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Ultimately the above deal has to translate into economics, commerce, trade, development, FDI and mutual admiration for each other. At the moment, Indian Opposition politicians think that the country’s independence and prestige has been sold out. The US politicians are thinking a bit differently but much worst. They are thinking that a gapping hole has been punched into the NPT regime. Yes, both are right, although the Indian side is stretching it a bit. In US, the Nuclear Lobby Group has gained an upper hand. They confidently are predicting to scuttle the deal. These few former US State Department officials are idealists. They wish to remove all nuclear weapons from India’s hands, hence will precipitate a crisis prior to the deal’s approval. When Manmohan – Bush finalized this deal in July of 2005, the Lobby Group mounted an instantaneous opposition. Unable to persuade the Bush administration to renege the deal, they changed tactics and started a campaign against it with the US Congress (the elected body). This resulted in US sending a tough negotiator in Nicholas Burn to negotiate further details and possible concessions to salvage the deal in the US Congress. He did well and ended up in getting ironclad concessions prior to President Bush’s visit to India. The opposition to this agreement is not dead yet. The Nuclear Lobby Group is making a last ditch effort to scuttle the deal in the Congress. But full backing of the President Bush and his able Secretary of State Condi Rice will ultimately help to get this deal through.

How does US benefit with this Deal

President Bush is looking forward at the changing times. From 1970-78 when US sponsored NPT (Nuclear Proliferation Treaty) and its subsequent laws, it was their intent to punish India for exploding a nuclear bomb in 1974. They deliberately set a date of 1967 as criteria for inclusion in the select group. China was gleeful; as they had exploded their bomb in 1964, hence found their berth in this group automatically. So did France. To exclude India with a fifth of humanity and a bomb was a mistake. India at that time was economically weak and had a quarrelsome person as a prime minister, hence could not negotiate an exclusion from these laws. For 25 years India endured ridicule for not signing the NPT and was barred from any civilian use nuclear technology and materials. Later US politicians, to placate Pakistan, even blamed India for starting a nuclear arms race. In short, India was ignored. Although China was no better economically then, yet it was welcomed as one of the World power.

India went through hard times economically from 1960 to 1992. Finally a new leadership emerged which decided to right the wrongs. Economics improved a bit with a few minor changes. They decided to send a notice to the world that enough is enough; India cannot be ignored any more. They backed it up by conducting five nuclear tests. With a new leader, a new confidence and a new recognition as a high technology business center of the world, India emerged on the World stage as a power comparable in size and stature of the big five. US started to look at India more favorably. They found that India is putting up a 7-8% growth with very little outside FDI cash. The same is not true about China. Huge FDI cash had to be donated to China to push growth to 8% level. Hence, US businesses concluded that India has something better than the others. The answer laid in its free and democratic society, in the strength of its financial institutions, laws that govern the business activity and overall capability of the masses to eject a leader who did not perform to their expectations. None of this is true in China. Hence focus on India increased. Although China is still the darling of the US investors in the short term, long-term focus has shifted to India.

• Economic benefits to US

1) Take for example the recently agreed Indo –US nuclear deal. If India sets up 10 large size nuclear power plants, which is the intent in next 15 years, India will import technology and hardware from US for at least half of these projects (technology for the remaining may come from elsewhere). Each of these plants at a green field site will cost about $4 billion. In short, orders worth $15-20 billion will be placed with the US companies in next 6 to 8 years. Remaining orders may go to France, Germany, Canada and UK. Monies for these installations will come to India either in form of FDI or soft & commercial loans. Banks and equipment manufacturers abroad will be delighted to make this money available to India. In return India will pay it back with goods and services export. Same way as China does it for the past 25 years. It is a win-win situation for the US lenders and US suppliers. Further expansion of business dealings on both sides will follow.

2) Another example of emerging Indo-US co-operation is in the area of aerospace industry. Order for $8 Billion worth of commercial airplanes has been placed with Boeing of Seattle. Another big order for 125 military planes is on the way. US parliamentarians have to work these big business deals in their thinking prior their vote.

