U.S.-India Bilateral Agreements and "Global Partnership"
Released: 2006-03-10T00:00:00

Most Recent Developments

In early March 2006, President Bush made a three-day trip to India, the first such visit by aU.S. President in six years. In a speech preceding his trip, the President called India a "naturalpartner for the United States" and identified five broad areas of bilateral cooperation: counterterrorism, democracy promotion, trade promotion, health and environmental protections, andenergy initiatives. On March 2, the President and Prime Minister Singh issued a statementexpressing their mutual satisfaction with the "great progress" made in advancing the U.S.-India"strategic partnership." The statement, which reviewed bilateral efforts to expand ties in a numberof key areas and called for further such efforts, notably announced "successful completion of India's[nuclear facility] separation plan," a reference to ongoing and complex negotiations related toPresident Bush's July 2005 vow to achieve "full civilian nuclear energy cooperation with India." OnMarch 9, the Administration informally submitted to key congressional committee chairman aproposal for adjusting U.S. laws relevant to nuclear commerce. As President Bush was in NewDelhi, the Pentagon issued a statement lauding bilateral military relations with India and anticipatingpossibly major arms sales to that country. (1)

In the wake of major U-S.-India bilateral agreements signed in the summer of 2005, Congressheld four relevant hearings in the latter months of that year. On September 8, October 26, andNovember 16, the House International Relations Committee (HIRC) considered the perspectives ofState Department officials and nongovernmental experts on the progress and meaning of increasinglywarm U.S.-India relations and relevant agreements. Similar panels testified before the SenateForeign Relations Committee on November 2. This Senate hearing, along with the October Househearing, was focused specifically on what has become the most controversial aspect of the July 2005Joint Statement issued by President Bush and Prime Minister Manmohan Singh: an intention toachieve full bilateral civilian nuclear energy cooperation.

In mid-October 2005, the chairs and ranking members of the Senate Foreign Relations andHouse International Relations Committees sent a letter to Secretary of State Rice requesting that theAdministration begin "substantive discussion" with their committees on possible legislativeproposals related to envisaged civil nuclear cooperation with India. During the October 26 HIRChearing, Committee Chairman Henry Hyde called "strange and unusual" the Administration'sminimal consultation with Congress on the details of such plans and said he was "troubled" by publicstatements from the Administration suggesting that congressional support for such cooperation wasbroad and virtually guaranteed. (2) In a November letter which echoed much of the analysis ofnongovernmental hearing witnesses, a group of 18 experts, scholars, and former U.S. governmentofficials urged Members of the Congress to "critically examine" the proposed nuclear cooperationagreement, saying it "poses far-reaching and potentially adverse implications for U.S. nuclearnonproliferation objectives" and is unlikely to bring India "into closer alignment with other U.S.strategic objectives." (3)

In late January, U.S. Ambassador to India Mulford caused a diplomatic stir when heexplicitly linked progress on the proposed nuclear deal with India's upcoming International AtomicEnergy Agency (IAEA) vote on Iran, saying if India chose not to vote with the United States, hebelieved the U.S.-India initiative "will die in the Congress." A State Department spokesman calledthe Ambassador's comments a "personal opinion" and denied that the issues were linked. India'sExternal Affairs Ministry responded that India "categorically rejects" any attempts to link the twoissues, and opposition and leftist Indian political figures criticized the remarks as "a serious affrontto India and its sovereignty." (4) On February 4, India voted with the majority (and the UnitedStates) on an IAEA resolution to refer Iran to the U.N. Security Council. New Delhi called theresolution "well-balanced" and insisted that its vote should not be interpreted as detracting fromIndia's traditionally close relations with Iran. The United States later expressed being pleased withIndia's vote. (5)

Developments relevant to civil nuclear cooperation with India have progressed in countriesother than the United States. In September 2005, India and France issued a joint statement promisingthat the two countries would work toward "conclusion of a bilateral nuclear cooperation agreement,"and France committed itself to working with other countries and the NSG to accomplish this. However, after four months of uncertainty over the issue of separating India's civilian and militarynuclear facilities, Paris indicated that New Delhi would have to make "some compromises" in thisarea, with the French Ambassador to India identifying a common French-U.S. interest in reachinga consensus among NSG members, which he said "is not easy." Also in September, Canada reversedits previous policy and announced that it would supply nuclear-related "dual-use items" to India'scivil nuclear program. Following the March 2 U.S.-India Joint Statement, Australia, which is hometo nearly half of the world's unmined uranium, indicated that it might alter its policy of not sellingthis resource to non-signatories of the Nuclear Nonproliferation Treaty, meaning India may becomeeligible. (6)

After more than seven months of intensive negotiations over a "credible, defensible, andtransparent" Indian plan to separate its civilian and military nuclear facilities as per the July 18 JointStatement, U.S. and Indian officials were able to reach agreement just hours before the issuance ofthe March 2 Joint Statement while President Bush was in New Delhi. The Indian plan, whichrequires India to move 14 of its 22 reactors into permanent international oversight by the year 2014and place all future civilian reactors under permanent control, exempts India's fast breeder reactorsand also would guarantee an uninterrupted supply of nuclear fuel for India's civilian facilities. UnderSecretary of State Burns, the lead U.S. negotiator, insists that the plan is a boost for U.S.nonproliferation efforts, claiming that the percentage of Indian nuclear facilities under safeguardswill grow as most future facilities are likely to be designated civilian. Numerous nonproliferationexperts remain critical of of the proposed deal. On March 8, the White House issued a press releaseresponding to critics. (7)

On November 1, 2005, S. 1950 , to promote global energy security throughincreased cooperation between the United States and India on non-nuclear energy-related issues, wasintroduced in the Senate. On December 15, H.Con.Res. 318 , expressing concernregarding nuclear proliferation with respect to proposed full civilian nuclear cooperation with India,was introduced in the House.

