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The Loosening Lasso

A backroom blitz is on. Come September, Vajpayee's visit may hasten the end of US sanctions.

The Loosening Lasso
outlookindia.com
-0001-11-30T00:00:00+0553

It could arguably be the best news for both India and its largest trade partner (read, the United States). Ever since US President Bill Clinton decided to ease trade sanctions on India, diplomatic circles have talked about possible moves by the White House to lift them. That could happen finally in September when Atal Behari Vajpayee visits the country.

Diplomatic sources in Delhi and Capitol Hill told Outlook that there are enough active anti-sanctions forces willing - and able - to push through the legislation to repeal the remaining penalties for the nuclear tests in 1998. "I'd expect the administration to lift the sanctions," says Senator San Brownback, a Kansas Republican and chairman of the foreign relations subcommittee which has complete jurisdiction over Washington's South Asia policies.

Support for such a move also came recently from Congressman Gary L. Ackerman, co-chairman of the Congressional Caucus on India and Indian Americans, who urged the Clinton administration to usher in sanctions-free relations with India. He also said it should not be held hostage to a single issue - New Delhi's signature on the Comprehensive Test Ban Treaty. "Because of this obsession, I am afraid we may end up losing many other promising opportunities in US-India relations. Continuing to keep India under a sanctions regime, despite the power given by Congress to the executive to waive them, I believe, is myopic policy. We have to replace this myopia with enlightened vision," Ackerman, India's most forceful advocate on Capitol Hill, told a meeting organised by the Indian American Forum for Political Education.

Diplomatic sources say Washington was more or less convinced that continuing with the sanctions regime - even after a successful presidential trip - was only adding to the problem. More so in the light of recent US moves to push for Permanent Normal Trading Relations with China and lifting economic sanctions against North Korea, both authoritarian regimes, while India was a democracy. Though Washington has eased sanctions on the activities of bodies like the Export-Import Bank, Overseas Private Investment Corporation and Trade Development Agency, India continues to be on the negative list for import of high-end computers from the US.

What New Delhi expects is anybody's guess. So far, there's nothing more than an announcement from the White House which says Vajpayee would pay an 11-day visit to the US, starting September 6. The Indian premier's meeting with Clinton is scheduled for September 15. Hopes are running high that Vajpayee, who is expected to spend a week in New York to attend a special UN session, will address a joint session of Congress on September 16. The buzz in Capitol Hill is whether House Speaker J. Dennis Hastert will extend Vajpayee an invitation to address a joint session of the Congress. The address carries an allure among world leaders, particularly since Hastert is not ordinarily wont to call joint sessions. Brownback, who is circulating a petition to convince Hastert, feels an invitation like this has "powerful symbolism that India is important to this country", though many also feel negotiations for a joint session are more complicated than a simple invitation. Especially because the speaker is likely to weigh what this means for Washington's relations with Islamabad.

Interestingly, the White House announcement followed the two-day deliberations Vajpayee's national security advisor Brajesh Mishra had with US officials in Washington, including under secretary for political affairs Thomas Pickering and Clinton's national security advisor Sandy Berger. Though Mishra refused comment on whether there was a possibility of an end to sanctions, optimism is high both in Delhi and Capitol Hill.

But how serious is Washington about lifting whatever sanctions remain? Officials involved in the visit say the agenda is clear. There's tremendous pressure from US multinational corporations seeking increase in the $12-billion bilateral trade, which effectively translates into a mere one per cent of Washington's total trade and investments globally.

On the other hand, there's considerable pressure from Indian business. Concerted efforts from bodies like the Confederation of Indian Industry and Indo-American Chambers of Commerce (iacc), which are sending separate delegations to the US before and during Vajpayee's much-publicised visit, convey this general sentiment. The premier's delegation will also include representatives from Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Maharashtra and Andhra Pradesh, a move aimed at highlighting the crucial issue of the states having significant decision-making authority in the changed economic scenario. "India is recognised as one of the top ten fastest growing economies in the world. Yet, this country attracts very low American trade and investments. The trend towards greater investments must gather momentum in this era of enhanced commercial interactions," feels Ravi Wig, iacc chairman.

Wade Cline, chief operating officer, Enron India, cites examples of his corporation's recent successful efforts in arranging finance for phase II of the Dabhol power project under sanction constraints: "The decision to lift the remaining economic embargo by the US will be significant as it will truly demonstrate the normalisation of trade relations. Of course, it was possible for US companies to conduct business even prior to this. But it was more difficult and required an enhanced level of commitment to complete projects in India." Says P. Balendran, vice-president, General Motors India: "Lifting of sanctions will make the investment and business climate more friendly and boost trade between the two countries in a host of areas." Agrees Srikanth Rao, country manager of bea Systems, a nasdaq-listed $22-billion world leader in transaction servers: "Lifting of economic sanctions by the US will bring both countries closer politically and economically and positive effects will be felt in the long run because of increased trade relations, investments and joint ventures between the two democracies."

But will that actually happen? "The real test is whether the administration is ready to lift the sanctions and what substantial policy win it wants in return," says senator Tom Daschle, the Democrat leader who travelled to India earlier this year. As pro-India forces press to lift economic penalties, the legislation most likely to carry such a provision - the spending bill for international programmes - is not ready for President Clinton's signature, giving the pro-India lobby a little more time to push for it. But Daschle remains highly optimistic. After all, who needs a Bill when the US President has the executive authority over the country's foreign policy decisions?

And there also remains a discordant chord which US corporations doing business in this country complain about routinely. Says Bernard Pasquier, South Asia head of the International Finance Corporation: "Besides sanctions, the shift in investor attitude towards India is influenced more by a change in the complicated - and at times prohibitive - rules and regulations that govern foreign investment coming into the country. China attracted foreign investors when Beijing opened the economy and simplified regulations to make it more investor-friendly. I feel that if India wants to improve its standing as an investment destination, then the real task is to further simplify guidelines that govern entry and change some of the investment regulations that may detract overseas investors. " Over to New Delhi then.

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