IN WASHINGTON, D.C. — India’s new External Affairs Minister Subrahmanyam Jaishankar will have his work cut out in making sure that the U.S.-India strategic relationship remains on auto-pilot and is not dissipated over growing irritants of trade and New Delhi’s close relationship with Iran, which is an festering anathema to the Trump administration.
Even the crown jewels of the U.S.-India ties in recent years—the defense relationship—could encounter serious hiccups, the Trump administration has warned if India goes ahead with a purchase of Russian S-400 missile systems in violation of U.S. CAATSA (Countering America's Adversaries Through Sanctions Act)sanctions against Moscow.
But administration and diplomatic sources, who acknowledged a visit by Jaishankar to the U.S. in short order is a no-brainer, and those former and current senior administration officials and policy wonks who’ve interacted with him in his earlier incarnations, say that his tough negotiating skills will hold him in good stead and then some, when he hits the ground running in Washington, D.C.
They recalled how in his first formal foray with America Inc., five years ago as India’s envoy to the U.S., he pulled no punches when he told members of the U.S.-India Business Council that India has been catalytic in job creation in the United States and hoped it is given due credit for helping in alleviating America’s economic recovery.
Essentially making clear that India was now a co-equal with the U.S. and could no longer be expected to kow-tow to Washington’s policy prescriptions or directives, Jaishankar at a reception accorded him at the Hay Adams Hotel in downtown Washington, DC that was attended by over 200 representatives of USIBC members companies, administration officials, think tanks and India well-wishers, said, “We as Indians have stakes in a strong US economic recovery and we contribute to job creation here with our economic imports, through direct investments and by enhancing the competitiveness of American companies.”
‘So, I hope that this is something that is given due credit in Washington,’ he said.
Jaishankar said that as both New Delhi and Washington “work our way — each one of us out of a difficult economic situation — it is important that we appreciate each other’s interests.”
He assured U.S. business and industry that “my country values its reputation as being open to international business,’ and asserted that ‘the record shows that we are prepared to respond to legitimate concerns.”
In this regard, the new envoy said, “Clarification of tax regulations factoring in Indian imports and different policies and liberalizing FDI caps in various sectors are recent examples that speak for themselves.”
“But equally, we expect our issues — issues of high-skilled visas, market access, totalization, to be given a fair hearing,” he added.
Jaishankar argued, “In the present climate, what we need above all, is sensible and constructive interactions as much between the governments as between our businesses,” and taking a hefty swipe at some of the stinging criticism leveled against India by some sectors of America Inc, and even some members of the U.S. Congress, added, “What we certainly do not need is public acrimony or misrepresentation of policies.”
“As Ambassador, I am here to advance our interests but to do so in a fair manner that takes yours into account in equal measure,’ he said. “I hope this spirit would continue to characterize my future interactions not just with USIBC but with American business as a whole.”
Jaishankar reiterated, ‘I can assure you where business is concerned, my doors and my e-mail in-boxes are always open.”
The sources said that all of these tough negotiating skills would hold him in good stead when he takes head-on the growing frictions in certain facets of the U.S.-India relations since the advent of the Trump administration.
On May 31, President Donald Trump, who has condescendingly called India as the “King of Tariffs,” hardly a week after he congratulated Prime Minister Narendra Modi and the BJP on its massive electoral triumph, terminated India's designation as a beneficiary developing nation under the General System of Preferences(GSP) trade program, complaining that New Delhi had not assured the U.S. that it will provide "equitable and reasonable access to its markets."
Despite several U.S. lawmakers from both sides of the aisle imploring him not to do so, Trump, in a proclamation, said, "I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India's designation as a beneficiary developing country effective June 5, 2019.”
The GSP is the largest and oldest U.S. trade preference program envisaged to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
On March 4, Trump had announced that his administration had decided to terminate India's designations as a beneficiary developing country under the GSP and the 60-day notice period ended on May 3.
India was the largest beneficiary of the program, and in 2017, $ 5.7 billion in Indian imports to the U.S. were provided with duty-free status.
Also, on May 31, a senior administration official warned India and other countries that import Iranian oil, that if they violated U.S. sanctions by importing oil beyond accepted levels, punitive sanctions would kick in.
