The Heritage Foundation

Backgrounder #1402 on Asia

December 11, 2000

December 11, 2000 | Backgrounder on Asia

Improving Relations with India Without Compromising U.S. Security

America and India share the distinction of being the world's largest democracies. Yet relations between the two countries have been unsteady and will need executive attention if they are to improve. A major stumbling block to relations in recent years has been India's testing of nuclear weapons and its missile development program, both of which threaten regional stability.

Now, as part of a program to accelerate economic modernization, India is seeking U.S. assistance to develop its commercial satellite and space launch capabilities. Although helping India to improve its economy and increasing opportunities for U.S. businesses in India are good foreign policy objectives, history has shown that there are limits to how far the United States should go in transferring sensitive technology that could be used in weapons development or ballistic missile programs.

Washington should not be swayed, either by rhetoric about India's democracy and its new nuclear power status or by suggestions of increased trade, into placing India's interests before U.S. national security concerns. At the same time, the United States must recognize that India is a great emerging democracy that is redefining its identity and future goals.1 A new strategy for improving relations with India should focus on how to improve regional security by restraining nuclear proliferation and avoiding technology cooperation that could advance ballistic missile programs, as well as on how to improve trade.

BALANCING TRADE ISSUES AND SECURITY CONCERNS
During a recent visit to Washington, Indian Prime Minister Atal Behari Vajpayee spoke before the U.S.-India Business Summit, recognizing that "The United States is today India's largest trading partner. The US companies are also the largest investors in India.... We would like to deepen this relationship."2 Building on this theme when he addressed a joint session of Congress, Vajpayee said that "In the years ahead, a strong, democratic and economically prosperous India, standing at the crossroads of all the major cultural and economic zones of Asia, will be an indispensable factor of stability in the region."3 Indian officials have asked for greater cooperation in the field of satellite technology and space launches.4 Inherent in these remarks is India's desire to be seen today as strategically important to the United States.

The fact that visiting Indian officials urged their American counterparts to invest in India is not surprising. India's economy grew slowly after the country gained its independence in 1947. Its formidable tariff regime and burdensome regulations stifled trade and economic development. Then, in the 1980s and 1990s, the government began opening borders to trade and emphasizing economic growth by increasing exports. India's economy began a steady and sustainable rise; however, it remains constrained by an average tariff rate of 27.2 percent.

Today, less than 10 percent of India's imports come from the United States.5 Over 20 percent of government revenues are derived from state-owned enterprises,6 such as the steel, automobile, and aviation industries, with Soviet-like centrally planned and controlled production lines that are not attractive to U.S. investors. The manufacturing processes on which they rely for the most part are obsolete and poorly managed and use labor inefficiently; they would be expensive to upgrade.

The U.S. government should not drive American businesses into making decisions about trading or investing in India that may prove to be unprofitable. According to the 2001 Index of Economic Freedom published by The Heritage Foundation and The Wall Street Journal, India has one of the world's least free economies, which ranks 133rd out of 155 countries.7 Developing an economy that draws foreign investors will require India to dismantle its centrally planned sectors and reduce barriers to trade, such as high tariffs, in order to become more attractive to foreign trade and investment.

To address India's decades-old policy of restricting imports to maintain a balance of payments, the United States recently sought a ruling from a World Trade Organization (WTO) dispute resolution panel. After the panel sided with the United States, India agreed to lift tariff restrictions on more than 1,400 items. While this hardly constitutes ideal dialogue, in light of the politicization of trade and the penchant of both sides in the past to take unilateral action, the responsible and quiet resolution of this dispute could herald the development of a more mature relationship between the world's largest democracies.

Historically, however, U.S.-India trade relations have long been overshadowed by the two countries' political and security differences. During the Cold War, relations were inhibited by India's pursuit of nonalignment and by U.S. regional security goals that led it to pursue close relations with Pakistan. Neither side perceived a benefit in developing closer economic relations; during periods of political or security tension, programs to aid commerce were either halted or delayed.

After the Cold War, a new interest in economic development led New Delhi to seek better relations with Washington and Washington to reassess its relations with Pakistan in favor of India. But when India detonated five nuclear weapons in May 1998, Washington was forced to reimpose economic sanctions, and mutual mistrust has generally guided engagement since then. Though most of the restrictions have now been lifted, the grave concerns that continue to surround India's efforts to gain nuclear weapons and ballistic missile capabilities make the issue of helping India develop space launch and satellite capabilities more problematic.

