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“The India-US Joint Statement of July 18, 2005 - A Year Later”: Address by Foreign Secretary Mr. Shyam Saran at India Habitat Centre, New Delhi

July 14, 2006

  1. I am delighted to join you this evening to share my thoughts on a theme that has been the focus of considerable debate in both India and the US over the last year. At the outset, let me express my thanks to the India Habitat Centre, Shri Lieberhan and to Commodore Uday Bhaskar for their initiative in organising this event today. On my part, I will try and share my assessment with this distinguished gathering in as candid a manner as possible and later, I would be happy to answer any queries you may have.
  2. It is a little unusual to revisit a Joint Statement agreed upon a year ago. More often than not, Joint Statements recede rapidly from public memory. I can think of very few other Joint Statements that have been dissected in as much detail as this one. What is so special about the July 18 Joint Statement that it warrants an analysis even a year later? Is it in any way a defining document of our contemporary diplomacy? Does it have a significance beyond the subject matter it addresses? Does it depart from our orthodox positions on important issues? The answer is yes to all of the above queries, in greater or lesser measure.
  3. Before we get to the Joint Statement itself, let us spend a little time understanding how we got there in the first place. July 18, 2005 was not an overnight happening. Nor was it conceived in a vacuum. It, in fact, represents a culmination of steps, spanning a number of Governments, and made possible as a result of the trust and confidence that had been incrementally built up between the two countries. The broad range of cooperation that it offers reflects a larger engagement over many years between our two societies.
  4. There were six key developments that merged to create the basis for July 18. First and foremost, an India growing at the rate of 8% per annum has led to a very different attitude on the part of the US towards India. This may be stating the obvious, but I am not sure how many of us appreciate its consequences. Ambassador Blackwill’s erstwhile description of our trade being "as flat as a chapatti” is now a distant memory. Bilateral trade, in fact, has been growing at a healthy 20% plus annually and we are now the fastest growing export market for the US. An India of high growth rates creates new demands for goods, services and technologies that a global trading nation like the US cannot ignore. The experience of companies already operating in India has been positive, as indeed has been their profitability. Those already in are expanding, while those still not in are wondering why not. Global US companies now require a mandatory ‘India strategy’. Consider the impact, for example, of the enormous orders placed on the US aircraft industry last year by a number of our airlines. Turn your attention then to investment opportunities, and recall some of the recently announced decisions by IBM, Microsoft, Cisco Systems or Intel. Read the latest BRICs monthly report by Goldman Sachs. It has taken us some time, but we have clearly caught America’s attention; and not merely as an investment destination. There is recognition that India too can produce world-class companies — in manufacturing as well as in services. If The Economist leads with ‘Can India Fly?’, that is a message in itself. India is today being invariably equated with China in terms of potential and possibilities.
  5. Let me turn to a second significant element of the new calculus — India as a nuclear weapon power. 35 years ago, Richard Nixon justified the US opening to China on the grounds that you cannot ignore 600 million people with nuclear weapons. Double the number and you have an even stronger rationale. This has made a compelling case for greater engagement with India. We saw that manifested, for example, in the ‘Next Steps in Strategic Partnership’ initiative of January 2004. The acknowledgement, on July 18, of India as a country with an impeccable record in non-proliferation of weapons of mass destruction and as a responsible state with advanced nuclear technology should be noted in this context.
  6. A third development is the larger strategic canvas that argues in favour of raising the quality of Indo-US ties. As a pluralistic and secular democracy in a world where fundamentalist violence is on the rise, India’s emergence as a model of stability, modernization and predictability, has begun to impact on international consciousness. To this has been added a healthy respect for our capabilities that have been steadily growing across the board. We have become a major interlocutor on key global challenges — from environment and pandemics, to counter-terrorism and disaster relief. The US strategic assessment of India is articulated both in its National Security Strategy of March 2006 and the Quadrennial Defence Review Report of February 2006. The NSS speaks of India as a major power shouldering global obligations. Similarly, the QDR refers to India, along with China and Russia, as key factors in determining the international security environment for the 21st Century.
