Dr. Syama Prasad Mookerjee Research Foundation

The Obama Visit : an Assessment

By Amb. Prabhat P. Shukla

The hype over the nuclear deal has obscured the main achievement of the Obama visit: this is in the Joint Strategic Vision Statement for the Asia-Pacific and Indian Ocean Region, to give the full name of the separate document issued by the two leaders. This is not to gainsay the importance of civil nuclear cooperation, or the understandings reached on defence and economic cooperation. But when heads of state and government get together, they should, and did this time, talk about the larger strategic environment in which their engagement takes place – and in the current regional situation, no partnership is more important for India and its security than the American one.

The Vision document begins by declaring that a closer partnership between the two countries is indispensible for peace, prosperity and stability in the Asia-Pacific and Indian Ocean regions. The geographical sweep is also impressive: from Africa to East Asia, from Central Asia to South-East Asia. It also addresses the high-voltage issues of freedom of navigation and over-flights especially in the South China Sea by endorsing these principles and linking their legal basis with the UN Convention on the Law of the Sea [UNCLOS]. As is well-known, China does not accept the applicability of UNCLOS to the South China Sea, but has its own claim to the entire Sea, based on flimsy and un-provable claims.

The document also endorses India’s interest in joining the Asia-Pacific Economic Cooperation [APEC] forum, and enjoins on both countries the development of a road map to work together with other partners to face the diplomatic, economic and security challenges facing the region. The main Joint Statement also makes a reference to the Indian “Act East” policy and the US “Rebalance” and points to the synergy between the two. This is welcome, and presumably, will also cover the Trans-Pacific Partnership, the economic arm of the Rebalance, that the US is driving in the Asia-Pacific region. Several of our main trade and investment partners are in it, and if India were to be left out, it would stand to lose substantially in terms of trade and investment – of the order of tens of billions of dollars. We need to take account of the fact that there is a similar free-trade agreement being worked out with the European Union, which is another important market and source of FDI for India. The Chinese, the Turks, the Africans have all expressed their interest in being part of these new arrangements, but have been kept out so far. We, who have been invited to join TPP, are hanging back presumably because of the high-standard labour, environment, and IPR requirements – this needs to be rectified.

The only issue that causes some concern is the treatment of the AfPak region. The talk and references on this are lukewarm from the stand-point of our interests, and confined to bromides about stability in Afghanistan and the need to curb terror groups. The more troubling bit is about the energy linkage between South and Central Asia, which is a high priority for America. But it will necessarily involve transit through Pakistan, and that country will use this leverage for its strategic purposes. Indians should not get beguiled by all the talk about a new approach from Pakistan after the Peshawar school terror attack – towards India, nothing has changed. US media commentaries prior to the start of the visit exhorted President Obama to press India to resume the dialogue with Pakistan. Fortunately, the conditions-based approach to dialogue of the Government is firm, and will not change.

It would be important to be clear that Pakistan is not about to change its approach towards India, not until we take action to change the calculus in Rawalpindi of their costs and benefits of enmity towards India. And the closer we get to the US vision in the Asia-Pacific, the more concern there will be in China as well, as was in evidence in the Chinese media during the visit itself. This is the real security contingency we need to prepare for, and need to know how far we can count on our friends and partners in the Asia-Pacific in such a situation.

In general, it needs to be emphasised that the US is still the driver of the global economy, and can thus be a stimulus for the Indian economy, especially for the “Make in India” campaign. If indeed manufacturing is to reach somewhere near the scale that the Chinese economy did with such success, India will need not just its domestic market, but will also need the huge market that the US represents. Even today, but for the US, China would have a deficit in its balance of trade with the rest of the world. Therein lies the true importance of the US as an economic partner. In a welcome decision, we have agreed to raise the Strategic Dialogue to a Strategic and Commercial Dialogue.