Overview and Congressional Interest

On July 18, 2005, during the first state visit to Washington, D.C., by an Indian leader sinceNovember 2001, President George W. Bush and Prime Minister Manmohan Singh issued a JointStatement resolving to establish a "global partnership" between the United States and India throughincreased cooperation on economic issues, on energy and the environment, on democracy anddevelopment, on non-proliferation and security, and on high-technology and space. Of particularinterest to many in Congress were the statement's assertion that, "as a responsible state withadvanced nuclear technology, India should acquire the same benefits and advantages as other suchstates," and President Bush's assurance that he would work on achieving "full civilian nuclear energycooperation with India." (8) Such cooperation would require changes in both U.S. law and Nuclear Suppliers Group (NSG)guidelines. This clause is widely viewed as representing the most direct (if still implicit) recognitionto date of India's de facto status as a nuclear weapons state and thus as a reversal of more than threedecades of U.S. nonproliferation policy. Notably omitted from the July 18 statement was anymention of India's aspirations for a permanent seat on the U.N. Security Council. Just weeks earlier,the United States and India signed a ten-year defense framework agreement. (9) Many observers view this andother U.S. moves to build strategic relations with India as part of an effort to "counterbalance" therise of China as a major power, although both Washington and New Delhi insist that their strategiccooperation is not directed against any third party.

This report reviews the major provisions of U.S.-India bilateral agreements signed in 2005and further explicated in March 2006, including the status of issues addressed in the now completedNext Step in Strategic Partnership initiative, security relations, economic relations, and global issues. The report reviews arguments made in favor of and in opposition to increased bilateral cooperationin each major issue-area and includes Indian perspectives. Regional issues involving China,Pakistan, and Iran also are discussed. (10)

U.S.-India agreements in June and July 2005 represent a new set of landmarks in rapidlywarming ties between the world's two most populous democracies. After decades of estrangementduring the Cold War, U.S.-India relations were freed from the constraints of global U.S.-Sovietbipolarity in 1991, the same year that New Delhi began efforts to transform its once quasi-socialisteconomy through fiscal reform and market opening. However, relations with India continued to beviewed primarily through the lens of U.S. nonproliferation interests. The marked improvement ofrelations that began in the latter months of the Clinton Administration -- President Clinton spent sixdays in India in March 2000 -- was accelerated after a November 2001 meeting between PresidentBush and then-Indian Prime Minister Atal Bihari Vajpayee, when the two leaders agreed to greatlyexpand U.S.-India cooperation on a wide range of issues. India's swift post-9/11 offer of full supportfor U.S.-led counterterrorism operations was widely viewed as reflective of the positive newtrajectory in bilateral relations. Pro-U.S. sentiment may be widespread in India (11) and many in Washingtonand New Delhi see a crucial common interest in cooperating on efforts to defeat militant Islam.

President Bush's 2002 National Security Strategy of the United States stated that "U.S.interests require a strong relationship with India," and a recent National Intelligence Councilprojection said the likely rise of China and India "will transform the geopolitical landscape" indramatic fashion. (12) In January 2004, President Bush and Prime Minister Vajpayee formally launched the "Next Stepsin Strategic Partnership" (NSSP) initiative, which sought to address longstanding Indian interestsby expanding bilateral cooperation in the areas of civilian nuclear activities, civilian space programs,and high-technology trade, and expanding dialogue on missile defense. (13) In March 2005, the BushAdministration unveiled a "new strategy for South Asia" based in part on a judgment that the NSSPwas insufficiently broad and that sets as a goal "to help India become a major world power in the 21stcentury." (14)

Nongovernmental proponents of closer U.S.-India security cooperation often refer to the riseof China and its potential disturbance of Asian stability as a key reason to "hedge" by bolstering U.S.links with India. While the Bush Administration has sought to downplay this probable motivator,Pentagon officials reportedly assert that India is likely to purchase up to $5 billion worth ofconventional weapons from the United States, including platforms that could be "useful formonitoring the Chinese military." (15) Skeptics of a U.S. embrace of India note that the IndianParliament passed resolutions condemning U.S. military operations against Iraq and later declinedU.S. requests for troop contributions in the effort to stabilize that country. India's U.N. Mission hasvoted with the United States roughly 20 percent of the time over the past five years. (16)

According to the current Indian Prime Minister, three major factors have driven a redefinitionof U.S.-India ties: the end of the Cold War, the accelerating pace of globalization, and the increasinginfluence of nearly two million Indian-Americans. However, there is concern among elements ofIndia's security establishment and influential leftist political parties that the United States is seekingto turn India into a regional "client state." In accord with India's traditional nonalignment sentiments,leftist figures have called the July 18 Joint Statement overly concessional to U.S. interests and afurther violation of the ruling coalition's commitment to independence in foreign affairs. Suchcriticism may have elicited assurances by India's defense ministry that decisions about any futurejoint Indian-U.S. military operations would be strictly guided by India's national interest and theprinciples of its foreign and defense policies. In 2003, the Indian external affairs minister denied thatIndia's relations with the United States could be used as a "counterforce" against China, saying, "Wecategorically reject such notions based on outmoded concepts like balance of power. We do not seekto develop relations with one country to 'counterbalance' another." (17)

The Administration's policy of assisting India's rise as a major power has significantimplications for U.S. interests in Asia and beyond. The course of U.S. relations with China andPakistan, especially -- and the relationship between Beijing and Islamabad, itself -- is likely to beaffected by an increase in U.S.-India strategic ties. Of most immediate interest to the U.S. Congressmay be the Bush Administration's intention to achieve "full civilian nuclear energy cooperation withIndia," and its promise to bring before Congress related and required legislative proposals. (18) Many in Congress alsoexpress concerns about India's relations with Iran and the possibility that New Delhi's policies towardTehran's controversial nuclear program may not be congruent with those of Washington. Morebroadly, congressional oversight of U.S. foreign relations in Asia likely will include considerationof the potential implications of increased U.S. cooperation with India in functional areas such asarms sales and high-technology trade. With rapid increases in Indian and Chinese influence on theworld stage, many in Congress will seek to determine how and to what extent a U.S.-India "globalpartnership" will best serve U.S. interests.

