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Diplomacy in Action

The Regional and Global Impact of the U.S.-India Strategic Partnership


Remarks
Geoffrey Pyatt
Principal Deputy Assistant Secretary, Bureau of South and Central Asian Affairs
Emerging India Summit, Emory University
Atlanta, GA
February 25, 2011

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Remarks as prepared

I’d like to thank Emory University for hosting this important conference and giving me an excuse for a long overdue visit to Atlanta. I’m especially pleased to be at Emory since my host for my last trip out of Washington was U.S. Ambassador to Singapore David Adelman, who is an active alumnus of Emory’s law school, as is one of my colleagues on the State Department’s India desk.

I’d also like to extend a special thanks to Howard Schaffer, former U.S. Ambassador to Bangladesh, for graciously introducing me today. Howie and his wife Ambassador Tezi Schaffer are two of the State Department’s great South Asia experts, and their nearly four decades of service to the United States is apparent on all the issues I’ll discuss today.

 

I would also like to acknowledge Indian Ambassador Meera Shankar, who spoke to you last night. Ambassador Shankar and her entire team at the Indian Embassy in Washington have been wonderful partners in building the U.S.-India relationship and we look forward to working closely with them in the run-up to the next U.S-India Strategic Dialogue.

Most of you are familiar with the broad strokes of President Obama’s recent visit to India, so I'd like to hone in on two of the most notable results of the President's trip, and discuss how the United States plans to capitalize on these opportunities in the weeks and months to come. The challenge now before us – which I hope India watchers and members of the Diaspora like yourselves can assist with ­­– is to define an agenda for both governments that capitalizes on what we have achieved and meets the ambitious vision agreed by President Obama and Prime Minister Singh.

I. Let me start off with defense cooperation, which is a critical cornerstone of the bilateral relationship.

Defense has long been the pointy end of the spear when it comes to advancing U.S.-India relations. I can vividly remember the front page Indian headlines in May 2002 when U.S. Special Forces participated in a para drop over Agra that was the first complex U.S. exercise with the Indian Army in more than three decades. Today the Indian military holds more exercises with the U.S. than any other country – a remarkable indicator of how far our defense partnership has come.

These exercises, along with service exchanges and senior visits, span all four branches of our military and reinforce the high esteem held by American soldiers, sailors, airmen and marines for their Indian counterparts. From counter-piracy to disaster preparedness, our two militaries are developing habits of cooperation especially important in light of the similar challenges we face in the Indian Ocean and the Asia Pacific region writ large.

One of the stars of that 2002 exercise in Agra was the U.S. Air Force C-130. Six years later, in 2008, India agreed to purchase six C-130J transport aircraft – the first of which was just inducted into the Indian Air Force. I don’t need to tell anyone in this room that the birthplace of the C-130 is just around the corner from us in Marietta. So this symbolically important defense sale also has a real impact on the Georgia economy and helps to balance our important trade relationship.

But the successful delivery of the C-130J’s on time and on budget is just the first chapter. The Indian government is also in the last stages of finalizing a $4.1 billion sale for ten C-17 Globemaster heavy-lift transport aircraft – a deal announced during President Obama’s recent visit. This sale will double the value of U.S.-India defense trade and provide the Indian Air Force a strategic airlift and humanitarian response capability unique in the region.

Once all these aircraft have been delivered, India will have the second largest C-17 fleet in the world, behind that of the United States –a highly visible manifestation of the U.S.-India defense partnership. The value of these sales is not simply monetary – with them come joint training and doctrinal exchanges that will help over time to further strengthen India’s role as a force for good in Asia.

There is one potential sale I would specifically like to highlight: the Medium Multi Role Combat Aircraft, or MMRCA, tender to provide the Indian Air Force with 126 frontline combat aircraft. Two American aircrafts, the F/A 18 Super Hornet and F-16IN Viper, are among the contenders. The U.S. proposals will dramatically enhance India’s own aerospace industrial base and defense capabilities and demonstrate our commitment to share with India cutting edge technologies – including the only operationally-mature AESA radar.

As Commerce Secretary Locke noted when he was in India earlier this month, high technology sales are a cornerstone of our strategic partnership. With India expected to spend nearly $45 billion on military modernization over the next five years, the U.S. welcomes additional opportunities to offer India superior technology and further deepen our defense cooperation. Secretary Locke also attended Aero India, India’s premier aviation exhibition. This year’s event was the largest ever and huge crowds turned out for the five-day event in Bangalore which featured aircraft from around the world. The F/A 18 and the F-16IN were centerpieces at the show, along with the Marietta-built C-130J.

II. We are actively working to elevate our government-to-government economic partnership to be commensurate with our robust global strategic partnership. In this regard, as Secretary Clinton has said, the challenge for us in Washington and New Delhi is to keep pace with the ambition and velocity of our private sector colleagues in New York and Mumbai – or Ahmedabad and Atlanta!

