CUTS International Washington DC Center
Monthly Brief #46, January 2022
Stuck in the Middle: Preparing for Fallout from the Russia-Ukraine Conflict
 
After a stretched bout of silence, India called for a peaceful resolution of the Russia-Ukraine crisis through “sustained diplomatic efforts.” As a strategic partner to both the U.S. and Russia, India finds itself stuck in the middle (once again), navigating her way out of the fallout from the ongoing crisis. Any escalation of the situation has the potential to affect India-U.S. bilateral relations.
 
Despite the U.S. nudging India to play a role in the Russia-Ukraine crisis, it is highly unlikely that India would alter its position of neutrality. After all, India had responded similarly after the Russian annexation of Crimea in 2014.
 
However, India must brace for the dominoes about to fall. Escalation of the crisis has dire consequences for Indian interests in the areas of economy, defence, energy and the larger geopolitical theatre where players are renegotiating their roles in a new world order.
 
For instance, another round of economic sanctions against Russia will derail the Indo-Russian attempt to diversify their relationship beyond defence cooperation. Further, considering Russia’s importance as a defence partner, future relations between the two countries will hinge upon India spending much of its political capital with the U.S. and the EU in safeguarding its strategic autonomy.
 
This conflict will also, in all likelihood, divert the attention of Western powers from the Indo-Pacific, allowing China an opportunity to display greater belligerence in the region.
 
The question then is whether India can preserve its multiple relationships and safeguard its interests from this conflict’s fallout. Hardening her stance by explicitly partnering with the West will push Russia towards China. This is a bad proposition, especially considering Russia’s response to the Indo-China clashes in 2020. Not only was India assured of an uninterrupted delivery of defence equipment, but Russia also maintained a strategic silence on the issue. Such support was provided to India despite Russia and China being ‘better than allies.’
 
Undoubtedly, the best possible outcome will be a Russian retreat facilitated by diplomacy for the sake of peace in the region and beyond. India’s role, even if secondary, must be conducive to this objective, even as it avoids taking an explicitly antagonistic stance against Russia.
 
Meanwhile, India must also prepare to secure its national interests – starting with diplomatic engagement with the U.S. to ensure that isolating Russia internationally does not come at the cost of sabotaging the capacity of partners who will shoulder the burden of conflict in other theatres.                                         
Pradeep S. Mehta
Editor

P.S.: What contours would the much-awaited U.S. Indo-Pacific Economic Framework take? Can it herald in an altered perception of the Indo-Pacific as an economic bloc, instead of just a geopolitical construct?
 

Wishing an exciting and productive new year to all our readers!


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U.S. and India should set bold goals to achieve US$ 500 billion in bilateral trade: new USIBC president
After achieving enormous progress in their overall relations, the U.S. and India must now set bold goals to take their ties to a new level and achieve the ambitious target of US$ 500 billion in bilateral trade, Atul Keshap, the new president of the influential U.S. India Business Council (USIBC) has said. Keshap articulated that the two countries need to be ambitious now. "This is a dangerous moment in world affairs," he said. There are all kinds of stresses and challenges during the pandemic, including economic stress, challenges from other countries, and other systems.

Indo-U.S. bilateral relation better today than it ever has been: David J Ranz
The U.S.-India bilateral relationship is better today than it ever has been. In fact, although the final numbers are not yet in, it appears that bilateral trade in 2021 broke our previous record, and this despite the challenges of the global pandemic. On tariffs, we believe that lower tariffs enable free, fair, and reciprocal trade. Last year, we had a very productive Trade Policy Forum Ministerial. As a result, we are close to finalising market access for Indian mangoes and pomegranates in the United States, and access for U.S. alfalfa and pork in India, said U.S. Consul General David J Ranz.
 
Here’s how to get U.S.-India trade on the right track
One key stipulation, however, is that the goal of a comprehensive trade relationship between the United States and India will not be reached via ongoing Indo-Pacific initiatives, such as a regional digital trade agreement. These are important, but bilateral trade must be addressed in true bilateral fashion - with the U.S. and India alone at the table. This formula will undoubtedly experience its share of frustrations on both sides, but the two can emerge as stronger allies with much better prospects for cementing their economic paths in a mutual vision for the future.
 
Security not economics is likely to drive U.S. trade engagement in Asia
Like Trump, Biden has struggled to craft an effective approach to deal with China. Multiple World Trade Organisation (WTO) cases have prompted China to reform individual aspects of its trade regime, but there has been no action through the WTO that’s persuaded Beijing to alter foundational features — namely forced technology transfers and subsidisation of state-owned enterprises. Trade battles have not relaxed U.S. fears over China’s military and technology ascent.

 

Getting real about the hydrogen economy
Is there a role for large-scale clean hydrogen in the energy sector right now? The short answer is, not really. Hydrogen is a clean source of energy that can be used in many places. Hydrogen can replace coal or gas for electricity generation, oil in transportation and gas in buildings to provide heat. But electricity derived from solar and wind does a much better job.

Green push too far
Since August 2021, Western Europe has faced a problem with renewable energy, causing it to turn to natural gas as an emergency alternative. This has led to a significant increase in gas prices and has serious implications for fertiliser and food prices. The crisis also holds lessons for India, which has ambitious plans for using renewable technologies but doesn’t have the financial cushion available to the European nations. Cheap and reliable energy sources should not be abandoned until the alternatives have been stringently stress tested. India will be especially hard hit if oil prices spike as it imports close to 1.4 billion barrels of oil annually.
 