In the wake of reports that India and China were attempting to circumvent U.S. sanctions by importing Iranian oil beyond the accepted levels negotiated from November to May,Brian Hook, Special Representative for Iran and Senior Policy Adviser to Secretary of State Mike Pompeo, said, "There will be no more oil waivers granted and the only oil that would have been permitted would have been under the cap that we negotiated. That cap was negotiated, it was to run for a period from November of 2018 until May of 2019.”
He told reporters during a conference call that once the countries have reached the negotiated cap, that would be the limit of the oil that U.S. would permit to move through and would not be sanctioned.
Hook made clear, "We will sanction any efforts to import Iranian crude oil beyond the limits that were negotiated in the period that ran from November through May.”
When informed that India and China continued to import Iranian oil, which was much less than their original levels of imports, the senior administration official said, "The countries that you mentioned I think every country is aware of it. We now have close to 30 countries that used to import Iranian crude oil that are now at zero. This accounts for 40 per cent of the regime's revenue".
Hook asserted, "If we want to get serious about denying Iran the money it needs to destabilize the Middle East, we have to enforce oil sanctions. We think all countries in the world share a desire for a more peaceful and stable Middle East. For as long as Iran is able to conduct its foreign policy with impunity fueled by oil revenue, it is going to be unstable.”
He said that this has been the clear and unambiguous message of the Trump Administration to all of these countries, and reiterated, "Nations know that if there are efforts to import Iranian crude oil beyond the accepted levels that were negotiated back from November through May, they will be sanctioned.”
However, another senior State Department official, in a background briefing told reporters that the Chabahar port in Iran that India was helping develop would continue to be exempt from the U.S. sanctions.
"That exemption continues. It's not being reviewed. The exemption allows for the development of the port, the development of the rail link to Afghanistan, the provision of crude oil and gas to Afghanistan and the provision of humanitarian supplies as well. That continues," the official said.
Last month, India's Ambassador to the U.S. Harsh Vardhan Shringla had told American reporters that India had stopped buying oil from Iran—which constituted at least 10 percent of India’s oil imports — after May 2 when the Trump administration waivers that allowed countries like Indiato continue their imports for six months, came to an end.
The official, who said that the Chabahar port exemption for India continues, noted that the administration was “having an ongoing conversation with India on Iran,” and noted that the administration “welcomes the fact that India has reduced its crude oil imports from Iran.”
"I don't see frankly a difference in concerns over the prospect of a nuclear Iran. I don't believe it's in India's interest and Indian officials are forthright in saying that they do not want to see a nuclear Iran," the official said.
The official added, "I think that there are shared concerns over Iran’s support for terrorism, including in the Gulf where six million Indians work. So, there's a lot that unites the US and India when it comes to analyzing and assessing Iranian activity.”
But if the heartburn over the contentious trade issue and the oil imports from Iran was not enough, the Trump administration also compounded the pressure on New Delhi warning of serious implications to U.S.-India defense ties if India goes ahead with its decision to purchase the Russian-made long-range S-400 missile defense systems in violation of the CAATSA sanctions.
In October, India and Russia signed a $5 billion S-400 deal after wide-ranging summit talks between Prime Minister Modi and Russian President Vladimir Putin.
A senior administration official took exception to the contention that India’s decision was “no big deal” as long as New Delhi continued with its massive defense and military purchases from the U.S. too.
The official, in a background briefing on May 30, said, "I disagree. The S-400 is significant because of CAATSA sanctions. It's also significant because of what it precludes, in terms of future high-tech cooperation.”
"You can look at the very serious conversation that's taking place with our NATO partner Turkey and the same concerns will apply should India proceed with an S-400 purchase," the official said, and added, "We don't commingle highest technology systems. There are threats posed by the purchase of an S-400. So that conversation you're seeing played out in Turkey right now.”
Such conversations would apply to India too, the official reiterated and shot down any exemptions or automatic waivers under the provisions of the CAATSA legislation that the U.S. Congress in a strong bipartisan vote had approved.
While acknowledging that "every case would have to be looked at individually,” the official argued, “I think the broader issue is where are India's military relations headed? with whom is it going to share the highest technology and that operating environment? because certain choices preclude other choices.”
"As we have discussions about a combat aircraft sales and other advanced systems, the decisions that India makes with regard to S-400 will have an impact on those conversations," the official added.
But the official re-emphasized, “We look forward to continuing the conversation because this really is a conversation. Choices that are made now will establish the framework for the future and we certainly have the ambitions for the broadest possible, deepest possible military relationship with India.”