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Prime Minister's US visit -- Euphoria masks the reality

The India-US relationship is far better than it was after Pokhran-II, and Mr Vajpayee's visit added to the feel-good factor. Still, there are several bridges to be crossed to build a long-term, mutually beneficial relationship, says R. Parthasarathy.

THE PRIME Minister, Mr Atal Bihari Vajpayee's visit to the US may be judged from three angles -- political and diplomatic; economic; and his address at the UN, which essentially dealt with social factors, the environment and measures to counter global te rrorism. At the political and diplomatic levels, the India-US relationship is far better than it was after Pokhran-II, and the visit has added to the feel-good factor.

Though its timing could have been more favourable, given the presidential election campaign in the US, the visit was essentially in response to the US President, Mr Bill Clinton's invitation and, thus, had to take place during his term.

In today's unipolar world, the US occupies a place of strength and influence in global political and economic issues. The US Government has been pressing India to sign the CTBT. But the Treaty has not received the US Senate's assent. Moreover, the securi ty environment in South Asia is fragile, particularly along India's borders. The Nuclear Non-Proliferation Treaty (NPT) is also equally ineffective.

These are issues with global ramifications. Unless the five major nuclear powers come round to accepting the ban on further tests, and non-proliferation is effectively implemented, there can be little progress on this front. The joint statement issued at the end of Mr Vajpayee's visit accepts these realities and stresses that the moratorium on further tests will continue until India signs the CTBT.

Post-Pokhran scene

The BJP Government has apparently softened its tone on the CTBT post-Pokhran. However, there is yet to be a full-scale discussion on the subject in Parliament before a national consensus is arrived at. Further, with the presidential election under way in the US, maintenance of status quo is the best one can hope for. India has also indicated that it will participate in the forthcoming conference in Geneva on the Fissile Material Cut-off Treaty (FMCT).

These are positive signals, but the American side must also realise that with two nuclear states along India's northern border, one of whom is belligerent, India has to take a cautious view. It is unfortunate that while, as a gesture of goodwill at the t ime of the Prime Minister's visit, US Congress voted favourably on a resolution introduced by the Chairman of the International Relations Committee, Mr Benjamin Gilman, for lifting all the remaining sanctions on India, the US Administration is linking it to India's progress on security related matters, signing the CTBT and the NPT.

There is enough evidence to prove that the sanctions not only strain the Indo-American business relationship but are also an irritant in an otherwise sound relationship between the two countries.

Co-operating against terrorism

In his address to the joint session of US Congress and the Senate, Mr Vajpayee dwelt at length on terrorism on India's borders that has caused the country untold misery and loss of life. Though he did not name Pakistan, the message was clear. Talk of jeh ad and dialogue cannot happen at the same time. As two of the world's largest democracies, the Prime Minister called for joint efforts by the US and India to tackle this problem. America has itself been facing the problem, as is evident from the bombings of its embassies at Nairobi and elsewhere.

The Kashmir issue and Pakistan's support to terrorism as a way of solving the dispute are unacceptable and, as Mr Vajpayee observed in his address before US Congress, the terrorist attacks have religious connotations, reflecting the multi-ethnic characte r of Indian democracy. No wonder there was spontaneous applause to his assertion that such efforts will not be allowed to succeed. Therefore, the global diplomatic pressure on Pakistan to desist from acts of state-sponsored terrorism must be redoubled, a nd the US must spearhead this effort.

It is a pity the attendance at the Congressional address was rather poor. While part of the reason could be the timing of the visit, this also points to the lack of interest among legislators to issues beyond their immediate concern. The lesson to be lea rnt is that our officialdom and the Indian embassy in Washington, in particular, must have foreseen such an eventuality and put in sufficient efforts to get the maximum mileage from such a high-powered visit.

The Prime Minister's address at the millennium meet of the UN General Assembly is noteworthy in two respects as far as India is concerned. First, the inequity in the progress of globalisation, with the developing countries having to bear costs or onerous conditions disproportionate to the benefits expected to flow. One has only to recall the events at the Seattle Ministerial Conference of the WTO, where issues such as labour, environment standards and other items not on the agenda were brought in.

