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Institute of Peace and Conflict Studies
INDO-US RELATIONS RECENT DEVELOPMENTS

Author(s): L Venkateshwaran
Institute of Peace and Conflict Studies (2006)
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IPCS Special Report 19
May 2006
INDO-US RELATIONS
RECENT DEVELOPMENTS
L Venkateshwaran
Research Assistant, IPCS
Background a core ally as it sought to engineer

At a time when anti-Americanism has what could be a major diplomatic shift
spread across the globe, a recent poll away from power alignments forged
shows that more people in India have after World War Two. Old standby
a positive view of the United States Britain, increasingly important Japan
than in any other nation surveyed. The and, according to some of the officials
poll, conducted by the Pew Global familiar with administration’s
Attitudes Project, raised, however, a thinking on geopolitics, Australia ,
larger question: How long would it be have all joined India in the group of
before the courtship between India countries Washington believes shares
and the United States would lead to a its values and goals. "You might call
strategic partnership? Despite a this emerging set of alliances the 'four
congruence of vital national interests, by four' strategy (which is) built
and a shared political goal to build a around four great powers - the United
long-term strategic relationship, the States, Great Britain, Japan and India,"
United States was yet to forge a true wrote Thomas Donnelly, of the
partnership with India. However, American Enterprise Institute (AEI)- a
there have been important shifts in think-tank with close ties to the
U.S. thinking, largely on account of administration, on the AEI website.
India's rising geopolitical importance, Nuclear power India, a growing
its abundant market opportunities, economic force on China's border and
and its role in ensuring a power also familiarly dubbed the world's
equilibrium in Asia. The United States biggest democracy, was the relative
and India have discussed cooperation newcomer to the group. Often an
on missile defense, nuclear energy, adversary, as a Soviet sympathizer
space and high technology earlier. and leader of the non-aligned
Furthermore, the two has also opened movement during the Cold War, it
a quiet dialogue on India's largest now enjoyed dramatically improved
neighbor, China, whose rise is likely to ties under President George W Bush.
pose the single biggest challenge to Presidential aides said the United
world security in the years to come.1 States was committed to helping India
to, not just prosper but also, rise as a
The Bush administration began regional power. One senior official has
looking increasingly towards India as said, privately, that the administration
also intends to back India for a
1
Arvind Virmani, “Poised for the jump can
Bush transform the terms of the India-US
engagement?,” The Indian Express, 15 July
2005
INSTITUTE OF PEACE AND CONFLICT STUDES

