By Austin Fernando –

Austin Fernando

Having read a post by HE Jaliya Wickramasuriya, our Ambassador in the USA, titled “A Role for Sri Lanka in US Pivot to Asia”, I thought it may be ideal to understand how others compete to be in the US pivot to Asia to do business. I mean “business” only in economic terms and exclude issues such as politics, rights, accountability etc; the presently more quoted US interests.

Concurrently, Minister Maithripala Sirisena stating that “the Sri Lankan government had implicit faith in the Indian central government and would continue to maintain close ties with them despite the current situation in Tamil Nadu” meant to me another aspect of relationship building with India. Since USA and India are hand in glove on many fronts Minister Sirisena’s statement too should be considered as a means to engage India and the USA as a joint response for a common cause.

Therefore, these may be showing attitudinal change of the government to the powers that are considered internationally anti-thematic towards Sri Lanka, e.g. Geneva. Very little discussion is in public domain on this ‘silent relationship building efforts.’

Ambassador Wickramasuriya has focused on the trend of western economic and political power shifting east by reinforcing trade and security alliances across Asia. He suggested examining President Obama’s foreign policy pivots to Asia and the unfolding vision of “America’s Pacific Century.” viz: U.S. strategic relations with Sri Lanka. He orchestrated links between Americans and Sri Lanka before 2009 and how the post-conflict status is being handled by Sri Lanka, and impressed on the potential openings for Americans and projected rebuilding trade partnership and means to become a stronger geopolitical and strategic ally of the USA. This is beckoning the Americans.

Media rightly commented whether Ambassador Wickramasuriya “is mooting his own foreign policy” and its possible fallout- especially when there are some Sri Lankan friends who do not have positive relations with Americans. While pondering how this economic and defense vision could be widened, I think this is certainly a pacifying approach after Geneva- March 2013. In that we must be aware of how for instance Indians deal with Americans in the fields of Wickramasuriya’s interests. Such recapitulation could be appropriate ‘Lessons Learnt’ even for Minister Sirisena to exhibit his genuine intentions.

Defense pivoting

Relationship building anticipated by both cannot be instantaneous. It is time consuming and overarching. In it there should be factual presentations, deep understanding and adjustments. To enlighten I may quote U.S.-India Defense Trade opportunities for deepening the partnership between India and USA, as discussed by Amer Latif and Ambassador Karl F. Inderfurth.

They have taken Georges Seurat’s ‘pointillism’ as a simile and pointed out that “U.S.-India defense relations could be taking shape with each defense dialogue, each defense sale, each military exercise,” another dot being applied to the canvas of U.S.-India defense ties that is slowly, gradually, taking shape as an increasingly important defense partnership. This stance has enhanced partnerships to an extent for Defense Secretary Leon Panetta to refer to India as a “linchpin” in America’s new defense strategy focused on “rebalancing” to the Asia-Pacific region. Can we participate in this performance? I doubt very much.

Increasing defense trade has been an important component of expanding partnership, proved by U.S. defense orders reaching US$ 9 billion plus from a negligible base. Lankan defense trade is more with China, Russia and Pakistan- less friendly with Americans- and to expect USA to call us the “linchpin” may be a distant dream. Concurrent praise of the military and government by Deputy Defense Minister from China and Defense Secretary from Pakistan last week, along with the news of presence of Chinese nuclear submarines sighted in the Indian Ocean close to Sri Lanka may not submit the most suitable time to even discuss this subject! In that background, Wickramasuriya’s approach may not be the best to some with militaristic orientation, as we would not have won LTTE terror without these countries. With the potential for criticism of showing ingratitude, and, derogatory rhetoric made against Americans / Indians by politicians and powerful bureaucrats, the task before Wickramasuriya could be uphill.

Further, the institutional aspect was reinforced by Panetta by appointing Deputy Defense Secretary Ashton Carter as the point man for deepening bilateral defense trade. He wished cutting through “bureaucratic red tape on both sides” to make defense trade simple, responsive, and effective. Do we need similar initiatives?

One important recommendation made in the USA – perhaps a platform for pivoting- on defense business was that India should increase the percentage of foreign direct investments (FDIs) in India’s defense sector to over 50% from 26%, which was inadequate incentive for US companies to invest in India. This was considered as probably offending Indian sensitivities about excessive foreign investment in the Indian defense sector. However, it was thought of as an arrangement that could ultimately help India’s efforts to develop its own defense industry, through state-of-the-art defense industrial practices and technology transfers. We are not there as yet.

Another was that the U.S. government should seriously examine the possibility of greater coproduction and co-development projects with India. Co-development would not initially delve into sensitive technologies and focus on non-sensitive defense equipment that mutually adds value. Panetta declared that in the long term he was certain that this would transition defense trade to substantial co-production, and, eventually, high-technology joint research and development. We do not anticipate such.

