In Washington, the winds of change

By Wayne Rogers, Sonnenschein Nath & Rosenthal LLP
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On 20 January, nearly two million people braved the cold to attend the inauguration of the 44th president of the United States, Barack Obama. The blustery winds symbolized the change coming to Washington and the world with the new administration. President Obama has made it clear that he will usher in a new era for America.

Hillary Clinton, quickly confirmed as secretary of state (the equivalent of foreign minister), highlighted the cornerstones of American foreign policy: Defence, diplomacy and development. Charged with two of these on her first day in office, Secretary Clinton promised “robust diplomacy” and “effective development”.

Wayne Rogers Advisor Sonnenschein Nath & Rosenthal
Wayne Rogers
Advisor
Sonnenschein Nath & Rosenthal

What will this mean for India?

(i) Strategic partnership: On the heels of the nuclear deal, expanded relations and closer ties are expected.

(ii) Terrorism: A renewed focus on the defeat of Al Qaeda and greater cooperation with India to strengthen capacities to defeat shared enemies. India has been listed as one of the most terror-afflicted countries in the world. The US State Department counted 2,300 Indian terrorist related deaths in 2007 alone. The recent Mumbai attacks will certainly complicate US foreign policy in South Asia.

(iii) Pakistan: An increase in non-military aid by 300% and greater accountability for anti-terrorism activities and border security. Secretary Clinton has described the Afghanistan-Pakistan border as the “central front in the war on terror”. In her confirmation process, she advocated conditioning US military aid on Pakistani efforts to close training camps, evict foreign fighters and prevent the Taliban and Al Qaeda from using Pakistan as a sanctuary.

(iv) Iraq: Responsibly end the war in Iraq and enable the country’s transition to autonomy and total Iraqi control. More resources will be dedicated to the fight against the Taliban and Al Qaeda in Afghanistan.

(v) Kashmir: A very sensitive subject that will be the focus of expanded diplomacy. India has consistently maintained that Kashmir is a bilateral issue between itself and Pakistan. Engagement by the US on this issue may result in a push back from India. The administration is likely to approach this cautiously. While special envoys George Mitchell (former senate majority leader and leader of Northern Ireland peace negotiations) and Richard Holbrooke (former UN ambassador) were appointed by President Obama for the Middle East and for Afghanistan/Pakistan, respectively, no announcements have been made as of press time concerning Kashmir.

(vi) Iran: Direct diplomacy with Iran, without pre-conditions.

(vii) Immigration: The president favours immigration reform and the H1B visa program.

(viii) Outsourcing: There appears to be strong sentiment in the US to protect jobs in light of the economic downturn. Tax treatment of offshore profits will receive increased scrutiny by the US congress. The current World Bank banning of Satyam and its “Enron-like” scandal and implosion will be unhelpful to the Indian cause.

(ix) Nuclear proliferation: There will be greater emphasis on securing nuclear material from potential terrorists. The strong move towards a “nuclear-free world” will involve negotiations to stop the development of new nuclear weapons, including in the US, and to reduce stockpiles of nuclear weapons and materials. Friendly suasion to bring India on board for the Comprehensive Test Ban Treaty may reopen the delicate political issue in India.

(x) Climate change: The US expects to be a leader on the issue of climate change. This will entail greater participation in global negotiations on the subject as well as an adoption in the US of renewable energy goals and, potentially, carbon emission limitations (whether by caps on trade or other means.) Since the US, India and China are major players on this subject, greater trilateral and global engagement from these nations is anticipated.

(xi) Intellectual property: The recent success of the film Slumdog Millionaire (4 Golden Globes, 10 Oscar nominations) in the US illustrates a growing connection between Hollywood and Bollywood. Simultaneously, the problem of Indian entertainment piracy, which has resulted in up to 820,000 Indian job losses valued at US$4 billion, points to the opportunities for collaboration and cooperation between India and the US on the issue.

(xii) Global poverty: The administration has embraced the millennium development goal of cutting extreme poverty and hunger around the world in half by 2015 and will double US foreign assistance to achieve that goal. These efforts are intended to help the world’s weakest states build healthy and educated communities, reduce poverty, develop markets, and generate wealth. The World Bank estimates that a 1% decline in growth rates in developing countries places an additional 20 million people in poverty. This will drastically impact India as the economic slowdown may reverse its strides towards combating poverty.

The US ambassador to India may continue in his post for some time, however, both the opportunities and challenges for improved US-India relations will present a full plate for his successor.

Wayne Rogers is a senior adviser in the international law firm of Sonnenschein Nath & Rosenthal, where he specializes in international trade and cross-border transactions. He may be reached at +1-202-408-6478 or [email protected]

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