U.S.-India economic cooperation has been a driver of our transformed bilateral relationship, and in many ways is the decisive factor behind India’s changing place in the international system. Bilateral trade is flourishing, with Indian investment in the United States increasing substantially. The pace of innovation in India has been staggering. Companies like Wipro, whose VP for Global Delivery Suraj Prakesh spoke here yesterday – have redefined what an "Indian" company represents. With sixteen offices in the United States, Wipro is providing thousands of highly-skilled jobs to Americans and helping to drive growth in both countries. Clearly, the suffocating days of the license Raj are long past, replaced now by an Indian economy that is directly linked to global markets and vital to our own economic prosperity and competitiveness.

In this regard one of the most important messages of the President’s trip was to reinforce the notion that trade between India and the United States helps both nations, and creates jobs in the United States. It is worth noting that the first Cabinet-level visit to India after the President was Commerce Secretary Locke, who led a successful trade mission to India earlier this month.

Besides meeting with government leaders in New Delhi, Secretary Locke traveled to Bangalore and Mumbai to visit with business leaders from the aviation, civil nuclear, defense, and information and communication technology sectors. More than half of his American delegation represented small or medium-sized enterprises.

Given that 80 percent of the infrastructure of India of 2030 has yet to be built – 80 percent! – we have an incredible opportunity to capitalize on the momentum our commercial relationship currently enjoys. To provide further context, I’d like to share with you three statistics that illustrate how important U.S-India economic synergy will be to both nations:

  • India’s GDP is 10 times what it was 20 years ago. What was then a closed economy is now our 12th largest trading partner in goods.
  • India is the world’s second fastest-growing major economy today and is projected to become the world’s third largest economy in the year 2025.
  • India will soon be the world’s most populous country. At a time when much of the industrialized world and China face rapidly declining birthrates, half of India’s population is under age 25, giving India an unforeseen demographic edge.

With business-to-business engagement at the vanguard of our relations, these statistics point to the enormous potential for even greater innovation and business development between our two knowledge-based societies. The task ahead for us in government, therefore, is to continue to open doors for greater private sector engagement. In so doing, we are keenly aware of the multitude of people-to-people connections that define and will help to deepen the U.S.-India relationship, particularly on the business front. The Atlanta Indian-American community includes many such business leaders who personify our changing relationship with India. I know some of you are here today and want to thank you for your efforts and let you know that we are eager to work more closely with you going forward.

With a market of 1.2 billion of the world’s consumers, and per capita incomes forecasted to grow at a rate of 8 percent over the next several years, India’s market promises U.S. companies continued strong demand for goods and services. For that reason, but also because it will support India’s continued rise as a global power, we want to be India’s partner in building the railroads, airports, power plants, and fiber optic networks needed to sustain India’s impressive economic pace.

Between 2002 and 2009, the value of U.S. goods exported to India quadrupled, and U.S. services exports to India more than tripled. Recently released goods-related trade data for 2010 suggest that our commercial ties have rebounded strongly from the global slowdown, with 30 percent growth in two way merchandise trade. In thinking about the implications of India’s economic rise and the opportunities that presents, we should see India not just as a market for our businesses, but as a strategic partner whose increasing international role complements U.S. power. India’s expanding global economic stakes have reinforced its readiness to share responsibility for security in Asia, safeguarding sea and air routes on which much of the global economy depends. And it’s very much in the U.S. interest for India to build on this role in the years ahead.

THE PROMISE OF AN INTEGRATED ASIA

So what does a global strategic partnership between the United States and India mean for the rest of the world? A good place to start thinking about these issues is Robert Kaplan’s marvelous appraisal of the region in Monsoon, which describes how vital the Indian Ocean is to both India’s strategic calculus and the global economy. For example:

  • The Indian Ocean is surrounded by 37 countries representing a third of the world’s population.
  • 40 percent of seabourne crude oil passes through the Strait of Hormuz.
  • Half of the world’s container traffic traverses the Indian Ocean.
  • 70 percent of all petroleum products go through the Indian Ocean.
  • 90 percent of India’s oil needs will come from the Persian Gulf through the Arabian Sea.

With the fulcrum of geopolitics shifting quickly to Asia, India plays an increasingly critical role in U.S. strategy. Indeed, amid the democratic transformation of Egypt and the continuing unrest in Bahrain, Libya and Yemen, India’s value as an anchor of democratic stability in the Indian Ocean region has only increased. Few would disagree that furthering India’s engagement with East Asia is in the United States’ strategic interest; we must work together to strengthen the bonds that tie our nations – the world’s largest and oldest democracies – with the economic and social dynamism that exists from Hyderabad to Hanoi, and from Mumbai to Macau.

We strongly welcome this recent progress in East Asian and Southeast Asian bilateral relations with India, and hope New Delhi will further build on these steps, adopting a “Be East” policy that seeks to expand its market and security integration across the region and enhance its role in Asian multilateral fora. Indian strategists are grappling with the same issues. For instance, Singapore-based Ambassador S.D. Muni, recently observed that “India’s rich cultural heritage can ring many sympathetic chords in the region and its multi-religious, secular, and democratic ethos, as well as in music, arts and architecture, theater, and cinema…” We often talk about the benefits of soft power – or the ability of a state to achieve its strategic goals through the projection of cultural dynamism and robust institutions – rather than sheer military force. India will benefit immensely from an Asia that grows up on Bollywood films, studies at esteemed Indian universities, and enjoys wide-ranging people-to-people ties.

