At one level, this is hardly surprising. The U.S. itself developed a full-blown capitalist system and rose to global pre-eminence at a time when a large section of its population did not have the right to vote. The same is true of Great Britain and Japan and Europe. In the post-World War II period, countries which registered the greatest success in establishing a free market system tended not to be democratic. If capitalism and multi-party democracy come as a package in many countries today, it is capitalism which got off the starting block first in virtually all of them, leaving its imprint on democracy.
India's ruling class, on the other hand, was handicapped by the need to harmonise in real time the anti-democratic consequences of a market-based economy with the procedural and substantial requirements of a democratic polity. Of course, economic elites have had the greatest influence in policymaking but their power has always been contested. As a result, universal adult suffrage — and the wider deliberative process that comes along with it — has had more of an impact on the development of capitalism in India than in the rest of the “free world”. Unsurprisingly, the country's global outlook has also been tempered by this aspect of its polity.
The U.S. sees the macro growth data and has a fair idea of where India will be in economic terms two decades from now. It sees the rise and wants to get in at the ground floor. This was the meaning behind the gratuitous promise, made during the presidency of George W. Bush, of helping India emerge as a world power. But India is not in need of that “help”. Its rulers have their own global ambitions and they are not interested in becoming a client state or even a military ally or partner. Those are the two kinds of relationships the United States is used to having with countries around the world. That is why early signs that India will play the power game differently have been greeted in Washington with bewilderment, consternation and even anger.
In the countdown to President Barack Obama's visit to India, American officials have expressed their frustration over the new nuclear liability law. They are also upset with India's reluctance to sign “foundational” defence agreements like the Logistics Support Agreement (LSA) and the Communication and Information Security Memorandum of Agreement (CISMOA). Having done the heavy lifting at the Nuclear Suppliers Group to win an exemption for India from the cartel's export ban in 2008, the U.S. fears its own companies may not be able to benefit from the multi-billion dollar Indian nuclear market. Westinghouse and GE are squeamish about selling their reactors because the new Indian law opens a door for them to be held liable in the event of an accident caused by defective equipment. The executive branch may have wanted a more lenient law but Parliament thought otherwise. Despite this, the American side is looking for ways to undo the legislation.
If the Indian liability law goes beyond the international norm in insisting that suppliers too shoulder a part of the risk involved in the nuclear power generation business, this is because India is the first democracy to go in for a massive expansion of nuclear capacity in recent years. If the U.S. administration is unable to appreciate the sensitivity of the question in a country which experienced the Bhopal disaster, it could at least look at how the BP oil spill in the Gulf of Mexico has forced a rethink of liability limits in the United States. Instead, suggestions are being made that the Indian nuclear operator contractually take on the entire liability burden of its supplier even when an accident is traced back to faulty equipment. The end result of this pressure, of course, is that Parliament is likely to demand the right to scrutinise any reference to liability in the commercial contracts the Nuclear Power Corporation of India Limited (NPCIL) signs with American vendors.
On the defence side, the LSA and CISMOA aim to boost interoperability between the Indian and American militaries, and pave the way for more arms sales from the U.S. Washington has both commercial and strategic reasons for developing a close military-to-military relationship with India. Billions of dollars of business and thousands of American jobs are riding on the weapons choices India will make over the next few years. But the U.S. is also keen to use its intimacy with the Indian armed forces to outsource low-end operations in the region, particularly in disaster management and counter-piracy.
India, on the other hand, is reluctant to sign these agreements because it is wary of the wider strategic implications. The U.S. has been an expeditionary and even belligerent power in Asia and though the Indian government supports the American war in Afghanistan, the 2003 invasion of Iraq had disastrous consequences throughout the region. With many in Washington speaking of a looming confrontation with Iran over the nuclear issue — a confrontation that would make the Iraq war look like a tea party — why should India do anything to facilitate American military deployment in the region?
Confronted with the Indian refusal to sign on the dotted line, American officials say the LSA and CISMOA texts on offer are identical to what dozens of countries have had no problem signing. In making this argument, the U.S. forgets that India is not an ally or a subordinate partner. Washington cannot hope to simply replicate the way it does business with Australia or Japan. Even if there are sections of the Indian establishment that would like to go along with these agreements, the political implications are far too complicated. This is a reality the U.S. will have to live with.
One test of the Indo-U.S. “strategic partnership” will be if it is able to survive an Indian refusal to spend billions of dollars on American military hardware. Though the technologies on offer seem tempting, India needs to proceed with caution given the end-use restrictions and the ban on modifications that America has imposed on all weapons it sells. Given the fickleness of the U.S. political system and the almost whimsical way in which technology and supply restrictions are imposed and lifted, India will place itself at risk by getting too dependent on American supplies for major weapon systems.
While the “unreliability” of the Americans is not in dispute, there are some in India who see this as a small price to pay in order to buy U.S. support against the “unpredictability” of the Chinese. It is true that the increasing assertiveness of China has rung alarm bells in many parts of Asia and that New Delhi needs to develop an effective strategy to manage what is likely to be an increasing complex relationship with Beijing. The White House has made much of the fact that Mr. Obama's visit to India will be followed immediately by visits to three other Asian democracies — Indonesia, South Korea and Japan. “There is a message in this to China,” a senior U.S. official said in Delhi last month. After fantasising in 2009 about a joint condominium with Beijing, Washington today appears slowly to be moving to the other extreme. In a few years time, it will be ready to move right back. It is essential that India have excellent relations with the United States. But these relations have to be free-standing, built with all the confidence that a rising, democratic power can muster, our eyes looking forward rather than sideways at the constant swings of an American pendulum.