Opinion Columnists 21 Mar 2021 Sanjaya Baru | India ...
The writer is an economist, a former newspaper editor, a best-selling author, and former adviser to Prime Minister Manmohan Singh

Sanjaya Baru | India and US: It’s still the economy, stupid

Published Mar 21, 2021, 11:28 pm IST
Updated Mar 21, 2021, 11:41 pm IST
Securing US support for India’s economic rise is as important for India as strengthening its defence capabilities
China has for long been a factor in relations between India and the United States. (Photo: PTI)
 China has for long been a factor in relations between India and the United States. (Photo: PTI)

Many observers and analysts have already commented on the fact that the first high-level visitor to India from the Biden administration in the United States happens to be US defence secretary Lloyd Austin. Keeping the defence and security relationship in focus serves both the Biden administration and the Narendra Modi government well at a time when the world’s two biggest democracies are arguing about human rights and trade. Their shared concerns about China help bridge the differences on other fronts.

The same purpose of focusing on the security relationship and their shared views on the Chinese threat in Asia could have been achieved if US national security adviser Jake Sullivan had been the first visitor, but defence secretaries also double up as arms salesmen. Defence sales have remained at the centre of the bilateral relationship ever since George W. Bush’s defence secretary Donald Rumsfeld and then defence minister Pranab Mukherjee signed the New Framework for the US-India Defence Relationship in 2005, defining the transactional underpinning to a strategic relationship.


China has for long been a factor in relations between India and the United States. What keeps changing is the equation in this geopolitical menage a trois. Even at a time when their bilateral relations were otherwise prickly and the United States and India were described as “estranged democracies”, American military support to India when China attacked it in 1962 kept the relationship going. There was a brief interregnum, at the time of the liberation of Bangladesh in 1971, when the US Navy entered the Bay of Bengal as an act of solidarity with Pakistan and in consultation with China.


When Prime Minister Atal Behari Vajpayee wrote a letter to President Bill Clinton mentioning China as a factor in India’s decision to conduct the Shakti nuclear tests in 1998, President Clinton promptly leaked the letter to Beijing, thus ingratiating himself with the Chinese leadership. China was then a major market and destination for US investment. US business interests drove its strategic policy and President Clinton was beholden to American business lobbies that were still enjoying their honeymoon years with China.

While President George W. Bush signalled a reset on China and affirmed India’s nuclear status, President Barack Obama resumed America’s flirtatious relationship with China. President Joe Biden has now made it clear that he will stay with the course set by his predecessor Donald Trump of seeking to contain China. The “New Cold War” is here.


There are, however, two dimensions to the emerging US-China Cold War. First, trade and investment policies. Second, Indo-Pacific security. India has differences with both China and the United States on trade and investment issues. Not surprisingly, therefore, President Biden chose to send his defence secretary as his first emissary to India. Mr Austin’s visit has thus given both governments the opportunity to say nice things to each other within days after India’s external affairs minister and the US secretary of state were able to participate in a gathering of friends called the “Quad”. When the conversation shifts to trade, investments and human rights, the two nations will have to come to terms with the fact that both are “strained” if not “estranged” democracies, dealing with domestic challenges that have become dividers rather than bridges in their relationship.


The apologists for both governments have argued that it is just as well that the focus in the bilateral relationship is currently on defence and security and not on trade and investment, because that is where there is greater agreement. The question remains, though, whether the two governments would be able to narrow down their differences on trade, investment and human rights in the extra time they have bought for their partnership by first focusing on China, the Indo-Pacific region and defence matters.

Consider the fact that even during the tenure of President Donald Trump, a self-confessed friend of India and hailed as such by the Narendra Modi government, the United States was not prepared to address India’s concerns on trade and investment-related issues, even if it was quite happy to refrain from comments on human rights issues. Can one expect the Biden administration to be more accommodative than Mr Trump and his administration?


The question will be answered when the recently confirmed US trade representative Katherine Tai engages her Indian counterpart, commerce minister Piyush Goyal. During the Senate confirmation hearings last week, Ms Tai did not reveal her mind on India. Even when references were made to India by several senators, Ms Tai chose to remain silent, except to say that she understood the fact that US should view relations with India in a wider context. It remains to be seen how the Biden administration will define its trade policies within that “wider context”. It is useful to note that unlike some of President Biden’s Indian American nominees, the Taiwanese American Ms Tai sailed through the Senate confirmation proceedings with both Democrats and Republicans confirming her appointment.


How the US defines its economic policy towards India is far more important than how it defines its defence and security policy. I say this for two reasons. First, consider the legacy of its post-war global leadership. The US has been a factor for good in the economic revitalisation of Europe and East Asia during the Cold War. As a defence partner, its legacy has been less impressive. It’s economic support in the period between 1950 and 1980 helped Western European and the East Asian economies. Its military interventions in Asia and Latin American failed to improve the defences of its allies.


Second, for India, China is as much a defence and security threat as it has been an economic challenge. In fact, after the recent border standoff, it can be asserted that while India may have the military capability to deal with a Chinese threat, it does not as yet have the economic and human capital capability to deal with China’s economic challenge. Hence, securing US support for India’s economic rise is as important for India as strengthening its defence capabilities. It is the unveiling of US policy beyond defence and the security of the Indo-Pacific region that one is keenly awaiting.