Shadow Government

Were U.S.- India relations oversold? Part II

Read more about the Indo-U.S. strategic partnership here. 

Critics of the  civilian-nuclear deal between the United States and India -- proposed in 2005 and ratified in 2008 -- have more recently charged that its supporters oversold the broader benefits of Indo-U.S. strategic partnership. Their critique has been given unearned momentum by the Indian parliament, which passed nuclear liability legislation that does not meet international standards, effectively making it impossible for U.S. companies to build civilian-nuclear plants in India.  Critics have also been emboldened by a certain drift in U.S.-India relations since 2009 -- for which both sides bear responsibility -- and by India's own lackluster economic performance, which diminishes its attractiveness as the pivotal U.S. partner in 21st century Asia. But these developments do not mean the relationship was oversold. The more accurate charge is that it has not yet been fully consummated. 

The Obama administration sent decidedly mixed messages to New Delhi upon taking office in 2009. Bush administration officials had argued convincingly that a shared appreciation for managing the balance of power in Asia was at the core of the U.S.-India entente -- music to the ears of leaders in a country that has still not recovered from the psychological scars of a war with China in 1962. However, early in their tenure, senior Obama administration officials reportedly told Indian counterparts that the United States was no longer "doing balance of power in Asia," while senior U.S. officials, including the president and secretary of state, gave credence for a time to the notion of a Sino-American "G-2" condominium in Asian and global affairs. 

This unnerved Indian officials who believed Washington had chosen New Delhi -- not Beijing -- as its privileged partner in rising Asia. Spurned Indian officials fell back on old non-alignment instincts and began speaking of "triangulating" between the United States and China. But events happily changed the discourse: China's militant assertiveness in 2010-11 reminded officials in Washington and across Asia of the growing danger posed by budding Chinese power. President Obama's self-declared "pivot" to Asia in 2011 moved the United States much closer to the Indian position of sustaining a regional equilibrium not tilted in China's direction -- a project of such immensity that India cannot achieve it absent close alignment, if not alliance, with the United States. Nonetheless, the early damage to a U.S.-India relationship whose central logic is rooted in the balance of power caused mistrust that still lingers.

More recently, Indians have been disappointed that the United States, after reassuring them for a decade that U.S. forces would finish the job they started in Afghanistan, will withdraw combat forces from Afghanistan through 2014. Beyond its intrinsic importance, Afghanistan was in fact a key test of the proposition that the United States, as a new strategic partner, could help India solve its toughest security challenge: the propensity of its neighbors to export terrorism into India, with state support. The Taliban's eventual return to control in at least parts of Afghanistan, as well as Pakistan's virulently anti-Indian security services as NATO forces draw down, will undermine Indian security in tangible ways. For many Indians, the United States' lack of staying power reconfirms old suspicions about American unreliability. It reinforces the conviction that India may have more to gain from collaborating with Russia and Iran to support Afghan groups committed to the Taliban's defeat than from relying on (and working with) the United States to do the job.

Americans, in turn, have been disappointed by India's apparent willingness, for a time, to risk its U.S. relationship over energy trade with Iran. The good news is that India has moved to reduce oil and gas imports from Iran, earning New Delhi a waiver from U.S. third-party sanctions set to take effect next month. This is particularly significant in light of India's energy-import dependence and its previous reliance on Iran as a top supplier. But American officials have spent precious time and energy over the course of several years urging India to cut back on its Iran trade -- time and energy that would have been better spent forging ahead on a wider agenda for Indo-U.S. cooperation, were it not for Indian reluctance to take American appeals to heart. New Delhi would have benefited more from early movement on this issue, rather than making a show of standing up to the United States even as India, out of concern for its own interests, systematically reduced its dependence on Iranian energy supplies.      

Americans excited about the rise to great-power status of the world's largest democracy have also questioned how India's passivity toward the Arab uprisings has served Indian interests, much less prospects for partnership with both Washington and reformist Arab regimes.  While India's election commission did assist in organizing Egypt's first democratic elections, New Delhi has been seriously behind the curve in Libya, Egypt, and Syria (though it has not blocked U.N. Security Council actions on the latter). It is Indian interests that suffer from such passivity, in the form of cool relations with post-revolutionary countries strategically positioned on its western doorstep. Such passivity has undermined the case, not just in Washington but internationally, that India is ready to provide global public goods and assume genuine responsibilities beyond its borders as a permanent member of the Security Council.

