Welcome, US salesman

Thinking aloud

Union commerce minister Kamal Nath tells of a meeting with the European Union petering out in 15 minutes because the Indian side held forth on Iraq and Afghanistan while the Europeans wanted to discuss trade and investment.

One hopes there won’t be a similar fiasco with President Barack Obama who also wants to discuss trade and investment. His press secretary,  Robert Gibbs, has already warned that the “trip is basically economic in focus.”

Most Indian analysts and policymakers find public mention of such pragmatism demeaning. It’s not that they are immune to realpolitik — India would not have courted Myanmar if that had been so or invested $1.3 billion in Afghanistan.

But no high-powered spokesman of the world’s largest democracy would bring himself to say like the American under-secretary of state for political affairs William Burns, that one of the virtues of democracy is that it “can foster economic development.”

Indians will claim that the lofty ideal of democracy is an end in itself. Hence the heartache over the long estrangement between the world’s two leading democracies.

Yet, India had warning five years ago that, as has been famously said, the business of the United States is business. Only a month before his historic 2006 visit to this country, then President George W Bush proudly told the Asia Society in Washington that “India’s middle class is buying air-conditioners, kitchen appliances, and washing machines, and a lot of them from American companies like GE, and Whirlpool, and Westinghouse.”

That meant more jobs for Americans. “Younger Indians are acquiring a taste for pizzas from Domino’s and Pizza Hut,” he added amid applause. It was a plus point in the relationship that Air India had placed an $11 billion order for 68 Boeings.

Of course, there’s a bigger picture too. Whatever the outcome of Tuesday’s mid-term Congressional elections, Obama’s travels speak of the grand strategy of a ‘Pacific President’ for whom the US is an ‘Asian power.’

He set the tone by calling President Asif Ali Zardari at the conclusion of the third round of the strategic dialogue with Pakistan.

He will be received in Delhi by Prime Minister Manmohan Singh, just back from Japan, Malaysia and another series of interlocking meetings in Vietnam where Hilary Clinton will represent the US.

Obama will then go to Indonesia (a homecoming of sorts), Japan and South Korea where he will meet President Hu Jintao and President Dmitry Medvedev on the sidelines of the G20 summit.

India, soon be the world’s most populous country with 50 per cent of its people under 25 while much of the industrialised world is ageing, can have a central role in this ‘Concert of Asia’ if its internal resilience can match external aspirations. That was also  Lee Kuan Yew’s hope way back in the 60s when he expected India would replace Britain in South-east Asia.

Politics over economics

It’s a truism now to say that one reason why that did not happen was the importance India accorded to politics over economics. Priorities are better ordered under a prime minister who is a distinguished economist and has no compunction about saying that “India is a vibrant marketplace.”

But India also has one of the world’s most powerful bureaucracies whose default position, many foreign investors feel, is negative. Diplomats who tried to boost trade and investment say they were told the government of India was not a ‘rentier.’ Nor were they ‘Dalda salesmen.’ South Block is a bastion of conventional diplomacy.

The much talked of ‘single window’ approach can mean in practice not freedom from red tape but that all the questions and questionnaires from all the other windows pile up at one point. Doctrinaire interpretations of agreed clauses and a reluctance to implement even what has been conceded explains why the promise of the landmark Comprehensive Economic Cooperation Agreement (ECEA) that India and Singapore signed in 2005 has been only inadequately realised.

Yet, if implemented in a spirit of generous realism, CECA can have the world flocking to India’s doorstep while also enabling Indian entrepreneurs to take far greater advantage of opportunities elsewhere.

It’s a two-way relationship. While American goods exports to India have quadrupled over seven years to about $17 billion and service exports have tripled to about $10 billion, Indian companies are the second-fastest-growing investors in the US. They employ about 57,000 people. So, it’s in the interest of both sides to extend and deepen the relationship.

Obama isn’t bringing an entourage of 200 businessmen, including the PepsiCo and McGraw-Hill CEOs, to admire the Deepavali junketings.

He is bringing them because as Robert O Blake, assistant secretary for south and central Asian affairs, reiterates a McKinsey prediction, “as many as 91 million middle class urban households in 2030, up from 22 million today.”

Blake adds that American companies are “set to produce and sell” the “TV, internet service, washer and dryer, chapatti maker” that these families will want.

If this sounds undignified to Indian ears, let us not forget that merchants and mariners, not poets and philosophers, created the Sri Vijaya empire which has been reborn as the Association of Southeast Asian Nations.