'The Line Of Control Cannot Be Changed By Violence'

In my office in Roosevelt House - the US Ambassador's residence in New Delhi -- before first light eachmorning I prepare for the coming day by reading online newspapers and analytical websites first from theUnited States, from around the world, from the rest of Asia, and finally from India. This sequence isconceptually purposeful. I initially review the latest policy developments in the United States, as describedin the major American newspapers and political websites. This provides me with an overview of the progress ofPresident Bush's policy agenda at home, and highlights any US domestic events that might affect the pursuit ofthe Administration's objectives regarding India.

By next scanning newspapers and analyses from elsewhere in the world, I can better appreciate theinternational setting in which the President is developing and implementing his general foreign and defensepolicies and, again, how those events relate to US-India relations in a global context. Then, I narrow mye-focus to Asia, and then to South Asia. Finally, I look each morning at seven or eight Indian newspapersonline for developments in India that could affect Indian policy and especially the President Bush'sobjectives with respect to the US-India relationship. I went through this daily ritual in my hotel room herein San Jose early this morning.

My e-methodology is a small example of the transformed global character of the US-India relationship. Theorganizing theme is not as narrow as America, India and South Asia. Rather, it is the United States and Indiain the world. And it is fitting that I study these matters early each day through information technology andthe Internet, that exquisite global exhibit of American and Indian invention, energy and function.

I have given many speeches in India since my arrival there, although none of them are as eloquent as thosegiven forty years ago by my predecessor and Harvard faculty colleague John Kenneth Galbraith. Here is one ofmy favorites of his many trenchant observations, "There are few ironclad rules of diplomacy but to onethere is no exception. When an official reports that talks were useful, it can be safely concluded thatnothing was accomplished."

Hoping that you will not find my presentation today "useful" in Galbraith's terms, in the next fewminutes I want in a composite way to reinforce preeminent themes that I have enumerated in formal remarkswhile American Ambassador to India.

A Big Idea

President George W. Bush for the past 24 months has been busy implementing a radically new big idea aboutUS-India relations. He took office determined to move US-India ties to new heights. He saw that our bilateralinteraction was still essentially weighted down by Cold War concepts and baggage, still defined largely bydisagreements, still limited by infrequent contact. Neither side gave the relationship the high priority itdeserved, and efforts to improve it lacked urgency and stamina. The President was determined to change thatdisjunctive pattern.

His big idea is that by working together more intensely than ever before, the United States and India, twovibrant democracies, can transform fundamentally the very essence of our bilateral bonds and thereby make theworld freer, more peaceful, and more prosperous. In short, President Bush has a global approach to US-Indiarelations, consistent with the rise of India as a world power.

I was present at the creation, or at least at one of the earlier expressions, of this big idea when I workedfor Governor Bush during his presidential campaign, and witnessed first-hand his respect for and fascinationwith India. When I asked then Governor Bush in Austin, Texas, in early 1999 about the reasons for his obviousand special interest in India, he immediately responded, "a billion people in a functioning democracy.Isn't that something? Isn't that something?" The concept of democratic India, a billion-strong,heterogeneous, multilingual with its vibrant press and respect for the rule of law, has a powerful attractionfor this American President.

He made many of these same points to me when I saw him in New York last September 12, just after his speech tothe General Assembly and before he met Prime Minister Vajpayee. It was crucially because of President Bush'spowerful vision regarding US-India relations that, when he asked me what I would like to do in the newAdministration, I said that my first choice was to be American Ambassador to India. Fortune smiled. He agreed.

Zero Tolerance for Terrorism

This speech today is not primarily about international terrorism, but I do want briefly at the outset toemphasize that some say that with respect to identifying terrorism, "it depends." To the contrary, Isay that defeating terrorism for the United States and India is a matter of survival for ourselves, for ourdemocratic values, for our religious freedom, for our children, for everything that we hold dear. Socratesthought that, "the beginning of wisdom is the definition of terms." So let us please name those forwhat they are, who murder innocents for political motives and who seek to bring down the very pillars of ourdemocracy -- in New York, in Washington, at the Assembly in Srinagar, at the Parliament in New Delhi.

These murderers are not misunderstood idealists. They are not disadvantaged dissidents. They are not religiousperfectionists. And they are not freedom fighters.

They are terrorists, and we should always be sure to call them exactly that. .

Working with dozens of like-minded nations, the United States and India will win the war on terrorism. Andthat war will not be won until terrorism against India is ended once and for all. To quote my Harvard KennedySchool colleague and Ambassador to India 1973-1975, Daniel Patrick Moynihan, "reason and careful moralreflection…teach us that there are times when the first and the most important reply to evil is to stopit."


