The Financial Times
May 28, 2009
Obama’s chance to cement ties with India
By William S. Cohen
When India’s Congress party won an unexpected sweep in national elections on May 16 the Bombay Stock Exchange roared its approval, rising a record 17 per cent in just 55 seconds of trading. Why is business so happy? Because the election results allow the prime minister, Manmohan Singh, the architect of India’s economic reforms in the early 1990s, to form a new government without the leftist parties that impeded his efforts at further liberalisation over the past five years. With the biggest mandate for any Indian government in nearly two decades, Mr Singh can now enact bold legislation – including financial, labour and land reforms that will strengthen India’s economy and help more of its citizens to achieve their potential.
The election presents an enormous opportunity for India – and also for the administration of Barack Obama. The US president now has a chance to build on the opening forged by his two predecessors by dramatically expanding economic and security ties with India, and cementing the relationship between the world’s largest democracies.
During the cold war, the US struck an alliance with Pakistan while India forged close ties with the Soviet Union, straining the relationship between Delhi and Washington. After the cold war ended some progress was made, but relations were set back after India’s 1998 nuclear tests resulted in the imposition of US sanctions. In 2000 President Bill Clinton made a historic visit to India, where he delivered a clear message that the US wanted to forge a new partnership. George W. Bush built on this foundation, lifting sanctions and improving ties in education, agriculture, trade, high technology, clean energy, civil aerospace and defence. He also signed and secured Congress backing for a historic civil nuclear co-operation agreement.
Now Mr Obama has a chance to take these ties to a new level. With a strong and stable government in New Delhi, he will have a reliable partner that wants to work with America and has the power to deliver in a number of critical areas. But the Indians are waiting for a signal from Washington that the new president is interested in furthering the relationship and that the US is committed for the long term.
One vital area of co-operation is counter-terrorism. Mr Singh has declared that securing his people against terrorism will be the “topmost priority” of his new government – and Indians will hold him to his word. India is surrounded by a “ring of fire” – with Pakistan, Afghanistan, Nepal and Bangladesh to the north and an improving but still volatile situation with its neighbour to the south, Sri Lanka. The Obama administration should find avenues for new co-operation in the fight against terrorism – between our two governments and also between our private sectors, where collaboration in areas such as homeland security could benefit both nations. The president must also make clear to New Delhi that his administration’s new focus on Afghanistan and Pakistan will not come at the expense of America’s relationship with India.
We must also expand defence co-operation. A framework agreement signed in 2005 has unfortunately not yet translated into a significant increase in commercial defence programmes. But now that Mr Singh has secured a strong majority in parliament, his government has the ability to work with the Obama administration to increase defence trade between our countries. By encouraging India to buy US equipment and giving it access to the state-of-the-art technology it needs to ensure security, Mr Obama can help New Delhi become a more effective defence partner – and create new, high-skilled jobs for American workers.
The president also has an opportunity to expand trade and investment. Between 2000 and 2007, US-India trade increased by more than 300 per cent – and foreign direct investment reached all-time highs as well. Mr Obama’s recent criticism of tax incentives that move jobs from Buffalo to Bangalore, however, has caused Indians to question whether this will translate into increased protectionism. We must seize the opportunity presented by india’s election to address such concerns and forge new ties of trade and investment.
Mr Obama should also champion UN reform that would give India a permanent seat on the Security Council. This would give the south Asia region a much-needed stabilising force and recognise India’s growing importance in the world. In addition, the president should encourage India’s admission to other international forums, including an expanded Group of Eight, the Asia Pacific Economic Co-operation forum and the Organisation for Economic Co-operation and Development.
The US and India are poised to build a relationship that would have been impossible to imagine only a few decades ago. This achievement is within reach – but it will require attention, and leadership, from the White House.
The writer is chairman of The Cohen Group and serves on the board of directors of the US-India Business Council. He served as US Secretary of Defence from 1997-2001
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