Nonetheless, over the past three years India and the United States have made quiet progress in consolidating their new relationship. India is the world's largest arms importer, and the United States is at the top of its list of defense suppliers -- notwithstanding American disappointment that India did not choose a U.S. fifth-generation fighter jet as part of its ongoing military modernization. Indian armed forces exercise more with U.S. counterparts than those from any other country -- a remarkable development for two countries that were on opposite sides of the Cold War divide. Intelligence-sharing is at historic highs; Washington and New Delhi cooperate more actively on counter-terrorism than ever before. The two countries are also more closely aligned on Pakistan as a result of the degeneration of the U.S.-Pakistan alliance over the previous three years. Perhaps most importantly, India and post-pivot America see eye-to-eye on the immense strategic challenge posed by China's ascendance; the Indo-American dialogue on East Asian security has been richly rewarding for both sides.

The hard truth is that Indo-U.S. relations would be better were India and the United States each doing better. India was a most attractive partner when it was growing at near-double digit rates annually, putting it on track to emerge as the world's largest economy before 2050. For many Americans today, India is a less attractive partner as economic growth slumps, the government stalls on key reforms necessary to unlock the economy's vast potential, populism trumps effective policymaking, and politicians seem unable to break partisan gridlock to govern effectively. Funnily enough, Indians could say exactly the same thing about America under President Obama.


Shadow Government

The disaster that is sequestration

More than any other economic danger looming on America's immediate horizon, including a possible break-up of the eurozone, sequestration poses the greatest single threat to American recovery in the near term. This arcane process came into force when the congressionally-mandated "super-committee, "officially known as  the Joint Committee on Deficit Reduction, failed in its mission. As a result, the sequester calls for reductions in government spending totaling $1.2 trillion over the next nine years, of which $984 billion, or $109 billion annually, will be realized from across-the-board budget reductions.

Although defense accounts for only 14 percent of the budget deficit, when entitlements are taken into account, the annual $109 billion dollar cut will be evenly divided between defense and non-defense reductions, with some small reductions in entitlements contributing to the non-defense side of the ledger. Put another way, once the sequester comes into effect, defense-related appropriations will have to be reduced by $55 billion annually. And these reductions will be of the sledgehammer variety: Every "program, project and activity" will be reduced by the same percentage, regardless of its relative importance to the overall enhancement of national security.

It gets worse. The sequester does not begin to bite until January 2, 2013 -- that is, until the beginning of the second quarter of the upcoming fiscal year. That means that the entire $55 billion must be found from programs that had not yet been obligated during the first quarter of the fiscal year. To the extent that such commitments will have been made, the amount of funding susceptible to reductions will itself be reduced, and the percentage of reductions will accordingly increase. Finally, because President Obama is expected to exempt the military personnel accounts, which total some $141 billion, and Congress is expected to exempt the contingency-related accounts (which are the major source of funding for the war in Afghanistan), there will remain some $375 billion, from which $55 billion will have to be found, resulting in a 15 percent reduction in all other defense programs. 

The impact of that reduction will be highly disruptive to both the current and longer term defense program. It will result in massive reductions in weapons systems, though not in personnel. It will render the pivot to Asia meaningless; any plans for increasing our military muscle in that region will be completely undermined by the reduction in shipbuilding, aircraft, missile, drones, and a host of other acquisition programs. Our presence in the rest of the world will at best fare no better, and, in light of the so-called pivot, will probably suffer even more.

All the foregoing has long been well-known to Washington's defense cognoscenti and especially its bean counters. What is less well-known, and at least equally alarming, is the impact of the sequester on the economy as a whole. As the recently released study by the Bipartisan Policy Center points out (full disclosure: I am a member of the Center's Task Force on Defense Budget and Strategy), the sequester will result in the loss of about a million jobs in 2013 and 2014 and America's GDP will decline by half a percent. Moreover, of these million lost jobs, it can safely be asserted that at least half will come from the non-defense sector. In other words, the sequester is not just a defense problem that should agitate only hawks. It is a national problem, and it demands immediate relief. 

Despite the urgency of the sequester's challenge, the administration continues to sit on its hands. No draft legislation has emerged from the White House that would at least postpone the sequester for a reasonable period to enable Congress to try its hand at another effort to reduce the deficit. The administration's allies on the hill, particularly in the Senate, have been equally nonchalant about the coming programmatic and economic disaster.

Such nonchalance carries with it a very high risk, however, and not only for the economy. In addition to its impact on the government's budget, the sequester will also trigger the WARN Act, which requires employers to give a minimum of sixty days notice to private and public sector employees whose jobs are being targeted for possible termination. Those politicians seeking re-election to national office should take note that Nov. 2, 60 days before Jan. 2, when the sequester comes into force, is just four days before election day. They may find it very uncomfortable having to explain to potentially hundreds of thousands of people who have been given WARN Act pink slips why they deserve to be returned to office after they did nothing about the sequester. America's economic house is burning; the Neros of Washington had better act soon, or they may find that their political fate will echo that of their ancient Roman namesake.

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