3) The high tech manufacturing industry is at a take off stage in India. In last 3 months, announcements by big US companies totaling $7 billion dollars investment have been made. This has gone far beyond India’s expectations. This sector together with IT services and BPO will power the US industry and businesses into higher profitability and help India accelerate its growth.

4) Co-operation in auto parts, pharmaceuticals, R & D and defense industry cannot be ruled out. For each of these US is looking for a low cost supplier. China does not fit the bill as too many eggs go into one basket, hence another supplier has to be located and developed. India fits the bill.

• Political Benefits to US

With a few strokes of pen, President Bush eliminated a major Cold War irritant from the scene. India is not politically and diplomatically aligned with US as the Europe is, but India as a strategic partner in ensuring safety of sea-lanes of the Indian Ocean is very valuable. At the moment and as long as US stays in Iraq and Afghanistan, the world will perceive US as big bully. A major regional power, with a different outlook than the European and the US is needed to cool the tempers off. India has to step in to prevent further sliding of the Middle East into anarchy. Hot heads in Washington are looking at each development in the region as a threat. This mindset has earned US demerit points on the international diplomatic chessboard. Muslim sympathy for US after 9/11 has evaporated. That is why Osma Bin Laden is still free and Mullah Omar is beginning to make inroads into Afghanistan. Further escalation in Iran will worsen the situation. Hence, India has to do what it has done best for the last 50 years i.e. advise a respite and cool thinking. Any development, which will extricate US out of Iraq and now Iran, will be welcomed by US.

• Military Benefits to the US

US will benefits immensely with India as a major military power. Forty percent of worlds’ oil and commerce passes through the Indian Ocean sea-lanes. These today are unprotected. Pirates in the Red Sea and at the Malacca Straits prey on commerce. Moreover, angry Iran could block Straits of Hormuz and prevent oil shipments. US alone cannot police all the sea-lanes of the world. They need India to be there in the Indian Ocean to ensure free flow of commerce.

Rising China as a military power is a menace. There defense expenditure of $85 billion a year and rising is nothing short of a desire to dominate East Asia. In-spite of US having its 6th Fleet in the area, they will be powerless to prevent capture of Taiwan by China if they so wished. Only China’s commercial and export interests are holding them back. Hence containing China should be the major goal of US’s China policy. India is the lynch pin of this policy. Suitably armed and ready to defend, India will easily neutralize China together US’s 6th Fleet and Japan. China’s political influence in Indian Ocean Littoral States, bar Pakistan is minor. Pakistan has no scruples. Thanks to President Bush, he has sent the first message to the Pakistani leaders in 55 years that Indo-US - Pakistani relations have permanently been de-hyphenated.

Future military expansion in India to take up its role as a regional player bids well for the US military hardware suppliers. They will gain immensely over next 20 years.

What does India gets out of the Deal?

Benefits to India are immense with this deal. First and foremost, is the de-facto recognition of India as a nuclear power? It is not clearly stated in the deal, but it’s an implicit understanding. India missed this opportunity in 1970-78. It is unlikely that this opportunity is to be missed again. Second, is the future recognition of India as a permanent UN Security Council member? India has tried this in last three years. It has not succeeded. It is unlikely to succeed in next 10 years. But with a Trillion and a half dollar economy (8% growth over ten years), India will make this grade. When UN reforming movement gains strength in the future, India will be right there and waiting for this opportunity.

Hence benefits to India could also be categorized as economical, political and military.

• Economic benefits to India

As stated above, there is an urgent need in India for capital to build its infrastructure and manufacturing base. And there is only one source to get it i.e. US & Europe. US and Europe at this moment are content with sending capital to China to supply them with consumer goods. The former very cleverly have avoided exporting manufacturing technology to supply high priced, high technology capital goods to China. This component together with auto-parts, pharmaceuticals and computer hardware could herald India into big leagues in ten years and beyond. Commercial Aircraft manufacture, ship building, factories to make giant power plants, steel making plants, mining & drilling hardware, petroleum & petrochemical plant building facilities could be ultimately shared with India. The latter within ten years will have a workforce sufficiently skilled to undertake all the foregoing. It will be beneficial to US. Labor costs in India, will always stay a third of US, and European costs. That will make India an ideal candidate for this technology transfer.