Hence, envisaged pivoting mechanisms are many. I do not hear such in Sri Lanka or by Americans or Indians on Sri Lanka. The growing suspicion in lieu is our potential defense arrangements with China, i.e. purported “Hambantota to be a Chinese Naval Base”, China assisting military camp upgrading in the north close to India, Chinese nuclear submarines etc. These may be even bogus claims. But, such suspicions could influence Americans and Indians, which will keep them on “back foot”, and withdraw from cooperation in defense and even economic development arrangements. However, the Chinese may be worrying with Wickramasuriya’s proposition. Minister Sirisena may note these complexities.

Nirupama Rao’s Indian Agenda

With his ambassadorial experience in Washington and the proximity to President Rajapaksa, Wickramasuriya could be a great canvasser to execute his “new foreign policy”. However, he may be well advised to glimpse through what HE Nirupama Rao, Indian Ambassador in Washington, a very intelligent lady, had to say regarding how India is accessing the US pivot in Asia-Pacific- the same interest Wickramasuriya possesses, in addition to the earlier mentioned political complexities.

On March 15th 2013 Rao’s remarks made at a Statesmen’s Forum of the Center for Strategic and International Studies (CSIS) on the “U.S- India Economic Agenda in 2013” may be helpful to Wickramasuriya. Wickramasuriya may convince CSIS’s Inderfurth on the ‘Sri Lankan agenda with the USA’, and be a competitor to Rao to attract Americans, by presenting his case. He may be perhaps guided by what Rao did.

Need for studies

Rao spoke of two extremely insightful and thought-provoking studies (i.e. ‘Bilateral Investment Treaty and Beyond’ and ‘Changing Nature of India- US trade and economic relations’.) Americans do not fall in line by just seeing programmes emerging from nowhere and therefore similar studies will help Wickramasuriya. The robust optimism Rao expressed for India cannot be facilitated by 150 person-groups visiting Washington with our President. Rao considered the two reports, taken together, presented a comprehensive roadmap for the future of India-U.S economic relations and focused on the two pillars of Indian economic co-operation; namely, mutual investments and trade; and, an outline of the broad context in which Indians see the possibilities of greater engagement between the two countries. She quoted from the latest Budget Speech by Minister Chidambaram to reinforce her excellent presentation, which I do not find in Wickramasuriya’s, most likely due to some political urgency dictated by Geneva for hasty preparation and submission.

Economic information

Rao’s presentation was a lesson in itself. It had restricted political or economic rhetoric, but included information on economic growth, need for rapid growth and huge investments, opening the economy with FDI reforms (e.g. that FDIs to India have increased from U.S $ 35 billion in 2007-08 to U.S $ 47 billion in 2011-12; portfolio investment norms relaxations for Foreign Institutional Investors in certain categories, e.g. Government securities and corporate bonds), economic achievements in increasing net portfolio investment into India touching US $ 17 billion in 2011-12 etc.

She shared information on the investment climate, functioning of the strengthened Cabinet Committee on Investment, power / energy issues, critical sectors such as infrastructure, agro-processing and manufacturing, and projected a bounce for the Indian economy to its targeted trajectory of 8-9% per annum growth. This scenario was considered by Rao to prove the immense potential for attracting U.S investments into India considering the U.S as the world’s leading investor, holding 14.8% of total global FDI stock in 2010. This approach was comparatively less in Wickramasuriya’s presentation. Of course, his presentation was short and he is not an economist of such character and the Ministries of External Affairs, Finance, Investment Promotion and the Central Bank ought to have guided him, as what ought to have been done by Delhi with Rao, in addition to professionalism in the latter.

The opportunities available to attract FDIs can be gauged from what Rao said emphasizing that except for 2005, the U.S has remained the universal leading source of FDI for the past decade, with a total FDI outflow in 2011 being around U.S $ 400 billion and India receiving between January 2000 and July 2012 U.S $10.88 billion of it, creating nearly 355,600 jobs (2007- 2011) and projected the US investment sectors as infrastructure, manufacturing, financial services and cold chain & retail. This is coming from a country that had in the past considered foreign investors as lepers!

Reverting investments

Of course, one important area in which Sri Lanka cannot match India is the Indian investments in the U.S and job creation in the USA. This is due to progressive liberalization in India’s overseas investment policies. Rao quoted a study which revealed that during July 2010–July 2012 Indian investments in the USA maintained a strong momentum witnessing 87 mergers and acquisitions with a cumulative disclosed value of US $4.3 billion. Can Sri Lanka similarly attract Indian investment by grabbing a few investments made in the USA? Of course, HE Prasad Kariyawasam in Delhi may have to go for the kill. Unfortunately, Kariyawasam is bound settling Tamilnadu issues, cricketers’ safety and finding family trees or pedigree of original Sinhalese in India! According to Confederation of Indian Industries estimates, cumulative Indian investments in the USA (2000-2010) stood at US $ 6.6 billion. This is what we have to grab, of course there are ignored issues such as CEPA.

