By: Nazira Al Afandi

India managed to achieve progress in its ties with the US on the political level with the support of its progress on the economic level. This is the result of the recent visit by President Bush to South Asia that took him to Afghanistan, India and Pakistan.

In spite of the fact that India was a traditional ally for Moscow during the cold war, Pakistan was a strong ally to the US, Afghanistan allied with the US in its war against terrorism, India managed to overcome all these factors and managed to be a favorite country to the US. The two countries signed a strategic partnership agreement in July last year which was considered the basis for the recent US-Indian talks that resulted in the signature of the landmark nuclear cooperation agreement between the two sides in spite of the fact that India is not a signatory to the NPT.

Some believe that this agreement might imbalance the US treatment of India and Pakistan. The developments related to the desire of India to get a permanent seat in the Security Council and the statements of Condoleezza Rice in this regard, however, refer to that the US is reconsidering its ties with Asian countries. Japan is also seeking to get a permanent seat in the Security Council with the support of the US. US support for India would be at the expense of other US allies. We should also ask ourselves about the position of China of those developments.

As for Pakistan, there is no doubt that Bush’s description of India and Pakistan as different countries, put Musharraf in an embarrassing situation. The Pakistani president can not justify to the hard-line groups his cooperation with Washington while they see the US double standards with both countries.

The second point that needs consideration is the US double standards in dealing with the issues. This issue is raised by several statesmen even in the US and in the Republican Party. Why did not the US sign the same agreement with both India and Pakistan? It might be said that this is due to the campaign launched against the Pakistani scientist Abdel Kader Khan; then why did not the US sign such an agreement with North Korea and Iran?

The agreement

This agreement which was proposed in the US capital in July 2005 stipulated that New Delhi would put 14 nuclear reactors under international supervision by 2014. In return, India would get investments, US technology and equipment within the framework of its nuclear cooperation for peaceful purposes.

Furthermore, India has to separate between its military and civilian nuclear installations. Only 8 nuclear reactors that are used for military purposes will not be inspected by the IAEA. This agreement would require the US Congress to change the law of atomic energy that bans exporting any nuclear sources or equipment related to this field to any country outside the five members of the nuclear club namely; the US, France, Russia, China and Britain.

In addition, the US ignored all the previous practices by India since 1974 when it conducted its first nuclear test, and the tests conducted in 1998 as well as the rejection of New Delhi of the demand of the former US president Bill Clinton that India should sign the NPT.

Lack of oil and the US move

The US President took this move because it would be useful to Washington as it will help India to get its energy requirements and would reduce its increasing demand on other sources of energy, the matter which will curb in the increase of its prices and would reduce its cost for the US citizens.

However, we can not ignore the project related to extending a natural gas pipeline from Iran to India through the Pakistani territories and what it means to Washington that launched a recent campaign against Iran and its nuclear program classifying it among the countries of the axis of evil.

For the current US Administration, India’s voting in the IAEA for referring the Iranian file to the Security Council is very important. We would also like to mention the coordination between China and India regarding purchasing 38% of the Euphrates Oil Company after a Canadian company put it into sale. Oil circles said that the Chinese–Indian coordination was a reaction to Washington’s endeavors to foil a $1.9 billion deal through which the Chinese National Oil company was about to take over UFCAL, therefore, it headed for the Middle East and Africa to get away from the US influence.

The Indian oil and natural gas company purchased 25% of the capital of a Sudanese oil company in 2002 for $ 783 million. It also offered a $ 392 million loan to Sudan to build a power plant in return of oil guarantees offered by the Sudanese government that pledged that in case of being incapable of repaying the loan, it will export to India its equivalent of oil. Furthermore, the US Administration must have observed the visit of the Saudi King to India, which was the first by a Saudi King in 51 years.

We should also take into consideration that signing such an agreement would offer the US further investment and export opportunity.

