India: France Of Asia?

Diplomats and analysts will be watching closely asChinese President Hu Jintao visits India this week, the first by a Chinese headof state to India in a decade. Few capitals have as much interest in the outcomeas Washington. However, those in the US who see India simply as a hedge againstChina will likely be disappointed—for the two Asian giants have also takengiant strides toward better ties. The US may be better off viewing India as anally like France—one which shares many values with Americans, but pursues itsown course.

This week’s India visit will be a reminder of animportant fact to those who focus exclusively on the US-India relationship as analliance of democracies with shared values and ever closer economic and culturalties: India and China are enjoying a honeymoon of their own. Long forgotten arethe lows of 1998, when then Indian Defense Minister George Fernandes famouslycalled China the country’s "number one threat" and accused it ofencircling India with its missiles, navy, and allies Pakistan and Myanmar. Forits part, China has modulated its position on Kashmir. Ongoing border talks haveled to Chinese recognition of the Himalayan state of Sikkim, absorbed into Indiain 1975, as part of India—although differences continue on Arunachal Pradesh,an Indian state which China claims. But overall the language describing thisrelationship has taken a 180-degree turn. After Chinese Premier Wen Jiabao’s2005 visit to India, the two countries heralded a "strategic and cooperativepartnership."

Underscoring this change is a new robustness ineconomic ties. As recently as 2001, two-way trade between India and China was apaltry $3.6 billion, but it nearly doubled in 2004, rising 79 percent from theprevious year to $13.6 billion dollars. By 2005 the figure reached $18.7billion, and is expected to top $20 billion in 2006. The India-China Joint StudyGroup of Comprehensive Trade and Economic Cooperation predicts enormous growthpotential because each country’s respective share of the other’s imports isstill so small—both under 5%. And both countries anticipate growth in servicestrade, the sector in which their bilateral trade has grown faster than thesector has in each country. While some Indian commentators raise concerns aboutChinese economic influence--underscored by the recent disqualification ofChinese firms from a mobile tender—this remains a mere blip overridden byeconomic pragmatism. Today’s talks, for example, between Hu Jintao and IndianPrime Minister Manmohan Singh produced a commitment to double trade from currentlevels to $40 billion by 2010.

In the past year, India and China have forged a newalliance in the energy sector—one in which both India and China requiresecurity for exponentially growing domestic demands. Onetime rivals for controlof fields in Angola, Nigeria, Kazakhstan, and Ecuador, India and China agreed inJanuary 2006 to cooperate on overseas acquisitions. The agreement grew out oftheir co-ownership of a Sudanese field and their cooperative bid for fields inSyria. These joint pursuits are knitting together the interests of Asianstate-owned oil and gas behemoths ONGC in India, and CNPC and CNOOC in China.With the rapid growth of these economic ties in areas critical to bothcountries’ development, the India-China relationship has set off on acompletely new path. It is this new course that the US, concerned about aworldwide scramble for energy resources, would be watching carefully.

At the same time, India and the US are drawingunmistakably closer - from joint military exercises to an American passion foryoga. A US that once sanctioned India for its nuclear tests now proposes closecooperation on civil nuclear energy. An India that famously evicted Coca-Colaand IBM in the 1970s has become a magnet for companies like GE and Microsoft.

This growing Indo-US warmth marks a complete reversalof past decades. Nominally nonaligned India had a quasi-alliance relationshipwith the Soviet Union. The US, of course, found a compliant partner againstSoviet Communism in Pakistan. India and the US clashed on matters ranging fromnonproliferation to human rights to the Nixon administration’s tilt towardPakistan during the 1971 Bangladesh war. With India’s economy among the mostautarkic in Asia, the economic relationship was equally frigid.

However, following India’s nuclear tests in 1998,US President Bill Clinton moved to craft a closer US-India relationship,highlighted by a successful presidential visit in 2000. The Bush administrationhas taken the relationship further. The president’s fascination with the scaleand diversity of India’s democracy is well known. A willingness to rethinkinternational treaties—including those relating to nonproliferation—has alsohelped clear the way for unprecedented cooperation. India’s opening of itseconomy has reinforced these trends. The scorching growth of India’s softwareand IT-enabled services sector has given it a significant role in globalbusiness. From a $150 million industry in the early 1990s, the sector now standsto exceed $36 billion in revenues in 2006, two-thirds from exports. India’sknowledge work has linked the country to American business in vital ways. In2006 it became the fastest growing mobile phone market in the world, and itsautomobile sector is one of the fastest growing, too.

Perhaps the driving force in the new US-Indiarelationship has been a shift in the perception of China in Washington, itsmetamorphosis from a strategic partner to a strategic rival. Not surprisingly,the new Indo-US strategic partnership, in particular the civil nuclear deal, hasenergized debate in the United States about what the nation will "get" inreturn.

The question becomes more acute when seen against theblossoming China-India economic relationship emerging over the last five years.Of course, a strong trade relationship may not indicate full agreement onsecurity issues—the US-China relationship an apt example—but the greatchanges taking place within Asia as its two largest powers grow faster, and comecloser together, mean that nothing can be assumed. And India’s historicwariness of US foreign policy and deep differences on Pakistan remain. Indeed,the fact that even in a phase of warming ties, the US still cannot satisfyIndian goals on Pakistan keeps at least one major roadblock in place.India-China cooperation on energy security points to others: their joint bid forSyrian fields, for example, was not welcomed in Washington. But mostimportantly, the emergence of a cooperative aspect to a once purely competitiverelationship between the two Asian giants creates new incentives for India. Soas India and the US overcome years of estrangement to craft a strategicpartnership, it’s worth asking what that partnership will really look like. Atthe moment a deep alliance, with an extensive convergence of security interestssimilar to US ties with Japan and South Korea, appears unlikely.

In the context of the many rapid changes taking placein Asia, Americans should step back to recognize that a good US-Indiarelationship will not be one where India complies with every US policy goal.Rather, the tango between Washington and New Delhi will resemble that of anotherproblematic ally, France, a relationship of robust cooperation marked bydisagreements and ideological bickering. Understanding, and planning for thiskind of relationship will create expectations that can be met successfully.

Alyssa Ayres is deputy director of the Center for the Advanced Study of India at the University of Pennsylvania and managing editor of the journal India Review. She will be an International Affairs Fellow of the Council on Foreign Relations in 2007. Rights: (c) 2006 Yale Center for the Study of Globalization. YaleGlobal Online