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“The business of our relationship has to be business”

By Deepa Agarwal Email By Deepa Agarwal
February 2015
“The business of our relationship has to be business”

 

It’s a mantra voiced by DR. SUBRAHMANYAM JAISHANKAR, India’s Ambassador to the U.S. [at the time of this interview, and now India's new foreign secretary].  As one who came into office at the peak of the diplomatic sparring between the two nations over the infamous Devyani Khobragade case, Ambassador Jaishankar faced an uphill battle. Deftly, he has been able to steer the focus to more constructive issues—such as the fertile ground for bilateral trade that has been created thanks to the momentum of the relatively new Narendra Modi government. Some quotes from the ambassador’s wide ranging exclusive interview with Khabar:

• “There was a U.S. view of what we [as Indian diplomats] were entitled to in the U.S. But the U.S. apparently didn’t have the same view of its own diplomats abroad, which obviously was an untenable expectation.”

• “We also recognize that we are perceived as not being an easy place to do business and we need to change that perception. That perception must have some basis.”

• “…no country, least of all a developing country, opens itself up completely to foreign business.”

• “You can’t preach market access abroad and turn protectionist at home.”

It came as no surprise when in August 2013, Prime Minister Dr. Manmohan Singh announced the appointment of Dr. Subrahmanyam Jaishankar as the new Ambassador of India to the United States. After all, S. Jaishankar, as he is commonly referred to, had recently finished a successful stint in China, where he had been the longest serving Indian ambassador. During his tenure in China, he had negotiated the end of a particularly tense standoff between the Chinese People’s Liberation Army (PLA) and the Indian armed forces along the Depsang Plains at the Indo-China border. He was also instrumental in improving economic, trade, and cultural relations between the two countries, and was the first Indian ambassador in ten years to visit Tibet.

With more than three decades of diplomatic experience in countries as diverse as the Czech Republic, Hungary, Japan, Sri Lanka, and Singapore, Jaishankar was perfectly poised to revive the tarnished Indo-US relations.

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The ambassador and his wife Kyoko Jaishankar with the Prime Minister.

That’s precisely the kind of experience that would come in handy, considering the unprecedented controversy that Jaishankar walked right into when he took charge of the Indian embassy in Washington D.C. in December 2013. By then the diplomatic firestorm between the two nations that was ignited from the arrest and strip search of a mid-level Indian female diplomat, Devyani Khobragade, had reached quite a frenzy. It certainly seemed to be bad timing for Jaishankar. However, this was not his first brush with the Washington bureaucracy. Having served as the Joint Secretary (Americas) from 2004 to 2007, he was well aware of what it takes to navigate Washington’s hallowed corridors of power. He quietly and effectively diffused the crisis without any brouhaha, and got on with the job he is best known for—restoring trust and building bridges.

An unapologetic envoy and a tough negotiator, Jaishankar’s intellectual outlook and worldview was shaped during his early years at the prestigious Jawaharlal Nehru University in New Delhi. He graduated from JNU’s School of International Studies with a doctoral degree on the political consequences of the spread of nuclear technology. That explains Jaishankar’s pivotal role in India’s landmark civil nuclear agreement with the United States in 2008.

Mr. Ambassador, you arrived in D.C. last December, right in the middle of a raging diplomatic battle between the U.S. and India. It was obviously not the kind of start you would have expected. In about the year since you have taken charge, how have things changed? What measures have been taken to ensure that a repeat of the Khobragade case doesn’t happen again?
A lot of things have happened in India in the last 11 months. As a consequence, a lot of things have happened to India-U.S. relations as well. There’s a sea change in the perception of India since the election and the new government it brought about. There is a very strong purpose and a high energy in India. There is a determination to change things, and all of that was reflected when Prime Minister Narendra Modi came to the U.S. So if you look at how India was perceived roughly a year ago and how India is perceived today, certainly there is a lot of business enthusiasm, there’s a lot of political interest.

With regard to the specific incident in New York that you referred to, I think it brought to light a number of problems and issues in how India and U.S. deal with each other. I think some of those have been addressed; some of those are still being addressed. It is still, frankly, a work in progress.

Has there been any resolution on the issues of diplomatic immunity that were raised as a result of the Khobragade incident?
There was a U.S. view of what we were entitled to in the U.S. But the U.S. apparently didn’t have the same view of its own diplomats abroad, which obviously was an untenable expectation. So now, that’s got leveled. But as I said, this is still an issue that is being worked upon. I think there is a broad recognition to- day that this was a very unfortunate and a very unnecessary incident.