B-7/3, Safdarjung Enclave, New Delhi
91-11-4100 1900 (Tel); 91-11-4165 2560 (Fax)
Website: www.ipcs.org
May 2006
permanent seat on the UN Security were also looking forward to the visit.
Council. 2 They believed that the world situation
had changed over the years, and that
US President Nixon transformed the time had come for India to give up
relations with China with his its old mindset, look far into the future
breakthrough trip to Beijing in the and evolve a new relationship with the
1970’s. This led, after a decade or so, to world's most powerful country. Often,
a transformation of China's role in in the past, the love-hate relationship
Asia. President Reagan transformed between the two largest democracies
US relations with the USSR in the witnessed hesitations and prevented
1980’s, contributing to the them from coming closer. Often,
disintegration of the Soviet empire. adversarial feelings, embedded in
Would President Bush transform the mutual distrust, ruled the relationship.
US’s relationship with India , leading Often, a step forward had led to two
to a transformation of India's role in steps backwards.
Asia, was the crucial question
uppermost in the minds of the As the Left parties’ chiped away at
International community. A change in efforts to improve relations with the
objective conditions suggested that United States, they had a powerful
this was likely. President Bush ally in Washington - the American
envisaged a much bigger role for India bureaucracy committed to old
in global affairs than his predecessors. thinking on non-proliferation and
This resulted in the initiative -The nuclear cooperation with India. With
Next Steps in Strategic & the nuclear question once again
Technological Partnership (NSSTP) -in becoming the touchstone for
2005. The process was, however, measuring the transformation of Indo-
sidetracked by 9/11 as the American US relations, on the eve of Prime
focus shifted to Afghanistan and Iraq, Minister Manmohan Singh's visit to
and Pakistan made itself indispensable Washington, the resistance to change
to the US.3 appeared as strong in the American
capital as it was here. The Left in India
Washington sent across word that and the non-proliferation bureaucracy
President George W. Bush had in Washington shared a deep aversion
ordered an extra length of red carpet to India's acquisition of nuclear
for Dr Manmohan Singh during his weapons. But, unlike the non-
visit in July 2005, the kind of reception proliferation champions in
given only to a few heads of Washington, President George Bush
government. Key functionaries of the conveyed a different political message.
Bush Administration also told New In his frequent encounters with Prime
Delhi that the Prime Minister's visit Minister Manmohan Singh, including
could mark a watershed in relations one at the Gleneagles summit, Bush
between India and the United States. reportedly conveyed his empathy for
There were influential people in Dr India's attempts to acquire civilian
Manmohan Singh's government who reactors from the international market,
in order to boost its nuclear electric
2
power programme. India had been
“United States looks to India as new global working hard to persuade the US to
ally,” Editorial, Daily Times, 8 December 2005
drop its sanctions and restrictions on
3
H.K. Dua “Opinion: Mission to Washington” the Nuclear Suppliers Group so that
The Tribune, 6 July 2005. the member nations would be able to
INDO-US RELATIONS: RECENT DEVELOPMENTS
sell, not just nuclear fuel, but also, at safeguarded nuclear reactors at
least six nuclear power reactors Tarapur.5
required by India to answer its
burgeoning energy needs. The Defense Agreement of July 2005
Tarapur plant was down to its last Foreign Secretary Shyam Saran in the
stock of fuel from Russia, and Moscow run-up to Prime Minister Manmohan
had expressed its inability to continue Singh's visit to Washington
the supply on account of the emphatically denied that the defense
restrictions imposed by the Nuclear framework agreement signed in June
Suppliers Group on India. It was 2005, between India and the United
imperative that American withdrew States, was a military alliance.
its support for the sanctions so as to Suggesting that there were some
give teeth to its promise of civilian "misunderstanding" about the defense
nuclear cooperation with India.4 framework, Mr. Saran said it set out
the "parameters" within which the two
Strategic Agreement of July 2005 countries could potentially cooperate
On July 18, 2005, India and the US with each other, if it was in their
signed a landmark strategic agreement interest to do so. Mr. Saran also added
that had far reaching consequences. that it would not have any adverse
There were two important facets to impact on India's substantial defense
this agreement. First, the belated ties with Russia and other countries
acceptance of India as a "responsible U.S-India defense pact, apart from
state with advanced nuclear other things, allowed New Delhi to
