The US threatened to take the matter before UN Security Council, where China feared questioning by members in open forum.
Indo-US relations were back in focus with the approaching G-20 summit in Osaka as US President Donald Trump and Prime Minister Narendra Modi prepared to meet for the first time after his re-election victory. Preoccupation with electioneering, the Pulwama terror attack and Balakote counter-strike in early 2019 led to the Indo-US bilateral relations receiving less than top priority. In fact, the US appeared to be subtly shaping events to bolster Mr Modi’s image as a resolute leader confronting Pakistan-sponsored terror. The Balakote airstrike crossed previous red lines about non-breaching of the Line of Control during peacetime. The effect of Pakistan’s nuclear blackmail and allowing of asymmetrical warfare against India by its sponsorship of non-state actors for the last two-and-a-half decades on the world’s perception of the relationship between the two nations stood negated.
The prompt return of Indian pilot Abhinandan Varthaman, downed by Pakistan over Pakistan-occupied Kashmir, indicated the unseen hand of the United States and its Gulf allies. Mr Trump tweeted from Vietnam, where his second and unsuccessful summit with Kim Jong-Un of Democratic People's Republic of Korea (DPRK) had ended, that good news was imminent. The Saudi junior foreign minister’s sudden forays into India and Pakistan confirmed the role of a foreign hand. The repatriation bolstered the BJP’s Lok Sabha campaign, leaning as it was on Mr Modi’s national security credentials. Similarly, the US pressured China to accept the listing by the United Nations Security Council’s 1267 Al Qaeda Sanctions Committee of Masood Azhar, the Jaish-e-Mohammed leader who masterminded the Pulwama attack. China indicated willingness to accept the listing post-Indian elections. The US threatened to take the matter before UN Security Council, where China feared questioning by members in open forum. Thus, the US expected that a re-elected Modi would be amenable to closer cooperation on issues it considers critical and about which frustration had mounted within the US administration.
The US withdrew India’s preferred access to its market, for certain categories under the Generalised System of Preferences (GSP) estimated to hit US $5.5 billion of Indian exports, as soon as the Lok Sabha election results were announced. Retaliatory tariffs by India, withheld also during the polls as it did not want a trade-spat with the US, were immediately announced before US Secretary of State Mike Pompeo’s visit. Dissonance over trade issues, brewing since the Trump administration's imposition of tariffs on Indian steel and aluminium, was now in the open as the Modi-Trump meeting approached on the sidelines of the G-20 Osaka summit. The Pompeo visit was used by both sides to assess the hurdles and solutions, considering the overall upward trajectory of a relationship nursed since 2001, the days of George W. Bush's presidency.
While minister for external affairs Subrahmanyam Jaishankar and Mr Pompeo put a beatific spin on their meeting, it was clear that the last word rested with Mr Trump. It came in an agitated tweet, as Prime Minister Modi arrived at Osaka, decrying “very high tariffs” historically and that India had “just recently increased the tariffs even further”. Trump concluded: “This was unacceptable and the tariffs must be withdrawn.” This was typical Trumpian upping of the ante pre-negotiation that embarrassed the Indian leadership, with television channels analysing it in detail. The Trump-Modi bilateral was embedded in a 20-minute slot between a trilateral of the US, Japan and India and Mr Trump’s meeting with German Chancellor Angela Merkel. During the photo op the two leaders spelt their priorities. Using a notepad, Modi listed four issues: Iran, G-5, bilateral relations and defence cooperation. Trump listed just two: trade and G-5.
The White House tweeted post-meeting that India “shared ideas to reduce America’s trade deficit, enhance defence cooperation and safeguard peace and stability throughout the Indian Ocean and Pacific region”. It appears that the immediate crisis has been averted as the ball has been passed to diplomats and experts to resolve the trade issues and overcome hurdles. The fundamental problems persist. First, Mr Trump, unlike two of his illustrious predecessors, mixes up strategic and transactional issues. Ashton Carter, Harvard ideologue and defence secretary (2015-17) during the Obama Administration’s last two years, advocated asymmetric US investment in India, which would over time create “broad strategic alignment”. There was even characterisation of India as an "informal ally". Thus, from the time of Barack Obama's 2015 National Security Strategy, India was seen as an important component of the US’s Indo-Pacific plan. Contrariwise, Mr Trump views trade issues purely in a bilateral context. His US Trade Representative (USTR) Robert Lighthizer is a lawyer by training. Combining Mr Trump's anti-globalisation and transactional approach to bilateral trade with the USTR’s legal bent creates a new ballgame. Thus, as Indian commerce ministry worthies engage the trade ayatollahs of the US, the outcome can be uncertain. But Mr Modi has posited two issues of interest to Mr Trump: technical cooperation to develop a counter to China’s Huawei and defence purchases, particularly for made-in-India job creation. Both sound good on paper but assume that the US will in the process give India a waiver from the Countering America’s Adversaries Through Sanctions Act (CAATSA) sanctions or accept that India cannot cut off relations with Iran in entirety. India has already turned off the Iran oil imports but is hardly likely to abandon Russian weapons purchases, including of the US’s much-detested S-400 missile systems, as well as its own nuclear submarine programme. Thus, Mr Modi’s meetings with Russian President Vladimir Putin and Chinese President Xi Jinping in Osaka take on an added importance. President Xi is expected in Varanasi for what is being termed Wuhan-II. Little noticed was a meeting of Mr Jaishankar on June 6 with Li Xi, party secretary of Guangdong province and Central Politburo member, but even more significantly, a President Xi confidant. India will have to balance relations with rival camps.
Crucial will be India’s ability to allay the Trump Administration’s trade phobias. The Indian trade deficit with US, taking into account goods and services, dropped from US $27 billion in 2017 to US $21 billion in 2018. The US also ignores that India’s cumulative weapons purchases from it total US $18 billion, compared to the US $15 billion with Russia in recent times. Nearly 2,00,000 Indian students in the US also suck almost US $10 billion dollars annually out of the Indian reserves. US Representative Eliot L. Engel, chairman of the House Committee on Foreign Affairs, wrote to Mr Trump that the US policy towards India needs coherence and predictability. Perhaps the best India can hope for is to avert crises till Mr Trump's fate is decided next year. Meanwhile, India will have to avoid, as a rising power, not being singed by Mr Trump’s splintered vision, Mr Putin's ideology-neutral opportunism and Mr Xi’s overweening ambition.