Last January, in your speech at the Carnegie endowment, you talked about the significance of trade and business relations between the U.S. and India. You said, “The business of our relationship has to be business.” However, despite this emphasis on business, there seems to be a steady barrage of grievances that Western companies have against India’s alleged discriminatory trade policies. Retail giants like Walmart and Carrefour have been trying to enter the Indian market without success. To what do you attribute this failure? What are the areas of mutual interest which would strengthen business opportunities for both countries?
I think there is a very clear message coming out of India today that we are interested in attracting capital, technology, and best practices from abroad. We see that as part of the development process in India. So there’s no question that we have an interest. We also recognize that we are perceived as not being an easy place to do business and we need to change that perception. That perception must have some basis. So, I think if you look at what’s been happening in the last six months, I think you have a lot of processes being reviewed. If there are justifiable reasons for complaints by companies, clearly they need to be addressed. There are efforts to make processes more responsive, more efficient with tighter timelines. You are also seeing more liberal policies; there are areas where there is a greater willingness to open up to foreign business.

But having said that, I want you to appreciate that no country, least of all a developing country, opens itself up completely to foreign business. You have mentioned certain examples; this [restriction on some foreign companies in some sectors] is not peculiar to India. There are a number of countries which have reservations [about opening up to giant multinational companies]. There are worries about what it would do to smaller businesses who might not find themselves able to compete with them. Japan, for example, is not very welcoming of large, foreign multibrand retail companies. I can think of ASEAN countries where there are reservations about them. I don’t see why that should become a test of whether India is open to business or not.

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India is often compared to China, which gets a relatively huge amount of investment, and so there is a perception that it is easier to do business in China as compared to India.
Look, I have come out of four-and-half years in China, so I know that comparison well. I think, at one level, yes, it’s a good motivator to say “How are we doing vis-à-vis China?” But I think you should also understand there are big differences between the two. You don’t have many of the compulsions and considerations in China that you have in India. And then, I am not sure that blindly copying China is also the way to go. Today, there are concerns in China about how much space they have given to foreign businesses in their economy. So I would, one, caution against taking that comparison too far. And two, I would not make this the benchmark for judging India. I think, if you were to ask, “Should India be an easier place to do business?” Yes, no question about it. And that’s what we are working towards.

Are there specifically any areas of mutual interest between the U.S. and India? Maybe retail is a tough nut to crack but are there certain other sectors which have lesser barriers to entry?
Absolutely. If you were to look today both in terms of policy and in terms of processes there is a very clear, very focused effort being made to bring down barriers or ease entry conditions for foreign investment, in pretty much every sector. Foreign Direct Investments (FDI) limits have been raised in a whole lot of sectors, including railways, defense… there is a big push being made to attract FDI into infrastructure projects. So I think it’s fair to say that today the climate is much more welcoming of foreign investment.

On the flip side, in the U.S., there are concerns about outsourcing jobs to India. U.S. tech firms have lobbied to impose caps on H-1B visas sanctioned to India-based firms. What would you say to an increasingly hostile U.S. Congress and American firms that are trying to protect American jobs?
Well, I would say—and I do say this by the way, since I go to the Congress and corporations fairly regularly— that the U.S. has for many decades now, held itself out as an example of an open economy. If at this time, India is opening up more and the U.S. is a beneficiary of it and is encouraging that, then it would be perplexing if [at the same time] the U.S. starts shutting itself more. Then what kind of signal is it sending? So, you can’t preach market access abroad and turn protectionist at home. I [also] think a lot of the outsourcing imagery is very primitive. It sort of doesn’t really reflect what is happening in the real economy. The fact is today if American companies are working with Indian companies, it makes American companies more competitive, not less. I don’t think anyone serious in the business world would accept some kind of simple arithmetic that if X number of jobs are created in Bangalore that means America lost X number of jobs. But I know that sometimes these are political tactics and it suits very interested constituencies to portray as though we are taking away jobs.

