India: Old Issues and New Opportunities

Stephen P. Cohen
Stephen P. Cohen
Stephen P. Cohen Former Brookings Expert

September 1, 2000

After a decade of drift and uncertainty, India is undergoing rapid and generally positive change and is taking its expected place as one of the three major states of Asia. Its economy is less advanced than that of Japan or China, and its billion people do not match their standard of living, but its economy has taken great strides. India has become a nuclear weapons state, and it has been able to maintain its pluralist, secular democracy.

Henceforth, India will demand much greater American attention. Until a few years ago, U.S. policy toward India focused primarily on the latter’s nuclear program. Since then, the dialogue with New Delhi has broadened, and President Clinton’s visit to India last March set forth a comprehensive agenda for cooperation between the two states. While the new administration must remain vigilant about India’s well-publicized problems—he conflict with Pakistan over Kashmir, a regional nuclear arms race, and serious human rights abuses—it must also take advantage of the new economic and strategic opportunities that India offers.

India as an Emergent Power

For many years, Americans have seen India as a giant but inept state. Press coverage has tended to emphasize its sluggish economy, its highly discriminatory caste system, and the violence suffered by women and religious minorities. Some observers have wondered whether such a diverse country can manage its own affairs, let alone play a role in Asia and the world.

That negative image is now obsolete. While India is far more populous and diverse than North America and Europe combined, its pluralist, secular democracy has achieved unremarked but quite remarkable success. Weaknesses, such as low literacy and caste discrimination, are being addressed more effectively than ever before, and the increasingly decentralized democratic system has allowed the rise of hitherto deprived castes and ethnic communities. Caste and religious violence remain, but often as the manifestation of a profound social revolution,one analogous to the American civil rights movement, but on a vaster scale.

The liberalization of India’s economy, begun in 1992, is now gathering steam, and the annual growth rate is expected to continue at more than 6 percent. Indian annual exports now total more than $30 billion. In some sectors, such as advanced computer and software development, Indians boast world-class skills, as is evident from the new class of Indian “dot com” millionaires, many with close ties to the United States.

For years, the only substantial economic component of U.S.-Indian relations was American aid programs. But economic bonds are strengthening. Normal, two-way trade doubled to some $14 billion annually between 1992 and 1998. America is India’s largest investor, providing $2.3 billion of India’s $12.6 billion of foreign direct investment between 1991 and 1999. India now ships more exports, especially software and other high-tech goods, to the United States than to any other country, and total Indian exports to America crossed the $9 billion mark last year.

India’s location should also attract U.S. interest. On the sidelines during the Cold War, India has regained some of the strategic importance it had under the British Raj. It is adjacent to the Middle East and Central Asia—two vital sources of energy—and its Andaman Islands are only 90 miles from Indonesia, making New Delhi a player in Southeast Asia. India has a modest capacity to project military power. It will soon have a two-carrier navy and is developing a nuclear-armed missile capable of reaching all of Asia.

Since World War II, relations between India and the United States have been rocky, except for a brief period of cooperation after the 1962 India-China war. Like the French, Indians value highly their civilization and culture and find alliances uncomfortable. Washington and New Delhi continue to differ on such issues as coping with a struggling (but nuclear-armed) Pakistan and stopping the spread of nuclear weapons and missiles. Relations between the two will always be prickly, but they share important interests. Both are essentially status quo powers. They have complementary economies and an interest in expanding trade contacts; both seek to avoid or limit war in South Asia; and both are wary of China’s growing power. What’s more, a million-plus Indian-American community increasingly serves as a bridge between the two states.

A New Economic Relationship

A new administration in Washington should look for ways to expand economic contacts. It should, for example, consider negotiating a phased free-trade zone between the two countries—despite problems posed by Indian child labor violations. Together with India’s active membership in the World Trade Organization, a free-trade zone would speed liberalization of the Indian economy, spur economic development, and give U.S. firms better access to the Indian market. India needs to expand its energy resources and make massive investments in its transportation and communications infrastructure to serve its growing middle class, now estimated at 300 million. American firms are well placed to assist India in these sectors, and India has goods and services that it wants to sell to the United States. A more liberal trading arrangement would facilitate trade and investment between the two.

