“Politics is the continuation of economics by other (peaceful) means”

One need not subscribe to the quoted popular saying on ‘politics’ to see through the economic interests that drive geo-political relations in the international arena today. In fact, one may go even beyond and state that the continuation may even be by violent means  – be it the two world wars to control the international colonial markets, or the recent US occupation of Iraq ostensibly to rid their people of Saddam’s oppressive rule but obviously with the huge Iraqi oil reserves in mind. As Mao-ze-dong was quoted by the ‘Oxford Dictionary of Quotations and Proverbs’, Vol. II, “Politics is war without bloodshed and war is politics without bloodshed” (Lecture, 1938).

The Preceding Indo-US Nuclear Deal

Given this overall perspective, let us try to explore the eco-political compulsions of both USA and India, as distinct from the merely personal perspective of the respective Govt. Heads, behind US President Barrack Obama’s recent visit to India.

The world’s biggest Head of State, in terms of economic, political and military might, concluded his India visit and left for Indonesia on the 10th instant. Not much hype was generated in India this time with the visit of an American President for the 6th time, the last being by George W. Bush in the 1st week of March, 2006. The Bush visit predominantly focussed on how to extract promises from India soothing enough for the international ‘Nuclear Suppliers Group’ (NSG) to relax its ban on nuclear supplies to India after it carried out nuclear test in Pokhran in the Rajasthan desert. The documented commitment to use nuclear fuel and component supplies only for peaceful civilian uses that followed from India’s side, was good enough for NSG to lift the decades old ban, and India has since then signed deals with Russia, France, Canada, Japan and even China for such supplies. However, the deal with USA remains stuck on whether India should stick to a clause that supplying firms may be held responsible for damages from accidents due to faulty material, reactor construction, etc. Going by the all-out persistent stance of the Indian Govt. on accomplishing the Indo-US nuclear deal, and current stress on ‘strategic partnership’ with USA to maintain regional geo-political superiority, especially vis-a-vis Pakistan and China, it is likely that the clause will be watered down sufficiently to allow the US firms eager to enter the Indian nuclear market the ‘escape route’ they desire.

US Recession

However, Obama’s India visit has to be viewed in the context of more compelling circumstances at home and abroad, with the compulsion to broaden as well as intensify its market penetration in as many countries as possible, to counter the invasion of its own market by Japan, China and other emerging powers, as well as loss of it export share in established markets to these same powers. On top of this came the ‘sub prime’ home lending crisis and the development and spread of the worst recession since the ‘Great Depression’, which led to ‘bankruptcy declarations’ or failures of giant US financial and other corporations like Lehmann Brothers, Merryll Lynch and AIG. Soon after taking over as the first Afro-American President of USA in November, 2008, Obama engineered the passing of a massive economic ‘stimulus package’ in the form of the ‘America Recovery and Reinvestment Act’ of 2009, by the US Congress, in February, 2009. The measures contemplated under the Act were collectively equivalent to $ 787 billion in tax incentives, unemployment benefits and other social welfare provisions, domestic spending on education, health care and infrastructure, including the energy sector. Other than its massive size, the ‘stimulus’ was in tune with age-old Keynsian capitalist economic theory of fiscal expansionary policies to recover from recession by stimulating demand through public or government spending, combined with earlier anti-recessionary monetary policy of interest rate cuts to near zero. However, his prescription of executive pay cuts in banks and other corporate beneficiaries of tax incentives or other stimuli were naturally not welcomed by the corporate sector.

US Healthcare Reforms: Obama’s Socialist Image

But what created one of the hottest debates in USA in decades was Obama’s new ‘health care reform’ proposals, which were signed into law in March, 2010 only after considerable watering down of its provisions to get majority support of both democrats and republicans in the ‘Senate’ as well as the ‘House of Representatives’. Even the watered-down version almost won for Obama a ‘socialist’ image, because of radical provisions which made the traditionally high-cost American health care, especially health insurance, far more affordable for the poorer sections, through a graded scale of State subsidies linked to ‘Federal Poverty Level’ criteria, forcing insurers to be less stringent in denying certain benefits (like removing the barrier of no cover for pre-existing diseases after 2014), providing for penalties on employers who fail to provide health insurance cover to its employers, etc. In fact, the new law was estimated to extend insurance cover to 32 million hitherto uninsured Americans. However, as per CBS News update of March 23, 2010, the measures under the new Reform Law were estimated to cost the American exchequer $ 940 billion over 10 years, though the resulting deficit was estimated to be reduced by $ 143 billion over this period. Naturally, Obama’s health care reform did not gladden the hearts of corporate houses like big insurance companies, or the conservative upper echelons of society, generally taken to be represented by the Republicans.