  7. A fourth element in the US approach to India has been its awareness of the potential that our partnership holds in respect of the knowledge economy. Interestingly, the majority of our current initiatives, in one form or the other, are strongly knowledge-based — be it S&T, agriculture research, energy issues, space, atomic energy, health or high-technology. We have heard from the highest levels in the US how much importance they attach to cooperating with a society that produces graduates by the millions and engineers, technicians and doctors by the hundreds of thousands. There is growing awareness as well of our demographic advantages. We note this in the US National Intelligence Council’s 2020 report on Mapping the Global Future that argues that new service sector jobs in India (and China) could exceed availability of similar skills in advanced economies. The report predicts that this would lead to a surge in technology applications, which in turn could lead to new international alignments. If 100 of the ‘Fortune 500’ companies have R&D centers in India, if Boeing wishes to undertake joint research with the Indian Institute of Science, if ISRO carries US payloads on its Chandrayaan Mission or if our scientists are invited to play a role in cutting edge international research projects - these are anecdotal examples of a much broader trend.
  8. A fifth point to be noted is that these developments are part and parcel of India opening up to the world. The impact of India integrating with the global economy cannot be underestimated, least of all on its leading player, the United States. This is not just in terms of business, services or even connectivity. Indians are making a visible impact on the rest of the world and certainly in the US, this is symbolised by the success of the Indian-American community. Two million Indians have not only established an enviable professional reputation but have a median income 50% more than the national average. Their image, over the years, has helped to shape ours.
  9. And sixth, as an open society and an open economy, the growth in India’s capabilities has been welcomed by the world. Our record and our worldview give no cause for apprehension in any quarter. At the same time, there is no reason to remind us that we have an obligation to the world from which we all draw sustenance. Even in the past, when our resources were less, India has contributed towards addressing global challenges to the best of its ability, including the use of its military forces in UN peacekeeping missions. As the 2004-05 tsunami relief efforts demonstrated, this approach stands reaffirmed with greater capacities at our command. That was why the July 18 Joint Statement envisaged the establishment of a global partnership as part of the transformation of our ties.
  10. Against this background, as we envisage a new basis for greater cooperation with the US, it is legitimate to ask: what is in it for us? How do we stand to gain by enhancing our ties with the US? It is equally reasonable to ponder whether in the light of past experience, are we widening our risk exposure in striving for better ties? There are good answers to these questions, many of which have been articulated as part of our domestic political discourse. The United States is clearly the pre-eminent power of our times. There can be no argument that better relations with the US are in our national interest. It is our largest trade partner, investor and technology source. Equally important, as the pre-eminent power, the US helps shape global sentiment. From the economic perspective, initiatives with the US can advance our development processes and accelerate our growth rate. Technologically, a partnership with the US would enormously benefit a country like India whose future is so tied to the knowledge and service industries. There are strong security convergences between us, be it on terrorism, maritime security or other threats from non State actors. From the political perspective, stronger ties make themselves positively felt on our relations with third countries. Domestically, India is seeking to leapfrog in its development process. In foreign policy, we require adjustments in the international order so that our aspirations are accommodated. A stronger relationship with the US can offer benefits on both fronts. The challenge to Indian diplomacy, of course, is to maximise the gains while minimising the costs, and create an international environment that is supportive of our developmental goals.
  11. It was with this approach that we embarked on a process that led to the July 18 Joint Statement. In doing so, we sought to synchronize our diplomacy much more closely with the changes that have taken place in India over the last 15 years. Our objective was that the India, which was making such strenuous efforts domestically to catch up with the world, should craft a foreign policy which supported and acted as a multiplier on those efforts. Rising expectations are as relevant to diplomacy as they are to impelling an improvement in the quality of life. India’s diplomats have to do their share in ensuring, for example, that our energy security was effectively met. It was important that we were not left out of global research initiatives. Or that our access to global natural resources was not hindered in any way. And, that the interests of our industry and our services sector were well served by creating expanding opportunities for our talented professionals worldwide. Because, in the US, we were engaging a global power, this provided us an opportunity to review our established positions. We asked ourselves whether these positions are as relevant as they were earlier. Were there new opportunities that we may have ignored? Were there emerging Indian strengths that could be leveraged? What is it that we are now able to bring to the table that we could not earlier? Were we getting the best returns for our efforts?
