April 8, 2013 |
By Austin Fernando -
Having read a post by HE Jaliya Wickramasuriya, our Ambassador in the USA, titled “A Role for Sri Lanka in US Pivot to Asia”,
I thought it may be ideal to understand how others compete to be in the
US pivot to Asia to do business. I mean “business” only in economic
terms and
exclude issues such as politics, rights, accountability etc; the presently more quoted US interests.
exclude issues such as politics, rights, accountability etc; the presently more quoted US interests.
Concurrently, Minister Maithripala Sirisena
stating that “the Sri Lankan government had implicit faith in the
Indian central government and would continue to maintain close ties with
them despite the current situation in Tamil Nadu” meant to me another
aspect of relationship building with India. Since USA and India are hand
in glove on many fronts Minister Sirisena’s statement too should be
considered as a means to engage India and the USA as a joint response
for a common cause.
Therefore, these may be showing attitudinal change of the government
to the powers that are considered internationally anti-thematic towards
Sri Lanka, e.g. Geneva. Very little discussion is in public domain on
this ‘silent relationship building efforts.’
Ambassador Wickramasuriya has focused on the trend of western
economic and political power shifting east by reinforcing trade and
security alliances across Asia. He suggested examining President Obama’s
foreign policy pivots to Asia and the unfolding vision of “America’s
Pacific Century.” viz: U.S. strategic relations with Sri Lanka. He
orchestrated links between Americans and Sri Lanka before 2009 and how
the post-conflict status is being handled by Sri Lanka, and impressed on
the potential openings for Americans and projected rebuilding trade
partnership and means to become a stronger geopolitical and strategic
ally of the USA. This is beckoning the Americans.
Media rightly commented whether Ambassador Wickramasuriya “is mooting
his own foreign policy” and its possible fallout- especially when there
are some Sri Lankan friends who do not have positive relations with
Americans. While pondering how this economic and defense vision could be
widened, I think this is certainly a pacifying approach after Geneva-
March 2013. In that we must be aware of how for instance Indians deal
with Americans in the fields of Wickramasuriya’s interests. Such
recapitulation could be appropriate ‘Lessons Learnt’ even for Minister
Sirisena to exhibit his genuine intentions.
Defense pivoting
Relationship building anticipated by both cannot be instantaneous. It
is time consuming and overarching. In it there should be factual
presentations, deep understanding and adjustments. To enlighten I may
quote U.S.-India Defense Trade opportunities for deepening the
partnership between India and USA, as discussed by Amer Latif and
Ambassador Karl F. Inderfurth.
They have taken Georges Seurat’s ‘pointillism’ as a simile and
pointed out that “U.S.-India defense relations could be taking shape
with each defense dialogue, each defense sale, each military exercise,”
another dot being applied to the canvas of U.S.-India defense ties that
is slowly, gradually, taking shape as an increasingly important defense
partnership. This stance has enhanced partnerships to an extent for
Defense Secretary Leon Panetta to refer to India as a “linchpin” in
America’s new defense strategy focused on “rebalancing” to the
Asia-Pacific region. Can we participate in this performance? I doubt
very much.
Increasing defense trade has been an important component of expanding
partnership, proved by U.S. defense orders reaching US$ 9 billion plus
from a negligible base. Lankan defense trade is more with China, Russia
and Pakistan- less friendly with Americans- and to expect USA to call us
the “linchpin” may be a distant dream. Concurrent praise of the
military and government by Deputy Defense Minister from China and
Defense Secretary from Pakistan last week, along with the news of
presence of Chinese nuclear submarines sighted in the Indian Ocean close
to Sri Lanka may not submit the most suitable time to even discuss this
subject! In that background, Wickramasuriya’s approach may not be the
best to some with militaristic orientation, as we would not have won
LTTE terror without these countries. With the potential for criticism of
showing ingratitude, and, derogatory rhetoric made against Americans /
Indians by politicians and powerful bureaucrats, the task before
Wickramasuriya could be uphill.
Further, the institutional aspect was reinforced by Panetta by
appointing Deputy Defense Secretary Ashton Carter as the point man for
deepening bilateral defense trade. He wished cutting through
“bureaucratic red tape on both sides” to make defense trade simple,
responsive, and effective. Do we need similar initiatives?
One important recommendation made in the USA – perhaps a platform for
pivoting- on defense business was that India should increase the
percentage of foreign direct investments (FDIs) in India’s defense
sector to over 50% from 26%, which was inadequate incentive for US
companies to invest in India. This was considered as probably offending
Indian sensitivities about excessive foreign investment in the Indian
defense sector. However, it was thought of as an arrangement that could
ultimately help India’s efforts to develop its own defense industry,
through state-of-the-art defense industrial practices and technology
transfers. We are not there as yet.
Another was that the U.S. government should seriously examine the
possibility of greater coproduction and co-development projects with
India. Co-development would not initially delve into sensitive
technologies and focus on non-sensitive defense equipment that mutually
adds value. Panetta declared that in the long term he was certain that
this would transition defense trade to substantial co-production, and,
eventually, high-technology joint research and development. We do not
anticipate such.
