Just when it seemed that Indo-U.S. ties had attained a semblance of predictability, relations between the oldest and the largest democracies of the world are back under the scanner, with some uncertainty about the future. Visa issues, online commerce rules, data flows, each side’s relationship with Iran, India’s defense trade with Russia, and even each country’s vision of the Indo-Pacific reflect areas of disagreement. The two sides are proceeding with caution as they try to deal with mismanaged expectations from their relationship and navigate their increasingly varied interests on trade. U.S. Secretary of State Mike Pompeo’s recent visit to India was meant to smooth over some of these lingering issues in U.S-India bilateral relations and prepare the grounds for a meeting between the leaders of the two countries on the sidelines of the G20 summit held on June 28 and 29 in Japan. But what came out of the visit were two continuing differences between New Delhi and Washington: first on Iran and the second on Indo-Pacific, which are inherently tied to each other from India’s perspective.
On Iran, Secretary Pompeo’s interjection about the United States’ perception of the country as “the world’s largest state sponsor of terror” has not found resonance in India, clearly indicated by Indian foreign minister S. Jaishankar’s response. New Delhi’s civilizational ties, energy links, and soft power connections with Tehran and its traditional foreign policy disposition all negate such a view of Iran.
On the Indo-Pacific, although the United States and India (along with Japan) had extensive discussions at the G20 on the region, there is a fundamental difference in each side’s perception of the region, especially vis-a-vis Iran. The United States binds the eastern end of the Indo-Pacific at the “western shores of India,” as defined in its Indo-Pacific Strategy Report 2019, leaving out Iran and the larger Gulf region but this vision is not synonymous with India’s. Judging by India’ recent policy articulation on the Indo-Pacific and its behavior in the regional expanse, its idea of the region extends from ASEAN in the east to East Africa in the west, which includes Iran and the critical Persian Gulf area. The Indian Navy’s recent move to deploy ships to protect Indian-flagged vessels from attack in the Gulf of Oman also exemplifies this, especially in light of U.S. expectations that capable countries should safeguard their own ships coming out of the Strait of Hormuz.
While these differences, among others, could potentially drive a wedge between them, India and the United States are working to repair the divide. Pompeo calmed Indian nerves on the ongoing trade dispute between the two countries with his conciliatory tone during his recent visit to New Delhi and set the stage for U.S. President Donald Trump’s meeting with Modi on the sidelines of the G20. And though Trump tweeted on the eve of his meeting with Modi that India’s tariff hike is “unacceptable” and “must be withdrawn,” his words were more muted and complimentary in person. He hinted that the two sides could soon begin trade talks and assured that the United States will “continue to get along with India.” The hope is that a resumption of bilateral trade talks may contain the trade war that seems to have spiraled out of control recently with the United States ending special trade treatment for India, and India imposing retaliatory tariffs on the United States.
Going forward, Washington and New Delhi must conduct a realistic assessment of each other’s concerns, interests, and compulsions, particularly with regard to Iran and Russia. There have been some indications at least from the Indian side that it may be ready to cede some ground to come to a compromise on these issues. For instance, New Delhi has lowered Iranian oil imports considerably due to American sanctions on Tehran and sought to buy more from the United States instead.
Both India and the United States seem to be prioritizing commercial/economic interests over strategic ones at the moment, with both Trump and Modi looking to signal to domestic audiences that they are strong leaders working for the country’s national interest. For a long time, New Delhi has had the advantage of being on the receiving end of certain benefits from the United States in return for little payback. However, more than being country-specific, U.S. foreign policy has now entered an era of give-and-take, where deals have to either be matched by counter-deals or compromises. The termination of India’s designation as a beneficiary developing nation under the Generalized System of Preference program is a clear example of this. At a time when even U.S. allies are not exempt from this transactional approach, India’s ability to stave off punitive repercussions from the United States and eke out exceptions will be tested on all ongoing issues, including New Delhi’s reluctance to further lower tariffs on Harley Davidson motorcycles, lowering import tariffs on trade, or the inclusion of China in 5G trials, even as Beijing has urged India to keep Huawei in.
As recent negotiations between India and the United States have shown, India’s ability to frequently hedge, and balance its relations between the United States on one hand and Russia and China on the other is likely to be tested in the near future and potentially even incur strategic costs. If India is to avoid these costs, it should brace itself for the policy of give-and-take with the United States under Trump.