  12. July 18, in retrospect, marks our determination to put behind us an era of defensive diplomacy. If India is to become a credible candidate for permanent membership of the Security Council, then we must adjust our traditional positions. Our foreign policy must reflect our national aspirations and express our confidence as an emerging global player. We cannot duck the difficult issues of the day and display an aversion to risk taking. July 18 is, in some ways, an effort to usher in a change in mindset.
  13. The Joint Statement covers three clusters of issues: (i) those that directly address our national development goals and reflect the leveraging of Indo-US ties to advance those goals, (ii) the dismantling of the technology denial regimes that constrain Indo-US cooperation and the medium term emergence of India as the leading knowledge-enabled power, and (iii) the key global responsibilities that India and the United States need to address. I will also include, in the course of this summary, those initiatives announced during President Bush’s visit on 2 March 2006 that represent a further development of the July 18 understanding.
  14. The three key constraints on the further growth of the Indian economy are that we are woefully behind in our lack of a modern infrastructure, in agricultural productivity and commerce, and in energy security. These three concerns form the tripod on which the Indo-US developmental agenda currently rests. On July 18, we agreed to set up a CEOs Forum to harness private sector energies and ideas to revitalize our economic cooperation. The very composition of this Forum, that includes ten key CEOs from each country, reflects how differently we regard each other today. The Forum has presented its report to the Prime Minister and President Bush in March 2006 and its recommendations are currently being examined. Infrastructure modernization through a dedicated fund is among them, and we should expect to hear more from the planned Investment Summit at the end of the year.
  15. In agriculture, we have embarked on an ambitious knowledge initiative that seeks to revive the traditions of the Green Revolution by linking our educational institutions. We have, by now, worked out a detailed three-year work-plan that covers agricultural education and training, biotechnology, water management, and food processing and agro-business.
  16. On energy, our dialogue has catalyzed activity across the entire spectrum. As a result of post-July 18 discussions, we have been able to finalise Indian participation in the FutureGen Initiative dealing with clean coal and the Integrated Ocean Drilling Programme, dealing with gas hydrates. A number of energy efficiency activities and programmes have also been initiated. Indian participation in the ITER fusion energy initiative was another important result of the July 18 commitments, catapulting India into a select group of advanced countries, namely the EU, France, Russia, China, Japan and South Korea to collaborate in an area of science of enormous promise for meeting our future energy needs.
  17. The dismantling of the technology denial regimes, led by the US — but imposed by other advanced countries as well — has been a key objective of the Indo-US nuclear deal. For historical reasons, what began as the imposition of limitations on India’s access to nuclear technology and equipment after our PNE in 1974, steadily expanded over the ensuing years to cover virtually the entire high-tech field on grounds that most advanced technologies have dual uses. You would recall that in the eighties, a Cray supercomputer India had sought from the US for better weather forecasting was denied, since it could conceivably be used in our nuclear programme as well. In dismantling these denial regimes and enabling our business and industry to access dual use technologies, the nuclear deal will really be the key which will open this lock. While it may be true that the denial of such technologies has, in some cases, encouraged indigenous innovation and led to outstanding achievements by our scientists, an increasingly globalised and competitive world demands a different response. As the Indian economy matures, and moves towards an ever more sophisticated knowledge and technology driven society, the importance of dismantling these technology denial regimes cannot be under estimated. This will also create opportunities for our scientists and technologists to benefit from regular interaction with their counterparts in the rest of the world and bring to the table their own considerable achievements in several fields.
  18. Even as we seek to put the era of technology denial behind us, parallel initiatives have been undertaken to build a more durable S&T partnership between us. In July 2005, we agreed to sign an S&T framework agreement, which was done that September, along with a protocol that addressed IPR generation issues. By March 2006, we were ready to announce a Bi-National S&T Commission that is now under implementation. We need to nourish exchanges and build capacities that would strengthen technology innovation and applications. As many of you are aware, India lags far behind in its generation of patents, which is the hallmark of a competitive industrial culture. Certainly, participation in international S&T exchanges and initiatives, not only with the US, but other partners as well, will be one of the key priorities for our diplomacy.
