The making of history!
Finally, India plunges into the great game of the 21st century

History may be kind or cruel, but it is always replete with twists, turns and delicious ironies. In 1973, when the American President Richard Nixon was hunting for someone to contain the strategic threat from a nuclear armed patently hostile Soviet Union, China happened to be in the right place at the right time. The subsequent entente between the US and China changed the course of history. In 2006, when American President George Bush was hunting for someone to contain the emerging strategic threat from a nuclear armed latently hostile China, India happens to be in the right place at the right time. And the spanking new strategic partnership between the US and India will surely change the course of history once again. In fact, America’s gesture of friendship towards India goes far beyond the entente that it established with China.

Without any doubt, the nuclear deal signed by India and the United States will ignite fire storms of anxiety across nations that would not be delighted with India’s emergence as a global super power in the 21st century.

Lobbyists and lobby firms in Washington are going to make a killing this summer. China will try damned hard to ensure that the $500 million a year it spends on lobbying in Washington is leveraged to scuttle the historic nuclear deal between India and the United States. Pakistan, too, has a formidable lobby in the US State Department and Pentagon, which will be used to kill the deal. Then again, India will have to contend with non-proliferation fundamentalists like Daryl Kimball, Executive Director of Washington-based Arms Control Association, who mutters on: “The (US) Congress and the members of the voluntary 45-member Nuclear Suppliers Group should not accept the deal as proposed and should press India to halt its production of fissile material for nuclear weapons.”

Of course, it is not as if India is bereft of friends and well wishers in Washington, prominent among them being Chief Executives of Fortune 500 companies, who want to do business with India. Union Commerce Minister Kamal Nath dramatically announced in a public platform after the nuclear deal was signed: “The US India Business Council (USIBC) has said that they will be taking up this issue in Washington DC with their Congress that the nuclear energy agreement is in the interest of the US and not ours.”

In an interview to the news channel CNN-IBN, international columnist Fareed Zakaria had this to say about the prospects of the US Congress giving a thumbs up to the nuclear deal: “There will be a core group of the non-proliferation types, who will oppose the deal. But at the end of the day, I think the President will get his way.”

There is a possibility that a politically weak George Bush may not have the clout to carry skeptical members of the Congress. Yes, the deal might be blocked in Washington. Still, the real story is the arrival with a bang of India as a global player that the world can no longer condescendingly ignore. B&E had earlier categorically forecasted that 2006 will be the year in which India will take a formal bow on the global stage; that the blinkered bracketing of India with Pakistan will be buried with state honours. Says Infosys CEO Nandan Nilekani:” India stands on the cusp of history and the world cannot afford to ignore India anymore”.

The statement by Secretary of State, Condoleezza Rice, after George Bush and Manmohan Singh shook hands on the nuclear deal, made it abundantly clear how impossible a similar nuclear deal with Pakistan was: “This is not the time for such an arrangement with Pakistan. Everyone knows that there have been concerns in terms of proliferation with Pakistan.” And Bush’s historic democratic- kick to Musharraf ’s nuclear ambitions, during Bush’s last leg visit to Pakistan on March 4, 2006, simply drove the point home and beyond that Pakistan is beyond the pale on nuclear issues.

The Rise Of India
Just look at the kind of global leaders that are making a beeline for India and the picture that emerges is crystal clear. The King of Saudi Arabia was in Delhi in January. French President, Jacques Chirac, dropped by for a brief visit a week before George Bush arrived. Australian Prime Minister, John Howard landed in Delhi on March 6, 2006 to discuss uranium supplies. Vladimir Putin of Russia and Wen Jiabao of China are also scheduled to come by.

The reason: The world is finally waking up to the fact that the Indian elephant – in deep slumber for centuries – is now awake and beginning to dance. The sheer volume of economic opportunities available in India is mind boggling for global investors. Says Vijay Govindrajan, Professor of Strategic Management at the Tuck School of Business, Dartmouth College: “Today, India is where China was in the 1990s. The sheer momentum now appears unstoppable.”

Without getting into the details, what exactly does the nuclear deal mean for India? Quite simply, if the US Congress does clear the deal, the future of India’s energy security will become considerably brighter. If India does raise electricity generated from nuclear energy to 30% of total power generated, American, French, British and Russian companies will be competing for new nuclear power plants with a total capacity of about 40,000 MW in the next few years. That is a Rs.2 trillion business opportunity waiting in the wings. No wonder, Ratan Tata and Anil Ambani want to enter the nuclear energy sector. Business opportunities apart, the killer advantage for India will be reduced dependence on oil supplies that look so very iff y with the way instability, unrest and civil war is unfolding in West Asia, and the way China is consolidating its hold on global oil supplies.

