Speaking soon after his inauguration in January this year, President Barack Obama said that relations with India would be a priority for his administration: “Our rapidly growing and deepening friendship with India offers benefits to all the world's citizens … (the people of India) should know they have no better friend and partner than the people of the United States.”1 But it took eight months into his administration for the contours of Obama's India policy to emerge, and until recently it was unclear whether it would be a continuation of the Bush administration policy (widely described as the move from estranged to engaged democracies), or depart from it in significant ways.

In the early months of his administration, many in India feared that the burgeoning US–India relationship would slip under President Obama, despite his high-sounding words. An off-the-cuff remark on the need for US mediation on Kashmir, made in an interview with Time magazine, was the first to raise Indian hackles. Then there was the threat of the landmark 2005 US–India civil nuclear energy agreement becoming no more than a piece of paper, given the Democrats’ strong commitment to non-proliferation. Finally, persistent US lobbies for Obama's AfPak policy to be an AfPakInd policy, placing India in the same ‘problem’ basket as Pakistan, seemed to set the seal on India's dismay.

These fears were assuaged one by one. There have been no US attempts to mediate on Kashmir. AfPak remained AfPak, despite the lobbies. And Secretary of State Hillary Clinton's July visit to India began to operationalise the US–India civil nuclear energy agreement, with both sides agreeing to the terms of end user certification.

In some respects, continuity was a foregone conclusion. Given that the US–India partnership is based on democracy, covering a range of heads from shared values to trade and defence, changes in government are unlikely to affect or alter the relationship fundamentally. Moreover, India's pace in foreign relations is slow, and the development of the US–India partnership has been only slightly less measured than the general norm. Though a strategic partnership was announced in November 2001, it was only formalised in 2004 with the announcement of the Next Steps in Strategic Partnership, and many of the agreements that were reached then have yet to be implemented. Thus, the unfinished business of one administration is left for its successor to complete. Looking back, we find that President Bush and Prime Minister Manmohan Singh built on the partnership goals identified by the Clinton administration and the Vajpayee government; similarly, the Obama administration has just taken forward agreements reached during the Bush period.

Continuity plus

Yet to describe the Obama administration's India policy as purely a continuation would be a misnomer. Karl Inderfurth, former Assistant Secretary of State for South Asian affairs in the Clinton administration, has more accurately described it as “continuity plus”.2 And even in his description there were some elisions. The truth is that the Clinton administration began a dialogue on India's core goals – which have indeed been constant across changes in government – but was not able to meet them. In 2000, Brajesh Mishra, former National Security Adviser in the Vajpayee government, said the litmus test of India–US relations was the extent to which there would be progress on the trinity of civil nuclear cooperation, space cooperation and high technology transfers. Then Secretary Strobe Talbott and Foreign Minister Jaswant Singh embarked on high-level talks on civil nuclear cooperation, but not much progress was made because the two could not agree on whether and in what ways this would be tied to Indian participation in non-proliferation regimes.

It was this background that led Indian analysts to fear that the Obama administration would put the 2005 US–India civil nuclear energy agreement on the backburner. But they were wrong. The China–US civil nuclear energy agreement was signed in 1985, under the Reagan administration – in other words, China made its breakthrough under a Republican administration – but it was only implemented in 1998, under the Clinton administration. Similarly, it may have only been possible for India to achieve its breakthrough on civil nuclear cooperation under the Bush administration, in part because President Bush was willing to untie nuclear energy from non-proliferation (indeed the Bush administration, faced with startling revelations of continuing violation of the non-proliferation regime by, amongst others, the AQ Khan network in Pakistan, talked about revamping the non-proliferation treaties). But, as Secretary of State Hillary Clinton's July 2009 visit showed, the agreement's implementation will be hastened under a Democratic administration rather than slowed. Already India and the US have agreed on the terms of the end user certificates, and India has allocated space for US-built civil nuclear reactors.

With continuity ascertained (or the trinity behind them), what will be the plus? First of all, Secretary Clinton has raised the relationship to a level that did not exist under the Bush administration: during her visit it was announced that India and the US would conduct a high-level strategic dialogue to be co-chaired by herself and Indian Foreign Minister S.M. Krishna. The dialogue is to be based on five pillars – strategic cooperation; energy and climate change; education and development; economics, trade, and agriculture; science and technology, health and innovation. Each pillar will be developed through working groups, some of which will continue from previous discussions (for example, a joint initiative on agriculture was announced by President Bush, but allowed to lapse).

Reports suggest that it was at Secretary Clinton's initiative that a high-level US strategic dialogue with India was created, similar in status to the strategic dialogue established by the US with China. According to Inderfurth, the dialogue will include a few things that would be “hard to discuss with China – on capacity building and democratic institutions – which India and the US as co-founders of the United Nations Democracy Fund could work together on, given President Obama's commitment to revive US support for the UN”.3

Yet, while India and the US might collaborate on strengthening or assisting democracy abroad, what the Clinton–Krishna joint statement reveals is a commitment to strengthening democracy at home – through women's empowerment, poverty reduction, reaping the demographic dividend, and collaborating on rural and environmental upgrades.