US Outsourcing to India

The next cause for alarm for these sections was Obama’s sudden shrill outcry against ‘business process outsourcing’ (BPO) by the US corporate sector to growing software-savvy destinations, with India leading the race. Obama threatened to deny certain tax and other concessions to companies which resort to such ‘outsourcing’. Like the ‘Health Care’ reforms, reversal of such ‘outsourcing’ meant more work for indigenous American labour, and hence was supposed to gladden their hearts, but not the hearts of corporate giants who wanted o take advantage of the relatively lower labour costs of ‘outsourced’ non-core business processes to less developed countries like India.  As senior US senator John McCain of the Republican Part put it in a speech at the ‘Carnegie Endowment for International Peace’ in Washington on 5th November, “We cannot allow our anxieties about globalisation to cause us to demonise India for crass political gain. Outsourcing is an inescapable feature of today’s global economy, not an Indian plot to steal American jobs…..” (‘Economic Times’, Nov.7)

Growing Adverse Balance in World Trade: the Chinese Challenge

Meanwhile, the US superiority in world trade and investment is being drastically reversed in favour of ‘emerging’ market economies like China, Japan, Russia and even smaller countries like Mexico and Venezuela – the latter accounting for growing US trade deficits on the oil front. According to US Census data, the nation witnessed a continuously rising trade deficit (i.e, imports exceeded exports) or negative trade balance in ‘goods & services’ in terms of US dollars from (-) $ 364.39 billion in 2001 to (-) $ 759.24 billion in 2006, then continuously improved to (-) $ 374.91 billion in 2009 (all on ‘balance of payments’ or ‘BOP’ basis). For the period Jan.-August, 2010, the deficit was (-) $ 336.25 billion, and the monthly average from January to August indicates a likely higher deficit in 2010, compared to that in 2009.

But the more significant US Census foreign trade data relate to its county or ‘country group’ wise trade patterns and its consequences:
Ø    the top 10 countries with which the US had a total trade surplus of USD 68.41 billion in Jan.-Aug.,2010 were countries with relatively lower economic status going by their GDP; in descending order of surplus, these were Hong Kong ($ 14.05 billion), followed by Brazil ($ 7.21 billion), Belgium ($ 6.10 billion), Singapore, Netherlands, Australia, UAE, Panama, Egypt and Chile
Ø    the top 10 countries with which the US had a total trade deficit of USD 374.07 billion in Jan.-Aug.,2010 – more than $300 billion in excess of the surplus with top 10 other countries as above - were the ‘emerging’ or rising economies of China, Japan, Russia, and the oil-rich countries of Mexico, Nigeria, Ireland, Venezuela, Canada and Saudi Arabia from which USA had to import oil at high prices this year so far. By far the highest gainer in trade with USA in this period has been China, with which USA had a deficit of USD 173.40 billion (i.e, more than double the total US trade surplus with top 10 other countries as above), followed in descending order of deficit by Mexico (USD 44.50 billion), Japan (USD 37.40 billion), Germany, Nigeria, Ireland, Venezuela, Canada, Russia (USD 13.30 billion) and Saudi Arabia. Though way behind these countries, India too has been enjoying a continuous trade surplus with USA, particularly after the ‘liberalisation-globalisation’ reforms were ushered in the nineties: the surplus shot up from US $ 0.8 billion in 1989 to $ 12.1 billion in 2006, falling steadily thereafter to 4.7 billion in 2009, but rising substantially again to $ 7 billion in theperiod Jan.-Aug., 2010.
(i)    top US imports from China are low technology but ‘value-added’ manufactured goods like electrical machinery, computers and other electronic goods, toys, footwear and apparel, while the US exports to China are simpler and primary raw materials and agricultural products that do not have the same value-added element. Thus China scores over the US even in terms of better composition of exports.
Ø    the strategy adopted by China in its exports, not only to USA but to other countries, is ‘no frill’ low technology but very cheap substitutes to the more sophisticated goods in these countries, thus enabling China to capture a large part of the mass market in these countries. However, going by reports so far, the quality of Chinese goods leaves much to be desired, and may gradually dethrone China unless it heeds a timely warning.
Ø    USA has even accused China of artificially devaluing its currency (yuan) vs-a-vis the US dollar and other currencies by purchasing large foreign currency reserves, and is putting pressure in recent summits of the G-20 countries to ban currency manipulations. However, though these Summits came out with declarations of letting currency exchange rates be determined by fee market mechanisms, they have stopped short of banning currency manipulations
Ø    USA has also accused China of ‘dumping’ its products in the US market by subsidizing its exports to the USA at prices below production costs, and has reacted by ‘anti-dumping’ import tariffs on selected Chinese imports. The US Govt. has also asked individual US companies to approach them for raising import duty on rising Chinese exports perceived by them to be due to artificial lowering of yuan’s exchange rate.
Ø    meanwhile, now the US Federal reserve has itself printed dollars to buy up US  treasury bills worth $ 600 billion at home, in the name of liquidating its domestic debt, thus undervaluing the US dollar in terms of other countries; both China and Germany have strongly reacted to these measures, as they will make their exports to the US costlier and hence less competitive vis-a-vis US domestic substitutes. In contrast, the China’s apex bank ‘Peoples Bank of China’ has raised the exchange rate of its ‘yuan’ on 10.11.2010 to the highest levsl vis-à-vis the dollar since July, 2005, to forestall US and British outcry on the currency issue at the G-20 Summit starting in Seoul, S. Korea, from 10th  November, 2010.

