Relating to India: the different approaches of the United States and the European Union

The predicted growth highlights the danger of a gradual marginalisation for European countries, without this necessarily implying they will be overtaken by the new Asian powers in terms of living standards, access to wealth and services, and per capita income. It does suggest, however, a decline in Europe’s influence on the world economy.
Although international attention is currently still more sharply focused on China than India, still experiencing a relative delay in economic reforms, over the last two to three years India has been attracting the interest of observers. In this article we will analyse how the United States and the European Union are approaching their relations with the second Asian giant and we will attempt to highlight the similarities and differences.

The United States and India: hard power to the fore
Since independence (1947), India has never had particularly friendly relations with the United States, nor has Washington taken any special interest in the Asian country.
Although Nehru had a basically socialist approach, within in the Congress, there were also supporters of liberal economic policy, led by Sardar Patel, the interior minister in the first government after independence.
It would be simplistic, however, to reduce the reasons for the coolness between New Delhi and Washington to this socialist aspect. Nehru, who completely dominated Indian political life until his death in 1964, was far from being anti-American. His socialism was ideological rather than
intellectual, and his vision of a planned economy was the outcome of analysing the specific needs of a backward country in which free enterprise would not have been enough to drive development.
To the contrast between planners and liberals we must add at least a third view, which was of great importance during the run-up to independence: Gandhi’s vision of developing an India of villages, i.e. the idea of creating thousands of self-sufficient centres in which the population would have produced clothes and food directly, with no need for industrialisation, which the Mahatma considered unsuitable for India. The struggle for independence was, however, ultimately mainly funded by Indian big business and Gandhi ‘s death basically put an end to the
dream of a self-sufficient, austere rural India.
The need to meet the enormous economic requirements of the Indian population led Nehru to adopt a planning-type approach, masterminded from the second five-year plan (1956-1961) on by the economist Mahalanobis.
From then until the beginning of economic liberalisation in 1991 (under the Rao government, when the finance minister was the current prime minister Manmohan Singh), Indian manufacturing industry was state-run or dependent on state licences for every decision (the so-called raj licence).

In a country proud of independence won peacefully through its own efforts and with no significant outside help, there was a very deeply felt need to keep control over its own development, economy and foreign policy. This explains India’s reluctance to encourage foreign investments and its strong degree of economic protectionism, although this has
diminished since 1991.
The background of independence also explains Nehru’s key contribution to the non-aligned movement from the Bandung Conference on. Thus the difficult relations with United States should not be explained by any a priori Indian alignment with the Soviet Union, but rather a whole set of factors which led India – one of the countries proudest of its own culture and specific nature – to choose an independent path. Under Indira Gandhi, the difficult economic situation and the radical change in political direction she introduced led to increasingly close
relations with the Soviet Union, without this implying economic – never mind political – kow-towing to Moscow. The Chinese ‘betrayal’ (the SinoIndian war of 1962) also helped push New Delhi towards closer relations with Moscow, at a time when the US was increasingly looking more favourably on India’s traditional adversary – Pakistan.
In the 1980s, Rajiv Gandhi launched a process of economic reforms, albeit still very tentative. Since 1991, however, India really has been gradually opening up its economy.
In the new international context after the fall of the Berlin Wall, it became increasingly difficult for India to keep a low profile in relations with the world superpowers. The basically cool relations between Washington and New Delhi continued at least until the great political change that led to the first right-wing nationalist BJP government in Traditionalist in the socio-cultural field but liberal in economic policy, the Vajpayee government sought to establish more friendly relations with the United States. Nonetheless, the Pokhran nuclear tests led to a technology embargo being imposed on India, since although now a nuclear power, the country had not signed the Nuclear Non- Proliferation Treaty (NPT).
After 11/9, the strategic scenario scene changed dramatically: while Pakistan was still a fundamental ally for the United States, Washington was also aware it could not sacrifice its relations with the emerging power of India and a population of over one billion people. A fundamental factor in this assessment is also Washington’s obvious need to strengthen military and technological relations with New Delhi, also in an antiChinese key. China’s rapid economic growth, foreshadowing even possible military aggression in the coming decades, means that Washington must cultivate a positive relationship with India, the only power large enough to curb Chinese expansion in Asia.
With New Delhi’s special relationship with Moscow on the wane and the differences in outlook on economics fading, there were still at least two major obstacles on the road to closer relations between the United States and India: the relationship between Islamabad and Washington, and the nuclear embargo following the Indian and Pakistani tests in 1998.