Hence, envisaged pivoting mechanisms are many. I do not hear such in
Sri Lanka or by Americans or Indians on Sri Lanka. The growing suspicion
in lieu is our potential defense arrangements with China, i.e.
purported “Hambantota to be a Chinese Naval Base”, China assisting
military camp upgrading in the north close to India, Chinese nuclear
submarines etc. These may be even bogus claims. But, such suspicions
could influence Americans and Indians, which will keep them on “back
foot”, and withdraw from cooperation in defense and even economic
development arrangements. However, the Chinese may be worrying with
Wickramasuriya’s proposition. Minister Sirisena may note these
complexities.
Nirupama Rao’s Indian Agenda
With his ambassadorial experience in Washington and the proximity to President Rajapaksa,
Wickramasuriya could be a great canvasser to execute his “new foreign
policy”. However, he may be well advised to glimpse through what HE Nirupama Rao,
Indian Ambassador in Washington, a very intelligent lady, had to say
regarding how India is accessing the US pivot in Asia-Pacific- the same
interest Wickramasuriya possesses, in addition to the earlier mentioned
political complexities.
On March 15th 2013 Rao’s remarks made at a Statesmen’s Forum of the
Center for Strategic and International Studies (CSIS) on the “U.S- India
Economic Agenda in 2013″ may be helpful to Wickramasuriya.
Wickramasuriya may convince CSIS’s Inderfurth on the ‘Sri Lankan agenda
with the USA’, and be a competitor to Rao to attract Americans, by
presenting his case. He may be perhaps guided by what Rao did.
Need for studies
Rao spoke of two extremely insightful and thought-provoking studies
(i.e. ‘Bilateral Investment Treaty and Beyond’ and ‘Changing Nature of
India- US trade and economic relations’.) Americans do not fall in line
by just seeing programmes emerging from nowhere and therefore similar
studies will help Wickramasuriya. The robust optimism Rao expressed for
India cannot be facilitated by 150 person-groups visiting Washington
with our President. Rao considered the two reports, taken together,
presented a comprehensive roadmap for the future of India-U.S economic
relations and focused on the two pillars of Indian economic
co-operation; namely, mutual investments and trade; and, an outline of
the broad context in which Indians see the possibilities of greater
engagement between the two countries. She quoted from the latest Budget
Speech by Minister Chidambaram to reinforce her excellent presentation,
which I do not find in Wickramasuriya’s, most likely due to some
political urgency dictated by Geneva for hasty preparation and
submission.
Economic information
Rao’s presentation was a lesson in itself. It had restricted
political or economic rhetoric, but included information on economic
growth, need for rapid growth and huge investments, opening the economy
with FDI reforms (e.g. that FDIs to India have increased from U.S $ 35
billion in 2007-08 to U.S $ 47 billion in 2011-12; portfolio investment
norms relaxations for Foreign Institutional Investors in certain
categories, e.g. Government securities and corporate bonds), economic
achievements in increasing net portfolio investment into India touching
US $ 17 billion in 2011-12 etc.
She shared information on the investment climate, functioning of the
strengthened Cabinet Committee on Investment, power / energy issues,
critical sectors such as infrastructure, agro-processing and
manufacturing, and projected a bounce for the Indian economy to its
targeted trajectory of 8-9% per annum growth. This scenario was
considered by Rao to prove the immense potential for attracting U.S
investments into India considering the U.S as the world’s leading
investor, holding 14.8% of total global FDI stock in 2010. This approach
was comparatively less in Wickramasuriya’s presentation. Of course, his
presentation was short and he is not an economist of such character and
the Ministries of External Affairs, Finance, Investment Promotion and
the Central Bank ought to have guided him, as what ought to have been
done by Delhi with Rao, in addition to professionalism in the latter.
The opportunities available to attract FDIs can be gauged from what
Rao said emphasizing that except for 2005, the U.S has remained the
universal leading source of FDI for the past decade, with a total FDI
outflow in 2011 being around U.S $ 400 billion and India receiving
between January 2000 and July 2012 U.S $10.88 billion of it, creating
nearly 355,600 jobs (2007- 2011) and projected the US investment sectors
as infrastructure, manufacturing, financial services and cold chain
& retail. This is coming from a country that had in the past
considered foreign investors as lepers!
Reverting investments
Of course, one important area in which Sri Lanka cannot match India
is the Indian investments in the U.S and job creation in the USA. This
is due to progressive liberalization in India’s overseas investment
policies. Rao quoted a study which revealed that during July 2010–July
2012 Indian investments in the USA maintained a strong momentum
witnessing 87 mergers and acquisitions with a cumulative disclosed value
of US $4.3 billion. Can Sri Lanka similarly attract Indian investment
by grabbing a few investments made in the USA? Of course, HE Prasad
Kariyawasam in Delhi may have to go for the kill. Unfortunately,
Kariyawasam is bound settling Tamilnadu issues, cricketers’ safety and
finding family trees or pedigree of original Sinhalese in India!