Corporate Anger: Republican Victory

Naturally, enough forces had built up to anger the US corporate powers against Obama’s policies, or failure of his policies:
Ø    the unwelcome burden on big employers to compulsorily insure their workers along with huge State subsidy which could otherwise have swelled the corporate rescue packages
Ø    the attack on ‘outsourcing’ of non-core business processes to destinations with known IT talent and low costs of handling such processes, compared to higher labour costs at home – never mind the loss of employment at home
Ø    failure to protect US corporates from the onslaught of rising ‘emerging’ economies in foreign trade

The growing disillusionment of the US ruling corporate power over Obama’s allegiance to fulfilling the traditional ‘American Dream’ of world superiority, notwithstanding his public ‘socialist’ pronunciations, was evident at the recent drubbing Obama’s Democratic Party received at the hands of the ‘Republicans’ in the ‘House of Representatives’, though in the  'Senate', Democrats retain a majority. It has been reported that the ‘Republican’ campaign was heavily funded by the US corporate big bosses. ‘The Telegraph’ of 8th November reports that the ‘US Chamber of Commerce’ pumped money into the ‘Republican’ campaign through various front oganisations. It also reported that an emergency meeting had to be called on 15th October in the White House with representatives of Indian companies to avert a possible crisis of Indian businessmen reluctant to grace Obama’s address to the ‘US India Business Council’ (USIBC) in Mumbai, in frustration at his anti-‘outsourcing’ policy rumblings. In fact, Democrats attending the meeting named 80 Indian companies and accused them of contributing over $ 800,000 to USIBC, which in turn utilized part of this money to fund the Republican campaign.

Obama’s Socialist Image : Growing Unemployment and Poverty

However, it is not only the ruling US monopolies that Obama failed to keep happy, despite handing out a massive State funding for bailout of failing monopolies from the unprecedented recession of recent years through ‘stimulus packages’, but also American labour, remaining seemingly oblivious of growing conflict between workers and giant monopoly owners, symbolized by growing pressure of monopolists on workers to accept pay-cuts and lay-offs. Witness the threats of ‘General Motors’, the biggest automotive US giant, funded by a huge $ 50-billion bailout package by the Obama administration in 2009, that their stamping plant at Indianapolis may have to be shut down by mid-2011, unless workers accepted a 50% wage-cut to work under J.D.Norman Industries of Chicago, a new potential buyer of the plant. But are they advocating similar cuts in salaries and perks of executives? No.

What are the employment and poverty situations in USA right now? The August U.S. government survey shows that the percentage of unemployed workers within the capitalist labor market was 9.6 percent. This marks the 12th consecutive month that unemployed workers represent over 9.5 percent of the capitalist labor market. The number of unemployed workers in the labor market in August was 14.86 million and the number employed 139.25 million. Out of these, 42.0 percent of unemployed workers in the labor market had been jobless for 27 weeks or more, representing long-term unemployment.

The US ‘Bureau of Labor’ report for the month of August 2010, together with US Census Bureau Report released Sep. 16, 2010, reveal as follows:
Ø    No. of persons involuntarily forced to be employed only part-time increased by 3,31,000
Ø    About 2.4 million people were not counted as ‘unemployed’ despite their wanting a job, simply because they did not search for work in the past 4 weeks preceding the Survey, out of frustration. Among these, 1.1 million believed no job was available, and rest 1.3 million were prevented from searching due to family responsibilities, school attendance, etc.
Ø    In May, 2010, a record 46 per cent of all US residents officially unemployed had been jobless for more than 6 months, charecterised as ‘long-term’ unemployed – the highest level since the US Govt. started maintaining labour statistics in 1948, and almost double the long-term unemployed during the harsh economic crisis of the early eighties
Ø    For the decade ending in 2007, approximately 4 million jobs were lost in the U.S. manufacturing sector, whose share in total employment during that period fell from more than 17 percent to 12 percent.
Ø    43.6 million people – the highest in last 50 years - are estimated to live below the present official ‘poverty line’ of annual income of $ 21,756, i.e, almost one out of every 7 person
Ø    Poverty level rose from 13.2 percent in 2008 to 14.3 percent in 2009 – the highest level since 1959, 5 years before the Johnson-era ‘War on Poverty’
Ø    A record number of Americans, 50.7 million, were not covered by health-care insurance in 2009 – never mind the Obama Health Care Reform Law  This is an increase of almost 4.5 million since 2008. The share of Americans without health coverage rose from 15.4 percent to 16.7 percent, mostly because of mass layoffs. Healthcare costs remain a main reason forcing families to file for bankruptcy.