A Regional Arms Race
India claims that its nuclear and missile development programs are in part a response to the growing security threat it perceives from China--an assessment not fully shared by Washington. The United States believes that Beijing has greater territorial concerns, such as Taiwan, the South China Sea, and "American hegemony" in Asia, than border disputes with India. Indeed, the border disputes that led to the Sino-Indian war in 1962 are the subject of continuing negotiations, and armed separatist movements in Tibet have not received India's support for many years.8 Nevertheless, India's concerns about China's potential threat cannot be simply dismissed.

Now that India's long-time rival, Pakistan, also is a nuclear state, the fact that China is Pakistan's principal source of nuclear weapons and missiles deeply concerns New Delhi. China believes Pakistan has the influence needed to defuse Islamic separatist movements inside China's borders, while it views India as a strategic rival. Meanwhile, India and Pakistan have sacrificed significant blood and treasure over the disputed territory of Kashmir and have even brought their peoples to the brink of a nuclear abyss in an attempt to resolve the dispute through military force.

Beijing's proliferation activities with Islamabad also intensify India's concerns that China is supporting an arms race in South Asia. China is selling small arms, armor, and artillery to Burma, which lies along India's borders to the southeast. Strategic thinkers in New Delhi are concerned that China's People's Liberation Army could someday gain access to geographically strategic bases in Burma along the approaches to the Strait of Malacca, the world's busiest waterway. China already is building deep-water ports off Burma and overland routes to move goods to and from these ports, as well as radar and listening posts in the Coco Islands.

These activities threaten India's aspirations of becoming a regional power that could project its own navy in the Indian Ocean and through the Malacca Strait into the South China Sea.9 Though the United States should not become embroiled in internecine territorial disputes between competing regional powers, the free flow of goods through these sea lanes could be threatened if either India or China gains naval regional dominance or a naval arms race develops.

For India, China would be a formidable opponent. A massive country with a military three times the size of India's armed forces, China has a nuclear arsenal that far exceeds India's capabilities and enables it to strike any target within India. By comparison, India's short-range missiles could not inflict strategically significant damage within China. Because the border disputes with China and the arms race with Pakistan are fueling nationalist sentiments and domestic support for India's nuclear program, New Delhi will likely continue to seek nuclear weapons with greater destructive power, as well as longer-range missiles and systems capable of striking multiple targets.

India's effort to gain U.S. assistance in developing its satellite and space launch capabilities ostensibly is meant to help bring India into the 21st century in telecommunications and commercial enterprise. However, such technologies could be used to advance India's strategic missile programs. Privately, in fact, Indian officials have indicated that New Delhi hopes to develop thermonuclear weapons, multiple independently targeted reentry vehicles (MIRVs), and intercontinental ballistic missiles (ICBMs). Moreover, some of these officials have argued that India needs a "360 degree" deterrent,10 suggesting that its future missile programs could target regions other than China.

Such defense imperatives present a significant dilemma for the United States, which believes in helping developing countries to improve their economies. But the technologies used in commercial satellite and space launches could aid India's strategic missile programs. Weather satellites could provide data to ensure that ICBMs are properly aimed, while other satellites could facilitate targeting.

As the United States has learned from the inadvertent sharing of sensitive technology between U.S. companies Loral Space and Communications, Ltd. and Hughes Space and Communications International, Inc. and China during commercial space launch projects,11 helping a country develop the capability to launch, position, and release satellites for telecommunications or other purposes is problematic. According to the congressionally mandated Cox Committee, it "may assist...in the design and improved reliability of future silo-based or mobile PRC ballistic missiles...with advanced payloads (that is, multiple warheads, or certain penetration aids designed to defeat missile defenses), and submarine launched ballistic missiles."12

The possibility that this troubling assessment by the Cox Committee could also apply to India by the sharing of dual-use technology (technology with both military and civilian applications) is not small. India's information technology and other high-tech sectors, including computers and wireless telecommunications, are among its most creative and the most free from government intervention, offering U.S. business and U.S. investors the most potential for return on their trade and investment dollars. The Administration should ensure that any satellite and space launch activities between India and American businesses have the same parameters that the United States imposed on Russia and China, such as implementation of the National Defense Authorization Act for FY 1999, creation of a satellite licensing authority within the State Department, heightened requirements for Defense Department monitoring of foreign launches, and other safeguards listed in the Cox Committee report.13