Next Steps in Strategic Partnership and Beyond

Since 2001, the Indian government has pressed the United States to ease restrictions on theexport to India of dual-use high-technology goods, as well as to increase civilian nuclear and civilianspace cooperation. These three key issues came to be known as the "trinity," and top Indian officialsstated that progress in these areas was necessary to provide tangible evidence of a changed U.S.-Indiarelationship. (19) Therewere later references to a "quartet" when the issue of missile defense was included. Prior to theformal launching of the NSSP initiative in January 2004, the United States had sought to balanceIndian interests in cooperation on and trade in sensitive technologies with concerns aboutproliferation and security. According to Secretary of State Powell in October 2003,

We have been trying to be as forthcoming as we canbecause it's in our interest to be forthcoming, but we also have to protect certain red lines that wehave with respect to proliferation, because it's sometimes hard to separate within space launchactivities and industries and nuclear programs, that which could go to weapons, and that which couldbe used solely for peaceful purposes. (20)

India's export controls are generally considered sturdy, with some analysts calling New Delhi's trackrecord comparable to or better than that of most signatories to multilateral export regimes. (21) However, others callattention to recent U.S. sanctions on four Indian individuals and entities said to have been involvedin WMD-related transfers to Iran. The "strategic partnership" forwarded by the NSSP involvedprogress through a series of reciprocal steps in which both countries took action designed to expandengagement on nuclear regulatory and safety issues, enhanced cooperation in missile defense,peaceful uses of space technology, and creation of an appropriate environment for increasedhigh-technology commerce. (22) Despite the "nuts-and-bolts" nature of NSSP efforts, someanalysts characterized the initiative's overarching goal -- increasing rather than denying New Delhi'saccess to advanced technologies -- as a revolutionary shift in the U.S. strategic orientation towardIndia. (23) On July 18,2005, the State Department announced successful completion of the NSSP, calling it "an importantmilestone" in the transformation of U.S.-India relations and an enabler of further cooperativeefforts. (24) The July 18Joint Statement includes provisions for moving forward in three of the four NSSP issue-areas (theJune 28 defense agreement calls for expanded collaboration on missile defense).

Since 1998, several Indian entities have been subjected to case-by-case licensingrequirements and appear on the U.S. Commerce Department's "Entity List" imposing licensingrequirements for exports to foreign end users involved in weapons proliferation activities. InOctober 2001, President Bush waived nuclear-related sanctions on aid to India, and the number ofIndian companies on the Entity List was reduced from 159 to 2 primary and 14 subordinate. InSeptember 2004, as part of NSSP implementation, the United States modified some export licensingpolicies and removed the Indian Space Research Organization (ISRO) headquarters from the EntityList. Further adjustments came in August 2005 when six more subordinate entities were removed. Indian companies remaining on the Entity List are four subordinates of the ISRO, four subordinatesof the Defense Research and Development Organization, one Department of Atomic Energy entity,and Bharat Dynamics Limited, a missile production agency. (25)

It may be that numerous Indian observers will remain skeptical about the NSSP process evenafter the July 18 Joint Statement, viewing it in the past as a mostly symbolic exercise that will notalter a perceived U.S. intention of ensuring its own technological superiority. (26) Many such analystsbelieve that past U.S. moves have not been substantive, opining that changes in licensingrequirements for high-technology trade have been of little consequence for prospective Indian buyersand progress on space and nuclear energy cooperation has been marginal. Months after its January2004 launch, the NSSP appeared to some Indian analysts to have "crashed against bureaucraticobstacles in Washington" (often an oblique reference to the nonproliferation interests of the StateDepartment). (27)

Civilian Nuclear Cooperation(28)

Among the more controversial and far-reaching provisions of the July 18 Joint Statement isan implicit recognition of India's status as a nuclear weapons state. The Bush Administration notesIndia's "exceptional" record on (horizontal) nonproliferation and its newly enacted laws to strengthenexport controls on sensitive technologies. The Administration insists that U.S. interests are bestserved with India "joining the mainstream of international thinking and international practices onthe nonproliferation regime." (29) The Director General of the International Atomic Energy Agency(IAEA) has welcomed the agreement as "out of the box thinking" that could contribute to theenhancement of nuclear safety and security. (30) Many favorable analysts view the decision in the context of aperceived need to "counterbalance" a rising China, calling nuclear cooperation with India a meansof both demonstrating U.S. resolve to assist India in increasing its power and stature, and bringingNew Delhi into the global nonproliferation regime rather than leaving it on the outside. For theseobservers, engaging a de facto nuclear India as such is a necessary and realistic policy. (31)

There is evidence that India's increasingly voracious energy needs can partially be offsetthough increased nuclear power capacity, although at present nuclear power accounts for about 2.6%of India's total electricity generation. Prime Minister Singh asserts that a major expansion of India'scapacity in this sector is "imperative," and India sets as its goal generation of at least 20,000megawatts of nuclear power by the year 2020 (present capacity is less than 3,000 MWe). GeneralElectric, which built India's Tarapur nuclear power plant in 1969, is an American company thatmight see financial gains from resumed sales of nuclear fuel to India. (32)

