A rocky road for strategic partners
With decisions that adversely affect India, the Trump administration fails to distinguish friend from foe
Why in news?
- The Donald Trump administration’s recent actions threaten the foundation of trust and flexibility on which India-U.S. relations are premised. However, they seem to be part of a pattern progressively visible in American foreign policy in which bullying friends has become the name of the game.
- India: United States President’s trade policy action against India suggests the narrative of a Rising India may well have met its comeuppance.
- The action has been explained away by some as collateral damage with the main targets being China and the trade-surplus enjoying OECD economies, especially Germany and Japan.
- The Federation of Indian Export Organisations has estimated that only $6.35 billion worth of trade, out of a total bilateral trade of $51.4 billion, benefits from US trade preferences. India can absorb that shock.
- US allies: The Trump administration’s insensitive approach towards its allies in Western Europe by denigrating the North Atlantic Treaty Organisation and the European Union (EU), threatening to impose tariffs on EU goods in connection with trade disputes and Europe’s relations with Russia, and Washington’s unilateral withdrawal from the Iran nuclear deal that roiled its European partners are all evidence of this policy.
- India is a lower middle income developing economy and will remain so for the foreseeable future.
- According to the International Monetary Fund (IMF), the per capita national income (gross domestic product, GDP) of the US, in purchasing power parity (PPP) terms was US$62,606 in 2018, compared to $7,874 for India.
- Most European Union countries have a per capita income in the range of $40,000 to $50,000 and China’s PPP-adjusted per capita income is $18,110. Despite her low income, India remains an open economy.
- The share of external trade (exports plus imports) in national income is 40.7 per cent for India but only 26.6 per cent for the US.
- India has a trade surplus with the US, but Trump’s complaint on that count is like a rich man complaining that he always gives gifts to his poorer friends, and they never give him a return gift.
- India has, in fact, been a bearer of gifts of another kind. It has exported several generations of highly talented professionals who have contributed to ensuring that the US remains a world leader in technology and knowledge-based businesses.
India, “strategic” partnership: Hurdles
- “Bookends of stability”: In a major foreign policy speech in October 2017, then U.S. Secretary of State Rex Tillerson declared that India and America were “two bookends of stability — on either side of the globe” and that the “emerging Delhi-Washington strategic partnership” was essential to anchor the rules-based world order for the next hundred years.
- However, the Trump administration seems to have reversed course in recent months. U.S. unilateral actions on three fronts have simultaneously demonstrated what amounts to downgrading India in American strategy.
- Iran oil sanctions waiver: The announcement on April 22 by U.S. Secretary of State Mike Pompeo that Washington would not renew after May 2 the exemption that it had granted India and seven other countries regarding import of Iranian oil was one sign that American unilateralism had trumped coherent strategic thinking.
- The Iranian share of Indian oil imports stood at 10%. While it would not be impossible for India to replace Iranian oil, the American announcement failed to consider the strategic importance of Iran in Indian foreign policy and the damage it could do to India-Iran relations.
- Moreover, by forcing India to tamely accept the American diktat on Iranian oil, it has torn off the veneer of “strategic autonomy” that Indian policymakers had long touted as the fundamental creed of Indian foreign policy.
- Defence deals with Russia: The second leg of this tripod is the U.S. threat to impose sanctions on India if it buys the S-400 missile defence system from Russia for which a deal had been signed in October 2018 by Russian President Vladimir Putin and Mr. Modi.
- The U.S. has argued that India’s purchase of the S-400 systems will violate the Countering America’s Adversaries Through Sanctions Act (CAATSA), a U.S. federal law that requires the country to impose sanctions on states entering into major military deals with Russia.
- Generalised System of Preferences (GSP): The third and latest instance of unwelcome U.S. pressure was the announcement on May 31 that, beginning June 5, India will be removed from the preferential trade programme, known as the Generalised System of Preferences (GSP), which gives developing countries easier access to the U.S. market and lowers U.S. duties on their exports.
- India is the largest beneficiary nation under the GSP scheme, and exported goods worth $6.35 billion to the U.S. under the preferential regime last year. This is close to 10% of the goods exported by India to the U.S.
- Taken together, these three decisions indicate that Washington is impervious to Indian strategic concerns and economic interests despite its earlier pronouncements that it considers India a valued “strategic partner”. These decisions are part of a unilateralist syndrome that currently afflicts American foreign policy.
- Trump and his advisers, principally National Security Adviser John Bolton and Mr. Pompeo, no longer seem to discriminate between friend and foe when making important policy decisions.
- Such an attitude does not bode well for the future of America’s relations with its friends and allies. Washington appears to have overlooked the fact that even the “indispensable nation” needs reliable friends and allies.
- Jaishankar, India’s new Minister of External Affairs and an outstanding diplomat with a wealth of experience in dealing with Washington, will have to convince American policy-makers that this maxim is relevant to the U.S.’s relations with India.
- Jaishankar should subtly communicate to his interlocutors that this is especially true now that the international system is becoming progressively multipolar, thus increasing foreign policy options available to Indian policymakers.
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