That is why the announcement of an agreement on nuclear matters signed by India and the United States during prime minister Singh’s Washington visit (July 2005) must be seen as a fundamental step with several consequences.
Relations between United States and India, have effectively been officialised: the agreement the United States no longer requires that India sign the treaty of Nuclear Non-Proliferation, implying that it is acknowledged to be an extant nuclear power outside the criteria of the
treaty.
It must be remembered that in addition to the five permanent members of the Security Council, only India, Pakistan and Israel officially have nuclear arms. Since both India and Pakistan were subject to embargoes on technology susceptible to twofold uses, the introduction of the nuclear agreement signifies admitting de facto that India is a member of the club of officially accepted nuclear powers.
The agreement announced by Bush and Singh includes an end to the embargo and the setting up of co-operation on civil nuclear uses.

For its part, India must respect the conditions concerning the separation between civil and military nuclear programmes and installations (at present they overlap), and accept a freeze on nuclear tests, controls on the export of sensitive material and a commitment to non-proliferation.
Pakistan can’t demonstrate that these conditions exist and there is evidence of Pakistani scientists’ involvement in states which in the past (Libya) or present (North Korea) have set up nuclear programmes or are nuclear powers (China).
Thus in one fell swoop India was acknowledged as having nuclear status, and was recognised as an emerging power with its own claims to become a permanent member of the UN Security Council. It also won an objective strategic advantage over Pakistan, with which it has set up a
‘comprehensive dialogue’, and despite considerable difficulties, this is helping cool down tension between the two great rivals on the Indian sub-continent.

Another great benefit for India from this agreement concerns energy: the rapid growth of the Indian economy could be stifled by shortfalls in this field, almost inevitable given the current pace of development. Despite the discovery of large new oil fields in the Gulf of Bengal, rising energy requirements in the coming decade will be so great that this fundamental equation must be solved by New Delhi immediately.
India expects to increase its nuclear energy production tenfold by 2020, and this is one of the other key points in the agreement with America. In the light of the new emerging strategic balances, India and the United States have set up a programme of military co-operation, which is something completely new compared to past relations. Recently the first joint India-US air manoeuvres took place in India, and that would have been unthinkable even only a few years ago.
Developments in recent years suggest more orders for military supplies will be placed with American firms, without implying, however, that European countries, especially France (Mirage planes and Scorpion submarines) but also to some extent Germany, have been ruled out of the
game. India’s traditional arms supplier is Russia, and it still plays an important role in this field.

Trade relations between India and the United States have been anything but impressive and they have mainly been concentrated in the services sector, through the phenomenon of outsourcing (relocating ‘back-offices’ and providing services via the Internet from India) an area in which the Asian country has become a world leader.
There is very little trade in goods, and it has to struggle against relatively closed markets both in India (high tariffs) and the United States (non-tariff barriers, especially of a health kind).
Direct US investments in India are also relatively small, while Indian legislation does not allow large financial or speculative investments by non-residents (which safeguarded the country during the financial crises in recent years).
The increasingly influential Indian immigrant community in the United States is mainly made up of well-trained people who are very successful in business. This is a far cry from the situation of other kinds of immigrants, who are less well integrated into American economic and
social life.

Although the Indian lobby in Washington is still not comparable to Jewish pressure groups, its influence is beginning to be felt, thus promoting even closer Indian-American relations.
One of the key issues for India, given that it has been recognised as a military and economic power, is the reform of the United Nations Security Council, sanctioning its new status as a permanent member of the Council.
Although the United States has never overtly come out for or against this idea, and India is probably one of the most solid candidates, incurring no particular opposition from any other member of the council, unlike Japan.
The proposals of the so-called G-4 group (Brazil, Germany, Japan and India) at the recent Millennium summit were not accepted. They had wanted five new permanent members (the G-4 plus an African representative) and several non-permanent members, and opposed the alternative coalition of the Consensus Club, in which Italy played an important role, and the position of the African Union, which wants two seats for its own continent.
The issue of the existence of the right to veto for any new permanent members has elicited different responses: India insists on the right to veto, while the other G-4 members are willing to give up this prerogative.

In India people commonly think that the European Union is no more than a trade bloc, similar to the FTAA or ASEAN, while there is no awareness of the political, cultural and social aspects making the European Union a unique case of economic and political integration, and a new form of international governance.
Various factors contribute to this low profile:

• •India’s vision of the EU is basically filtered through Britain, a country with the largest Indian community in Europe, where most of the Indian elite study and where the Indian correspondents gather their information on the European Union. The Indians thus only tend to know the British version of Europe with all the attendant consequences.

• •The relatively low international exposure of the Indian economy makes the European Union’s strength in the trade field less visible: although the European Union is India’s no. 1 trading partner, the Indians tend to underestimate the importance of the EU’s joint trade policy, because India’s trade with the rest of the world is relatively small compared to the strategic importance of the country.

• •The Indian political class can certainly not be described as young and the intellectual reference points for the current government are still rooted in Nehru’s vision of international relations, when Europe was still at the infancy stage.