The Indian Economy and alliances

If India managed to achieve this progress in its ties with its new strategic ally (the US) after the end of the cold war, how did it manage to achieve this and how could others benefit directly or indirectly from it?

It is quite evident that the praise of India and its democracy in President Bush's speech saying that it is the largest democracy in the world, did not come out of vacuum. It is evident that India is the second largest country in the world in terms of the population. It comes second after China with a population of 1.2 billion. Yet, disturbances, sectarian and religious disputes that emerge from time to time in India and the Kashmiri problem represent a series of time bombs that might go off any minute. India, however is considered one of the largest emerging industrial powers that strongly has its mark on the international arena.

We have also to take the rotation of power in India between different political parties and the religious formula found in the government into consideration. The Indian President is a Muslim, the Prime Minister is a Sikh and the ruling coalition mixes between the Congress party and the leftist parties while BJP represents the opposition. The visit of President Bush was accompanied by demonstrations and protests against it.

It is quite sure that this US-Indian rapprochement was based on economic elements. For the US, India is a better partner if compared to China that represents a headache for the US. It is evident that the performance of the Indian economy and the Indian alliances on the international level represents a base for its progress in its ties with the US.

In spite of the rise of the Oil imports bill, the Indian economy managed to achieve a growth rate of 7.6% during the last three months. It is worth mentioning that the Indian economy managed to maintain a 7.5 % growth rate since 2004. In addition, India’s foreign exchange reserves reached 133.4 billion in January this year and thus, India ranked fourth among world countries in this regard.

We have to mention that the Pakistani economic performance was strong during the past three months as it managed to achieve an 8.4 % growth rate in 2005. The stock exchange growth in Pakistan reached 19.8% compared to 14% in India. But the Indian economy is distinguished by its wide base, its versatility, the huge Indian population as well as the role played by the Indian community outside India.

We have also to mention the robust industrial entities that have become international competitors such as Mittal company for steel, and medium and small scale industries as well as the special economic zones that started their activities a decade ago and has become a world power in the field of software and Information Technology exports.

We have to refer to the role of the small scale industries that reached 10.52 million units and employ 24.93 million persons.

The rise of the industry and exports of software and IT in India in addition to the role played by Indian minds in the silicon valley and in Britain is one of the positive factors.

A study conducted by the World Bank stated that the Indian information technology industry maintain the same quality as we find in China, Hungary and Philippines and the low cost as we find in Israel, Ireland and Singapore.

The Indian exports in this sector jumped from $ 734 million in 1995-1996 to about $ 6200 million in 2000-2001. During the first five years of the 21st century, they reached about $ 8 billion per annum.

As for the offshore outsourcing processes, the annual growth rate in this sector has reached 40 to 50% annually. It is predicted that the employees of this industry would reach 1.5 million. Statistics refer to that the US is the main outsourcing market as it provides 62% of the revenue of this sector.

It is worth mentioning that the Indian ambition does not stop at providing outsourcing in the field of IT but all studies focus on the future potentials of outsourcing in the fields of research, legal and engineering counseling, and translation. It is predicted that the volume of Indian outsourcing activities on the international level would reach $ 141 by 2008.

In spite of the difference of economic performance between the urban and rural areas in India, between the IT sector and the infrastructure sector, the gap between citizens regarding salaries and economic conditions, the Indian market is growing and is attracting foreign investments.

As for the motives of the US President behind signing the nuclear cooperation agreement with India, he based his argument on the fact that India is a democracy that achieves wide strides in the field of economic growth and he wanted to reduce its dependence on energy imported from abroad through using nuclear energy.

India is a democracy with a balanced foreign policy with all developing countries whether they are emerging industrial powers or are still on the way to become industrial countries. Could India give up its ties with Latin American countries such as Venezuela? Can it give up its natural gas pipeline project with Iran? India has also cooperation agreements with China and managed to establish closer ties with Japan. These are points that can not slip the memory of the US decision maker.

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