Nancy Powell’s tenure was part of a larger drift in the India-US partnership, as bureaucratic pettiness took over.
Nancy Powell’s scripted exit from Roosevelt House would end a rather uneventful tenure, which saw no real movement in the strategic relationship. Instead, her term coincided with a downturn in the partnership, punctuated by lows like the Devyani Khobragade affair that has definitely become the best advertisement of the relationship’s plummeting stock.
But convenient as it may be, pinning all the blame on Powell would not just be grossly unfair, but also wrong. She is after all a career diplomat, posted to India during a difficult time and one who eventually acted on Washington’s cue. The problem actually lay in the milieu — both in Washington and New Delhi — she worked in and gradually became a part of, just like any other bureaucrat.
In fact, for the last few years, the Indo-US relationship has become the playfield of and for bureaucrats. It’s about throwing the rulebook at each other, talking about inspections, drawing up negative reports for each other’s political leadership, finding faults in procedures, turning them into legal encumbrances, fighting over it, convincing the political boss and again fighting over it.
It all probably started with the unravelling of the historic nuclear deal after India passed the civil nuclear liability act. This adversely affected US business opportunities in this sector, an outcome that went against all arguments the US administration had made internally while canvassing support for the deal. The US wanted exemptions, which the UPA government was unable to give.
As a result, lawyers were brought into the picture to assess the nature of liabilities on the US supplier. This led to installing more safeguards, which meant escalating the per unit price of nuclear power and that, in turn, translated into more threadbare negotiations. Eventually, the whole affair slipped out of the domain of the lawmaker and into a web of techno-legal details from which it has yet to resurface.
At present, India and the US are in the middle of an escalating fight on trade issues. Complex as these issues are, US concerns boil down to four broad points: One, India’s tax bureaucracy is harassing US companies with scores of complaints on invisible duties and raising charges that outstrip profitability in trying times. Two, the Indian pharmaceutical industry is threatening established patent regimes and was fast emerging as a hub for challenging patents. This is like setting a wrong precedent and, if not checked, could present a template to other developing countries. Three, India insists on domestic content in telecom, power and, now, the solar energy industry that makes investment difficult and unviable. Same arguments were made against the fine print in the FDI in retail policy that were sought to be addressed later. Last, of course, the tardy progress on investment in civil nuclear energy and the fallout of the difficult liability clauses.
While India did try to redress some of these concerns, the process took time and, of course, involved considerable lobbying. So, whenever an issue was ironed out, it was seen as too little, too late. Matters have come to such a pass that even a preliminary document of understanding on Westinghouse reactors appeared like a milestone.
On the US side, impatience created a mood to punish, and with almost no political direction to act on, the rule-keeper had a field day. As doing business with India grew difficult, out came the stick — the investigation under Section 332 of India’s trade practices, moving the WTO on patent issues, and even considering designating India a priority watch country in the Special 301 list. With an overall low-growth economic scenario, US officials probably thought this was not a bad time to get aggressive without much negative impact.
On defence, many sales went through, like the C-130J Hercules, but there were no large strategic gains. There was movement on transfer of technology and co-production issues during Prime Minister Manmohan Singh’s US visit but again, marked by slow progress. Not one concrete proposal has moved off the ground. And as for joint exercises, India did not want to do any trilateral or quadrilateral involving the US off the Indian coast, an issue that always irked the Pentagon.
Broadly, progress has been below par on all key initiatives, and on trade, the story has headed south with no ideas in place to arrest this negative trend. Here is where the political leadership was required to step in, but leaders simply went by bureaucratic advice on both sides. Not that all such advice is negative, but the fact is that a bureaucrat responds to a political leader’s willingness to take bold calls. Unfortunately for India-US relations, this was missing in both Washington and Delhi.
Still, much of this remained under the radar with the public impression continuing to be positive due to the successful conclusion of the nuclear deal and the joint effort that nailed and shamed Pakistan’s intelligence agencies for carrying out the 26/11 attacks. No wonder that when a bunch of unsuspecting Congressmen found their scheduled appointments with Rahul Gandhi and Narendra Modi cancelled at the eleventh hour, they asked why. The answer they got was “Devyani Khobragade”, and that made no sense at all, and still does not.
With fresh hands on deck, the time has come to refresh and restart — and clearly, that has to be among the first order of things for the next government in Delhi. Meanwhile, Washington has made its first bid.
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