Though limits necessarily will be placed on how far U.S. companies may go in assisting India's space and satellite launch industries, Washington must ensure the careful application of export control policies on any dual-use items and technologies in the satellite and space-launch sectors. U.S. interests will be served best if India is encouraged to limit its nuclear and missile programs, to refrain from proliferating missile technologies, and to reach peaceful negotiated agreements on territorial disputes.

CONCERNS ABOUT INDIA'S CAMPAIGN FOR RECOGNITION
India is hoping that the United States will support its efforts to gain a permanent seat on the U.N. Security Council.14 One motivation for seeking permanent membership in the Security Council is India's rivalry with China. New Delhi has argued that the two countries are the most populous in the world; thus, Indian membership in the Security Council is only proper. China's permanent seat on the council makes China more powerful diplomatically than India. New Delhi, on the other hand, is nearly invisible, or at least the most populous state among many "equals" in the General Assembly, though occasionally it is able to occupy a temporary seat on the Security Council.

The Security Council is indisputably the U.N.'s premier political body. Nearly every important U.N. decision must originate in or be approved by the Security Council. The council nominates the candidates for membership in the General Assembly and for Secretary General. It also is the only body that can initiate U.N. peacekeeping missions and impose economic sanctions.15

Expanding the number of members on the Security Council is not in the best interests of the United States. Adding new permanent members would increase the complexity and difficulty of negotiating resolutions and thereby reduce the Security Council's effectiveness. Gridlock in the Security Council would be of little benefit to the United States or to India.

Certainly, other countries have strong arguments for obtaining a permanent seat on the council.16 Japan and Germany, for example, are major contributors to the U.N. budgets. Japan contributes $216 million annually and Germany contributes $104 million, compared with India's annual $350,000.17 Both Japan and Germany are developed countries and economic powers; India is neither. In pursuing nuclear capabilities, India hopes to demonstrate that, despite its economic problems, it is a major world power and deserves a seat on the council. But acceding to its demands could encourage other developing nations to pursue nuclear capabilities as well, if only to use them as leverage in the United Nations.

Finally, the United States has little reason to expect India to side with its positions in the Security Council if it were to become a permanent member. India, which takes pride in its traditional independent stance, sided with the United States on U.N. votes in 1999 less than 22 percent of the time. The Russian Federation, by comparison, voted with the United States 46 percent of the time.18 Among Asian nations, only China, Laos, Vietnam, Burma, and North Korea voted with the United States fewer times than did India. A 1997 analysis of U.N. votes showed that India--the fifth highest recipient of U.S. aid in FY 1997--had voted against the United States at the U.N. an astounding 80 percent of the time, more than any of the top 10 aid recipients.19

INDIA'S CONTINUING ALLIANCE WITH RUSSIA
The only permanent member of the Security Council that supports India's accession is Russia, India's one enduring security ally. This alliance was forged in 1950 when India signed the Soviet-Indian Treaty of Peace and Friendship. It was reinforced when the two states signed a Treaty of Cooperation and Mutual Friendship in 1971 and when India renewed that treaty with Russia in 1991. India's relations with the Russian Federation continue to be based on this strategic partnership and oriented around the complementary nature of their state-owned heavy industries and their arms trade.

This long security relationship means that the vast majority of India's weapons are either Russian-produced or Russian-designed. Moreover, India's relationship with Russia is likely to continue under current economic conditions; India simply cannot afford to make a major change in suppliers, and Moscow still produces generally high-quality weapons at low cost. The recent $3 billion arms deal signed by Russian President Vladimir Putin during a visit in October demonstrates that New Delhi will likely seek Russia's assistance in developing nuclear weapons and missile capabilities, especially if the United States prohibitively limits American commercial involvement in India's developing space program.

India, however, has begun to move away from a socialist, centrally planned economy to a more open market economy, and as it continues to do so, its foreign and defense policies will change and links to the West will grow. India thus far has resisted Russia's calls to build a three-way alliance with China to offset America's international power. India could move more toward the West as friction with China grows and economic ties to the United States increase.