Politicians Make Merry While the Country Burns

Amidst this backdrop of increasing unemployment, poverty, closure of plants and ‘lay-offs’, as of October 20, spending on just advertising in Senate, House and gubernatorial races has surpassed $1 billion, out of which almost $620 million was spent since September 1, and $250 million in the two weeks preceding October 20, overtaking roughly $220 million spent on advertising in the nine and a half months between January 1 and September 15. Year-to-date spending is almost 50 percent greater in House (of Representatives) races (from almost $142 million in 2008 to more than $210 million) and almost doubled in Senate races compared to 2008 (from $157.5 million to $314 million)

The US Military Thrust

Side by side, the US is committed to huge military spending. Pentagon funding for wars in Iraq, Afghanistan and other arenas now stands at more than $700 billion. Demonstrations erupted across the country against the continued U.S. presence and war in Afghanistan, demanding to bring All U.S. Troops Home, and against the massive killing of civilians and the continued drone attacks against the peoples of Afghanistan and Pakistan, in the name of “rule of law” and “war on terror.” Thousands of Afghan civilians protested outside the U.S. military base and prison at Bagram on August 23. They were denouncing the U.S. occupation forces for civilian killings. It was the second demonstration in the last 10 days. U.S. troops fired on the protesters at the August 23 action, reportedly killing at least one civilian. On August 15 hundreds of residents participated in a militant demonstration to protest the construction of military facilities on land owned by villagers.

In the week since the much publicized withdrawal of "combat" troops from Iraq it has become more evident that the Iraq War continues under a new name: "Operation New Dawn." The Pentagon press secretary Geoff Morrell said shortly after the "end" of the war, "I don't think anybody has declared the end of the war as far as I know. Counter-terrorism will still be part of their mission." He said the more than 50,000 remaining troops will be well armed and that among their responsibilities will be counter-terrorism, which will mean taking on [Iraqi resistance] in combat situations. “I don’t think anybody declared the end of the war as far as I know,” Geoff Morrell said. “There’s still fighting ahead.”

The former head of the Central Command who had been in charge of military operations in Iraq echoed the Pentagon sentiments when Petraeus told CBS News, "We're not leaving" Iraq and that the troops remaining behind will have "an enormous capability." General Ray Odierno said it was possible that U.S. combat troops would return to Iraq if the security situation worsened. A report in the Navy Times said the “different” mission involves “facing terrorist attacks, roadside bombs and accompanying Iraqi troops on dangerous counter terrorism missions — essentially combat, but it’s just not classified as such.”

It is also significant that while maintaining a large combat force in Iraq, of at least 50,000, Obama is moving to put the State Department in control of “non-combat” operations. This reflects the further militarization of all aspects of U.S. governance, with statecraft and diplomacy

Obama’s India Visit: Utilising Indian Prosperity and Influence

Given these broad domestic and international compulsions, the US has been increasingly trying to wean New Delhi away from its traditional allies like Russia, as well as utilize its growing clout in the international arena, not to speak of penetrating the huge Indian market for goods and services, given its perception of India as follws:

(i) the increasing pivotal role of India in mediating disputes in international bodies including the UN, G-8 and G-20 Summits,

(ii) growing recognition of India's accelerating economic growth when USA, Europe, Japan and many other advanced economies are still to fully recover from global recession, 

(iii) Indian market being perhaps more accessible now than the wider Chinese market, aincluding India's relatively more profitable and secure financial market, especially the booming share market.

According to latest US Census data, total bilateral trade of USA with China in ‘goods’ alone (i.e, excluding ‘services’) from Jan.-Sep., 2010 at about $ 327 billion ranked 2nd after US-Canada trade, while Indo-US 2-way ‘goods’ trade in the same period was way behind at only about $ 36 billion, ranking 12th. But China enjoyed a far greater trade ‘surplus’ with USA in ‘goods’ trade in this period, with its exports to US being about $ 264 billion, compared to far lower imports from the US, at $ 63 billion. In contrast, the Indo-US ‘goods’ trade in the same period was more balanced, with Indian exports of about $ 22 billion to the US being far closer to its imports of about $ 14 billion. No wonder Obama addressed the ‘US India Business Council’ at Mumbai on the 1st day of his visit with the words: “There is no reason why India cannot be our top trading partner…relationship between India and the US are going to be one of the defining partnerships of the 21st century.”