In April 2005, Secretary of State Rice noted that current U.S. law precludes the sale ofnuclear technology to India, and she conceded that U.S. nuclear cooperation with India would have"quite serious" implications for the Nuclear Nonproliferation Treaty (NPT). (33) Critics of such cooperationinsist that a policy of "exceptionalism" toward India may permanently undermine the coercive powerof the NPT. They say such a move would seriously risk turning the existing nonproliferation regimefrom "imperfect but useful mechanisms to increasingly ineffectual ones," and they fault the BushAdministration for "lowering the bar too much" with a selective and self-serving policy. (34) Many opponents worrythat the Joint Statement exacerbates a global perception that the United States cannot be countedupon to honor its own nonproliferation obligations, including those made in the 1995 and 2000 NPTReview Conferences. This may encourage other supplier countries, such as France, Russia, andChina, to relax their own rules and provide increased aid to potential security risks, such as Iran,Pakistan, and Syria. (35) A further concern is that NPT member countries with advanced scientific establishments that haveforesworn nuclear weapons may become tempted to develop their own such capabilities, especiallyif negotiations over the status of Iran and North Korea break down. (36) Some also see overt U.S.strengthening of India as disruptive to existing balances of power involving both Pakistan andChina. (37) Moreover,some in Congress do not believe the United States should sell nuclear materials to any country thatis not a member of the NPT and which has detonated a nuclear device. (38)

During a September 8, 2005 hearing on U.S.-India relations, the first held after the July 18Joint Statement, Members of the House International Relations Committee expressed widespreadapproval of increasingly warm U.S.-India relations. However, many also expressed concerns aboutthe potential damage to international nonproliferation regimes that could result from changes in U.S.law that would allow for civil nuclear cooperation with India. Some voiced negative appraisals ofthe Bush Administration's lack of prior consultation with Congress leading up to the July 18 JointStatement. Administration officials appearing before the panel insisted that the United States wasnot condoning India's nuclear weapons program and that bringing India into the mainstream ofnonproliferation norms would represent a "net gain" for international nonproliferation efforts. Theseofficials also assured the Committee that the Administration will do nothing to undercut NSG guidelines or the body's consensus process, even as they conceded that preliminary consultationswith NSG members had brought "mixed results," with some expressing reservations and/oropposition to making an exception for India. (39)

Many influential Indian figures have weighed in with criticism of the specifics of greaterU.S.-India nuclear cooperation. For example, former Indian Prime Minister Vajpayee of theBharatiya Janata Party (BJP) criticized the July 18 Joint Statement as causing "consternation" amongIndian nuclear scientists and defense analysts. His primary objections were that separating India'scivilian and military nuclear facilities could erode India's ability to determine the future size of itsnuclear deterrent and that the costs of such separation would be "prohibitive." India's mainopposition BJP asserts that India stands to lose from the July 18 deal while the United States riskslittle, a claim echoed by some nongovernmental analysts. (40) Prime Minister Singh has dismissed such criticisms asmisguided, insisting that the stipulations will not lead to any limitations on or outside interferencein India's nuclear weapons program, and that substantive Indian action is conditional upon reciprocalU.S. behavior. (41)

Under the heading of "Energy and the Environment," the July 18 Joint Statement containsan agreement to "strengthen energy security and promote the development of stable and efficientenergy markets in India ..." This clause has obvious relevance to the above discussion and may alsobe considered in the context of U.S. efforts to discourage India from pursuing construction of aproposed pipeline that would deliver Iranian natural gas to India through Pakistan (see "RegionalIssues" section below). Washington and New Delhi launched a new Energy Dialogue in May 2005. The forum's five Working Groups, one of which addresses nuclear power, seek to help secure clean,reliable, affordable sources of energy. (42)

Civilian Space Cooperation

A U.S.-India Joint Working Group on Civil Space Cooperation was established in March2005. The inaugural meeting was held in Bangalore, home of the Indian Space ResearchOrganization (ISRO), in June of that year. This forum is meant to provide a mechanism forenhanced cooperation in areas including joint satellite activities and launch, space exploration,increased interoperability among existing and future civil space-based positioning and navigationsystems, and collaboration on various Earth observation projects. The next meeting is slated to takeplace in Washington, D.C., by spring 2006. (43) The July 18 Joint Statement calls for closer ties in spaceexploration, satellite navigation and launch, and in the commercial space arena. U.S. proponentsaver that increased civil space cooperation with India can lead to practical solutions to everydayproblems related to communication, navigation, the environment, meteorology, and other areas ofscientific inquiry. Immediate benefits could include launching U.S. instruments on a planned Indianmoon mission and working to include an Indian astronaut in the U.S. astronaut training program. The two nations also express a readiness to expand cooperation on the Global PositioningSystem. (44) Whilecurrent cooperative plans may be considered noncontroversial, there have in the past been U.S.efforts to prevent India from obtaining technology and know-how which could allow New Delhi toadvance its military missile programs. (45)

High-Technology Trade

The United States and India established a U.S.-India High-Technology Cooperation Group(HTCG) in November 2002. The July 2003 inaugural HTCG session saw trade representatives fromboth countries discuss a wide range of issues relevant to creating conditions for more robust bilateralhigh technology commerce, including market access, tariff and non-tariff barriers, and exportcontrols. Several public-private events have been held under HTCG auspices, including a July 2003meeting of some 150 representatives of private industries in both countries to share their interestsand concerns with governmental leaders. Commerce Department officials have sought to dispel"trade-deterring myths" about limits on dual-use trade by noting that only a very small percentageof total U.S. trade with India is subject to licensing requirements and that the great majority of dual-use licensing applications for India are approved. (46) In February 2005, the inaugural session of the U.S.-IndiaHigh-Technology Defense Working Group met in Bangalore, where participants sought to identifynew opportunities for cooperation in defense trade. The July 18 Joint Statement noted the signingof a Science and Technology Framework Agreement. A later resolution of a dispute over intellectualproperty may lead to increased scientific collaboration. (47)