We welcome the fact that other large Asia-Pacific democracies – Indonesia, Japan, Australia, and South Korea – are also engaging more closely with New Delhi and cooperating more systematically on security and economic issues.

India-South Asia

One key to India’s emergence as a more forceful actor in the Asia Pacific is New Delhi’s success in navigating its complicated regional relationships. Indian Foreign Secretary Nirupama Rao put it well in a speech last fall at Harvard, noting that India’s emergence as a global power requires “a peaceful and stable neighborhood and external environment.” Indeed, I would argue that India’s emergence as an Asian power – which President Obama celebrated in his visit to New Delhi – will only benefit from faster progress in social and economic integration in South Asia.

In the State Department’s Quadrennial Diplomacy and Development Review (QDDR) Secretary Clinton highlighted our intention to elevate cooperation with regional organizations as an integral part of the U.S. strategy for global engagement. The major regional organization in India’s immediate neighborhood is the South Asian Association for Regional Cooperation or SAARC. The United States has been an official SAARC observer since 2006, a role we pursued not only to bolster our bilateral relationships in the region, but also to encourage greater integration among the countries of South Asia. Over time, we hope that SAARC will accelerate the movement of people, goods and ideas throughout the Subcontinent, helping to strengthen the fabric of international organizations that connects India and its neighbors to South East Asia.

By encouraging overlapping spheres of cooperation among regional organizations (i.e. SAARC, ASEAN, and BIMSTEC), we acknowledge the complicated landscape of the Indian Ocean region, and the geopolitical and economic realities of 21st century Asia. For instance, SAARC members can learn from ASEAN’s increasingly active security and economic cooperation, while BIMSTEC provides a vehicle to build on the warming of relations between Dhaka and New Delhi.

Today, for the first time, almost all the countries on India’s eastern periphery – Sri Lanka, Bhutan, Bangladesh, and Nepal – have democratically elected governments in place, stabilizing South Asia and helping India to think more ambitiously about its role in South East Asia. Pakistan too continues on a democratic path that is important to both India and the United States. The institutionalization of democracy among India’s neighbors remains a work-in-progress, but like Latin America, where a few decades ago democracy was the exception and is now the rule, I’m confident the region will follow the Indian model toward greater democratic consolidation.

India-Pakistan Relations

In the United States’ engagement with the countries of South Asia, one of our overarching objectives is to facilitate economic linkages and opportunities for all in the region. Reinvigorating trade and commerce between India and Pakistan, for instance, can provide extensive benefits to both countries and their millions of farmers, business people and entrepreneurs.

Freer movement of people and goods across South Asia, including between India and Pakistan, will generate new economic opportunities for one of the world’s youngest and most vibrant populations. At the moment, South Asia is one of the least economically integrated regions in the world. While accounting for nearly 23 percent of the world’s total population, the region’s share of global GDP is less than 3 percent. In terms of trade linkages, SAARC stands in sharp contrast to regional forums in East Asia.

The pace of economic integration in the Asia Pacific region over the last two decades was unprecedented and serves as an example for other regions. It should, and I believe it can, be replicated in South Asia.

Just as the private sector did in ASEAN, trade associations such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) can play a significant role in improving trade relations between India and Pakistan.

Recently, FICCI set up two well-received “Made in Pakistan” business and product exhibits in India. FICCI now plans to organize similar “Made in India” exhibitions in Pakistan for which it is closely working with the Federation of Pakistan Chambers of Commerce and Industry.

Clearly, there is pent up demand for trade between Indian and Pakistan, as demonstrated by the volume of trade that transits third countries to avoid restrictions or endures the cumbersome offloading and reloading that occurs at the land border. Some analysts estimate that trade between India and Pakistan could be more than ten times what it is currently if both Governments work together to relax economic restrictions on cross-border trade. To provide context, official bilateral trade between India and Pakistan reached $2.75 billion in 2009 from $215 million in 2001, and those numbers will only grow as India’s consumer class expands.

Last week, an article published in the Washington Post highlighted the missed opportunities. A frustrated Indian merchant cited in the article is quoted as saying, "I had 400 trucks stuck on the other side. For a week these onions were standing there, and eventually they had to be sold within Pakistan for half the price. Who loses? Both countries." Both countries indeed.

In this context of unfulfilled possibilities, we applaud the positive outcome of the recent Foreign Secretary talks between India and Pakistan and the announcement of a renewed dialogue on the full range of issues. This is a very important opportunity for both governments to explore important items on their agendas. We hope that progress can be made.

Against this background, I’d like to close with a quote that addresses both the desire and the potential for closer India/Pakistan relations: As Indian Prime Minister Manmohan Singh said in 2007, "I earnestly hope that relations between our two countries become so friendly and we generate such an atmosphere of trust between each other that the two nations would be able to agree on a treaty of peace, security and friendship. I dream of a day, while retaining our respective identities, one can have breakfast in Amritsar, lunch in Lahore and dinner in Kabul. That is how my forefathers lived. That is how I want our grandchildren to live."

With that, I’d be happy to take any questions. Thank you.



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