G2 or G20, economy and environment

Until recently, India's focus was on a permanent seat in the UN Security Council, an aspiration to which the US paid lip service but little more than that. Following the world financial crisis of this year, however, India's focus has shifted to membership in international financial institutions and this is an aspiration that the US is more likely to support. China's exponentially increased economic leverage in the aftermath of the world financial crisis led many to speculate that a new economic superpower equation would dominate the world in the coming decades, US–China or G2. Against this, the G8 summit of spring 2009 saw an opposite development – the G20 countries being asked to pull their weight and pick up the slack. India's role in the G20, along with Brazil and South Africa, is a major reason for this attention.

The past decade has seen a sharp increase in US–India trade, which has gone from $US 13.7 billion in 2000 to around $US 43 billion in 2008, with a trade imbalance that is in India's favour.4 (Though these figures plunged sharply in 2009 due to the US recession, they are expected to rise again from 2010). While some Indian analysts argue that China's rise threatens US predominance in South Asia, the argument is unconvincing. True China's presence is more pervasive in South Asia than is the US’ – in the same decade of 2000–09, Chinese trade with India overshot that with the US in terms of growth (from $US 3 billion in 2000 to $US 38 billion in 2007).5 But even though Beijing may emerge as the largest trading partner in South Asia, the calculus is no longer a balance of power, nor are the US and China engaged in a strategic rivalry in the region. Indeed, India was quite emphatic in rejecting India–China rivalry when it was proposed by Taro Aso and Shinzo Abe of Japan.6 The US and China are also coming closer to collaborating on Afghanistan and Pakistan.

The Asia Society Task Force report of January 2009 is more on the mark in de-hyphenating India from China. In an imaginative set of recommendations, they suggest that as the international financial architecture is restructured in the aftermath of the crisis, an expanded role for India as well as China in the Bretton Woods institutions should be a priority for the Obama administration, along with support for Indian membership in economic institutions such as Asia-Pacific Economic Cooperation (APEC), the Organisation for Economic Cooperation and Development (OECD) and the International Energy Agency.7

In many ways, the Obama administration holds the promise of a Kennedy era type commitment to India, rather than the somewhat ginger engagement of the Clinton administration. The Asia Society's recommendation that the US engage with India in technological innovation that could lead to a second Green Revolution, keeping in mind that the Doha negotiations “can’t be concluded without addressing US agricultural subsidies”, recalls the 1960s US–India rice collaboration under the Rockefeller Foundation's aegis that led to India's first Green Revolution.

Their absolutely brilliant recommendation that a water credits system should be established along the line of the carbon credits system, with an exchange market for water credits set up at the Bombay Stock Exchange8 as part of the climate change negotiations, homes in on what is rapidly becoming one of India's great sources of insecurity, the growing depletion of water reserves, and cross-border conflicts with a number of countries, including Pakistan, China, Bangladesh and Nepal, on water sharing.

On the negotiations leading up to the UN Climate Change Conference in Copenhagen, however, despite the suggestion of the Asia Foundation that the climate change issue might provide an opportunity to manage US, China, India ties as a cooperative rather than competitive triangle,9 it looks as though the old North–South divide might re-emerge. Indian Environment Minister Jairam Ramesh recently visited China and stressed a partnership in resisting emission targets for the developing world. This is a strange position to take, given that India is in the company of angels when it comes to emissions while China is not, but what is frequently called the “stifling bureaucracy” is given to burying India's credit in a welter of moral outrage, especially when it comes to the West.

Strategising in the neighbourhood

Perhaps the biggest potential thorn in US-India relations is the US approach to Pakistan. President Obama's AfPak policy raised Indian hopes that the US was finally committed to supporting the transformation of Pakistan into a stable, democratic and militancy-free country. Such a transformation would have in itself entailed making peace with India, because it would have professionalised the Pakistan army, moving it towards civilian control and reducing its consuming dominance over Pakistan's polity and economy.

Unfortunately, the AfPak policy has decreasing support in the US, where more and more people are turning away from the commitment to a stabilised Afghanistan and, by extension, to a democratic Pakistan. Given President Obama's sinking ratings, the temptation for the US is to fall back on the much discussed strategy of cobbling together a military-dominated Pakistan that has apparently got militancy under control, seeking a Chinese guarantee in Afghanistan and (indirectly) Pakistan, thereby enabling a speedy exit from Afghanistan (say within a year or eighteen months).

If the Obama administration gives in to this temptation, the consequences for India will be relatively grim – although they pale in comparison to the consequences for Afghanistan. Pakistan has already used military aid for the Bush administration's ‘war on terror’ to strengthen its conventional weapons against India; it appears to have continued to develop its nuclear weapons program under US watch; and has bargained hard and successfully to extract a very large military aid package from the Obama administration in order to move some troops from its Indian border to fight the ‘Pakistani Taliban’ in its own northwest.

A US walk away at this point would allow this trend to overcome the weak and corrupt movement towards democracy in Pakistan, and would encourage the Taliban and their supporters, which include many in positions of power, from security agencies to elected politicians, to wait out and defeat the military's attempt to make a paradigm shift. India could be left to face a ‘hostile as usual’ Pakistan equipped with far more weapons for use against India than before 9/11. And Afghanistan would surely slip back into a decimating war.

Such a development would bring back bitter memories for India of US instrumentalism in South Asia, and would certainly harm the new potential in India–US ties. The two countries could move on from such a setback, but it would require concerted effort by the Obama administration to put substance into the working groups announced by Secretary Clinton and Foreign Minister Krishna, and a US seeking to revive from recession might not be in a position to do so.