Was the US-India strategic partnership oversold to the extent that it has failed to yield tangible benefits for the US? An increasing number of American analysts argue that indeed is the case. These sceptics cite two high-visibility issues in particular: India’s rejection of separate bids by Lockheed Martin Corp. and Boeing Co. to sell 126 fighter jets, and New Delhi’s reluctance to snap energy ties with Iran. The discussion over these issues, however, obscures key facts.
Take the aircraft deal. Despite that setback, US firms have clinched several other multi-billion -dollar arms deals in recent years. These contracts have been secured on a government-to-government basis, without any competitive bidding. But in the one case where India invited bids, American firms failed to make it beyond the competition’s first round.
Shyamal Banerjee/Mint
Now consider the Iran issue. Just as the Indian rejection of the Boeing’s F/A-18 and Lockheed Martin’s F-16 bids has made big news the US landing of multiple arms contracts has received little notice, India’s reluctance to publicly support US energy sanctions on Iran has been in the spotlight, but not the quiet Indian strategy since the late 1990s to let the share of Iranian oil in India’s energy imports gradually decline—a trend that has seen the importance of Iranian oil supplies for India considerably weaken.
Few in India consider Iran a friend. But given India’s troubled neighbourhood, New Delhi is reluctant to rupture ties with Iran, its gateway to Afghanistan—the top recipient of Indian aid. India already has paid a heavy price for taking America’s side earlier in its long-running battle against Iran, even though Washington doesn’t take India’s side in its disputes with China or Pakistan. India’s 2005 and 2006 votes again Iran at the International Atomic Energy Agency, for example, led to Tehran’s retaliatory cancellation of a 25-year LNG deal, leaving India poorer by several billion dollars.
Now the US energy embargo against Iran has pushed international oil prices higher, significantly increasing India’s import bill. The embargo also threatens to undercut India’s import diversification strategy by making it place most of its eggs in the basket of the Islamist bankrolling, Saudi Arabia-led oil monarchies that continue to play a role in South Asia detrimental to Indian interests.
Lost in the US public discussion is an important fact—the declining share of Iranian crude in India’s total oil imports as part of a conscious Indian effort to reduce supply-disruption risks linked with the lurking potential for Iran-related conflict. Since 2008 alone, Iranian oil imports have swiftly fallen from 16.4% to 10.3%. Given India’s soaring oil imports and search for new sources of supply, the Iranian share is set to decline further, even without India’s participation in the US embargo.
The repositioning of the US-India relationship was never intended to be transactional. Rather it was designed as an important geostrategic move to underpin Asian security and serve the long-term US and Indian interests. But even if the relationship were viewed in transactional terms, the US has reaped handsome dividends.
On Iran, the right course for US policy would be to encourage India to continue reducing Iranian oil imports by granting it a waiver from American sanctions law—as Washington has to Japan and nine other countries—and by helping to finance the retrofitting of Indian refineries that presently have a technical capacity to process only Iranian oil.
More fundamentally, just as the Bush administration exaggerated the importance of a single deal with India, contending that the nuclear deal would be fundamentally transformative, it is an overstatement that the US-India relationship today is losing momentum. The geostrategic direction of the relationship is irreversibly set—towards closer collaboration. Even trade between the countries has continued to grow impressively, from $9 billion in 1995 to $100 billion in 2011. While it is too much to expect a congruence of US and Indian national security objectives in all spheres, the two countries are likely to deepen their cooperation in areas where their interests converge, such as ensuring Asian power equilibrium.
Barack Obama had stroked India’s collective ego by inviting Prime Minister Manmohan Singh for his presidency’s first state dinner, leading to the joke that while China gets a deferential America and Pakistan secures billions of dollars in US aid periodically, India is easily won over with a sumptuous dinner and nice compliments.
The mutual optimism and excitement that characterized the blooming US-Indian ties during the Bush years admittedly has given way to more realistic assessments as the relationship has matured. Geostrategic and economic forces, however, continue to drive the two countries closer. Indeed, Obama’s recent pivot to Asia has made closer US strategic collaboration with India critical.
Brahma Chellaney is professor of strategic studies at the Centre for Policy Research in New Delhi.
Comments are welcome at theirview@livemint.com
