According to Raymond E. Vickery, economic engagement—trade, investment, lending, aid, and macroeconomic cooperation—constitutes the "engine" of strategic engagement. This theme is underscored repeatedly in Vickery's new book, The Eagle and the Elephant: Strategic Aspects of U.S.-India Economic Engagement, which was launched by the Asia Program at a June 1 event. Vickery, senior director of Albright Stonebridge Group and of counsel to Hogan Lovells, asserted that the U.S.-India strategic relationship, which he described as "at its highest point ever," would not be where it is today were it not for the economic ties cultivated by the two countries over the last two decades. This economic engagement has influenced not only defense cooperation, but also political collaboration on a range of transnational issues. However, Vickery warned that economic engagement gone wrong can negatively affect relations between the world's two largest democracies.
Vickery's book (much of it written while he was a Wilson Center Public Policy Scholar in 2008-09) features eight case studies of U.S.-India economic engagement, ranging from defense to food security and economic development. Vickery examines the U.S.-India civil nuclear initiative as a primary example of the interaction between economic engagement and strategic cooperation. The Hyde Act—passed by Congress and signed into law by President George W. Bush in 2006—authorized civil nuclear cooperation between India and the United States, and demonstrated Washington's commitment to a deeper strategic relationship with New Delhi. Yet in fact, Vickery argued, the Hyde Act evolved from earlier efforts to strengthen bilateral economic relations. Soon after September 11, 2001, he explained, New Delhi and Washington formed a High Technology Cooperation Group, which sought to increase trade in high-tech goods. This arrangement led to the Next Steps in Strategic Partnership initiative, which was launched by India and the United States in 2004. Then, in July 2005, the two countries' leaders announced a formal agreement to pursue a civil nuclear accord.
Another of the book's case studies focuses on reactions to terrorism. On December 13, 2001, gunmen attacked India's Parliament in an attempt to decapitate the country's political leadership. Tensions between India and Pakistan quickly escalated, and fears abounded that the nations would go to war. However, said Vickery, U.S.-Indian economic engagement served as an "ameliorating" factor. General Electric—a U.S. firm with a strong presence in India—and other corporations were concerned about the disruptive effects of hostilities. U.S and Indian companies conferred, thereby setting in motion a series of events that eventually led to war being averted. In his book, Vickery regrets that some diplomatic analysts give short shrift to New York Times columnist Thomas Friedman's wry yet apt assessment: "That cease-fire was brought to us not by [Secretary of State] General [Colin] Powell but by General Electric."
The strong ties between economic engagement and strategic relations were also on display in November 2008, when militants launched a deadly siege on India's financial capital of Mumbai. Among the targets were several leading hotels, emblems of India's economic success and frequent meeting spots for Indian businesspeople and their counterparts from the West. These were chosen, according to Vickery, because the terrorists wanted "to besmirch the success" of India working with the United States and other countries to build prosperity in India. The terrorists may have hoped to trigger war between Pakistan and India, which would have damaged the strategic interests of both the United States and India.
A chief question The Eagle and the Elephant seeks to answer is what the United States can do to enable economic engagement to better serve its interests. Vickery highlighted several options. One is reforms in planning to more fully integrate economic and other strategic factors. Vickery cited a need to support this process by bringing more economic and business expertise to the U.S. government. Vickery expressed concern that recruitment is unduly biased toward those with a traditional geopolitical training. The U.S. Foreign Service—much like India's Administrative Service—is lacking in personnel with pertinent economics and business experience. He suggested that Washington adapt a dynamic "interagency process" that allows the government to freely draw on the expertise of all pertinent departments in crafting strategic initiatives that fully integrate economic considerations. For this to happen, he acknowledged, bureaucratic infighting and "my-agency-against-your-agency" mentalities must be addressed.
According to Vickery, Washington can better leverage economic engagement to promote its interests by involving the private sector to further strategic goals. Vickery advocates public-private partnerships to serve the national interest, and rejects the notion that such initiatives are simply means for companies to advance their own interests.
Vickery noted that many in Washington regard politics as the driver of strategic cooperation. On the contrary, he said, the U.S-India experience illustrates that economic engagement serves this role. According to Vickery, the U.S.-India relationship "cannot be on autopilot." Recent events such as discontinuities in U.S.-India defense procurement and delays in implementation of the civil nuclear initiative demonstrate that both countries must work constantly to build the economic engagement that will increase their abilities to cooperate strategically.
Drafted by Michael Kugelman, Asia Program Associate
Robert M. Hathaway, Director, Asia Program, Ph: (202) 691-4020
- Global Fellow