  19. Global issues of common concern are an intrinsic aspect of the emerging Indo-US strategic partnership. An important initiative was the promotion of democratic capacities in emerging democracies. India has valuable experience through the ITEC programme in building civic society and contributing to the strengthening of democratic institutions. We have joined the US to launch the UN Democracy Fund last September. Combating terrorism is another important shared goal and we have ongoing exchanges and activities in that direction. Pandemics are yet another common challenge that we have chosen to address and our cooperation on HIV/AIDS and avian flu has yielded beneficial results. We have also agreed upon a disaster relief initiative and a maritime cooperation framework that draws upon the new Defence Framework that we finalized in June 2005.
  20. Understandably, the nuclear issue has dominated the public discourse on Indo-US relations since July 2005 and I would like to take this opportunity to share our reading of the state of play. In March 2006, we completed discussions with the US Government on a range of issues including supply assurances, that allowed us to finalise the Separation Plan. These discussions were based on a clear understanding that the nuclear deal was about civil nuclear energy cooperation between India and the US and not about India’s strategic programme. In pursuing such cooperation, India was, however, willing to provide assurances that what it received as part of international cooperation from the US and other partners would not be diverted to third countries, and would not be diverted to non-civilian uses within India. We reject any limitation on our strategic programme, but we do not expect our partners to, in any way, assist that programme either. Our part of commitments having been delivered upon, the US is now engaged in adjusting its laws to enable full civil nuclear energy cooperation with India. Bills were introduced to that effect in both the House and the Senate at the instance of the US Administration. These were considered by the Committees concerned and fresh texts were finally marked up, by the House Committee on 27 June and the Senate Committee on 29 June, 2006. The Bills are likely to be voted upon by the two chambers in the coming days, and if all goes well, we may see the text of final legislation fairly soon.
  21. It would be inappropriate for us to comment on the legislation before the final text emerges. We are, however, quite clear that India cannot undertake any obligations going beyond the July 18 Joint Statement and the Separation Plan. Obviously, the legislation will be the product of an American political process and could well include some references that we may find unpalatable. While making our views quite clear, we must focus on what is essential. India’s obligations will only be those that we undertake in the bilateral 123 cooperation agreement and the safeguards arrangement with IAEA. When we assess the legislation, we should scrutinize carefully the binding provisions that will find their way into the 123 agreement and safeguards arrangement. The bottom line, I repeat, is that these provisions should measure up to the yardsticks of 18 July and 2 March.
  22. It has been asked whether our strategic options are not being restricted as a result of the July 18 commitment to continue our voluntary moratorium. Let me make it quite clear that this is not a new commitment, even in a bilateral understanding. In 1998, in the UN General Assembly, we had expressed a willingness not only to continue the moratorium but also to move towards its de jure formalisation. The Separation Plan has also been depicted by some analysts as eroding the vigour of our strategic deterrent. I can only state that those who are in a position to make an informed judgment on the needs of our credible minimum deterrent have concluded otherwise.
  23. The July 18 Joint Statement has been followed by vigorous diplomatic engagement with our other major partners. That should set to rest any anxiety that the gains in Indo-US relations are at the expense of other ties. With the European Union, we had an extraordinarily successful summit last September in New Delhi that witnessed substantive progress on energy, trade, political, consular and cultural issues. India’s participation in the Galileo project and support for our membership of ITER were its high watermarks. With Russia, our traditional exchanges have intensified further, including enhanced cooperation in defence, energy and trade sectors. The progress on GLONASS was a noteworthy development. With China, we have moved forward in the establishment of a strategic and cooperative partnership for peace and prosperity. Exchanges in defence have built mutual trust and confidence and Raksha Mantri’s recent visit was very successful. Our bilateral trade volume has grown rapidly and should cross $ 20 billion by 2008. With Japan, our economic and strategic engagements have intensified during the last year. Our growing partnership with Brazil and South Africa reflects the higher profile, of our interactions with Latin America and Africa. In South Asia itself, the beneficial effects of a confident and self-assured India have made themselves apparent, including in the dialogue with Pakistan. Our partnerships with South East Asia and West Asia have gained as well. As you are all aware, the King of Saudi Arabia paid a state visit earlier this year, after half a century.
  24. July 18 is a milestone in the road to realize our aspirations. It is something of a departure from the beaten track, but one necessary for the times. Our mission is to realize its full potential, and by doing so, I am confident that we will create new opportunities to advance our national goals.
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