U.S. proponents of increased high-technology trade with India assert that expanded bilateralcommerce in dual-use goods will benefit the economies of both countries while meeting New Delhi'sspecific desire for advanced technologies. The United States has taken the position that "the burdenof action rests largely on Indian shoulders" in this arena given past frustrations with Indian tradebarriers and inadequate intellectual property rights protections. (48) In addition to concernsabout sensitive U.S. technologies being transferred to third parties, critics warn that sharinghigh-technology dual-use goods with India could allow that country to advance its strategic militaryprograms. Some in Congress have expressed concern that providing India with dual-use nucleartechnologies could allow that country to improve its nuclear weapons capabilities. (49)

Security Relations

Since September 2001, and despite a concurrent U.S. rapprochement with Pakistan,U.S.-India security cooperation has flourished. Both countries acknowledge a desire for greaterbilateral security cooperation and a series of measures have been taken to achieve this. TheIndia-U.S. Defense Policy Group -- moribund since India's 1998 nuclear tests and ensuing U.S.sanctions -- was revived in late 2001 and meets annually. U.S. diplomats have called bilateralmilitary cooperation among the most important aspects of transformed U.S.-India relations. On June28, 2005, Indian Defense Minister Pranab Mukherjee was in Washington, DC, where the UnitedStates and India signed a ten-year defense framework agreement that refers to a "new era" forbilateral relations and calls for collaboration in multilateral operations, expanded two-way defensetrade, increasing opportunities for technology transfers and co-production, expanded collaborationrelated to missile defense, and establishment of a bilateral Defense Procurement and ProductionGroup. The United States views defense cooperation with India in the context of "common principlesand shared national interests" such as defeating terrorism, preventing weapons proliferation, andmaintaining regional stability. (50)

Some analysts believe that India, as a major democracy with a well-trained and professionalmilitary, is a worthy candidate for greater security cooperation with the United States, even ifsignificant asymmetries (on technology transfers, for example) could persist and limit therelationship. Greater interoperability and coordination with the Indian armed forces has the potentialto benefit the United States in areas including counterterrorism, counternarcotics,counterproliferation, and peacekeeping operations. (India has extensive experience in this lattercategory.) (51) Skepticspoint to an Indian strategic culture rooted in concepts of nonalignment and multipolarity as reasonsthat a true strategic partnership will be difficult to develop in the security realm. (52) Apparently divergent U.S.and Indian worldviews are demonstrated in significantly differing policies toward Iraq and thestrategy for fighting religious extremism, relations with and investments in Iran and Burma, and,perhaps most importantly for New Delhi, relations with Pakistan. Also, the Indian military is quitenew to doctrines entailing force projection, having long been focused on defending the country'ssovereignty from internal or neighboring threats.

Several Indian officials have expressed concern that the United States is a "fickle" partnerthat may not always be relied upon to provide the reciprocity, sensitivity, and high-technologytransfers sought by New Delhi. Indian military officers voice frustration at what they see asinconsistent U.S. policies and a lack of U.S. credibility. (53) The June defense pact and July Joint Statement apparently seekto mollify Indian concerns in these areas, but it remains to be seen whether or not leaders in bothcapitals can overcome potential political opposition and provide what their counterparts seek fromthe defense relationship.

Military-to-Military Relations

Since early 2002, the United States and India have held numerous and unprecedented jointexercises involving all military branches. February 2004 "Cope India" mock air combat saw Indianpilots in late-model Russian-built fighters hold off American pilots flying older F-15Cs, surprisingU.S. participants with their innovation and flexibility in tactics. While military-to-militaryinteractions are extensive and growing, some analysts believe that joint exercises are of limitedutility without a greater focus on planning for potential combined operations that arguably wouldadvance the interests of both countries. One suggests that there is no reason why the United Statesand India cannot formalize a memorandum of understanding on cooperative military operations inthe Indian Ocean region. (54) Such a move could, however, antagonize security planners inboth Islamabad and Beijing.

Arms Sales

Along with increasing military-to-military ties, the issue of U.S. arms sales to India has takena higher profile. In early 2004, a group of 15 private U.S. arms dealers traveled to New Delhi fortalks with Indian officials on potential sales. The Indian government reportedly possesses anextensive list of desired U.S.-made weapons, including P-3C Orion maritime patrol aircraft, PAC-3anti-missile systems, electronic warfare systems, and possibly even F-16 fighters. In March 2005,the Bush Administration welcomed Indian requests for information on the possible purchase of F-16or F/A-18 multi-role fighters and indicated that Washington is "ready to discuss the sale oftransformative systems in areas such as command and control, early warning, and missile defense." The Director of the Pentagon's Defense Security Cooperation Agency is slated to visit New Delhiin September 2005 for classified technical briefings on U.S. missile defense systems and combataircraft, and India may seek to purchase the USS Trenton , a decommissioned U.S. Navy transportship. India has emphasized a desire that security commerce with the United States not be a"buyer-seller" interaction, but instead should become more focused on technology transfers,co-development, and co-production. (55) At present, approximately 70% of India's imported militaryequipment has come from Russia.

