Making A Difference

Was It Happenstance?

Why did the US partially lift sanctions and then clamp down on India with a blacklist?

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Was It Happenstance?
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WILL the ping-pong vis-avis sanctions ever end? Or the US doublespeak, for that matter? The irony couldn’t be more stark. First, the US partially lifted economic sanctions – with a distinct Pakistan bias – and then administered the sting in the tail, by blacklisting a huge Indian institutes and private companies, denying them the right to import US goods for their alleged links with nuclear weapons and ballistic missile development. The same fate befell many Pakistani institutions.

Says a defensive US Administration official: "There has been a strange confluence of events. The ‘entities list’ is the end of a process that began in June. It represents the last stages of the application of sanctions. The fact that it coincides with the first stage of the relaxation of sanctions is totally accidental and even embarrassing for us." The US, he says, would "want to encourage India in the area of non-proliferation and the CTBT where we recognise that progress has been made. At the same time you have this list coming out now, whose timing is pure happenstance".

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But is it "pure happenstance"? One US diplomatic source thinks otherwise. Pointing out that the list is "hostile, sweeping and punitive", he says it is meant "to cripple the activities of every single major Indian entity even remotely linked to defence or military-related functions".

What do India’s defence experts make of it? To the discerning eye of Indian science and defence peers, the upshot of America’s constant harangue over the missile programme is clear: delay indigenous projects and coerce every organisation into a cycle of perpetual dependence. Says Prof. Rajagopal, former secretary, Atomic Energy Commission: "It would hurt the Americans, but they know where to put the squeeze on us so that it would affect the whole system, say by denying us a powerful chip. We have the resilience to bear it, but we must have a group in the government which postulates a strategy for every scenario."

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That the US is clamping down on India’s defence-related research is not lost on our analysts. Otherwise, why would the US commerce department zero in even on private companies that have supplied some equipment or components for India’s nuclear power programme? For instance, Godrej and Boyce has provided coolant towers and heat exchangers for nuclear power plants. Kirloskar Brothers has suplied pumps for these plants. "This time, they have worked on the list to make sure that it hurts the private sector as well."

So, how will India tackle it? For, the defence community, the move comes as no surprise – and anyway it is getting used to moving along without US help. Yes, defence projects, honed at home, will be delayed but it also gives India a chance to build up indigenous resources, so what if it takes a longer time. As for private companies on the hitlist, industry giants like Godrej and Kirloskar feel American businesses will be hurt more.

A senior US official points out that the list was necessary to "make it clear to our companies what kind of trade is prohibited so that they won’t apply for licences, which will be denied". In fact, he refuses to refer to it as a "blacklist" or "hitlist". "We know this list will stir fresh controversy, but we have no choice but to implement the law. This should not derail or present an obstacle in the progress of the non-proliferation dialogue that the US has been having with the two countries."

Explaining the need for the list, the official points out: "When the sanctions were first imposed, it caused great confusion in business circles. US Companies kept calling us. We had two ways of clarifying the situation, naming the items or naming the organisations. The latter course was considered easier. This list was issued to give definition – US companies wanted to be told who they should or shouldn’t be dealing with. Some said they were not going to export anything until we issued such a list. We don’t want to dampen trade across the board, only to agencies that may be involved in proliferation. For instance, we don’t want a US computer company to stop selling its products to an Indian university."

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Among the 40 Indian "parent entities" targeted along with their subordinates, there are several premier research and development institutions like the Defence and Research Development Organisation, the Bhabha Atomic Research Centre, the Indian Space Research Organisation, the Indian Institute of Science, the Indira Gandhi Centre for Atomic Research, and the Indian Institutes of Technology. Also targeted are public sector companies involved in defence production and their subsidiaries.

Indian experts admit that domestic projects will be further delayed. The US has already set off delays in defence projects through the sanctions announced after Pokhran II. The Light Combat Aircraft (LCA), a fighter jet, which was scheduled to make its maiden flight by end-1998, now has to wait for the flight control systems to be developed indigenously. Ditto the Advanced Light Helicopter being build by Hindustan Aeronautics, Bangalore.

