Behind the scenes

Lack of definition and of transparency governed the entire trip. Deals were struck behind closed doors, often to set aside parliamentary laws.

Industrialists queue up at a banquet hosted in honour of Obama at the Rashtrapati Bhavan on January 25.

EMBLEMATIC of the visit of United States President Barack Obama to India was the single-file queue of major Indian CEOs waiting to shake hands with Obama. There they were: the Ambani brothers, Gautam Adani, Sunil Mittal, Ratan Tata, men whose names are embossed in gold. Not often do these CEOs wait their turn. They are known to seize the moment. The concept of the VVIP—an extra V to enhance Very—is essentially an Indian term. It is a child of the liberalisation era. These are VVIPs. But in the presence of Obama, they stood patiently in the most orderly queue seen that evening in India.

The bonhomie between Obama and Prime Minister Narendra Modi set the terms for the media coverage of the visit. This is a crucial aspect of contemporary public relations managers for senior political figures. When Modi went to Australia, he was said to be best buddies with Premier Tony Abbott (the Australian said that Modi is “like a brother”). Personal connections are essential to highlight. Hugs and smiles, easy gestures and affection for each other on Twitter: this sets the mood for the visit and governs the superficial media attention.

Behind the scenes, in the U.S.-India CEO forum and in the negotiations between the bureaucrats, the real business of these trips is worked out. The CEOs complained about India’s loose adherence to intellectual property laws and worried about too much regulation in Indian industrial and financial law. They longed for a looser regime so that they can, in Modi’s tortured phrase, Make in India. “The government is taking initiatives to ensure ease of doing business,” promised Modi. His Niti Aayog chief, Arvind Panagariya, had written in Foreign Policy (the journal of the U.S.-based Council on Foreign Relations) that Indian labour laws would be the first to be reformed. “Highly rigid labour laws,” he wrote last June, “have made entrepreneurs terrified of hiring workers.” Modi now promises these CEOs that he would lessen their terror. Soon, labour laws will be eviscerated and investment will be able to operate untrammelled. Obama agreed, “Modi and I are interested in smart regulation.” “Smart regulation” was left undefined.

The lack of definition and of transparency governed the entire trip. Deals were struck behind closed doors, often to set aside parliamentary laws. In 2010, the Indian Parliament passed the Civil Liability for Nuclear Damage Act, which ensured that in the event of any nuclear accident the liability vested with the suppliers. A year later, a terrible nuclear accident at Fukushima, Japan, underlined the wisdom of such a law. Not only was public confidence shaken by the Fukushima accident, but also public dismay was raised to fever pitch when the insurers refused to cover the damages. Inoculation for private capital in the event of financial or industrial disasters has become common—this is what often passes by the name of “reform”. Profits from these massive investments are guaranteed, but losses are to be borne by the public exchequer. “The deal is done,” announced Foreign Secretary Sujatha Singh, indicating that the Modi government has been willing to set aside the 2010 Act. U.S. firms General Electric and Westinghouse can comfortably enter, respectively, Kovada (Andhra Pradesh) and Mithi Virdi (Gujarat) without worry. The India-Nuclear Insurance Pool, a vague mechanism in case of an accident, should not provide comfort to those worried about a disaster.

The Modi government put the word about that the liability arrangement would put India “in conformity” with the Convention on Supplementary Compensation for Nuclear Damage (CSC), a 1997 IAEA (International Atomic Energy Agency) framework that essentially shelters suppliers from liability. Only a handful of states have signed on to the CSC, whose payout in the event of a disaster is far less than promised by the IAEA’s Vienna Convention of 1963. The U.S., one of the signatories to the CSC, has made it clear that it would not be bound by its dispute resolution mechanism. This being the 30th anniversary of the Bhopal disaster, it is correct to be watchful about the promises of the U.S. government and multinational industrial firms, both of whom joined the Indian government to let down the victims of the 1984 Union Carbide gas leak. Down the hall from the pomp of the dinners and the hushed debates around “Contracting Parties” and “Public International Law”, sat the merchants of defence and the architects of geostrategy. They had two things before them—the push by the U.S. to draw India into its view of international affairs, and the push to encourage India to buy U.S. weaponry. Hardeep Singh Puri, India’s former ambassador to the United Nations and an adviser to the Bharatiya Janata Party (BJP), wrote that the discussions sought convergence related to “stability and security in the Asia-Pacific and Indian Ocean regions”. The undercurrent here is to suborn India into the narrative of U.S. policy—to “Pivot to Asia”, which is a polite way of saying to “Encircle China”. Modi and Obama released a “Joint Strategic Vision for the Asia Pacific and Indian Ocean”, which poked a finger in Beijing’s eyes. In the anodyne language of such statements, it called for maritime security and respect for the U.N. Convention on the Laws of the Sea.

What is fascinating about this is that the U.S. objects to the Convention on the Laws of the Sea on the grounds that the protection of seabed exploration and mining impinges on U.S. strategic interests. Nonetheless, the “Joint Strategic Vision” refers to this Convention to assert the need for peaceful waters, “especially in the South China Sea”. This is a direct challenge to Beijing. Visits by Modi to Australia and Japan—two other pillars of the U.S. strategy to build a ring around China—indicate that India has now drifted into a U.S. vision of Asian relations.

China reacted as it would. The Chinese Foreign Ministry suggested that such mention of the South China Sea was a provocation. As an influential member of the Nuclear Suppliers Group, China has indicated that it might block India’s membership. The NSG, which controls the disbursement of nuclear material, was founded in 1974 in reaction to India’s test of a nuclear weapon. Allowing India into this group would not only ease access to nuclear materials, but also signal India’s removal from the nuclear pariah list. In aggravating China to please the U.S., Modi went some way to undermine his own objectives—namely to move India into the nuclear power club.

India currently straddles two major international blocs—the U.S.-led alliance and the BRICS community. It is not going to be easy for the Modi government to balance the two, especially if the U.S.demands that India make inflammatory statements to affirm the U.S. position on world affairs (namely on China, Israel and Iran). Despite all the excitement about economic deals, the U.S. offers little to India apart from the import of U.S.-made goods into the Indian market. The BRICS bloc offers far more, including energy security and mutually beneficial trade. It will not be easy for the Modi government to navigate these waters, as the Chinese reaction to the Joint Statement indicates. More caution in foreign policy should be the watchword.