technology" amounted to tacit US join the multilateral Proliferation
recognition of India's status as a de Security Initiative (PSI). The PSI is a
facto nuclear weapons power outside global plan aimed at stopping the
the Non Proliferation Treaty. Second, shipment of weapons of mass
the US offered to cooperate with India destruction (WMD), their delivery
on civilian nuclear energy issues. As systems, and related materials,
per the agreement, the US would work worldwide.
to achieve full civilian nuclear energy
cooperation with India as it realised The Pentagon also approved the lease
India's goals of promoting nuclear of two P-3C reconnaissance aircrafts
power and achieving energy security. for India and notified the US Congress
It would seek agreement from the of a $133 million military sale to
Congress to adjust US laws and provide logistical support for the deal
policies. The US would also work with that included training devices, test
friends and allies to adjust equipment and spare parts.
international regimes to enable full Announcing the deal, the Pentagon's
civilian nuclear energy cooperation Defense Security Cooperation Agency
and trade with India, including, but (DSCA) said the proposed sale would
not limited to, expeditious help "improve the security of an
consideration of fuel supplies for important ally and strengthen the US-
India strategic partnership". The P-3C
aircrafts, built by Lockheed Martin,
4 5
Brahma Chellaney “India can be America's Gen V. P. Malik (retd) and Brig Gurmeet
best friend” International Herald Tribune, 1 Kanwal (retd) “N-deal with the US” The
July 2005 Tribune, 28 November 2005
3
91-11-4100 1900 (Tel); 91-11-4165 2560 (Fax)
May 2006
would replace the Navy's Soviet IL-38 seventh round of talks.8 A 12-day joint
May aircrafts which are "quickly exercise of Indo-US Navies, called
reaching the end of their operational 'SALVEX', began at Kochi on 13
service life". This modernisation September, 2005 with the
would enhance the capabilities of the commencement of the harbour phase
Navy, support its regional influence, of exercise. As part of this phase,
and meet its legitimate needs of self- training and professional discussions
defence, said the DSCA, 6 . It said that between the two navies were held. The
India needed the advanced aircraft for exercise, which focused on diving and
land-based maritime patrol, and salvage operations, continued till
reconnaissance, to protect its economic September 23, 2005.9
exclusion zone and to guard against
submarines and surface warfare In a step up of service-to -service
ships. 7 engagement, India and the US
conducted the biggest-ever army level
India and the United States also exercises near Ranikhet, in
agreed to further strengthen bilateral Uttaranchal, in January as American
defense cooperation and emphasised officials indicated that Washington
the importance of service-to-service was working to open doors to high-
ties at the meeting of the Defense technology transfers. A company force
Policy Group (DPG) in Washington in of the US army also conducted joint
September 2005. The three-day exercises with a thrust towards anti-
meeting of the DPG, held in an insurgency operations in the
extremely frank, friendly and co- mountainous terrain near Choubhatia.
operative atmosphere, was co-chaired American officials said that, in the
by the Indian Defense Secretary coming year, armed forces of the two
Shekhar Dutt and the Under Secretary countries would participate in "more
of Defense for Policy - Eric Edelman. complex, patterned" war games. "US
The two sides exchanged views on the Pacific Command wants to expand its
international strategic and security military-level interaction with India
situation as well as on the further over a broad front to enable the two
development of bilateral defense armed forces to share experience in
cooperation, as envisaged under the doctrines and higher formation-level
Indo-US Defense Framework exercises”, said officials. Officials said
agreement, inked in June 2005. "Both that, though Indo-US defense trade
countries view their bilateral defense stood at USD 287 million, they
cooperation as an important facet of expected a big jump in arms sales
the India-US global partnership, through major deals with the Navy,
reflected in the India-US Joint the Special Forces and the Air Force. 10
Statement of July 18, 2005," read a
statement issued at the end of the Mutual Legal Assistance Treaty
India and the US also signed an
agreement to help each other
8
Editorial “India, US to strengthen defense
6
DSDA is the US Defense Department's nodal co-operation” Hindustan Times, 24 November
agency for foreign military sales. 2005
7 9
S. Rajagopalan “Pentagon hints at big Editorial, Daily Times, 13 September 2005
10
defence deal with India” Hindustan Times, 16 Editorial “India, US to conduct biggest
November 2005 ever military exercise” Deccan Herald, 10
December 2005
investigate offences related to roadmap for major reforms in the