Missile Defense

India was among the first (and few) countries to welcome President Bush's May 2001 callfor development of missile defenses. Expanded dialogue on missile defense was among the fourissue-areas of the NSSP and the June 28 defense pact calls for expanded collaboration in this area. The United States has been willing to discuss potential sales to India of missile defense systems andhas provided technical briefings on such systems. While New Delhi has expressed interest inpurchasing Arrow and/or Patriot anti-missile systems for limited area use, the Indian defenseminister states that India has no intention of "accepting a missile shield from anyone." Some Indiancommentary on missile defense has counseled against Indian purchases of U.S.-made systems, sayingthey are unlikely to be effective, could be overwhelmed by augmented Chinese and Pakistani missileinventories, and would increase regional insecurities. (56) U.S. proponents of increased missile defense dialogue with Indiaview it as meshing with President Bush's policy of cooperating with friendly countries on missiledefense. Skeptics warn that the introduction of anti-missile systems in South Asia could disrupt theexisting regional balance and perhaps fuel an arms race there.

The Proliferation Security Initiative

The Proliferation Security Initiative (PSI) launched by President Bush in May 2003 seeksto create multilateral cooperation on interdiction of WMD-related shipments. According to the StateDepartment, PSI is not an organization, but rather an activity in which more than 60 "participants"cooperate and coordinate efforts. New Delhi has been concerned that a "core group" comprisingPSI's founding states represented a two-tiered system, but has since been reassured that organizationwill be nondiscriminatory. However, India's navy chief indicates that India has "reservations" aboutthe mechanics of maritime interventions and that New Delhi seeks to be among the initiative'sdecision-makers rather than a "peripheral participant." (57) Neither the June 28 defense pact nor July 18 Joint Statementmake direct mention of the PSI.

Economic Relations

As India's largest trading and investment partner, the United States strongly supports NewDelhi's continuing economic reform policies. U.S. exports to India in 2004 were valued at $6.1billion (up 22% over 2003), while imports from India totaled $15.6 billion (up 19% over 2003),making India the 22nd largest U.S. trading partner. The U.S.-India Economic Dialogue, which wasinaugurated in New Delhi in March 2000, has four tracks: the Trade Policy Forum, the Financialand Economic Forum, the Environment Dialogue, and the Commercial Dialogue. Each of thesetracks is led by the respective U.S. agency and Indian ministry. The July 18 Joint Statement includescalls for revitalizing the Economic Dialogue, most concretely through the launch of a new CEOForum, and promoting modernization of India's infrastructure "as a prerequisite for the continuedgrowth of the Indian economy." The CEO Forum, composed of ten chief executives from eachcountry representing a cross-section of key industrial sectors, seeks to more effectively bring privatesector input to government-to-government deliberations. In March 2006, the Forum issued a reportidentifying India's poor infrastructure and dense bureaucracy as key impediments to increasedbilateral trade and investment relations. (58)

In September 2004, U.S. Under Secretary of State Larson told a Bombay audience that "theslow pace of economic reform in India" has meant "trade and investment flows between the U.S. andIndia are far below where they should and can be," adding that "the picture for U.S. investment isalso lackluster." (59) InAugust 2005, the New Delhi government announced that it was abandoning plans to sell more thana dozen state-owned companies in what many analysts called a major setback to India's economicreform program, one that likely will affect the flow of foreign investment there. The move was seenas a gesture to India's communist parties which support the ruling coalition in New Delhi. (60) Despite the generallyclosed nature of the Indian economy and U.S. concerns, India's recent GDP growth rates are amongthe highest in the world, averaging more than 6.5% annually for 2002-2004.

In November 2005, U.S. Treasury Secretary Snow made a five-day visit to India focusingon that country's efforts to further liberalize its financial sector and improve financing infrastructure.During his stay, Secretary Snow led the U.S. delegation at a meeting of the U.S.-India Financial andEconomic Forum in New Delhi. During the same month, U.S. Trade Representative Portman visitedNew Delhi for meetings with top Indian officials, where he inaugurated the U.S.-India Trade PolicyForum and urged "ambitious" cuts in India's trade-distorting agricultural subsidies. AmbassadorPortman and Indian Commerce Minister Nath made agreements to establish several focus groups topromote bilateral trade.

U.S. proponents of increased economic cooperation with India make traditional free-marketarguments that more bilateral trade and investment will benefit the economies and citizens of bothcountries. Some U.S. interest groups have expressed concern that closer U.S.-India economic tiescould accelerate the practice by some U.S. firms of outsourcing IT and customer service jobs toIndia. Proposals have been made in Congress and various state governments to restrict outsourcingwork overseas. Bush Administration officials have expressed opposition to government restrictionson outsourcing, but they have told Indian officials that the best way to counter such "protectionist"pressures in the United States is to further liberalize markets. Other U.S. interest groups have raisedconcern over the outsourcing of financial services (such as call centers) to other countries that entailtransmitting private information of U.S. consumers. U.S. officials have urged India to enact newprivacy and cybersecurity laws to address U.S. concerns over identify theft. (61)

Global Issues

Terrorism

In the July 18 Joint Statement, President Bush and Prime Minister Singh resolved to "combatterrorism relentlessly" through "vigorous counterterrorism cooperation." The June 28 defense pactcalls for strengthening the capabilities of the U.S. and India militaries to "promote security and defeatterrorism." (62) AU.S.-India Joint Working Group on Counterterrorism was established in January 2000 and meetsregularly; the two countries also share relevant intelligence. New Delhi has long been concernedwith the threat posed to India's security by militant Islamic extremism, especially as related toseparatism in its Jammu and Kashmir state. Following major terrorist attacks on the United Statesin September 2001, Washington's own attention to this threat became greatly focused, and India'soffers of full cooperation with U.S. counterterrorism efforts included base usage and territorialtransit. However, ensuing U.S. operations in Afghanistan were better facilitated throughaccommodation with Pakistan, leaving many in New Delhi uncomfortable with a (renewed) U.S.embrace of a country that Indian leaders believed to be "the epicenter of terrorism." Thus, whileWashington and New Delhi agree on the need to combat terrorism, there remains a disconnect in thetwo countries' definitions of the term and in their preferred policies for combating it globally (forexample, the 2003 U.S.-led invasion of Iraq and its aftermath gave pause to Indian leaders who mayhave been predisposed to greater U.S.-Indian counterterrorism cooperation). (63)

