GP Insights # 91, 29 June 2019
Trade and tariff, restrictive oil imports from Iran, the Russian S-400 air defence deal and Huawei's entry in 5G are the important issues that were of significance in the agenda from the recent visit by the US Secretary of State Mike Pompeo to India from 25 to 27 June.
The tour took place amid the current trade tensions between the US and India, and both the ministers Pompeo and Jaishankar equivocated that this "won't impact ties between the two nations, and their partnership is already beginning to reach new heights." The two sides discussed at length on India's $5 billion deal with Russian and on the on-going tensions between the US and Iran that have led India, who is heavily dependent on imports, look for options in meeting its energy needs.
What is the background?
The visit of the Secretary of State comes in less than two weeks after India increased tariffs on some of the exports from the US. This decision was seen as a response to the Trump administration's move to end India's participation in a preferential trade program. Delhi first announced plans to impose new tariffs a year ago in retaliation to the increased US import duties on Indian steel and aluminium. However, that decision afterwards was repeatedly delayed while both the sides held a series of trade talks.
When it comes to the aircraft deal with Russia, India had signed it in October 2018 during Putin's visit to India. However, perceived as a violation of the Countering America's Adversaries Through Sanctions Act (CAATSA), the US has opposed the deal and has threated India with sanctions. In addition to this, the visit also came at the backdrop of US's rift with Iran and trade conflict with China that has made India's energy deficits and Huawei issue as major talking points for Mike Pompeo in the visit.
What does it mean?
As Mike Pompeo's visit concluded, the Indian Prime Minister was seen flying to attend the G20 Summit in Osaka, Japan. Where do India-U.S. relations figure as New Delhi seeks to leverage its relationships with all the major powers in the Summit and the subsequent bilateral meetings? Mike Pompeo's visit should be seen precisely as the groundwork to India's act of leveraging. Hence what opportunity did Pompeo's visit give or didn't give for India?
Firstly, it opened and acknowledged a deeper level of communication that needs to be done if the problems at hands regarding trade have to be dealt with. Thus both Pompeo and External Affairs Minister S Jaishankar were seen taking a pragmatic approach by saying that while trade differences exist, they are keen on addressing them effectively as well. At the outset, it might seem that no fruitful agreement or resolution was begotten from the visit, but Pompeo was never meant to meet that requirement.
Secondly, Trump's decision was seen by many as a sign of strain in a bilateral relationship in recent decades, but India has dealt with several lows in the relation between these two once 'estranged democracies.' As always Russia continues to be an irritant when it came to the Indo-US relationship. Moreover, historically, India has been able to channelize the differences and have tilted towards buying more in the defence sector from the West. However, what has differed in this situation is along with the US, India has to simultaneously make its decision clear vis-à-vis China and 5G tussle and its interests in Iran over Chabahar have now hit a slag. This is where Pompeo's visit assumes significance as clarity was needed in terms of what Washington thinks constituted a "strategic partnership."
Thirdly, the visit also brought to light what India is likely to do in its stance in the Huawei. With no comment on it, India will remain non-committal on allowing the company in 5G rollouts. Previously, the government has already formed a panel to examine concerns arising out of Huawei's participation in 5G.
Sourina Bej is currently a Research Associate with the ISSSP, NIAS. She can be reached at email@example.com.