Indeed, India has demonstrated an interest in developing a closer relationship with the United States. Washington should take this opportunity to foster a meaningful strategic dialogue with Indian officials about U.S. concerns and find ways to limit mischief by China and Pakistan in the region. Such an approach could result in cooperation in such other areas as antiterrorism and counterintelligence.

ESTABLISHING NEW U.S.-INDIA RELATIONS
The Prime Minister's recent visit to Washington should be seen as a genuine attempt by both countries to improve relations, which seemed to bend with every political wind. Despite their differences, a closer relationship is in both countries' long-term interests. The United States and India must begin to view themselves as friendly countries that have complementary, though not identical, goals.

To move U.S. policy in this direction, the U.S. government should:

  • Explain to India that accelerating its nuclear weapons programs is in neither India's nor America's best interests. Indian leaders believe that being a nuclear power makes India a major international actor that deserves a strategic partnership with the United States. While it may not be possible to reverse India's nuclear and missile developments, there are specific steps Washington can take to limit India's nuclear activities. The United States should emphasize, for example, that reducing nuclear weapons and adhering to the Nuclear Nonproliferation Treaty are better guarantees of security than developing a nuclear deterrent and provoking an arms race. It should encourage strategic dialogue between India and China on limiting their nuclear weapons and aggressively pursue discussions on proliferation with India, China, and Russia to confine the spread of nuclear weapons. Moreover, the United States should make clear that a naval arms race to gain regional control of sea lanes--which could interrupt the free flow of goods through the area--would be in no one's best interests.

  • Avoid technology cooperation that could improve India's ballistic missile programs. The experience with China in the transfer of sensitive technology should provide ample lessons that commercial space launch and satellite business can be used to advance missile programs. The Administration should consider the recommendations of the Cox Committee,20 which tend toward limiting U.S. assistance to India's satellite and space launch sector, and develop policies to ensure that commercial activity with India in the satellite and space launch sectors takes place within the same parameters that the United States has imposed on Russia and China.

  • Encourage and assist India in adhering to WTO standards. Trade is easily the most neglected facet of the U.S.-India relationship. Although domestic political forces in both countries are opposed to trade and globalization in general, developing the relationship between the United States and India has attracted broad support. Opening up its economy and increasing two-way commerce will enhance India's reliability as a democratic partner enormously. However, India continues to claim developing country status and to demand special exemptions from the WTO agreement.

At the WTO ministerial meeting in Seattle, for example, New Delhi criticized the high cost of implementing WTO measures. Admittedly, some elements of the agreement, such as protection of property rights and customs regulations, have a price tag that could be high for an economy of India's size. But the cost of not implementing the agreement is lost trade opportunities and cautious foreign investment. The United States should assure India that investing in its own future is vital and that the WTO agreement provides the best way to do so. It should demonstrate to India that improving bilateral trade is among its policy priorities and that transitory political crises will not be allowed to affect those relations.

  • Refrain from getting involved in internecine territorial disputes between competing regional powers, such as between India and China or between India and Pakistan over Kashmir. The United States has little role in resolving the conflicts over the Northeast Frontier Area and the Aksai-Chin, territories over which both India and China claim sovereignty. Pakistan's long-brewing hostility toward India dates back to the creation of these countries as separate states in 1947. Pakistan continues to be ruled by a military dictatorship that is troubled by a rapidly unraveling economy, while India is evolving as a stable and strong democracy with a reforming economy. Yet there is no American advantage in taking sides in their conflict over Kashmir. Correct and sincere neutrality will benefit the situation as well as U.S. interests.

  • Explain that giving India a permanent seat on the United Nations Security Council is not in America's best interests at this time. Given the current makeup of the Security Council, India's accession appears highly unlikely. Therefore, consulting with India on matters of mutual interest in the long term may bring India into a closer strategic alignment with the United States and convince its next generation of leaders to view cooperation with America as more important to its future stability and relations than the appearance of independence.

CONCLUSION
India has clearly demonstrated its interest in developing a closer relationship with the United States. Washington should take this opportunity to foster a meaningful strategic dialogue with Indian officials about U.S. concerns, such as proliferation, and to find ways to limit mischief by China and Russia in the region. Such an approach could result in better cooperation in both trade and security in the future.