United Nations Reform

India, Germany, Brazil, and Japan (the "G4") have engaged in an effort to expand the U.N.Security Council (UNSC) and gain permanent membership in that body. After confirming that Indiais a worthy candidate for such status, the United States on July 12 announced a rejection of the "G4"proposal and urged U.N. member states against voting for changes. In early August, it was reportedthat the United States and China would begin coordinating their efforts to defeat the G4 measure,which requires a two-thirds majority in the U.N. General Assembly for passage. In what manyanalysts called the one substantive disappointment for India during the Prime Minister's DC visit,the July 18 Joint Statement makes no explicit mention of New Delhi's U.N. aspirations, although itdoes reflect President Bush's view that "international institutions are going to have to adapt to reflectIndia's central and growing role." Many in Congress have expressed support for India's permanentrepresentation on the UNSC. The Bush Administration's position is that proposed change in themakeup of the UNSC should take place only in the context of an overall agenda for U.N. reform.

Other Global Issues

The inaugural session of the U.S.-India Global Issues Forum was held in October 2002; themost recent meeting came in May 2005. Within this forum, the United States and India discussissues related to protection of the environment, sustainable development, protection of thevulnerable, combating transnational organized crime, and promotion of democratic values andhuman rights. (64) Otherrelevant provisions in the July 18 Joint Statement include establishment of a new U.S.-India GlobalDemocracy Initiative and a new U.S.-India Disaster Relief Initiative. The United States and Indiaalso cooperate on efforts to combat HIV/AIDS; the Joint Statement calls for strengtheningcooperation in this area. Bilateral initiatives pursued in the "global issues" realm may be consideredpolitically noncontroversial.

Regional Issues

Closer U.S.-India relations growing from an overt U.S. desire to increase India's power haveimplications for U.S. relations with other regional countries, as well as for the dynamics among thosecountries. Policy makers in Beijing, Islamabad, and Tehran are among those who follow closely thecourse of a U.S.-India "global partnership" with an eye toward how their own geopolitical standingis affected.

China

A rising concern for U.S. policymakers is China's growing global "reach" and theconsequences that China's increasing international economic, military, and political influence hasfor U.S. interests. After decades of relatively little U.S. attention to India, recent U.S. moves toembrace New Delhi are widely seen in the context of Washington's search for friendly Asian powersthat may offset Beijing's power, prevent future Chinese hegemony, and give Washington morenuanced opportunities for leverage in Asia. However, for many observers, it appears unlikely thatIndia will be willing to play a role of "balancer" against China except on New Delhi's own terms andnot those imposed from abroad; in this view, New Delhi tends to see Beijing more as an opportunitythan as a problem. For some American analysts, the emergence of an overt counterweight allianceis viewed as both misguided as policy and unlikely as an outcome. (65)

A brief but intense India-China border war in 1962 had ended the previously friendlyrelationship between the two leaders of the Cold War "nonaligned movement." (66) Just days before NewDelhi's May 1998 nuclear tests, India's defense minister called China "potential threat number one,"and a 2002 projection by India's Planning Commission warned, "The increasing economic andmilitary strength of China may pose a serious challenge to India's security unless adequate measuresare taken to fortify our own strengths." The Indian Defense Ministry asserts that China's closedefense and arms sales relations with Pakistan -- which include key nuclear and missile transfers --its military modernization, its strategic weapons, and "its continental and maritime aspirationsrequire observation." Significant elements of India's defense establishment consider China a potentfuture threat, express worry about New Delhi's perceived military vulnerability vis-a-vis Beijing, andview with alarm a Chinese "string of pearls" strategy that may seek to restrain India through a seriesof alliances with its neighbors. More recently, some Indian analysts have concluded that Chinaprovided Pakistan with cruise missile technology. In addition, there are signs that the global oilmarket's center of gravity is shifting toward the vast markets of India and China, and the twocountries' energy companies often find themselves competing for oil and gas supplies abroad. (67)

Despite still unresolved issues, particularly on conflicting territorial claims, high-levelexchanges between New Delhi and Beijing regularly include statements from both sides that thereexists no fundamental conflict of interest between the two countries. Upon the Indian PrimeMinister's June 2003 visit to Beijing -- the first such visit in more than a decade -- the two countriesissued a joint statement asserting, "The common interests of the two sides outweigh their differences. The two countries are not a threat to each other." Recent years have seen bilateral securityengagement including modest, but unprecedented, joint military exercises and plans to expandbilateral defense cooperation. In April 2005, Chinese Prime Minister Wen Jiabao visited New Delhiwhere India and China agreed to launch a "strategic partnership" to include broadened defense linksand efforts to expand economic relations. Trade between India and China is growing rapidly andmany in both countries see huge potential benefits in further trade expansion. New Delhi andBeijing also have agreed to cooperate on energy security. (68)

Pakistan

For many observers, the July 18 Joint Statement struck a serious blow to the "hyphenization"of U.S. relations with India and Pakistan. A persistent and oftentimes perplexing aspect of U.S.engagement in South Asia has been the difficulty of maintaining a more-or-less balanced approachtoward two antagonistic countries while simultaneously promoting perceived U.S. interests in theregion. Despite India's clearly greater status in material terms, the United States has for the pasthalf-century found itself much more closely engaged with Pakistan, even if U.S. policy toward oneSouth Asian power often required justification in the context another's perceived interests. In recentyears, however, the United States has shown increasing signs of delinking its India policy from itsPakistan policy, and this process has been starkly illuminated with an explicit recognition of Indiaas "a responsible state with advanced nuclear technology." Islamabad expressed "serious concern"over recent U.S.-India agreements and their potential meaning for Pakistan. Islamabad has requestedand been refused an opportunity to be given the same consideration as is being shown to New Delhi(Pakistan's nonproliferation case was seriously undercut by the exposure of A.Q. Khan's globalproliferation network). (69) Increased U.S.-India cooperation may lead Pakistan to furtherdeepen its ties with China.