There is also the need for the Indian platform for US regional military engagements in Afghanistan and Pakistan, as well as springboard for entering the rising Asian markets, given India’s membership of regional economic groupings like the ASEAN. However, in trying to do so, USA has to grapple with growing ambitions of the Indian ruling corporate empire (now increasingly turning out billionaires figuring in the famed ‘Forbes’ Lists) to become a regional superpower iitself in contention mainly with China (Pakistan being another irritant) and a dominating voice in various world eco-political forums.

Run-up to Obama’s Visit: Indo-US Strategic Dialogue

These were the considerations, which appear to have weighed heavily in Obama’s mind when he visited India. However, these considerations have been engaging the minds of the US corporate powers far before Obama took over, and was brought to focus in the ‘nuclear deal’ initiated by President George Bush during his India visit earlier. The ‘Indo-US Strategic Dialogue’ early this June in Washinton DC, was an attempt to bring various key Indian sectors closer into the US embrace. The process was initiated during President Bush’s visit to India, along with the ‘Indo-US Knowledge Initiative on Agriculture’, and is now being taken much further and deeper.

The ‘Strategic Dialogue’ saw India represented by Minister for External Affairs S M Krishna, Deputy Chairman of the Planning Commission and architect of the neoliberal project in India Montek Singh Ahluwalia, HRD Minister Kapil Sibal, and Minister of State for Science and Technology Prithviraj Chavan, and the US by Secretary of State Hillary Clinton, as well as representatives of the US Security and Intelligence establishment. According to a ‘US-India Strategic Dialogue Joint Statement’ issued on conclusion of the Dialogue, the Dialogue covered many opportunities to deepen cooperation between the two countries – security and counter-terrorism, trade and investment, science and technology, infrastructure investment, climate change, energy security, education, agriculture, food security, and healthcare. As Robert O. Blake, Jr., US Assistant Secretary, Bureau of South and Central Asian Affairs, indicated in his press briefing on the eve of the Indo-US Strategic Dialogue, “On the bilateral front, we have 18 separate dialogues underway between the United States and India to really try to capture the full scope of the opportunities ahead of us.”

In the same press briefing, the US Assistant Secretary categorically informed his American audience that the US was keeping a close eye on the nuclear liability legislation in India, which when passed “would provide a very important legal protection and open the way for billions of dollars in American reactor exports and thousands of jobs.” In the wake of the recent Bhopal verdict, it is clear that while the liability legislation spells “billions of dollars” and “legal protection” for US reactor companies, it may spell more ‘escape routes’ for the US corporate sector at the expense of the safety and health of people in India.

The US interest in education legislation in India, in particular the Foreign Universities Bill, taken forward by the ‘Obama-Singh 21st Century Knowledge Initiative’ launched last year, may not just serve US commercial interests (realistically assuming that pure philanthropic concern for improving literacy standards is not the diving force), but long-term political and foreign policy objectives as well. The US-educated Indian-American community has played a key role in facilitating the present phase of Indo-US strategic partnership. With Indian students getting American degrees on Indian soil, the pro-American constituency within Indian middle classes and policy-making establishment is likely to expand further.

The ‘Strategic Dialogue’ comes in the wake of the launching of ‘Economic and Financial Partnership’ between India’s Ministry of Finance and the US Department of the Treasury in April 2010, the Indo-US ‘Framework for Cooperation on Trade and Investment’ in March 2010 and the ‘Memorandum of Understanding on Agricultural Cooperation and Food Security.’ The thrust of all these ‘partnerships’ was indicated by Hillary Clinton’s urging of India “to reduce or ease caps on investment in critical sectors.” She also noted that “the US military holds more exercises with India than with any other country”. The US military-industrial complex is clearly looking to corner the huge Indian market for arms imports – a key part of the “strategic dialogue” agenda.

US Under Secretary for Political Affairs William J. Burns, on the eve of the ‘Strategic Dialogue’, noted that India had “$1 trillion worth of new projects to build highways, airports, electrical power stations and other infrastructure”, representing “major potential opportunities for American firms”, and also argued for “easing of caps on investment in critical sectors” to facilitate the entry of US firms.