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Even basic research has suffered a setback after the first bout of sanctions. Says Prof. C.N.R. Rao, president of the Jawaharlal Nehru Centre for Advanced Scientific Research, also in Bangalore: "The sanctions are affecting us in a small way. I have not been able to procure a state of the art electrometer. It is not very expensive, but we are being denied this instrument because my laboratory is inside the Indian Institute of Science campus." Apart from the electrometer, the centre has been denied a four-processor Hewlett Packard computer because it exceeds a computing power of 2,000 MTOPS (million theoretical operations per secont).

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Several senior scientists feel that such denial would only hurt American companies. "The government is the largest purchaser of computers. If the US targets institutions n DRDO, ISRO and the Department of Electronics, US companies will suffer a 50 per cent drop in sales. Today, 2000 MTOPs is the limit. But sooner or later, even PCs with such computing power would come into use. What will the US companies do then? Such denial will also have an indirect impact on the US. We have been developing inexpensive software for American companies with the help of their computers. Such decisions will snap the plough-back process," says a senior professor at the Indian Institute of Science.

The curbs will, however, have little impact on India’s atomic energy programme. For, the department of atomic energy has learnt to manage by sourcing from alternative companies since the first technology embargo in 1974. Says Prof. Rao, a member of the Atomic Energy Commission: "Atomic energy is managing reasonably well. Inhouse facilities have been built over the years because we have learnt not to depend too much on others. Whatever happens, Russia will stand by us, and our nuclear power projects will not suffer."

India can perhaps even fall back on the UK which announced late last week that it would not blacklist any Indian company.

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ISRO, too, has adopted work-around solutions over the year. "I have not applied my mind on this issue," says Dr Krishnaswamy Kasturirangan, Chairman of ISRO. "The worst is over for ISRO after the US slapped a two-year technology embargo in 1992 merely because of its contract with the Russian space agency, Glavkosmos, for cryogenic rocket engines. At that point, ISRO had several satellite and rocket projects on the assembly line, and had to wait for Thompson CSF of France to supply radiation-hardened integrated circuits and other critical components."

Companies like Bharat Electronics, too, have been repeatedly put on the list. Says Dr V.K. Koshy: "We have been on the list since May 1997. We are used to this kind of a situation. Our task force in each unit is looking at alternative sources, and on indigenisation of some components. We have even redesigned some equipment to overcome this problem because the US is the largest supplier of military grade components."

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OFFICIALS in HAL say the aerospace and engines divisions have been culled out for sanctions in order to thwart the import of compnents not only for the Prithvi missile, but rockets like the Polar Satellite Launch Vehicle (PSLV) and Global Satellite Launch Vehicle (GSLV) as well. "We cannot hope to get anything from the US, so we'll have to go to either Russia, Israel or France as the alternative sources. Indigenisation will take five or six years to fructify."

Which, scientists feel, would mean inordinate delays because the government would have to draw up a list of projects that have to be completed on a priority basis. The resource crunch could add to the woes of scientists like A.P.J. Abdul Kalam, who believe that the mantra of indigenisation is the best prescription for such problems. And with the delays set off by American sanctions, India's forays into the international defence markets would be put off well.

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Asked about reactions from US business, an Administartion official says "the multinationals have accepted this as a legal necessity. They are asking us to provide more specifics, not asking why the list was issued." A new office, attached to deputy secretary of state, Strobe Talbott, has been set up to coordinate the inter-agency process required to administer such a list, but Joydeep Mukherji, a ratings analyst with Standard & Poor's Corporation, New York, says the list will "not have any impact on India's ratings, which is what I look at". Mukherji thinks there would be no impact on investor confidence either.

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So, why did it take so long for the US to draw up the list? An Administration source says it is because "of a lot of back and forth between our embassy in New Delhi and ourselves as well as a lot of hand wringing and teeth gnashing". He says there has been a "struggle between the hardliners who were looking at the letter of the law and other people in government who are concerned about not fundamentally damaging relations with India. In the end, I hope we achieved a good compromise."

Indian and the US began the sixth round of talks in Rome late last week. And though both parties made similar noises - "we both look forward to the talks" - the blacklist will loom over the discussions even if it's purely "happenstance".

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