. The US also worked with European allies to put Pakistan on the “grey list” of the Financial Action Task Force, which identifies countries that fail to check financing of terrorists and money-laundering. Pakistan continues to be in the doghouse with President Trump.
There has been a similar convergence between India and the US on China, which is reflected in the increasing importance the Trump administration is according to the Indo-Pacific and in projecting itself as an Indo-Pacific power, starting, symbolically, by renaming its Pacific Command (PACOM) as the Indo-Pacific Command, which was also taken as a nod to growing military ties with India.
“This demonstrates a recognition by America’s national security and defence leadership that Indian military power is essential to the stability of Asia,” Benjamin Schwartz, a former US department of defence official had then said to the Hindustan Times. “Transforming this recognition into a geopolitical reality will be more difficult than changing a name, but this is an important step.”
New Delhi has also felt encouraged by certain US moves to confront and check China. Such as the enactment of the Better Utilization of Investment Leading to Development (or BUILD Act) legislation, which offers a private sector-led alternative to China’s state-led Belt and Road Initiative that is threatening to plunge unsuspecting nations into sovereignty-sapping debt, as with Sri Lanka and the Maldives in India’s neighbourhood.
“Public remarks and comments have been indicative also of the confrontational role firming up in US strategic thinking vis-a-vis China,” said the person who has been watching India-US ties for the year. President Trump has accused China of interfering in US elections; vice-president Mike Pence has said China is using “whole-of-the-government approach” to advance its interest in the US, and secretary of state Mike Pompeo had called the Asian giant the “greatest challenge” facing America.
The trade war triggered by Trump with China has further widened the chasm but has touched India as well, adding to the festering issues of tariff, market access and intellectual property right protections. That is despite the continuing growth in bilateral trade, which is expected to reach $140 billion at the end of the year, from $126 billion in 2017, there have been tensions on account of tariffs imposed by President Trump and his demand for India to lower its tariffs — he took to calling India the “Tariff King” for a while — and grant more access to its markets.
Officials continue to talk, working towards a trade deal, prospects of which had dimmed some weeks ago. There is renewed optimism on both sides of an impending resolution now. At stake is also a US trade promotion programme of which India is the top beneficiary — the Generalized Preference System, under which Indian exported over $5 billion worth of goods duty-free in 2017.
But, experts point out, the differences are a distraction from a happier story unfolding out of public eye. Bilateral trade is starting to balance out, with US exports increasing considerably faster than US imports, which has been a chief concern for Trump. “This point flies in the face of the policy concerns,” wrote Richard Rossow of the Center for Strategic and International Studies in a recent paper.
And then there is H-1B, without which no India-US story is complete.
Unlike President Trump’s first year of shock-and-awe attacks on the visa programme — increased scrutiny, site inspections, stricter rules with the aim of securing American jobs for Americans — that had left them reeling, 2018 was a coming-of-age year for Indian IT firms in the outsourcing business as they learnt to stay a step ahead of whatever the administration’s immigration hawks could throw at them.
One of the top Indian IT firms operating in the US, which did not want to be identified as “the changes and the repositioning are still work in progress”, has cut its H-1B visa applications drastically — from 14,000 to 4,000 — and ramped up local hirings; and, more significantly for its own future, it is beginning to overhaul its business model.
It would share no more details and refused to make available an executive to either confirm or flesh out the details obtained by the Hindustan Times independently.
First Published: Dec 28, 2018 18:42 IST