According to Confederation of Indian Industries estimates, cumulative
Indian investments in the USA (2000-2010) stood at US $ 6.6 billion.
This is what we have to grab, of course there are ignored issues such as
CEPA.
Commercial and other ties
According to Rao the other areas of cooperation between India and the
USA have covered strong commercial ties reflected in bilateral trade in
goods and services touching U.S$100 billion for 2011 which may further
increase. US exports around US$ 3.3 billion in educational services in
2011 reflect a key strength of education cooperation, linking
people-to-people transforming the landscape of relationships. These
areas may not be that prominent with economic cooperation between Sri
Lanka and the USA, though the rhetoric Minister SB Dissanayake shows different attitudes. Wickramasuriya may have to also influence such thinking.
Rao’s presentation has given many areas of cooperation such as
providing food security, improving agricultural productivity and
boosting rural incomes, thus escalating the profile of the agriculture
dialogue, particularly in commodity trading, seeds, tractors, farm
machines, logistics, retail and marketing etc. She focused of
non-traditional areas such as education and skill development leading to
mutual strategic partnerships. Probably the size of the country,
population, opportunities etc may not permit such vast cooperation
between Sri Lanka and the US, but these are adjustable quantum.
Potential for dialogue
She impressed on the India-U.S. Homeland Security dialogue, launched
in 2010 which had identified technology as one of strategic priorities
in India-U.S. cooperation in trade and collaboration. Her attention drew
on innovation, economy of products, technology solutions and service
delivery platforms for bilateral commercial engagement. She prioritized
value creation in addressing developmental challenges. Her recognition
of the platform of the India-U.S CEO Forum bringing the leadership of
the top Indian and US companies in shaping a vision of bilateral
economic cooperation was another potential to provide valuable guidance
in setting inter-governmental priorities and creating new avenues for
productive engagement. These are unheard in our relations with US or
with Indians.
Economic concerns
With deep trade and commercial relationships she predicted new issues
and concerns created on both sides and highlighted the need to assess
these issues from the long term perspective of bilateral cooperation. To
what extent we have gone through such will be a matter of concern for
Minister Sirisena and Ambassador Wickramasuriya.
Just as US businesses have some concerns; Indian industry has also
highlighted its concerns. Rao spoke of effects on the Indian Information
Technology industry facing regulatory challenges in the USA. She
highlighted problems of initiating a dialogue with the US on a bilateral
Totalization Agreement. In pursuit of broader and deeper India-U.S
commercial cooperation, and to address bilateral policy and regulatory
concerns, India and USA have inter-governmental mechanisms, including
the Ministerial Trade Policy Forum which should be activated according
to Rao. She stressed that to go forward India and the U.S also need to
explore new trade and economic cooperation arrangements with momentum on
the Bilateral Investment Treaty, or otherwise, of any future bilateral
economic partnership arrangements. Is Sri Lanka there? Wickramasuriya’s
presentation does not project these, obviously for the length of his
presentation.
The India-US partnership has been termed as “a defining partnership
of the 21st century” by President Obama, said Rao and added “We need to
remain committed and engaged at all levels, continuously and without
pause, overcoming any challenges that may exist. She was very optimistic
about the future, and of the firm view that the economic relationship
between the two democracies can only become stronger with the passage of
time.” How confident and optimistic are we with India or the USA?
Futuristic projection
Once, Henry Kissinger’s views were sought about Indians pursuing a
policy of “strategic autonomy.” Domestically this is what has irked many
Sri Lankan political commentators right now. Kissinger has responded:
“I think India should pursue its own perception of its national
interest. And I hope that on key issues we [India and the US] can find a
parallel policy.” Asked to explain his concept of parallel policies and
whether they could converge, Kissinger said they were already doing so
in many areas, adding: “I would like to think that each side following
its own convictions leads to results that are compatible and
cooperative.” India as once said by Shri Jawaharlal Nehru first gave
priority to its national interest in decision making at the United
Nations. Let us not misunderstand others on this subtle value of
strategic autonomy and national interest, which will not be erased to
suit our issues. This is the reality..
Based on political conceptualities some question why India should go
against Sri Lanka in Geneva. Kissinger and Nehru explain one facet of
Indian thinking. Rao explains the most modern version arising from
diplomacy and economics. Both converged gives the sense of how we should
look at relationships that should be built. It may not be so straight
forward as Ambassador Wickramasuriya envisaged.
The relationships based on all these quotes give priority to national
interest and parallel policies. Therefore, if we are to pursue
relationship building with Indians and Americans, as envisaged by
Minster Sirisena and Ambassador Wickramasuriya, we may keep in our minds
the need to collate these priorities, act logically and diplomatically.
And, one could be happy that we are on the correct path if these two
statements by the Minister and Ambassador are genuinely oozing from the
bottom of their hearts, and not for short-term manipulation, because
Indians and Americans, as seen above work on a common platform, not only
based on past history and concepts, but on new modalities, which Rao
has explained eloquently. Let these be ‘Lessons Learnt’ for our Minister
and Ambassador.
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