Run-up to Obama’s Visit: Indo-US Changing Economic Relations

It would be fruitful here to bring out the striking features of Indo-US economic, and, by extension, political, relations in the recent few years:
(i)    the predominant share of Indian goods exports to USA, in the period Jan.-July, 2010, were precious stones & metals (22.5%), followed by textiles (20%), mineral fuel & oils (9%), pharmaceutical products (7.4%), while high technology and high value electrical and other machinery exports together contributed only 8.9% of total exports to the US
(ii)    but high technology and high value products in the same period constituted a far greater share of goods imports from USA: machinery – 13.2%, electrical machinery – 7.4%, aircraft/spacecraft – 7.8%, optical instruments & equipments – 6.2%
(iii)    according to a report by the ‘Financial Express’ of 11th Nov., 2010, US share of India’s merchandise exports peaked to about 40% in the mid-sixties, but has now fallen to only about  6%. Most of the eroded share ha been filled up by China
(iv)    of course, the share of IT services, mainly in terms of ‘business process outsourcing’ and other software services by far outweighs the share of Indian exports of goods to USA, and has even been perceived as a threat to US economy by Obama, as already discussed. The ‘Financial Express of 11.11.2010 reports that exports of IT and ‘IT-enabled services’ (ITeS) to the US has been the dominant driver of almost 80% growth in the entire ‘services’ exports since 1991, with nearly half of India’s annual services exports of over $ 100 billion going to the USA.
(v)    no wonder, then, that Indian IT sector has been increasingly concerned over Obama’s anti-‘outsourcing’ stance, the latest being the law passed by the US Congress last August to raise the fees for ‘work visas’ , predominantly aimed at Indian IT workers in the US, by $ 2,000, to about $ 4,300; Som Mittal, President of Indian IT industry’s lobby group ‘NASSCOM’, says this could cost Indian companies upto $ 250 million a year.
(vi)    on the other hand, the recent massive injection of foreign institutional investment bolstering the Indian share market has mostly been from USA; at the same time, significantly reversing the age-old pattern of capital export from developed to developing countries (read imperialist and neo-colonial countries, if you prefer to be a Marxist) 23 acquisition deals of US companies at an aggregate value of over $ 3.8 billion by Indian corporate sector in the 1st half of 2010 represent double the volume and 8 times the value of all such deals together in the 1st half of 2009, according to the July, ’10 issue of ‘LVG IMaCS VIRTUS’, based in New York; the focus of these massive investments by Indian companies has been ‘vertical integration’, mainly to acquire new sources of natural resources, like ‘Reliance Petrochemical’s acquisition of a stake in shale natural gas assets of ‘Atlas Energy and Pioneer Natural resources’ at about $ 2.8 billion, and ‘Essar Group’s acquisition of ‘Trinity Coal’ for $ 600 million. However, IT and ITeS remained the most acquisitive industry, with 65% share of total US acquisitions by volume, followed by oil & gas and mining (10% each), then pharmaceuticals, finance and media with less than 5% share by volume by each of these sectors. As reported in the ‘Economic Time’ dated 10th November, and ‘The Telegraph’s editorial on 11th November, a joint FICCI (‘Federation of Indian Chamber of Commerce & Industry’) – Maryland University Study reveals that “Indian corporates acquired as many as 372 American firms and created 127 new companies (greenfield) during 2004-09. Of these, 85 companies alone supported 40,000 jobs for the US workforce.”

Thus, the current Indo-US economic ‘balance of power’ may be characterized as increasingly going in India’s favour, though retaining right now an almost even keel. Gone are the days when the dominant Indian capitalists could hope to grow only as subservient to the ruling capitalists of advanced countries, especially USA – witness the ‘countervailing’ high Indian tariff on imports of US farm or agricultural products, because the production of these products are heavily State subsidized in the US. On the other hand, every now and then there are sudden flurries of activity by Indian Govt., backed by so-called ‘expert’ opinions, in favour of further ‘green revolution’ of the US variety. This ‘revolution’ argues in favour of allowing large US firms to lure Indian peasants with the bait of unprecedented yields using their superior farm technology and seed supplied by the US firms, to finalise contracts for purchase of their output at certain prices; however, the high costs of the seeds supplied, together with high water and irrigation requirements as well as need for large land holdings and farm machinery like tractors to be effective, in a country where small land holdings and scarce agricultural capital is the rule, has led to bankruptcies and suicides by many Indian peasants who fell into this trap, particularly in Andhra Pradesh and Maharashtra. One may therefore charecterise the present Indo-US economic relations, and, by extension, political relations, as swings sometimes all-out in favour of the US - India’s voting in favour of sanctions against Iran on US-led outcry on Iran’s so-called nuclearisation (mostly seen as an adjunct to the 123 Agreement with USA on civil nuclear supplies), advocating continued US military presence in Afghanistan, perhaps to also maintain regional superiority itself - while at other times India opposes USA on its negative role in international trade and unfair domination of world bodies like the WTO, IMF and UN, particularly by forming counter-balancing ‘groups’ with other developing countries, like ‘BRIC’ (Brazil, Russia, India and China). ‘Dialectical’ swings between ‘opposites’, in the language of Marxists! And sometimes the Indian Govt. is cautious to maintain what we call ‘equal distance’ between US and other powers in the international arena – as in the case of the current US-China currency war – again, ‘dialectical unity’ of ‘opposites’, which, according to Marxists, can only be temporary and must sooner or later break into its 2 opposite aspects, forcing abandonment of ‘neutrality’?