Defence is also a sector of growing importance for bilateral ties and for strategic purposes. The US has emerged as the largest supplier of hardware in the last few years, and this trend is likely to stabilise. A few, admittedly minor, new “pathfinder” joint projects have been picked out to get the pump primed, and will lay the foundation for deeper collaboration in the future. It is reported that the US has also revived its interest in the operational agreements like CISMOA, which had gone into deep freeze over the past few years. And, of course, there is the issue of military-to-military links, including the posting of an officer of the Indian Armed Forces at the US Central Command HQ. It is time to resolve all these and move on to the higher level of defence cooperation that the two countries need to achieve in their own respective interests. There is absolutely no threat to our cherished nonalignment or strategic autonomy in any of this.

Now for a brief discussion on the nuclear package. By way of background, it would be important to bear in mind that other industries do not get the kind of protection that the nuclear industry demands and gets. BP, for example, for an oil spill in the Gulf of Mexico, has already been charged $ 8 billion, and is facing procedures for an additional $ 13 billion. The banks that were instrumental in the financial crash of 2008 have already paid a collective amount exceeding $25 billion, and further investigations are on-going. And the reason is obvious: the nuclear industry itself recognises that the damage it can cause in the event of an accident is much greater.

Three issues have dominated the discussion on the subject – the maximum amount of liability; the right of recourse against the supplier; and protection of the supplier from suit by individual victims of a nuclear incident outside of the Law on Civil Liability for Nuclear Damage [CLNDA],as provided for under Article 46. There was an earlier issue regarding tracking of nuclear fuel, but that has been settled along the same lines as those adopted in the case of the Canadians – that is that the IAEA will be permitted to share information with Canada after their inspections.

On the first two, there really is no room for confusion – all the extant international legislation allows for unlimited liability. In fact, the Indian law is the most categorical in fixing an upper limit on the operator, with the balance above that amount – if any – to be taken on by the Government.

The right of recourse is similarly expressly provided for in the Convention on Supplementary Compensation, which Government of India has signed, but not ratified. But here again, the liability of the supplier is limited, under the Rules issued by the Department of Atomic Energy, to the value of the contract or the liability of the operator, whichever is less.

It is the third point on which there is still some ambiguity. Government has issued some guidelines indicating that only the operator is liable under the relevant clause of the domestic law. Prime facie, this is correct, because the text of the law only speaks of the liability of the operator. Nonetheless, it is open to doubt whether the operator could cover this liability under the right of recourse. This is why the final American word on this is that the individual companies will have to make their own risk assessment on this issue. The fair conclusion would be that Government has indeed gone a long way in clearing up any doubts that may have arisen. The Russians and the French have clarified that they are willing to work within the domestic law; it is now for the Americans to take their decision.

All of the above ignores the most fundamental issue of commercial viability. The US figure, as at present projected, is Rs 12 per unit, and this will clearly not be viable. Both sides have wisely focused on the need for commercially viable electricity generation, but we are far removed from this at the moment.

One last point on the visit needs to be addressed briefly: this is the “admonition” by President Obama supposedly to the Indian authorities over religious tolerance. After the play this issue received in the Indian media, an official of the US National Security Council told the Indian press that there was no such intent behind Obama’s remarks. Promptly, the next day, Obama gave the lie to this assertion, and informed us that Gandhi would be shocked at what was happening in India.

Never mind that much of this kind of criticism comes from people who proudly proclaim their own religious belief never mind that India has a better record of empowering minorities than any other country in the world; here is something for all those who seized upon Obama’s remarks  to study and reflect upon, in the words of the Mahatma himself:

“(If) instead of confining themselves purely to humanitarian work such as education, medical services to the poor and the like, they would use these activities of theirs for the purpose of proselytizing, I would certainly like to withdraw. Every nation considers its own faith to be as good as that of any other. Certainly, the great faiths held by the people of India are adequate for her people. India stands in no need of conversion from one faith to another.”

Wise words, indeed, spoken in April 1931. We would all do well to remember them today.

(The author is former Indian Ambassador to Russia, High Commissioner to Singapore & Australia and former Diplomatic Advisor to the Prime Minister of India. He is also member of SPMRF Advisory Board.)