Update: U.S.-India Strategic Dialogue: Progress, Problems, and Prospects

Q1: What is the purpose of the U.S.-India Strategic Dialogue?

A1: The U.S.-India Strategic Dialogue was launched in 2010 by Secretary of State Hillary Clinton and Minister of External Affairs S.M. Krishna to serve as the capstone dialogue between the two countries. This week’s meeting on June 13 in Washington is the third in the series. It is the highest-level, regularly scheduled bilateral exchange between the two counties, as evidenced by the leadership and composition of both delegations. The United States and India have some 20 other ongoing fora and working groups connecting various departments and agencies. The purpose of the Strategic Dialogue is to assess progress, provide policy guidance, and propose new areas of cooperation across the breadth of the U.S.-India relationship.

The Strategic Dialogue has five pillars of focus: strategic cooperation; energy and climate change; education and development; economics, trade, and agriculture; and science and technology, health, and innovation. In addition to Minister Krishna, the Indian delegation will include ministers responsible for science and technology, heath, human resources (education), and women and child development.

Q2: What happened at the last U.S.-India Strategic Dialogue?

A2: The June 2011 Strategic Dialogue, held in New Delhi, was an important meeting in the evolution of the U.S.-India strategic partnership. Agreements were signed covering counterterrorism cooperation, cyber security, aviation safety, women’s empowerment, scientific cooperation and clean energy, information sharing, and higher education.

The two governments agreed to the first ever U.S.-India-Japan trilateral dialogue (held in December 2011 in the United States). They also announced an expansion of their regional consultations to include the Middle East and Central Asia. These consultations were the foundation for a larger, regional strategic dialogue on issues of critical importance to both countries.

Secretary Clinton’s speech in Chennai, just after the 2011 Strategic Dialogue, acknowledged India’s stake in Afghanistan; it also commended India’s “Look East” policy, describing it as essential for further integration of the Asia-Pacific region. She encouraged India to not only “look East,” but also “act East” and “be East.”

Q3: What are the key issues that will be discussed at the Strategic Dialogue?

The two most crucial issues—and in need of deeper consultation (Secretary Clinton was just in New Delhi last month)—are Afghanistan and Iran.

India has grown increasingly concerned about the U.S. withdrawal from Afghanistan in 2014 and the risk of Afghanistan again being used as a breeding ground for terrorists. Further, India is currently a major donor to Afghanistan (providing some $2 billion in reconstruction aid) and actively engaged in pursuing commercial interests in the country and beyond in Central Asia. India will not want to see its investments placed at risk by a badly executed drawdown of U.S. and international forces. Yashwant Sinha, India’s former finance and foreign minister, recently captured the thinking of many Indian officials in and out of government: “NATO has to stay the course in Afghanistan until we are absolutely confident that the Afghan army and the armed forces of Afghanistan are in a position to meet the Taliban threat.”

On Iran, the atmosphere for the Clinton-Krishna meeting will be bolstered by the June 11 announcement that India will not be subject to the congressionally mandated sanctions regarding the importation of Iranian oil. According to the State Department announcement, India, along with 16 other countries, have all significantly reduced their crude oil purchases from Iran resulting in their exclusion from the sanctions list.

During her May visit to India, Secretary Clinton acknowledged that this was a “hard decision” for India because of its historical dependence on Iran for a significant percentage of its oil. She also said: “We think India, as a country that understands the importance of trying to use diplomacy to try to resolve these difficult threats, is certainly working toward lowering their purchase of Iranian oil… We commend the steps that they have taken thus far. We hope they will do even more.”

How much more will be a subject of further discussion during the Strategic Dialogue.

Q4: What about the South Asia perennial—India and Pakistan?

A4: Since the last dialogue, U.S.-Pakistan relations have spiraled downward, resulting in the Pakistani government closing supply lines for NATO supplies to Afghanistan. Alternatively, the India-Pakistan economic relationship has improved, with intentions to trade more goods and increase the infrastructure needed to enable it. Both countries will want to discuss these complex relationships and the broader implications of the U.S. withdrawal from the region in 2014. Relatedly, when Defense Secretary Leon Panetta was in India last week, he encouraged a more active role for India in Afghanistan, something the administration had not suggested before because of sensitivities with Pakistan.

Q5: How about other regional “hot spots”—and China?

A5: There will likely be discussions on the escalating violence in Syria and the greater Middle East, as well as a number of issues relating to China. Both sides have expressed the desire to engage China while maintaining good relations and working with that growing economic and global power. The current dialogue will probably emphasize China’s recent economic and internal woes, as well as its increased military spending, something that both India and the United States expressed reservations about at the recent Shangri-La Dialogue. Minister Krishna visited China last week as part of the Shanghai Cooperation Organization’s summit.

Q6: Where do the two countries currently have “good news” to report?

A6: Recent events in Myanmar—which the United States still refers to as Burma—have been welcomed by both countries. Following her visit there in late 2011, Secretary Clinton announced that the United States would ease some sanctions and open an embassy in Naypyidaw. On his visit last month, Prime Minister Manmohan Singh of India praised Myanmar, saying, “Myanmar is a critical partner in India’s “Look East” policy and is perfectly situated to play the role of an economic bridge between India and China and between South and Southeast Asia.” His visit highlights Myanmar’s growing importance to India—currently India’s fourth-largest trading partner. The two nations signed 12 agreements, including a $500 million line of credit that will provide needed assistance to build Myanmar’s economic infrastructure.

Aside from economic interests, India views Myanmar as a potential energy source. Myanmar has vast reserves of natural gas, from which China and India both seek to benefit. The “China factor” in Myanmar’s future will likely be a topic of continuing discussion between the United States and India.

Q7: What about the economic dimension of U.S.-India relations?

A7: Both governments have made it clear that strengthening the bilateral economic partnership is their top priority. Commerce Secretary John Bryson’s recent trade delegation to India is a case in point, and the U.S. private sector is eager to increase its trade volume with India. U.S.-India trade is expected to cross the $100 billion threshold this year, and Indian businesses are increasingly investing in the United States. However, Rajiv Kumar, secretary-general of the Federation of Indian Chambers of Commerce and Industry, provides a more cautious outlook, “The relationship is still alive but not kicking as hard as expected.”

Secretary Clinton and Minister Krishna will have an opportunity to do something about this at the Strategic Dialogue by calling attention to ways to increase bilateral trade and investment, including by accelerating negotiations on a bilateral investment treaty (the two countries started talking about a so-called BIT in 2008). They could also suggest that the two countries begin to discuss a more ambitious trade and investment agenda, including a free trade agreement for the future.

Q8: Whatever happened to the U.S.-India Civilian Nuclear Agreement?

A8: It remains stuck on resolving the nuclear liability issue, something that has very deep resonance in Indian domestic politics. The U.S. ambassador to India, Nancy Powell, has expressed her eagerness to support efforts to implement the nuclear deal but that a level playing field needs to be ensured for U.S. companies. In response, Foreign Secretary Ranjan Mathai said that India would ensure a level playing field for U.S. companies and that practical steps must be taken to advance this cooperation.

Persis Khambatta is a fellow with the Wadhwani Chair in U.S.-India Policy Studies at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jesse Sedler is an intern scholar with the CSIS Wadhwani Chair.

Critical Questions
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© 2012 by the Center for Strategic and International Studies. All rights reserved.

Jesse Sedler

Persis Khambatta