US-India Relations in the Past Two Years

Two years ago, under the 1998 US sanctions regime, the United States and India seemed constantly at odds.Today, President Bush has this to say about India, "The Administration sees India's potential to becomeone of the great democratic powers of the twenty-first century and has worked hard to transform ourrelationship accordingly." The President waived the 1998 sanctions against India, and drastically trimmedthe long "Entity List" which barred Americans from doing business with certain Indian companies fromover 150 Entities to less than 20.

Two years ago, the American and Indian militaries conducted no joint operations. Today, they have completedsix major training exercises. Two years ago, American and Indian policymakers did not address together theimportant issues of cooperative high technology trade, civil space activity, and civilian nuclear power.Today, all three of these subjects are under concentrated bilateral discussion, and both governments aredetermined to make substantial progress.

Two years ago, American sanctions against India undermined bilateral diplomatic cooperation on regional andglobal issues. All that has changed.

President Bush and Prime Minister Vajpayee champion this powerful and positive bilateral interaction with topdown direction, reinforced by an unprecedented stream of Washington policymakers who have traveled to India.The Prime Minister has spoken of India and the United States as "natural allies." He is right. SinceSept 1, 2001, five members of the Bush Cabinet have come to India, some more than once -- Secretary of StateColin Powell, Secretary of Defense Donald Rumsfeld, former Secretary of the Treasury Paul O'Neill, US TradeRepresentative Robert Zoellick, and Director of the Environmental Protection Agency Christine Todd Whitman.

Their efforts have been underpinned by nearly 100 US official visitors to India at the rank of AssistantSecretary of State or higher, including Chairman of the Joint Chiefs of Staff General Richard Myers, andDirector of the FBI Robert Mueller. Robustly engaging with their Indian counterparts, these US policymakersgive attention to diplomatic collaboration, counter-terrorism, defense and military-to-military teamwork,intelligence exchange, law enforcement, development assistance, joint scientific and health projects includingon HIV/AIDS, and the global environment.

In my view, close and cooperative relations between America and India will endure over the long run mostimportantly because of the convergence of their democratic values and vital national interests. Our democraticprinciples bind us -- a common respect for individual freedom, the rule of law, the importance of civilsociety, and peaceful inter-state relations. With respect to overlapping vital national interests, my"Big Three" for the next decade and beyond are to promote peace and freedom in Asia, combatinternational terrorism, and slow the spread of Weapons of Mass Destruction.

Indeed, it is difficult for me - and this is a momentous strategic constant -- to think easily of countriesother than India and the United States that currently face to the same striking degree all three of theseintense challenges simultaneously - let me repeat them -- advancing Asian stability based on democraticvalues; confronting daily the threat of international terror; and slowing the further proliferation of WMD.This daunting trio will be an encompassing foundation for US-India strategic cooperation for many years tocome.

Afghanistan

With respect to diplomacy, India and America are committed to encouraging a stable, free and peacefulAfghanistan -- one with a representative central government that can provide physical and economic securityfor its people. We want an Afghanistan that has good relations with all its neighbors and with theinternational community -- and one that will never again export terrorism.

Iraq

In the context of numerous US-India high level exchanges in recent months, the Government of India stoutlybelieves that Iraq should fully comply with UN Security Council Resolution 1441, which orders Iraq to give upits Weapons of Mass Destruction. India earnestly hopes that Iraq will disarm peacefully. The BushAdministration steadfastly agrees with both these crucial propositions advanced by India.


Defense Policy

Defense cooperation between Indian and American armed forces builds military capacities on both sides forcombined operations. In May, the US Air Force from 353rd Special Operations Group deployed from the Americanairbase in Kadena, Okinawa to Air Force Station Agra to take part in the largest-ever airborne joint exercisebetween the United States and India. During the exercise, an elite brigade of Indian paratroopers jumped withUS Special Forces in the "Balance Iroquois 02-01."

In June and July 2002, the Indian Navy Ships Sukanya and Sharda conducted escort patrols for American shipsthrough the Malacca Straits in support of Operation Enduring Freedom. Knowing what they would be up against ifthey had to deal with the Indian Navy, the pirates sensibly stayed away.

The US Army 1st Battalion, 501st Parachute Infantry Regiment welcomed 80 soldiers from India's 50thIndependent Parachute Brigade to conduct "Geronimo Thrust" in September, the first-ever live fireexercise between American and Indian paratroopers. The jawans flew to Alaska in an Indian Air Force IL-76.This marked the first time that an Indian Air Force combat aircraft has landed on US soil.