Commercial and other ties

According to Rao the other areas of cooperation between India and the USA have covered strong commercial ties reflected in bilateral trade in goods and services touching U.S$100 billion for 2011 which may further increase. US exports around US$ 3.3 billion in educational services in 2011 reflect a key strength of education cooperation, linking people-to-people transforming the landscape of relationships. These areas may not be that prominent with economic cooperation between Sri Lanka and the USA, though the rhetoric Minister SB Dissanayake shows different attitudes. Wickramasuriya may have to also influence such thinking.

Rao’s presentation has given many areas of cooperation such as providing food security, improving agricultural productivity and boosting rural incomes, thus escalating the profile of the agriculture dialogue, particularly in commodity trading, seeds, tractors, farm machines, logistics, retail and marketing etc. She focused of non-traditional areas such as education and skill development leading to mutual strategic partnerships. Probably the size of the country, population, opportunities etc may not permit such vast cooperation between Sri Lanka and the US, but these are adjustable quantum.

Potential for dialogue

She impressed on the India-U.S. Homeland Security dialogue, launched in 2010 which had identified technology as one of strategic priorities in India-U.S. cooperation in trade and collaboration. Her attention drew on innovation, economy of products, technology solutions and service delivery platforms for bilateral commercial engagement. She prioritized value creation in addressing developmental challenges. Her recognition of the platform of the India-U.S CEO Forum bringing the leadership of the top Indian and US companies in shaping a vision of bilateral economic cooperation was another potential to provide valuable guidance in setting inter-governmental priorities and creating new avenues for productive engagement. These are unheard in our relations with US or with Indians.

Economic concerns

With deep trade and commercial relationships she predicted new issues and concerns created on both sides and highlighted the need to assess these issues from the long term perspective of bilateral cooperation. To what extent we have gone through such will be a matter of concern for Minister Sirisena and Ambassador Wickramasuriya.

Just as US businesses have some concerns; Indian industry has also highlighted its concerns. Rao spoke of effects on the Indian Information Technology industry facing regulatory challenges in the USA. She highlighted problems of initiating a dialogue with the US on a bilateral Totalization Agreement. In pursuit of broader and deeper India-U.S commercial cooperation, and to address bilateral policy and regulatory concerns, India and USA have inter-governmental mechanisms, including the Ministerial Trade Policy Forum which should be activated according to Rao. She stressed that to go forward India and the U.S also need to explore new trade and economic cooperation arrangements with momentum on the Bilateral Investment Treaty, or otherwise, of any future bilateral economic partnership arrangements. Is Sri Lanka there? Wickramasuriya’s presentation does not project these, obviously for the length of his presentation.

The India-US partnership has been termed as “a defining partnership of the 21st century” by President Obama, said Rao and added “We need to remain committed and engaged at all levels, continuously and without pause, overcoming any challenges that may exist. She was very optimistic about the future, and of the firm view that the economic relationship between the two democracies can only become stronger with the passage of time.” How confident and optimistic are we with India or the USA?

Futuristic projection

Once, Henry Kissinger’s views were sought about Indians pursuing a policy of “strategic autonomy.” Domestically this is what has irked many Sri Lankan political commentators right now. Kissinger has responded: “I think India should pursue its own perception of its national interest. And I hope that on key issues we [India and the US] can find a parallel policy.” Asked to explain his concept of parallel policies and whether they could converge, Kissinger said they were already doing so in many areas, adding: “I would like to think that each side following its own convictions leads to results that are compatible and cooperative.” India as once said by Shri Jawaharlal Nehru first gave priority to its national interest in decision making at the United Nations. Let us not misunderstand others on this subtle value of strategic autonomy and national interest, which will not be erased to suit our issues. This is the reality..

Based on political conceptualities some question why India should go against Sri Lanka in Geneva. Kissinger and Nehru explain one facet of Indian thinking. Rao explains the most modern version arising from diplomacy and economics. Both converged gives the sense of how we should look at relationships that should be built. It may not be so straight forward as Ambassador Wickramasuriya envisaged.

The relationships based on all these quotes give priority to national interest and parallel policies. Therefore, if we are to pursue relationship building with Indians and Americans, as envisaged by Minster Sirisena and Ambassador Wickramasuriya, we may keep in our minds the need to collate these priorities, act logically and diplomatically. And, one could be happy that we are on the correct path if these two statements by the Minister and Ambassador are genuinely oozing from the bottom of their hearts, and not for short-term manipulation, because Indians and Americans, as seen above work on a common platform, not only based on past history and concepts, but on new modalities, which Rao has explained eloquently. Let these be ‘Lessons Learnt’ for our Minister and Ambassador.