Positive Spin Offs
The spin off benefits for the power sector in India too would be tremendous. American utility AES Corporation has already inked an agreement with the government of Chattisgarh to set up a 1,000 MW coal fired power plant at a cost of $1.3 billion. Of course, analysts caution against early euphoria because none of these power projects will eventually materialise if state governments do not reform their State Electricity Boards.

It is not just the power and energy sectors that will become major beneficiaries of this growing and deepening love affair between the two largest democracies of the world. Trade between the two nations is poised to take a quantum leap as a result of this. Both Commerce Minister Kamal Nath and US Trade Representative Robert Portman pledged that the value of Indo-US trade will double in the next three years from the current levels of $21 billion a year. The enormous opportunity that exists for trade to flourish between the two countries can be gauged from the fact that just merchandise trade between US & China (excluding trade in services) is worth $300 billion a year currently.

A Joint Indo-US CEO forum that was set up last July during Manmohan Singh’s visit to Washington has been given the responsibility to ‘fast track’ this process. Ratan Tata heads the forum from the Indian side, while the JPMorgan Chase Chairman, William Harrison, heads the American side. The Deputy Chairman of the Planning Commission and one of the architects of India’s reforms journey, Montek Singh Ahluwalia, has been given the specific responsibility of ensuring that there are no glitches in this exciting journey of Indo- US collaboration that lies ahead.

Of course, it is not going to be an extended honeymoon alone between the two when it comes to trade ties. The controversial WTO negotiations are still deadlocked in agriculture and other areas and the deadline to settle disputes is April 30, 2006. Says Kamal Nath: “Both of us believe that deadlines must be kept. We are working towards it. We have to see how convergence can be reached and modalities worked out before the deadline.” Though just symbolic, the decision of the US government to allow mango imports (!) from India reflects the rapidly changing perceptions in the United States.

Second Green Revolution
What’s escaped the notice of the media by and large so far are the path-breaking agreements reached between the two countries on the agriculture front. Close to Rs.10 billion has been set aside to promote research cooperation between the two nations in the agriculture sector. Having been fed on State propaganda that the Green Revolution in India was purely the result of indigenous efforts, most Indians are not aware of the fact that the US did play a positive role in helping India trigger the Green Revolution. Who knows, the new partnership can lead to newer efforts that can trigger a Second Green Revolution – something that the Indian agricultural sector is desperately waiting for. Yet, there is a need here for Indian policy makers not to rush in where angels fear to tread. And this applies particularly to the controversial genetically modified (GM) crops and seeds that American companies specialise in. Agricultural scientists in India must be allowed to conduct extensive field trials of GM crops before the door is opened.

Similarly, strategic experts caution against undue euphoria about the strategic partnership between the United States and India. Writing in the Times of India, Swaminathan Aiyer categorically states that “India and the US are not natural allies... In its current mood, the US does not want allies...but they are natural partners.” The fundamental question beyond the rhetoric and lip service about the two largest democracies of the world is, what does the US gain out of this strategic partnership apart from access to the vast Indian market and world class pool of intellectual capital?

The Great Game
For those familiar with the Great Game, it is basically the rise and rise of China that has convinced the United States that India must be wooed and befriended and encouraged to emerge as a global ‘balancing’ power as a counterweight against the growing strategic ‘competition’ from China. For sure, China will threaten the American dominance of Asia and the world for decades to come. Who better than a militarily, economically, demographically and technologically powerful India to counter the Chinese ‘menace’? Strategic analysts ranging from C. Raja Mohan and C. Uday Bhaskar to K. Subramanyam caution that India must pursue its own national interest and not succumb to the temptation of picking up fights with China on behalf of the United States. Just as the US continues to support Pakistan, India, too, needs to engage with China rather than confront the dragon.

Yet, these cautionary signals apart, there is absolutely no doubt that Manmohan Singh and George Bush have “created history.” After decades of inward looking isolation, missed economic opportunities and the status of a third world wannabe, India is well on its way to becoming a regional super power in its own right. And what about the vociferous protests by the Left ? But that’s the beauty of the Indian democracy that Bush so admires. Isn’t it?!