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Obama visit: India may offer deals, US strategic help

By Nikhil Lakshman
Last updated on: October 14, 2010 21:29 IST
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Barack ObamaWhat will India offer the Americans? What will the Americans offer India?

Nikhil Lakshman glances at the smoke signals for next month's Obama visit.

On Diwali night, less than three weeks from now, Barack Obama will arrive in Mumbai, but Indian diplomats take the route of arcane diplomatese when asked what we can expect from the American President's passage to India.

Either the mandarins at the ministry of external affairs want to retain the surprise card. For instance, Obama telling the Indian people during his November 8 address to both Houses of Parliament that America endorses India's candidature for a permanent seat on the United Nations Security Council would bring the WOW! factor into play.

Or maybe both sides are wrestling over issues with such gusto that it would make Satpal Maharaj beam. In other words everything is negotiable till the very moment when Prime Minister Manmohan Singh and Obama walk into the conference room at New Delhi's Hyderabad House on November 7.

Five years ago, in a different Presidency, Indian negotiators -- including M K Narayanan, then India's National Security Adviser and now West Bengal's governor, and S Jaishankar, then Joint Secretary (US) at the ministry of external affairs and now our ambassador to China -- butted heads with George W Bush's senior aides over what would eventually become the India-US civilian nuclear agreement hours before that President greeted Dr Singh at the White House on July 18, 2005.

This time around, the deal may be more direct and less complicated.

In return for Washington removing strategic hurdles (withdrawing entities like the Defence Research and Development Organisation from the US Entities List; easing the curbs on US high-tech exports to India), India could open up some of its lucrative markets to American companies.

The big-ticket transactions are the ones involving the defence market. India is expected to sign a deal with Boeing to buy 10 C-17 transport aircraft for about $3.5 billion during the Obama visit.

The Americans are hoping that the Indian government will also opt for what The Financial Times described as the world's biggest military hardware deal and buy 100 multi-combat aircraft worth $11.8 billion from US defence manufacturers.

Agreement on the latter aircraft will be more complicated since India is also negotiating with the Russians to jointly build a Fifth Generation Fighter Aircraft, which is expected to be the finest of its kind when operational. The Russians will also sell 150 Sukhoi-30 MKI fighters, the best of its kind, to the Indian Air Force.

India expects to conclude the agreement for the FGFA with the Russians when President Dmitri Medvedev visits New Delhi in December, a visit which will probably match the Obama excursion in its strategic significance, if not in its symbolism.

The biggest bone in the American throat in recent weeks has been India's Nuclear Liability Act, NLA -- which places the onus of responsibility on corporations in the event of an accident at a nuclear facility -- that US companies insist shuts them out of India's atomic commerce.

In an interview to The Wall Street Journal this week, Union Minister of State for Science and Technology Prithviraj Chavan, who negotiated the passage of the Nuclear Liability Bill in Parliament in August, revealed that India was looking at tweaking the NLA to address the concerns of American nuclear companies.

Chavan went further to declare that 'We could announce that we are going to place 2 reactors order from Company A or Company B (during the Obama visit), then adding mysteriously, 'We may even go further than that.'

Both External Affairs Minister S M Krishna and Foreign Secretary Nirupama Rao categorically ruled out the possibility that the NLA would be amended to address American commercial concerns.

"The question of amending the Act was never on the cards," Krishna declared, adding, "we will work within the parameters of the legislation."

During his discussions with US Secretary of State Hillary Clinton, Krishna revealed he had provided the Americans enough reasons to understand India's position. Both Krishna and Rao felt the NLA was a level playing field for all, including American corporations.

The timing of Obama's visit is intriguing. He will arrive in India four days after the mid-term elections in his country which is widely expected to reduce his Democratic Party to a minority in the US House of Representatives -- the lower House of the US parliament -- for the first time since November 1994.

Though the Democrats may retain their majority in the Senate, the party is tipped to lose key Senate seats races and some important governorships (in the US, governors are equivalent to India's chief ministers and much more powerful, unless they are someone like Narendra Modi or the late Y S Rajasekhara Reddy) as well.

The Democratic debacle will reduce the Obama visit to India -- he will also visit Indonesia where he lived as a child, and South Korea to attend the G-20 summit -- a quark on the American mindspace.

"We cannot quantify the outcome of President Obama's visit," Krishna said during an interaction with editors on October 13 to celebrate India's presence on the United Nations Security Council after more than 15 years, adding meaningfully, "it will depend on other developments in the neighbourhood."

Both Krishna and Rao declined to elaborate what the minister meant when asked the duo.

Significantly, Krishna rejected as speculative -- "there is not a grain of truth" -- reports that Obama would endorse India's candidature for a permanent seat on the UN Security Council in return for decisive Indian action on Kashmir.

Rao revealed that the Kashmir issue has never been raised by the Americans in recent bilateral interactions.

Sources have told my senior colleague India Abroad Editor, News, Aziz Haniffa in Washington, DC that 'some senior Obama administration officials are pushing for the President to endorse India for a UNSC permanent seat saying there is nothing to lose and everything to gain because the UNSC expansion process could take months or years, but the announcement will have a major impact on both the Indian government and more important, its people.'

'Even if ultimately the likes of China, Pakistan and others move against India getting a permanent seat,' his sources told Aziz, 'the US could always argue that it did endorse India.'

Barack Obama will be the first American President in recent times to visit India in his first term in office -- Bill Clinton arrived in March 2000, the last year of his second term; George W Bush in March 2006, no longer the unquestioned leader of the free world, indeed then its most divisive and polarising figure.

Though both sides seem in stealth mode in the days running up to the Singh-Obama summit in New Delhi -- the Indian side highlighting recent history and the New Strategic Relationship, rather than identify likely landmarks -- we could be surprised yet.

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Nikhil Lakshman in New Delhi