terrorism, narcotics, trafficking, and financial sector. At the conclusion of a
other organized crimes in October joint press conference with the U.S.
2005. The protocol of exchange for the Treasury Secretary, John Snow,
Instrument of Ratification concerning pertaining to the Indo-U.S. Financial
the Mutual Legal Assistance Treaty and Economic Forum meeting,
was signed by Union Home Secretary Finance Minister P. Chidambaram
V K Duggal and US Ambassador to said: "I have told Secretary [John
India David C Mulford. Speaking after Snow] that we are fully committed to
the signing of the treaty, Mr. Mulford checking money laundering as well as
termed it as "a very, very important stamping out financing of terrorist
step forward" in bilateral relations activities. An anti-money laundering
between the two countries. He said legislation is in place. There has to be
that relations between India and the an inspection, and a report, which will
US touched virtually every area of happen shortly,” He also reiterated
human activity, and the US would like the intention of the two countries to
to develop relations further. The implement the recommendation of the
Union Home Secretary described the Financial Action Task Force. The panel
signing of the Protocol as yet another was set up to prevent abuse of the
step in "our continuing strong financial system and both the U.S. and
friendship." Mr. Duggal said India was India agreed to work together to
the 16 th country with which the US identify and freeze the assets of
had signed such a treaty. The treaty terrorist groups.12
was ratified by India soon thereafter.
International Thermonuclear
Agreement on Cooperation in the Experimental Reactor (ITER) energy
Field of Science and Technology project
After 15 years of negotiation, India India’s inclusion as a full partner in
and the United States finally signed an the ambitious multinational
umbrella agreement on cooperation in ‘International Thermonuclear
the field of science and technology in Experimental Reactor’ (ITER) energy
October 2005. The pact was signed by project was an acknowledgement of
Union Science and Technology being a responsible nuclear state with
Minister Kapil Sibal and U.S. Secretary advanced nuclear technology. The
of State Condoleezza Rice. In a press decision was taken by six partner
release from Washington, where the countries -US, European Union,
agreement was signed, the Ministry of Russia, China, Japan and South Korea.
Science and Technology said that "The decision recognizes that India can
cooperation would be based on shared significantly contribute to such
responsibilities and equitable endeavours and also is recognition
contributions. 11 that India is a country with advanced
nuclear technology, including in the
India also gave assurance to the field of fusion research," said a
United States that it would make all- spokesman for the External Affairs
out efforts to curb money laundering Ministry. ITER is the experimental
and stamp out financing of terrorist
activities while it laid down a 12
Editorial “India, US push for wider trade
ties” The Hindu, 10 November 2005
11
Editorial,The Hindu, 19 October 2005
5
91-11-4100 1900 (Tel); 91-11-4165 2560 (Fax)
May 2006
step between the latest studies of wanted to tell the skeptics in the US
plasma physics and future electricity – that India's search for nuclear energy,
producing fusion power plants. The which is cheaper and cleaner,
main ITER facility will be built in deserved all-out American support as
Cadarache in France by 2016 and all India has had a clean track record so
partners will participate in its far, as nuclear non-proliferation is
construction, development and concerned, despite not being a
research. 13 signatory to the Nuclear Non-
Proliferation Treaty. What Dr Rice said
Bush visit to India and the Nuclear in Washington, while interacting with
agreement of March 2006 journalists, was also aimed at
The Indo-US relationship proceeded at convincing the detractors of the Indo-
a furious pace in President Bush’s US nuclear agreement, in India , that
second term. It started with there was nothing sinister about the
Condoleezza Rice's visit to New Delhi deal. 14
in March 2005, when she expressed
the American desire to help India India and the United States remained
achieve major world power status and engaged in intensive negotiations to
stressed the need for an energy try and clinch a civilian nuclear deal,
dialogue. This was followed by the even as U.S. President George.W.Bush
new framework for the US-India landed in New Delhi on March 1st.It
defense relationship agreement signed was the fifth visit by an American
on June 28 2005, the completion of the President to India. Interestingly,
Next Steps in Strategic Partnership during a stop over in Kabul, Mr. Bush
(NSSP), and the finalization of the said that officials had been talking to
George Bush-Manmohan Singh joint the Indians even from his special
agreement on July 18 2005. The joint aircraft, and these discussions would
pact included the nuclear deal that is continue in New Delhi. Reiterating
now the focus of controversy in both that it was a difficult issue for both
countries. This was followed by governments, the President said that
India's surprise vote in the IAEA the two sides would continue to have
where, along with western nations, it a dialogue and work towards an
envisaged that Iran would be referred agreement.15 President Bush and
to the Security Council if it did not Prime Minister Manmohan Singh were
satisfactorily account for its suspect involved in lengthy discussions,
nuclear activities. shortly after the arrival of President
Bush. The meetings revolved around
The US Administration was the common values that bind India
determined to implement the July 2005 and the United States together: the
civilian nuclear deal it had entered commitment to democracy, to the
into with India. US Secretary of State institutions of freedom -- free press,
Condoleezza Rice made it clear, once freedom of religion, independent
again, that the US was committed to judiciary, and the like -- and the
helping India with advanced important message that the United
technology and equipment to produce States and India had to stand together
sufficient nuclear energy for its fast as advocates for these institutions, and
growing economy. She obviously subsequently provide the world with a
13 14
Editorial “India becomes partner in nuclear Editorial, “Indo-US deal on track” The
reactor project” Daily Times, 8 December 2005 Tribune, 9 January 2006
15
Editorial, The Hindu, 20 March 2006
living example of the strength of such year long moratorium on the sale of
institutions. The discussion also nuclear fuel and reactor components
included issues like the War on Terror, by the US to India. The export of
trade issues- especially the impending nuclear material, reactors, and their
entry of Indian mangoes in to major components from the US, would
American markets, the Doha round require a Section 123 amendment of
conclusions and the agriculture the Atomic Energy Act. Technically,
knowledge initiative.16 The special India is a non- nuclear weapon state
emphasis, though, lay on energy and does not have the full-scope of
issues. The discussion largely safeguards. Under the terms of the
concentrated around India's need for Atomic Energy Act, Congress has to
energy, its plans to dramatically approve an agreement for cooperation
enhance its ability to provide secure and needs to pass a joint resolution of
energy to its people, and its desire to approval. The Administration,
do so in a way that avoided alternatively, may seek to amend
proliferation risks and did not create certain portions of the Atomic Energy
environmental problems. The Act, in particular Sections 128 and 129,
American President talked about his both of which includes non
advanced energy initiative and his proliferation criteria. 18
hope that technologies arising from