A couple of years ago Fareed Zakaria wrote an op-ed titled “India: Please Stand Up.” In it, Zakaria accuses India of having a passive foreign policy that allows it to befriend America, Israel, and Iran at the same time, which goes against the American worldview that ‘friends of friends are our friends’ and ‘enemies of friends are our enemies, too.’ How would you respond to that? Can the U.S. and India have a defining and a strategic partnership considering they are pursuing different geographical, economic, and political interests?
The idea that ‘I cannot have good relations with you because I have good relations with someone with whom you don’t get along’… I could turn this around! What about the countries with whom we don’t have great relations but America has good relations? Why can’t we say unless America becomes more like India and agrees to endorse all of India’s friends and not deal with India’s adversaries, we can’t have that relationship? Why must it be one-sided? Why is it that we must adjust to ‘friends of America’ or ‘adversaries of America’?

“If we are looking to build relationship based on complete convergences, I am afraid you are not going to have a relationship with anybody. I can’t think of any country in the world which will 100 percent endorse another country’s foreign policy interests.”

I think the reality of the world is that different countries will have different interests. You would have convergences, you would have divergences. If we are looking to build relationship based on complete convergences, I am afraid you are not going to have a relationship with anybody. I can’t think of any country in the world which will 100 percent endorse another country’s foreign policy interests. So we have tried to walk away from that kind of definition of our relationship. So, to me, this is like the old logic returning, this time from an American mouth.

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Receiving Prime Minister Narendra Modi at the time of his maiden official visit in September last year.

The historic 2008 civil nuclear deal was purported to open doors and break barriers for Indo-US trade relations. However, for the most part, it hasn’t amounted to much. Would you agree that India’s refusal to fix the nuclear liability law has made it impossible for domestic and international nuclear suppliers to operate in India?
I wouldn’t put it the way you have put it, obviously. We are still engaged in discussions with the Americans. During Prime Minister Modi’s visit it was decided that we would set up a contact group with the two sides, and we would also discuss it with industry. So we will have to wait for that to work itself out.

Are there any new developments on India’s campaigns for the Most Favored Nation (MFN) status and a permanent seat on the U.N. Security Council?
I think there is a wider recognition of the strength of India’s case. It was reflected also when Prime Minister Modi held discussions with President Obama. The American position was that it was supportive of our case. I think if you look year on year, there is a growing acceptance of the validity of India’s presence on a permanent seat in the U.N.

But even when President Obama visited India at the beginning of his tenure he did mention his support, but really there hasn’t been any movement as such.
Many things take time to happen. The nuclear deal happened in 2008. It took us a long time to get there. You could have argued a few years prior to that that nothing is moving. Things take their time.

You’re optimistic about it?
Of course, I am always optimistic.

This, of course, is not your first time to the US. You were here in the 80s, following which, you served as the Joint Secretary, Americas, (2004-2007) and played a decisive role in negotiating the 2008 US-India civil nuclear agreement. However, it clearly is a different Washington that you have come back to. You are now working with a Democratic government bogged down by two wars and a resurgent opposition, in an environment of protectionism, and whose South Asia policy is primarily AfPak- centric. In your opinion, how have things changed since the last time you were here?
One of the best indicators of what the country feels about India would be when I meet members of Congress and business people when I travel around the U.S. There is really a striking change. Today every member of Congress has an Indian friend, an Indian advisor, someone Indian-American who is important to them. Their perception of India is shaped by that. Today we are actually among the more well-regarded countries in the world. When an American politician looks out at the world and asks, which are the countries that he or she feels good about, I think we are among them.

So when you say that the American South Asia policy is bogged down in Af-Pak, I don’t think so. Af-Pak may be a problem, and problems are always highlighted. But if you look at where is the good news, the good news is the growing trade, the investment, the human flow, the goodwill, the political perception, the security cooperation with India. That’s the good news. And I think most people in administration, in the Congress, in the media understand that. Which is why you had close to 40 members of Congress at Madison Square Garden for that event. That would not have happened earlier. So, my assessment of the American perception of India is more positive than the way you have put it.

You have worked with both Republican and Democrat administrations. In your experience, have things been different working with one party or another?
If you look at the change in India-U.S. relations, it’s not a single party’s viewpoint. Bill Clinton had a lot to contribute, George Bush had a lot to contribute, Barack Obama has a lot to contribute. So you had changes of administration but the last fifteen years has been very, very strong.

Finally in terms of the bilateral relations between India and the U.S., are there any prominent roadblocks you see? Where do you see this going?
I see it going up, because I think all the indicators…you look at the business, take any facet of cooperation, all signals are pointing upwards.


Deepa Agarwal is part of a Peabody Award winning team at CNN International, where she is a freelance planning and editorial producer, and was formerly a full time editorial producer.



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