The Shared Fruits of Obama’s Visit – and Consequences

Let’s now summarise the gains of each side on the conclusion of Obama’s visit, remembering that gains to one side on any particular area is almost mathematically a loss to the other, but the sum total of all gains-cum-losses will have to be evaluated for each side in the light of their present compulsions-cum-aspirations. Side by side, we will also look at the broader international consequences of these aspirations and agreements.

On the US side, the media has highlighted so far almost a single big gain – creation of 50,000 additional jobs for the US workforce from 20 deals involving a total of $ 10 billion or about Rs. 44,000 crore. But the actual figures appear to be far higher, going by the front page of the ‘Economic Times’ of 7th November:
Ø    agreement for sale of 30 B737-800 commercial aircraft by ‘Boeing’ to ‘Spicejet’, valued at around $ 2.7 billion; this is estimated to support around 12,970 US jobs
Ø    further agreement worth about $ 4.1 billion with ‘Boeing’ to sell 10 ‘C-17 Globemaster III’ military transport aircraft to the IAF (‘Indian Air Force’), estimated to generate 160 US jobs (rather insignificant!)
Ø    contract for supply of 6 advanced gas turbines and 3 steam turbines by ‘General Electric’ (GE) for the 2,500 MW Samalkot power plant to be constructed by Anil Ambani’s ‘Reliance Power; the transaction is valued at a total of around $ 750 million, with $ 491 million in US exports, and is estimated to support around 2,650 US jobs
Ø    ‘GE Transportation’s ‘pre-qualification’ by the Indian Ministry of Railways, along with the only other sole bidder ‘Electro-Motive Diesel’, to manufacture and supply 1,000 diesel locomotives to India over 10 years, with the US content of the deal estimated to exceed $ 1 billion; however, the job creation potential for this deal is not yet reported
Ø    GE’s additional contract with IAF (‘Indan Air Force’) for supply of 107 F414 engines fo ‘Tejas’ light combat aircraft, at about $ 800 million, estimated to support around 44,000 US jobs
Ø    Other deals in the area of infrastructure, telecommunications, instrumentation, etc.

As reported by NDTV, Nov. 8, the ‘White House’ has stated that the total value of the deals is worth $ 15 billion! The ‘Economic Times’ editorial of 11th November reports that ‘Boeing’ alone will be selling $ 28 billion worth of aircraft to ‘Spicejet’ as well as ‘Air India’ and ‘Jet Airways’, which are in addition to the reported deals for $ 10 billion, and are together estimated to create 280,000 jobs, in addition to the 50,000 jobs extimated o come from the $ 10 billion deals! Anyway, these trade deals appear to be the main and perhaps the sole significant outcome of Obama’s visit, as far as the US is concerned. And perhaps the gain most wanted by the American President, as evident when he told the assembled CEOs at ‘The Trident’ in Mumbai: “ I make no apologies to do whatever I can for job creation and business investment in America….I have marshaled the full resources of the US government to increase exports to India….We fervently welcome India’s rise. We want to invest in it.” What clearer expression of intent and direction for Indo-US relations could come from an American president? As further eagerness of entering the Indian market, Obama bent over backwards in pulling out all controls on so-called ‘dual technology’ exports, a euphemism for high-technology hardware with both civil and military uses. Out of 4 Indian institutions now on the US ‘Entity List’ to which supply of such dual-use technology based hardware is banned, the ‘Indian Space research Organisation’ (ISRO) and the ‘Defence Researh and Development Organisation’ (DRDO) have been taken off the list immediately after the visit of Obama, who went so far as to state that “We have agreed to deepen cooperation on nuclear, defence and other high-end spectrum” (Does this mean an imminent rapprochement between both sides on the nuclear supplies deal, despite USA’s unwillingness so far to include any ‘liability clause’ for accidents caused due to faulty material or technology on the part of US firms, or the disallowance of reprocessing of nuclear fuel supplies by the US, unlike the absence of such conditions by other nuclear fuel and reactor suppliers to India so far?)  He has also express support for India’s full membership in the 45-member ‘Nuclear Suppliers Group’ (NSG), which had banned nuclear reactor and fuel supplies even for civilian use to India for decades! As the Director-General of the ‘Confederation of Indian Industries’ (CII) Chandrajit Banerjee put it, “India would require 25,000MW of nuclear capacity in the next 10 years. American companies are looking at a plum share in that pie. India is talking about $ 100 billion of investment in defence hardware technology. Even if 20% of it goes to the US….” Incidentally, India is one of the biggest buyers of foreign munitions, including warships, fighter jets, tanks and other weapons. Its arms imports more than doubled from $ 1.04 billion in 2005 to $ 2.2 billion in 2009. Its defence budget for 2010-11 is a whopping $ 30 billion (what if even 50% of this had gone for poverty alleviation and employment-generation programmes?) – a 70 percent increase from 5 years ago! The American stake in the Indian military aspirations was beautifully expressed by Robert O Blake Jr., US assistant secretary of state (central and south Asia affairs): “India also has a military side and we plan to continue a broad array of defence cooperation…..Equally important, it will help seal our strategic objective of working wing-to-wing with India to bolster global security and stability.” One has only to read ‘global military superiority’ (while at the same time heavily arming Pakistan in the name of fighting the ‘Talibans’) in place of “global security and stability”, to get a glimpse of the possible arms race in the international arena, and its dangerous likely consequences.

