The Washington Diplomat / November 2009
By Larry Luxner
It’s official: Indian Prime Minister Manmohan Singh is coming to Washington next month — marking the first state visit of the Obama administration and a milestone event in the steadily improving relationship between the world’s two largest democracies.
Singh’s Nov. 24 reception at the White House demonstrates the “shared values and goodwill” that now link the United States and India, said New Delhi’s recently appointed ambassador in Washington, Meera Shankar.
“The new U.S.-India relationship has grown substantially in recent years. It’s very broad-based and has bipartisan support in the United States, as well as broad political support in India,” Shankar told The Washington Diplomat during an interview at the Indian Embassy. “It’s a trend that began with the Clinton administration and solidified under President Bush. And now, we’re looking forward to taking the relationship to the next level.”
Shankar is the first woman to represent India in the United States since Vijaya Lakshmi Pandit, the sister of India’s first prime minister, held the ambassador job from 1949 to 1952.
Originally from New Delhi, Shankar was India’s ambassador to Germany before taking up her current post half a year ago. This isn’t her first time in Washington; from 1991 to 1995, she served as a minister for economic affairs at the Indian Embassy here. Among other things, Shankar also headed two key divisions in the Ministry of External Affairs dealing with the South Asian Association of Regional Cooperation (SAARC) and India’s relations with neighboring Nepal and Bhutan.
In her first interview with a U.S. publication since becoming ambassador, Shankar praised the “India-U.S. Strategic Dialogue” enacted during the mid-July visit of Secretary of State Hillary Clinton.
That dialogue, to take place annually and alternately in Washington and New Delhi, will focus on five principal areas: strategic cooperation (with working groups to address defense, counterterrorism and the development of nuclear technology for civilian purposes); energy and climate change; education and social development; economics, including trade and agriculture; and science, technology and health care.
The agreement includes a $30 million science and technology endowment, a space cooperation accord, and end-use monitoring agreements for Indian procurement of lucrative U.S. defense technology and equipment.
“We don’t have a defense pact as such, but we are increasingly seeking international competitive bidding for making our defense purchases, and we would very much like American companies to be active participants,” Shankar said, explaining that up to 26 percent of any Indian defense-related venture has been opened up to foreign direct investment. “There will also be other opportunities as India seeks to build its defense capabilities through increasing private-sector participation.”
Two factors, Shankar told The Diplomat, have allowed India’s friendship with the United States to flourish like never before: the end of the Cold War and the opening of India’s once-closed economy in the early 1990s.
“Since then, Indo-U.S. trade has grown substantially. In the last four years, bilateral trade has doubled, and investment now flows in both directions,” said the ambassador, quoting a study that estimates the bilateral relationship has injected $103 billion into the U.S. economy since 2005.
In fact, Indian companies now invest more money into the United States than American companies invest in India — a consequence of that country’s large and growing consumer market.
Between 2004 and 2008, India has seen its economy expand by an average of 9 percent a year. That’s slowed somewhat because of the global recession, but even so, gross domestic product during fiscal 2010 is expected to climb at least 6 percent, Shankar noted.
“The growth of India’s economy has been spurred largely by domestic demand and investment. In that sense, its exposure to the global economy has been somewhat less than other major economies,” she said. “With the easing of inflationary pressures, our central bank was able to reduce interest rates, and the government also undertook reductions in value-added tax and excise duties to stimulate demand.”
India now has a total GDP of $1.2 trillion, though per-capita GDP stands at only $1,017 and some 80 percent of Indians live on less than $2 a day — more than double the same poverty rate in China. And with 1.14 billion inhabitants, India accounts for 15 percent of the world’s population, ranking second only to China, which has around 1.32 billion people.
About one-third of India’s citizens live in the largest 200 cities, with the remaining two-thirds inhabiting more than 550,000 villages.
“Our population growth is now about 1.5 percent — it used to be over 3 percent at the time of our independence,” Shankar said. “But if we are to overcome poverty, we need to continue growing our economy at the rate of 8 to 10 percent a year. That’s our objective.”
Yet with all that economic growth also comes pollution and greenhouse gas emissions, though India claims it is doing more than its share to avert global warming. Just two months before the global U.N. summit on climate change takes place in Copenhagen, the Indian government has announced policy initiatives ranging from a $2.5 billion forestation fund to a $22 billion solar energy program.
“Over the years, the energy intensity of India’s economy has come down, and today, we sustain a 9 percent growth in GDP with only a 4 percent growth in energy production,” Shankar pointed out. “We used to require more than 1 percent growth in energy to have a 1 percent growth in GDP. It’s come down because our industrial tariffs are very high, so there’s a huge incentive for companies to produce energy efficiently.”
Nevertheless, India’s greenhouse gas emissions are expected to triple over the next two decades — from about 1.2 billion tons to between 4 billion and 7 billion by 2030. At the same time though, India’s per-capita emissions will still be far lower than major industrialized nations — one of the reasons why India insists that, as a developing country, it should not be held to the same strict standards as wealthy nations like the United States and Japan that were largely responsible for the planet’s warming to date.