On many of the earlier WTO agreements, the developing countries have been asking for a modified approach, keeping the domestic compulsions in view. These are legitimate demands to the extent that one can work out acceptable alternatives, and the US Gover nment should heed these suggestions. They are not merely issues between India and the US but also form part of the global agenda.

Significantly, the recently released World Development Report of the World Bank points out that a market-based approach has failed to meet the aspirations of the people, and that what is needed is political empowerment of the under-privileged. The other question pertains to revamping the UN to make it more resourceful to meet the emerging social issues. India's case for a permanent seat in the Security Council stands on solid and transparent credentials, and one hopes it will receive the support of the US Government and other members of the UN.

Business issues

From a bilateral point of view, the meetings with the CII-sponsored Indo-American business group in New York, and the interaction with the National Association of Manufacturers, in Washington, hold the key for a future course of action to attract a large r flow of investments from the US. The inflows from the US were a dismal $2.5 billion over the past decade, against approvals of $14 billion -- less than 20 per cent!

The Indian side has to do much soul-searching to explain this poor performance as, apparently, much of the fault lies nearer home. If China has a far better record to show in this respect, it is not because of its political ideology alone. The hassles of doing business in India, pervasive corruption, avoidable public litigation, hostility towards MNCs and bureaucratic inertia -- all add to the negative mindset.

The solution is: The Government diktat should be minimal in core business decisions, the outdated laws on land acquisition must be considerably simplified, and infrastructure support augmented. These need to be done within a set time-frame. It is welcome that a Strategic Management Group will be set up in the PMO to monitor the progress of major investment projects. Going beyond this step, extensive administrative reforms at the Central and State levels is required.

Key officials dealing with foreign investment need to be given proper orientation to be sensitive to the foreign investor's genuine concerns. Better political governance is equally important. One has only to look at States such as Andhra Pradesh, on the one hand, and Bihar, on the other. To aim for US foreign investment of $5 billion, going up to $15 billion in the next three years, as outlined by the Prime Minister in his speech to the CEOs of Corporate America, may not be difficult, provided the envir onment is made conducive at both ends. Mr Vajpayee's address before the joint session of the Senate and the Congress makes a hopeful reference to India's desire to double per capita income in ten years, which means the economy should grow at 9 per cent p er year.

Thrust areas for co-operation

Rightly, the focus was on economic issues, with five major thrust areas -- textiles, taxation, civil aviation, power and telecom -- being identified. American interest in getting the Indian market opened to foreign business in the last three sectors is w ell-known. India should, equally, press hard for significant gains in the textile trade, such as removal of quota restrictions and rationalising the rules of origin.

Further cooperation with the US in the energy sector, particularly in the light of the OPEC decision to increase steeply the crude prices to $34 a barrel is welcome. This is an area where India, vulnerable as it is, should seek comprehensive internationa l cooperation not only in tapping new sources of energy through transfer of technology but also in its dialogue with OPEC.

India's vital interest in trade expansion is another area where American cooperation is essential, particularly considering the contentious issues that stalled progress at the WTO ministerial meeting. There are issues on trade where the stand of the US a nd other developed countries is diametrically opposite to India's and that of other developing countries. These matters need to be taken up at the relevant official level and a consensus built up among the developing countries.

Still, there are several bridges to be crossed to build a long-term India-US relationship. An immediate concern is, naturally, the outcome of the American presidential election. No matter who comes to power, India will be faced with a totally new set of personalities and equations. The dialogue, in that sense, has only begun. The MoUs signed at the end of the Prime Minister's visit for a total American investment of $7 billion in energy-related sectors is to be welcomed.

Progress on other fronts, such as the double-taxation avoidance agreement, WTO issues before the next ministerial meeting, and so on, will have to be taken up at the official level at the right time. In the IT sector, advances will take place at their ow n momentum, as cooperation here is on perceived mutual interest, as outlined by Mr Bill Gates, who visited India briefly at the time of Mr Vajpayee's visit to the US.

(The author is a New Delhi-based management and financial consultant.)