Reviving a Strategic Tie

America’s strategic and military relationship with India (and Pakistan) must also be reevaluated. Since 1965 the United States has had no significant military ties with New Delhi. The United States has been dismissive of Indian military power, and India has regarded America as an unreliable supplier of military equipment. Restored and even expanded military exchange programs could improve understanding between the two security communities.

India, along with other South Asian states, has been a stalwart contributor to UN peacekeeping operations, but it lacks air and sealift capabilities. The Indian and American strategic establishments need to address circumstances under which they might cooperate in helping to stabilize war-torn or fragmenting states in Africa and elsewhere and to discuss the interoperability of military units from various countries.

The Indian military is interested in the new technologies that have reshaped the face of conventional warfare. But Washington should be cautious about renewing conventional military sales to India (or Pakistan). Their conventional military balance, now in India’s favor, is linked to their nuclear balance. Hostilities between the two in the Kargil region of Kashmir in June 1999 raised fears that Pakistan might use tactical nuclear weapons. Before undertaking any significant arms sales to South Asia or assisting India’s defense production establishment, the United States must determine whether selling particular weapons would help stabilize, or make worse, the region’s nuclear balance of terror.

Security ties cannot be expanded as long as U.S. military sanctions, imposed after India and Pakistan carried out nuclear weapons tests in 1998, remain in place. Intended to keep India and Pakistan from developing nuclear weapons, the sanctions have clearly failed. The 1998 nuclear tests ratcheted up immeasurably the danger in the two countries’ long and bitter dispute over Kashmir. Both states regard possessing nuclear weapons as vital to security and important to prestige. They are highly unlikely to reduce, much less eliminate, their small nuclear stockpiles.

It is therefore unrealistic to try to do away with those nuclear weapons. A more feasible goal is to ensure that their use remains unlikely and that nuclear and missile technology is not transferred to other states. The present punitive sanctions-led policy must give way to a grand bargain that emphasizes political incentives and mutual security. As part of that bargain, India and Pakistan might agree to limit the numbers of nuclear weapons that they build, develop better command-and-control systems to guard against accidental launch, and work closely with the United States and international agencies to keep their nuclear and missile technologies from leaking to other states. These steps would bring the two states into alignment with many essential provisions of the Non-Proliferation Treaty.

For its part, Washington should be prepared to provide early warning devices and intelligence information to help prevent accidental war, both by sharing satellite data and by bringing India and Pakistan into a larger arrangement to detect and warn against missile launches. America should also support Indian and Pakistani membership in international regimes designed to contain the spread of missiles, fissile material, and nuclear technology. Once progress is made on stabilizing their nuclear arms race, America should be willing to change some of its own laws and assist civilian nuclear energy programs that are under adequate international safeguards. Finally, Washington should explore the possibility of selling defensive anti- missile technologies to India (or Pakistan) in exchange for their limiting deployment of offensive systems.

Sustaining the Relationship

When President Clinton visited New Delhi last March, he and India’s prime minister, Atal Behari Vajpayee, signed an ambitious “Vision Statement” charting regular summit meetings and high-level consultations between officials of both governments. Prime Minister Vajpayee reciprocated with a successful visit to Washington in September. Given India’s past reluctance to engage America—except as a critic—these dialogues will help reduce suspicion of the United States in Delhi. They will also acquaint American officials with Delhi’s unique world view, revealing significant areas of overlap with Delhi (on issues of democratization, economic liberalization, and countering terrorism), some areas of disagreement (India was upset at U.S. intervention in Kosovo), and a large zone of uncertainty, especially on how the world must deal with a rising China.

India’s relationship with China has a complicated history—one in which the United States played an important role. During India and China’s 1962 war (over what is still the world’s longest disputed border), Washington and London supported India’s position, leading China to regard New Delhi as part of the West’s strategy to contain it. In response, Beijing provided considerable military assistance to Pakistan.

Despite significant Sino-American differences, U.S.-China relations today are much improved. Washington may be able to play a marginal role in easing suspicions on both sides of the still-disputed border. Indeed, all three states now have shared economic interests and a common strategic interest in ensuring that Pakistan does not become an extremist Islamic state.