[Source: Various recent issues of the ‘Economic Times’ and ‘The Telegraph’, plus the ‘Internet’]

Whether this is a potential politico-military gain for India depends on whether we would like to satiate the American industrial-military corporate empire in return for muscle-flexing in South Asia, or would like to pursue the prudent diplomacy of mending fences with neighbours in the interest of greater collective economic growth and security, while utilizing the allocation for the defence budget towards social reforms at home.

The gains to USA also depend on whether we look at them from the viewpoint of the ruling monopolies there or the vast no. of unemployed. No doubt the deals concluded and potentially opened during Obama’s India visit would gladden the US corporate sector. But since the American industry in general, and the US companies directly profiting from the deals (‘Boeing’, ‘GE’, etc.) are very capital-intensive, the total US job creation (50,000 to, say, 1 lakh at the most) announced with great fanfare is a drop in the ocean when compared with the figure of 14.86 million unemployed as per the official Census data of the US Govt., excluding the further no. of unemployed not included in this data, as already discussed. The dream of huge US military hardware supplies to India in the future notwithstanding, the fact remains that Obama could not extract any Indian promise to lower import tariffs on heavily subsidized US farm products, or open up its retail and financial sectors to greater US penetration by removing the present caps in FDI (foreign direct investment) in these sectors; at present, no FDI is permitted in the retail sector, and though 74% FDI is permitted in the ‘banking and financial sector, there is a cap of 5% equity holding by any one foreign entity.

But the gains to India appear to be substantial in terms of its long-term aspirations and political clout:
Ø    Studied silence by Obama on the ‘outsourcing’ menace posed to US labour by Indian IT sector
Ø    US support for India's permanent membership in the Security Council, despite Obama’s initial reluctance on a commitment on this issue, being hailed in the Indian as well as international media as the ‘bete noire’ of Indian bargaining capability with the USA
Ø    After Obama’s initial watering down of the Pakistani terrorist threat by advocating that India should work for a ‘stable Pakistan’ in its own interests, ultimately condemning the terrorist outfit ‘Lashkar-e-Toiba’ for carrying out attacks on India from Pakistani soil, and calling upon Pakistan to take actions against the terrorists who had participated in the Mumba terror attacks. However, while there was much talk of shared counter-terrorism objectives, there was conspicuous silence, even on the Indian side, on the dubious attitude of the US to David Headley, one of the key masterminds of the Mumbai terror attack.
Ø    Promise of lifting controls on ‘dual use’ high-technology supplies to India – the vast Indian military market appears to have been too much of a lure to be ignored by the US

It now remains to be seen what kind of dialectical relationship evolves between the ruling corporate powers (do the common men have anything to gain from the bargaining over markets or politico-military superiority?) of the two countries out of the thrust attempted by Obama in his brief 3-day visit. As already demonstrated, the trip itself was the culmination of a phase in the developments in dialectical relationship between them for years prior to the Obama visit. 2 World Wars and subsequent developments have long back exposed the essence of the inter-nation relationships as a tussle for control of markets worldwide, not only for goods and services, but also for the now far more important control of capital investments, leading often to wars like the ones in West Asia (they are full of ‘liquid gold’!). But we tend to forget the past, we tend to forget. Maybe the Great ‘Mahashakti’ as described in the ‘Vedas’ is playing the final dance of destruction in this ‘Kali Yuga’ to rid the Earth of all pests in human form who have become a burden on that very Earth which supports them. Remember how Lord Parasuram and then Lord Krishna were instrumental in destroying all the war-mongering greedy ‘Kshatriyas’ who were sullying this beautiful creation?