This divide on climate change even led to an unusual public spat between Hillary Clinton and India’s environment and forests minister, Jairam Ramesh, during the secretary of state’s recent visit.
“There is simply no case for the pressure that we, who have among the lowest emissions per capita, face to actually reduce emissions,” Ramesh declared at a press conference, adding that “we are simply not in a position to take over legally binding emission reduction targets.”
Shankar though denies that the climate change issue represents a major “bone of contention” between Washington and New Delhi, but she did admit that differences persist.
“I think we need to take into account our different circumstances and capabilities,” the ambassador said. “India’s per-capita emissions are a little over one ton per year. The United States is over 20 tons. India needs to provide 400 million people access to commercial energy, which they don’t have at present” — a challenge, she noted, that would entail a boost in energy production of anywhere between five to seven times the current rate in the next 20 years.
“For India, what we would have a problem with is to look at ways to deal with climate change which would in a sense deny us the rights to development — that is really the crux of the dilemma that we face,” she reiterated in a recent discussion at the Atlantic Council in Washington. “We would like to develop in a way that is environmentally sustainable, but it’s not an easy choice: How do you do that with limited resources?”
One way is through nuclear energy, which Shankar says will be key in helping to wean India off its dependence on coal — the source of 60 percent of India’s electricity. In that regard, the landmark U.S.-India nuclear accord ratified by the U.S. Senate in October 2008 was crucial because it reversed a 34-year ban on the sale of civil nuclear technology to India (also see “U.S.-India Nuke Deal Passes Under Radar” in the November 2008 issue of The Washington Diplomat).
“It’s a symbol of the increasing trust both sides have in the relationship,” Shankar told The Diplomat. “It is important for helping to meet India’s energy needs in a more sustainable manner. But it’s also good for the world because it would ease the pressure of fossil fuels, and be a better alternative from the point of view of global warming.”
The ambassador conceded that while “the overwhelming majority of Indians supported the agreement,” it faced heavy criticism at home from politicians who warned it could erode India’s strategic nuclear autonomy.
Critics outside India were equally vocal, warning that the historic pact would create a dangerous precedent by allowing India — which conducted nuclear tests in 1974 and 1998 and had largely been exiled from the nuclear community — to expand its nuclear power without requiring it to sign onto the Nuclear Non-Proliferation Treaty.
At the time, Sen. Byron Dorgan, a North Dakota Democrat, warned that “the bill before us will almost certainly expand the production of nuclear weapons by India.”
For now, implementation of the deal has been inching along, with two nuclear power plant sites in India designated for investment by American companies — supply contracts worth billions of dollars. But disputes remain with those companies and the Indian government over liability in the event of a catastrophic nuclear accident.
Despite ongoing fears that technology supplied by American businesses could be used for military and not civilian purposes, Shankar insists that nuclear proliferation is not in India’s interests. Far more important to her country is achieving a lasting peace with nuclear-armed Pakistan — India’s longtime adversary — and stopping the scourge of terrorism that has its roots in Pakistan-based Islamic fundamentalist movements such as Lashkar-e-Taiba, which was linked to the November 2008 carnage in Mumbai that killed 173 people and wounded at least 300 more.
“Terrorism is a challenge not just for India, but for many countries around the world. Much of the terrorism in India has external roots, as we saw in the Mumbai attacks last year, which were masterminded and executed by a Pakistani group,” she said. “It’s important for Pakistan to bring those responsible for the Mumbai attacks to justice, in order to prevent the recurrence of further attacks.”
Shankar, who was serving in Germany at the time, declined to say what should happen with Ajmal Amir Kasab — the only one of 10 Pakistani militants captured alive following the attack, which targeted the Taj Mahal Palace & Tower, the Oberoi Trident Hotel and an Orthodox Jewish community center, among other prominent buildings.
But at the Atlantic Council discussion, she did criticize the Pakistani government for not speeding up the investigation and trial of suspects, pointing out that the India-based trial for one of the alleged perpetrators is well under way while “Pakistan has yet to bring those responsible for the Mumbai attacks to trial.”
Shankar said India is also very concerned about the escalating violence in nearby Afghanistan, where many civilian Indian lives have been lost in the construction of everything from public toilets to highways. In July 2008, the Indian Embassy in Kabul was targeted by suicide bombers, killing 58 people and injuring 140.
In early October, that same embassy was targeted again. This time, 17 people were killed and at least 70 more were injured. Many Indians believe Pakistani intelligence agents were behind both attacks, as well as the Mumbai atrocities as well.
Shankar says India won’t back down — nor should the United States, despite increasing skepticism about increasing the number of troops in Afghanistan.
“We share the U.S. objective of improving the security situation in Afghanistan, and to move Afghanistan and Pakistan in the direction of greater moderation,” she said, noting that India — despite its own poverty — has pledged $1.2 billion for schools, hospitals and other assistance to Afghanistan. “This underlines our commitment to Afghanistan’s development and stability.”