Kashmir and Pakistan

India’s emergence as a major power has been hamstrung by its long and bitter dispute with Pakistan over the former princely state of Jammu and Kashmir. Both India and Pakistan claim Kashmir. For both it has deep ideological, emotional, and strategic significance.

The United States made several efforts to resolve the dispute, most recently during the Kennedy administration. For several years, the dispute appeared to be fading away, but after an anti-Indian uprising in Indian-administered Kashmir in 1989 and the nuclear tests of 1998, the Kashmir dispute helped make South Asia (in President Clinton’s phrase) “the most dangerous place on earth.”

Washington should find a role for itself in the Kashmir dispute somewhere between doing nothing and being an unwelcome intruder. While Pakistan would like America to intervene on its behalf, India officially rejects the idea of a mediator. Many influential Indians, however, feel that India is in an impossible situation in Kashmir. They understand that the dispute hurts India’s reputation as a democracy and hinders its emergence as a major Asian power. Some Indians would welcome a low-profile and balanced U.S. effort to help both countries find common ground.

Such a policy would not be unprecedented. Washington has been able to move several other bitter regional disputes closer to resolution. Northern Ireland and the Middle East are not exactly comparable to Kashmir, but elements of each, as well as other conflict-resolution efforts, might form a South Asia peace process. The guidelines for such a process can be set forth, although implementation will be difficult. First, the cooperation of both governments will be required, and because India opposes mediation, the role of outsiders will be limited to persuasion and encouragement. Second, the peace process should include several states; Japan, in particular, has a strong interest in preventing regional nuclear war, and because of its aid and investments in both countries, is quite influential. Third, the process should begin with small steps, avoiding grand declarations or high-profile publicity. Finally, no one should expect an immediate political payoff. The 50-year-old Kashmir dispute will not be resolved quickly or easily.

Washington should also use India’s desire for a seat on the United Nations Security Council to encourage the peace process. By conditioning its support for India’s place on the Security Council (one warranted by India’s size and importance) on progress in resolving the dispute, the United States creates an incentive for India to work with Pakistan and other countries.

America and Pakistan

While India is emerging as a major Asian power, it is threatened by instability in its own region. American ties to India will always be shaped by the latter’s relations with Pakistan. In the past, U.S. support for Pakistan embittered Indians, who believed that America was thereby trying to contain New Delhi. The danger to India today, however, may be Pakistan’s weakness, not its strength. A failing Pakistan could imperil India by increasing support for extremists and terrorists operating in India, by using force to seize territory in Kashmir, even by undertaking a last-minute, desperate nuclear strike against India.

Islamic Pakistan, soon to be the world’s sixth most populous state and now a nuclear power, is plagued by declining literacy, a mismanaged economy, and the growth of radical Islamic groups. The October 1999 coup, by which General Pervez Musharraf overturned Prime Minister Nawaz Sharif, promised reform in many areas—too many for even a great leader to accomplish, and General Musharraf is no Kemal Ataturk. Although Pakistan’s fate is in the hands of its own citizens, the United States can make a marginal difference by offering concrete assistance to the country’s moderate and democratic forces. Washington plowed billions of dollars of military assistance into Pakistan during the height of the Cold War (1953-63) and in the 1980s sold first-line aircraft and other equipment to Pakistan when the two countries joined to expel the Soviet Union from Afghanistan. Pakistan’s current security problems stem from its internal weaknesses, and the time has come for Washington to help shore up Pakistan’s civic institutions, especially its trade unions, courts, universities, administrative services, and political parties. Encouraged by the next U.S. administration, American foundations, the National Endowment for Democracy, and nongovernmental organizations should join in a wider effort to make this “last chance” for Pakistan a success.

New Delhi should welcome these steps. In the long run India must live in peace with its troubled neighbor. During his stopover in Pakistan last March, President Clinton delivered a firm but optimistic message to Pakistan. It was well-received in India. The new administration should not neglect its dialogue with Pakistan, an important state in its own right, while moving forward with India.