India has never been completely comfortable with the post-9/11 U.S. embrace of Pakistanas a key ally, and New Delhi reacted with disappointment to March 2004 news that Pakistan wouldbe designated a major non-NATO ally (MNNA) of the United States. When the BushAdministration suggested that India could be considered for similar status, New Delhi flatly rejectedany military alliance with Washington. Many in India regarded U.S. handling of the MNNAannouncement as a betrayal. One year later, New Delhi was again expressing disappointment withthe United States, this time after the Bush Administration's decision to resume sales of F-16 fightersto Pakistan. (70) NewDelhi likely will continue to view warily Islamabad's relations with both Washington and Beijing.

Iran

As noted above, a potentially major area of friction in U.S.-India relations could be futuredealings with Iran. India-Iran relations have traditionally been positive and, in January 2003, the twocountries launched a "strategic partnership" with the signing of the New Delhi Declaration and sevenother substantive agreements. Later that same year, India's external affairs minister said that Indiawould continue to assist Iran's nuclear energy program. In September 2004, the State Departmentsanctioned two Indian scientists for violating the Iran Nonproliferation Act of 2000 by transferringto Iran WMD-related equipment and/or technology (India denied any transfers took place). (71) In 2005, New Delhi gaveconditional diplomatic support for Iran's controversial nuclear program -- so long as it abided byinternational obligations -- and indicated it would decline any U.S./Western requests that it act asintermediary with Tehran on this issue. Many Indian and international analysts assert that Indianrelations with Iran will be an important litmus test of the New Delhi government's pledge to pursuean independent foreign policy. (72)

In recent years, Indian firms have taken long-term contracts for purchase of Iranian gas andoil. Building upon growing India-Iran energy ties is the proposed construction of a pipeline todeliver Iranian natural gas to India through Pakistan. The project has become a point of contentionin U.S.-India relations. In June 2004, Indian External Affairs Minister Natwar Singh said Indiawould be willing to consider building the $4-$7 billion pipeline if Pakistan provided securityguarantees. The Bush Administration repeatedly has insisted that it is "absolutely opposed" to anygas pipeline projects involving Iran; a U.S. arms control official has said "it would be a mistake toproceed with this pipeline" as it would generate revenue that Iran would use "for funding its weaponsof mass destruction program and for supporting terrorist activities." (73) In January 2006, Secretaryof State Rice explained:

We have to recognize that India is a big and importantand growing economy. It will have to access civil nuclear energy if it's not to be totally dependenton carbon and if it is not to be dependent on carbon relationships with countries that we've hadconcerns about. (74)

U.S. law requires the President to impose sanctions on foreign companies that make an "investment"of more than $20 million in one year in Iran's energy sector. However -- despite U.S. concerns andwith the strong support of Indian leftist and opposition parties -- New Delhi has maintained that itsrelations with Tehran are affable and that the pipeline project is in India's own national interest. InJuly 2005, Indian and Pakistani officials made a "serious commitment" to begin work on thepipeline, and a key Indian official reportedly said the United States had not pressured India to changeits course on this issue. (75)

During a September 2005 hearing on U.S.-India relations, numerous members of the HouseInternational Relations Committee expressed serious concerns about India's relations with Iran,especially with New Delhi's apparent opposition to the referral of Iran's nuclear case to the U.N.Security Council. Some senior members of the panel suggested that full Indian cooperation with theUnited States on this matter should be a prerequisite for U.S.-India cooperation in the civil nuclearfield. President Bush later expressed to the Indian prime minister growing U.S. concerns aboutdevelopments in Iran, and 12 Members of the House signed a letter to Singh strongly encouragingIndian cooperation in holding Iran accountable for potential violations of internationalagreements. (76) As theIAEA prepared for a late-September meeting to consider referral of Iran to the UN Security Council,India declined to take a strong stand and urged a consensus on further negotiation. BushAdministration officials reportedly pressured New Delhi by linking its policy on Iran's nuclearprogram with movement on the civil nuclear cooperation deal. (77)

When the September 24 IAEA roll was taken, New Delhi surprised most observers by votingwith the majority (and the United States) on a resolution finding Iran in noncompliance(consideration of referral to the Security Council was deferred). The vote brought waves of criticismfrom Indian opposition parties and others who accused the New Delhi government of betraying afriendly country by "capitulating" to U.S. pressure. New Delhi later defended the vote in theinterests of "allowing time for further negotiations" and being in India's national interest. A seniorState Department official later called India's vote a "dramatic example" of New Delhi's stance toprevent Iran from acquiring a nuclear weapons capability. (78)

Relevant Congressional Hearings

The U.S.-India 'Global Partnership': How Significant for American Interests? , House InternationalRelations Committee, November 16, 2005.

U.S.-Indian Nuclear Energy Cooperation: Security and Nonproliferation Implications , SenateForeign Relations Committee, November 2, 2005.

The U.S.-India 'Global Partnership': The Impact on Nonproliferation , House International RelationsCommittee, October 26, 2005.

The U.S. and India: An Emerging Entente? , House International Relations Committee, September8, 2005.