• •A young state proud of its independence, India toils to recognise new forms of international governance or the idea of relinquishing sovereignty (see, for example, its reluctance to subscribe to the International Crimes Tribunal, the Nuclear Non-Proliferation Treaty and the Kyoto Protocol).

• •An emerging state power, India prefers to interact with the twenty-five individual states, which it sees as being smaller than itself, rather than with an integrated single player like the European Union.

For its part, Europe had long neglected India: the absence of a clear Asian strategy in the European capitals was reflected in the lack of a strategy towards India in Brussels, partly because of India’s relatively minor economic importance before its economic reforms.
In the 1990s the situation changed, but for several years the framework of reform was still deemed not sufficiently clear and India was seen as ‘not worth the trouble’.
In recent years the Europeans have discovered India: the reforms and liberalisation have become irreversible (even though they are not always introduced very quickly), growth rates are very high and the country’s potential is immense. It has emerged as a world leader in services and as an indispensable partner in strategic terms. In short, India has become
fashionable and the old saying ‘China, not India’, has now become ‘China and India’.

Since 2000, the European Union and India have held annual political summits, accompanied by meetings involving businessmen. The European Union only has a similar kind of relationship with the United States, Russia, Japan, China and Canada.
It took some time to get these India-EU summits fully functional, but the meeting held in The Hague (2004) approved the drafting of a strategic partnership between the European Union and India, and thus opened a new chapter in bilateral relations.
India and the European Union have gone beyond all the outmoded definitions and prejudices to set up a vast range of joint actions, extending the spectrum of relations from trade and cooperation development, previously almost the only fields of joint action, to a set of
more ambitious relations.
The joint action plan for the new India-EU strategic partnership, approved at the recent New Delhi India-EU summit (7 September 2005) includes the following chapters:
– Strengthening dialogue and consultation mechanisms;
– Deepening political dialogue and cooperation;
– Bringing together people and cultures;
– Enhancing economic policy dialogue and cooperation;
– Developing trade and investment.

This set of actions is very wide ranging and detailed. And even if the action plan is only partially implemented, it will lead to considerable intensification of India-EU relations.
These new developments are important for various reasons.
Firstly, India and the European Union jointly recognised their own importance on the international scene and have decided to set up routine consultations on almost all international topics. India recognises the specific nature of the European Union and its political and trade features, and has set up a dialogue that goes beyond existing relations with
individual EU member states.
The European Union recognises the growing importance of India, its enormous potential and the need to have closer relations with the Asian country ahead of future developments that will go beyond the current relatively limited relations.
India’s strategic importance makes the country’s participation in large international projects indispensable: announced at the summit, India’s membership of the European Galileo Satellite Navigation Systems project, along with China, means that this project can develop uses of
technology for civil purposes complementary to the American GPS, and thus opens up interesting strategic prospects.

Similarly, there will be closer cooperation between Europe and India on energy, with the announced Indian membership of the ITER thermonuclear project, of which the European Union owns fifty per cent of the capital. Also involving the United States, Japan, China, Russia, and South Korea, this project could revolutionise future energy scenarios, its main aim being to develop technology for hydrogen-based nuclear fusion.
University exchanges will also be stepped up with the opening of an ‘Indian window’ for researchers and students in the Erasmus -Mundus programme, and the participation of Indian institutions and scientists in the Sixth Framework Scientific Research Programme.
These are all important laboratories for the future: the European Union and India have decided to work on the basis – to use Nye’s expression – of ‘soft power’ methods, and multilateralism will inevitably be strengthened by this new strategic axis.
The new India-EU relations also concern more traditional fields, such as increasing trade and investments (High Level Trade Group), a Business Round Table involving European and Indian entrepreneurs, and cooperation development (health and education). The aim is to help India
achieve the objectives of the millennium summit, but the added value of this new cooperation framework lies above all in the fact that the European Union and India have decided to set about seriously establishing all-round relations.

Conclusions
We may thus conclude that the responses of the United States and the European Union to the Indian challenge are in line with the basic features of their external policy: the United States, which favours the use of ‘hard power’ views India as a strategic military partner and a counterweight to China. The European Union which out of conviction, but also necessity, favours economic relations and soft power, is seeking to establish a long-term wide-ranging complex relationship with India.
The great European difficulty, and this is nothing new, will be in developing the great potential of its individual member states in the overall framework of the India-EU strategic partnership. At present many of these countries tend to pursue bilateral relations, constructing dialogue of a strategic type. If, in these attempts, the European dimension is pushed into the background, the new building will be weakened at the very foundations, and the message given to India
contradictory.
But the relations with the new emerging powers are a litmus test for the external dimension of the European Union as an international player: it is in relations with countries and regions like China, India, Russia and Latin America that a common foreign policy must be forged in order to give broader prospects and a new dimension to our countries.

The views expressed in this article are strictly personal and only reflect
the opinions of the author.