Opportunity of the KPO (Knowledge Process Off-shoring) is knocking at India’s door. Indian graduates of Science and Engineering will play a major role in this expansion. In about 5 years KPO Off-shoring will grow immensely. India stands to benefit most from it. Thanks to the edge, Indian science & technology graduates have established.

All these benefits will start to accrue when the US finally sets its seal of approval on Indo-US Nuclear deal.

• Political Benefits to India

After 50 years of isolation, India will have the opportunity to say something, in world forums like UN, WTO and World monetary lending institutions, and be heard. This was not the case previously. Reasons – India had no clout. With western economies in the future, tied more and more with India, the latter’s clout will improve. There will be frequent inter-government exchanges on matters of mutual interest. India could become a full member of the select group of G-8 members. Gone will be the days that US politicians will heap scorn on India, the way they are doing it today. The Indo – US Nuclear deal is in fact dumping the past and unlocking the hidden potential of the future. In addition Pakistan may get the cue and begin a rethink of its policies towards India.

• Military Benefits to India

Indian military is in dire need to diversify its sourcing of military hardware. Russia has been a very reliable source for the past 40 years. This source has to be diversified. Ultimately all military hardware will have to be produced in India. But development time in India is too long and success factor is low. This has to be speeded up. The only way at India’s disposal is buy its immediate needs and import technology to develop its own weapon system. It is a bit expensive up front but pays dividend later as India joins the select group of countries as a source of military hardware.

Additionally a well-equipped Indian military will preclude any repeat of 1962 Chinese invasion or future conflicts with Pakistan.

Technological Leapfrog

Current progress in India on building its own nuclear power plants at best has a failing grade. Most of nuclear power plants in India are of other country’s design. The Indian Department of Atomic Energy falsely clings to the view that Fast Breeder Reactors will allow India to bridge the nuclear gap in the future. That future may be difficult to arrive. It may be too distant. This will hold economic development as hostage. Moreover developing nuclear technology is one thing, implementing it is another. For even homegrown technology, India will have to import critical components, Uranium, Heavy Water and high capacity steam turbines etc. If that is true then why not to import the whole thing and do it in a shorter period of time. In addition, technology obtained today will be useful when in 20 years time Cold Fusion process is tamed and safer electric power is generated. India as of this year is a full participant in the multi-nation Cold Fusion research in France. First generation commercial prototype plants will be ready in 10-15 years. India has to be ready to build its own second-generation plants when most of the bugs of the Cold Fusion Technology have been worked out.

US Congress and its Support

The above is the major headache, which the Manmohan and Bush Administration have to deal with. Currently, US Nuclear Lobby Group has the ear of the US Congress. The latter has become hostage to its past fallacies. They enacted bad laws in the past and are having difficulty modifying them. Now it is for the US Congress to redeem itself by changing the bad laws. I do not mean that North Korea and Pakistan are to be invited to become full members of the select group. They are nothing on the international scale. Rather, one pre-condition for joining this select group has to be the nations capability to further the cause of peace and human welfare. The both miserably fail this test.

I hope that sanity prevails in this select group of distinguished gentlemen in the US Congress. If past week is any indication then narrow mindedness and racism has begun to prevail. They just dumped a US ports deal with an Arab based company. God bless, it does not happen to the Indo-US Nuclear deal.

Conclusion

Thanks to diplomatic and political skills of President Bush and Prime Minister Manmohan Singh, we have a deal which lift India into the Trillion-dollar club, faster. They both have worked hard to turn, lemons into lemonade. Ten years from now when electricity supply situation in India’s households, industry and farms is significantly better, we have to thank them both. Thank God, we are not struck with in one sided, Iran - Pakistan – India pipeline deal. This would have held India permanently hostage to Pakistan’s will.

Hari Sud

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