initiative could be shared with India The nuclear deal, though, accords
and other countries. The meeting of acceptance to the military and the
the two leaders with the CEO forum, security component of the Indian
soon after, once again reemphasised to nuclear program, by the sole
them that energy issues were the superpower and torchbearer of the
crucial cog in the wheel of relations nuclear non-proliferation regime, the
between the two countries. President US. The Indo-US deal also makes
Bush’s visit to India also included India's nuclear weapons program
visits to an American funded acceptable, legitimate and non-
agricultural institute and the business threatening to the existing nuclear
school in Hyderabad. He cleverly order unlike those of Iraq, North
avoided any visits to American Korea and Iran. The nuclear deal
outsourcing multi national companies, envisages an alliance, albeit informal,
a topic of hot debate and controversy between the US and India deriving
back in the US.17 from a real convergence of mutual
security interests. The nuclear deal
Under the historic nuclear agreement also seeks to enhance India's nuclear
signed on March 2, 2006, India has security via nuclear arms control. By
agreed to classify 14 of its 22 nuclear agreeing to separate its large civilian
facilities as civilian, and put these and small military nuclear programs,
under the permanent supervision of India has acknowledged its
the IAEA. This should, then end a 30- commitment to minimum nuclear
deterrence, which provides for its
16
nuclear security interests vis-à-vis
Briefing to the American press by National
Security Advisor Steve Hadley on March 2,
18
2006 in the White House Ajey Lele “Nuclear Indulgence to India:
17
Briefing To the American Press by Secretary Will US Congress Relent?” www.ipcs.org,
of State Condoleezza Rice on March 4, 2006 in Article no. 1975, 22 March 2006,
the White House
7
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May 2006
China and Pakistan. India has readily agreement is to bring about an early
agreed to continue its voluntary freezing of the Indian weapon-usable
moratorium on nuclear testing and nuclear materials stock at the
agreed to participate in future minimum possible level. India, in turn,
negotiations on the FMCT. India has obviously wants to retain all the
also committed to prevent the spread accumulated inventory of such
of nuclear technologies by strict export materials, as well as the facilities to
control laws, which are already in produce the additional material we
place.19 consider essential for a minimum
credible deterrence, in compliance
Space Launch Agreement in the with IAEA safeguards. Obviously,
Offing each country wants to maneuver the
India and United States are also separation plan to suit its specific
poised to take their strategic objective. Despite the façade that the
relationship a notch higher. They will deal is progressing well, it is clear that
soon sign a crucial space launch most of the originally perceived
agreement to allow India to launch differences between the two sides are
US-made satellites, not just from US, very much present even now. It
but from other countries that use appears that the US side feels that
American components in their certain facilities, especially reactors,
satellites. The understanding will help which India has proposed to retain in
the country's premier space body, the strategic group, really belong to
Indian Space Research Organization the civilian list. In addition, it is clear
(ISRO), boost its earnings. It will also that the US considers India's time
help the once estranged democracies schedule for bringing these facilities in
get into a tighter strategic partnership. phases into the civilian list as too
Some last-minute refinements in the stretched out, and that India should
agreement, relating to the pre-launch indeed place them under safeguards at
treatment of US satellites on Indian a more rapid pace.
rockets are being worked out. But,
these are procedural issues which both The nuclear deal, though, will
sides expect to be sorted out at the improve India's global standing.
next meeting of the space working India's deal with the US for transfer of
group. India has already accepted two nuclear technology will help it in a big
US payloads for the ‘Chandrayaan’ way. As non-NPT states, or non-
mission. Many such joint endeavours nuclear weapons states with nuclear
are now expected, and together with weapons, India, Pakistan and Israel - a
these, a closer exchange of strategic strange trio, indeed - have much to
space technologies. 20 defend to the rest of the world. They
have no choice but to stick together
Conclusion whenever questions of comprehensive
One of the major objectives of the safeguards come up. There was even
United States in entering into the an occasion when Pakistan changed its
Indo-US nuclear cooperation vote to join India and Israel. When the
Arab world gangs up every year to
19
call upon states to accept
Manish Dabhade “Indo-US Nuclear Deal: comprehensive safeguards, essentially
New Realism” www.ipcs.org, Article no.
to focus attention on Israel, it has to
1958, 7 March 2006,
20
Editorial, “US join hands in space,” The contend with Indian diplomatic skills
Times of India, 2 August 2005. as Israel hides behind us. These
strange maneuvers could stop if the

India-US nuclear deal is approved by
the US Congress, and the Nuclear
Suppliers Group, and comes to
fruition. India will then cross over
from the group of nuclear mavericks
to join the designated nuclear weapon
states in its new capacity as a
responsible state with advanced
nuclear technology.
9
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Institute of Peace and Conflict Studies

INDO-US RELATIONS RECENT DEVELOPMENTS

Background a core ally as it sought to engineer

INSTITUTE OF PEACE AND CONFLICT STUDES

investigate offences related to roadmap for major reforms in the

hope that technologies arising from

strange maneuvers could stop if the

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