With American warships now routinely refueling in Chennai and Mumbai, we saw in September and October thelargest-ever US-India naval exercise, called "Malabar." Over 1,500 American and Indian navalpersonnel participated during this four-day event, which featured flying operations, anti-submarine warfareexercises, and replenishment at sea.

In October 2002, again in Agra, an air transport exercise named "Cope India-02" developed a baselinefor future interoperability that will lead to a fighter aircraft exchange. USAF personnel, on board Indianaircraft, observed the drop of Indian paratroopers and heavy equipment. By the end of the exercise, Indianparatroops dropped from US C-130 Hercules transporters.

During the same period, there have been a number of breakthroughs on defense sales that have put the UnitedStates and India on the road to a stable, long-term defense supply relationship.

US Investment

Americans hesitate to invest in India because of the uncertainty over India's economic reforms. The recentdisinvestment debate is only the latest example. Potential US investors stress to me that Indian taxes andtariffs here are still too high, and there remains too much government interference over business decisions.With respect to intellectual property rights, US pharmaceutical and biotech companies would expand theirpresence here if India had a modern legal framework to protect product patents. The need to raise the FDI capsis a theme I also hear frequently. No FDI is permitted in retailing.

You all are more than familiar with what needs to be done regarding Indian domestic infrastructure and thepower sector. Within the US business community there is an erosion of confidence about whether the sanctity ofcontracts will be honored in India. And there is also no question that tensions between India and Pakistan andcommunal violence further dampen investors' urge to come into the Indian market.

It is in this problematical context that commercial exchange between the United States and India languishes.Last January, I gave a speech on the state of US-India economic relations. In it, I described US exports toIndia and investment flows as being "flat as a chapati." Sadly, nothing much has changed. Ourcommercial ties remain far below their full potential. Two-way trade between India and the United States isless than that between America and Ireland, a country of less than four million people.

Disinvestment Minister Arun Shourie said this last October 26, "Labour reforms, privatisation, reforms ofthe power sector…what have we not announced in the last decade? For which of them have we not in the lastdecade pledged ourselves to time-bound targets? Yet on everything a 20-metre sprint and inertia overwhelmsus." Or, as I put in my speech a year ago in New Delhi, "The reform rabbit can become a turtle,which can become a rock."

India and China

Indian entrepreneurs and officials often raise with me comparisons between the respective economicperformances of India and China. The two countries launched their economic reform programs from differenthistorical experiences. Nonetheless, the fact remains that in the last 10 years, China has forged ahead onmost economic measures.

The following statistics do not say everything about the Indian economy. They do not address India'scomparatively high GDP growth rate over the last decade, its impressive foreign reserves, its low inflation,and its high savings rate. And these numbers do not describe the serious and well-known structural problems inthe Chinese economy. But I think you will agree that these data do tell us something important and worththinking about. Over the last 20 years, China's GDP has increased at about 10% a year, compared with India's6% growth rate.

A decade ago, India and China had close to the same per-capita income. Today China's per-capita income isabout $900, roughly twice that of India.

Cellular phone penetration in India is less than one percent of the population, compared to over 11% in China.

In 1991, India and China started off from about the same base, with less than one computer for every thousandindividuals. By 2000 China's rate is three times India's, with more than 15 computers for every thousandpersons, compared to 4.5 in India.

In 1990, manufacturing in China was about 37% of the economy; today that relative weight has increased toabout 45%. China now produces 50 % of the world's cameras, 30 % of the air conditions and televisions, 25 % ofthe washing machines and 20 % of the refrigerators. In the last 12 years, manufacturing as a percentage of theIndian economy has decreased, falling to about 24% of the economy from 30%.

Since 1980, China has welcomed over $336 billion in foreign investment; India has received only $18 billion.

And we all know what an enormous investment China is putting into its domestic infrastructure - airports,roads, port facilities, telecommunications, and so forth.

India's large and talented labor pool makes it possible for it to become yet another "Asianmiracle." Indeed, it already has shown its mettle through the information technology and softwareaccomplishments. As President Bush remarked to the Prime Minister in New York on Sept 12, human resources andintellectual capital are India's greatest asset. This advantage will have a multiplier effect on the economywhen second-generation policy reforms present businesses and consumers with the right incentives. There is somuch pent-up dynamism at the micro level of India's economy that Indian entrepreneurs and workers will amplifythe benefits of these reforms as they are introduced.