Larry M. Wortzel is Director of the Asian Studies Center, and Dana R. Dillon is a Policy Analyst on Southeast Asia in the Asian Studies Center, at The Heritage Foundation.

 

1. Republican Platform 2000, at http://www.rnc.org/2000/2000platformcontents

2. Remarks before the U.S.-India Business Summit at the Hotel Waldorf Astoria in New York, September 13, 2000.

3. Prime Minister Vajpayee's Address to the Joint Meeting of the U.S. Congress, September 14, 2000.

4. Information from a discussion with Dr. Murli Manohar Joshi, India's Senior Minister for Human Resource Development, at a meeting at The Heritage Foundation, June 8, 2000, and with other Indian Cabinet Ministers in Washington, D.C., that same day.

5. See Gerald P. O'Driscoll, Jr., Kim R. Holmes, and Melanie Kirkpatrick, 2001 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2001), pp. 203-204.

6. Ibid. , p. 203.

7. The Index grades each country's economy on a scale of 1 to 5, with a rating of 1 considered "free" and a rating of 5 considered "repressed." In the 2001 Index, India received a rating of 3.8, which is classified as "mostly unfree." Ibid. , p. 204.

8. In the 1950s, after China occupied Tibet, the U.S. Central Intelligence Agency provided support to Tibetan minority groups opposed to China's control. In some cases, this support was provided with at least tacit Indian assistance. Xia Liping and Larry M. Wortzel, PLA Operational Principles and Limited War: The Sino-Indian War of 1962 (Alexandria, Va.: Center for Naval Analysis, forthcoming 2001), pp. 3-4. On Indian involvement in Tibet, see Lowell Thomas, Jr., The Silent War on Tibet (New York: Doubleday and Co., 1959); Michel Piessel, The Secret War on Tibet (Boston: Little Brown and Co., 1972); George N. Patterson, Tibet in Revolt (London: Faber and Faber, 1960); Allen S. Whiting, The Chinese Calculus of Deterrence: India and Indochina (Ann Arbor: University of Michigan Press, 1975).

9. Anthony Davis, "Heading for Trouble," Asiaweek, June 9, 2000, p. 41. See also Larry M. Wortzel, "China Pursues Traditional Great-Power Status," Orbis, Spring 1994, pp. 161-162.

10. From discussion with Dr. Murli Manohar Joshi, June 8, 2000.

11. Richard D. Fisher, Jr., "Time to Heed the Cox Commission's Wake-Up Call," Heritage Foundation Executive Memorandum No. 602, June 3, 1999.

12. Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China, U.S. House of Representatives, 106th Cong., 1st Sess., May 25, 1999, Vol. 2, pp. xviii. This report is also known as the Cox Committee report.

13. Ibid. , Vol. III, pp. 170-172.

14. Thomas Fuller, "Vajpayee Optimistic: Visit May Bolster U.S.-India Ties," International Herald Tribune, September 1, 2000, p. 6.

15. Brett D. Schaefer, "The United States Should Oppose Expansion of the U.N. Security Council," Heritage Foundation Backgrounder No. 1140, September 22, 1997, p. 2.

16. Initially, permanent Security Council membership was given to the victorious allies of World War II. In 1971, the People's Republic of China took the seat that had been held by the Republic of China on Taiwan.

17. The fundamental criterion on which each country's assessments are based is the ability to pay. This is determined by considering their relative shares of total gross national product, adjusted to take into account a number of factors, such as per capita income. United Nations, Basic Facts About the United Nations (New York: United Nations, 1998), p. 19.

18. Paolo Pasicolan, U.S. and Asia Statistical Handbook 2000-2001 (Washington D.C.: The Heritage Foundation, 2000), p. 106. These numbers address only contested U.N. votes. The vast majority of votes in the General Assembly are unanimous.

19. See Bryan T. Johnson, "U.S. Foreign Aid and United Nations Voting Records," Heritage Foundation Backgrounder No. 1186, June 12, 1998, p. 3.

20. Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China.

About the Author

Larry M. Wortzel, Ph.D. Visiting Fellow
The Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy

Dana Robert Dillon Senior Policy Analyst
Asian Studies Center