Sanctions on realism

The resumption of official contacts between India and the US is a positive development. Ambassador Naresh Chandra’s talks with State Department officials in Washington were the first since the nuclear blasts of May 11 and 13 set off acrimonious and self-defeating noises in the two capitals. It is more productive to talk directly about the post-Pokharan II scenario in the subcontinent than to let reaction and counter-reaction set the new parameters of the bilateral relationship. Neither can ignore the range of factors behind the nuclear tests in the first instance and the swift announcement of US sanctions which followed. So, the task now is to set aside the disappointments both courses of action have caused and to move towards substantive political discussions. India’s willingness to announce a moratorium on testing in order to cool the overheated atmosphere is evidence of how seriously it takes its responsibilities. Discussions which have apparently already begun on the CTBT with some "interlocuters" musteventually engage the US as well.

The sanctions issue is confusing Indian and American business alike. Nor does the US administration seem to be very clear about the objectives and scope of economic sanctions being applied for the first time since the law was passed in 1994. If past experience is any guide, unilateral US sanctions have the effect of deepening political differences across a wide front without achieving the aims they are intended to. An immediate case in point is US trade sanctions against countries investing in the South Pars oilfield in Iran. They have involved Washington in a bitter two-year wrangle with France and Russia even as the companies involved, Total, Gazprom and Malaysia’s Petronas, have carried on with the project. A deal has been thrashed out last week to end that messy affair and bring about more coordination in US-EU foreign policies. But the two remain at odds in the South Asian context, where one of President Clinton’s immediate objectives of reassuring Pakistan has led tosanctions on India, whereas the EU believes in a less assertive, commerce-first policy.

Global trade rules also militate against the kind of sanctions envisaged by the US administration, promise to involve it in lengthy legal disputes and undermine the WTO. All this establishes that sanctions create a very tangled web of conflicting international and domestic interests from which in the end no one can really hope to gain. If sanctions are made to stick in the longer-term despite this, India has no choice but to take them into its commercial and economic calculations, neither underestimating nor overestimating the consequences. But it is totally unwise to take counter-measures against foreign companies in retaliation for the actions of their governments. Such a course of action would do more to drive foreign investment out than government restrictions on loans and credit which international business does not take kindly to in any case. New thinking will be needed in the process of resconstructing thebilateral relationship.