India’s green energy capacity growing fastest among large economies: Economic Survey
India has witnessed the fastest rate of growth in renewable energy capacity among all large economies, the Economic Survey, tabled in the Parliament on Monday, January 31, said. During the last seven and a half years, the country’s renewable energy capacity grew by 2.9 times and solar energy expanded by over 18 times, it said. As of October 31, 2021, India’s total renewable energy installed capacity (excluding hydro power above 25 mega watt) has reached over 103.05 giga watt, the Survey said.

U.S.-India climate change cooperation needs a revamp
Climate change will be a big issue for U.S.-India collaboration. India is already doing a lot when it comes to climate change mitigation. Yes, we have coal-fired power plants but we are also the nation that committed at Glasgow to meeting 50 percent of our energy needs from renewable sources of energy by 2030. For a coal-based economy, this is a massive shift.

 

U.S.-India Insight: 2022: Expected inflection points in U.S.-India ties
It is difficult to remember a quiet, calm year in U.S.-India relations. The relationship is replete with areas of congruence and conflict, so inflection points are common. This year will likely be no different. There are a few key issues that will impact the commercial and strategic relationship. Successful stewardship from the respective nations’ leaders can determine if these issues cause setbacks or steps forward in the relationship.

In 2022, India should keep an eye on Indo-Pacific
The region is central to world economy and peace, and nine countries are key players: the U.S., China, Japan, India, Germany, the UK, Russia, Australia and France. The geopolitics and geo-economics of the Indo-Pacific will be largely shaped by the interplay of relations among these nations. India has done well by fulfilling its humanitarian duties during the pandemic. Learning how to convert them smartly into economic and strategic opportunities in its periphery is the focused task for the nation in 2022.

India and U.S. discuss various key issues during virtual homeland security dialogue
India and the United States senior officials met on Wednesday, January 12, for Homeland Security dialogue through video conferencing, said the Ministry of Home Affairs in an official release. The Dialogue was co-chaired by Home Secretary Ajay Bhalla and U.S. Under Secretary of Homeland Security for Strategy, Policy, and Plans Robert Silvers. Both sides, according to the Ministry of Home Affairs (MHA), reviewed the ongoing cooperation and even identified further steps taken to explore opportunities and synergies.

Filling in the Indo-Pacific economic framework
The Biden administration has presented the outlines of an “Indo-Pacific economic framework” as the proposed vehicle for U.S. economic engagement in that vital region. A credible and durable economic strategy in Asia is critical to advancing U.S. commercial, diplomatic, and strategic interests. The Biden framework holds promise in this regard but needs to be developed in a way that meets several tests.

 

India must strive to be amongst the top 25 in Global Innovation Index: Piyush Goyal
India must strive to be amongst the top 25 in the Global Innovation Index, said Commerce and Industry Minister Piyush Goyal. Pointing out that startups were creating job opportunities across the country, Goyal said that almost 4 startups are recognised in India every hour with 45 per cent belonging to Tier II & III cities. It is also empowering women as 46 per cent of startups are found by women entrepreneurs.

India and U.S. discuss ties in science and technology
India's Ambassador to the U.S., Taranjit Singh Sandhu, has met America’s presidential advisor on science, Prof. Eric Lander, and exchanged ideas on strengthening bilateral cooperation in science and technology, a key priority area for the leadership of the two countries. “We exchanged ideas on strengthening the India-U.S. coop in Science and Technology, a key priority for the leadership of India and the U.S.,” Sandhu said in a tweet after the meeting with Lander.

Biden signs memo improving cybersecurity across defence, intelligence sector
U.S. President Joe Biden on Wednesday, January 16, signed a memorandum to bolster the cybersecurity of the U.S. defence and intelligence communities' networks. The memorandum requires the agencies responsible for managing the National Security Systems to improve the visibility of cybersecurity incidents and create binding directives about how to respond against cybersecurity threats.
 
Chip makers contend for talent as industry faces labour shortage
The world’s largest chip makers are fighting for workers to staff the billion-dollar-plus facilities that they are building around the world to address a shortage (Paywall) of semiconductors. A dwindling supply of qualified workers has worried semiconductor executives for years. Now that concern has been amplified by a global labour shortage, the pandemic-fuelled demand for all things digital and a race among governments to bolster their local chip-manufacturing capabilities, according to industry officials.

 

The end of American adventurism abroad
American decision-makers have long warned allies and partners that the United States must reduce its security obligations, lighten its military footprints in certain regions and that greater burden-sharing is inescapable. But U.S. allies have largely ignored these warnings and pleas. Perhaps because the U.S. itself has sent mixed messages: When Europe begins to talk about strategic autonomy, Washington has a meltdown. When Europe continues to rely on the U.S.’s security umbrella, American leaders rebuke Europe for freeriding.

India's TS Tirumurti assumes new chair of UN Counter-Terrorism Committee
TS Tirumurti, India's permanent representative to the United Nations (UN) was named the new Chair of the UN Counter-Terrorism Committee (CTC) on Tuesday, January 01. Prior to taking up his current position as Permanent Representative of India to the United Nations, in May 2020, Tirumurti served as Secretary in the Ministry of External Affairs, handling the Economic Relations portfolio (which included, inter alia, the Gulf and the Arab World, Africa, and India's Development Partnership), according to UNSC statement.

Diaspora has been important pillar of India-U.S. relationship: Ambassador Taranjit Singh Sandhu
The Indian American diaspora has played an important role in strengthening the India-U.S. relationship, said India’s Ambassador to the U.S. Taranjit Singh Sandhu, a day after the Indian government announced Padma Bhushan civilian awards to three eminent Indian Americans. Addressing thousands of Indian Americans, who joined the celebrations through various social media outlets, Sandhu said this year, three of the distinguished diaspora members have been conferred the Padma Bhushan - Madhu Jaffrey for popularising Indian cuisine, Satya Nadella and Sundar Pichai for their leadership in the technology sector.
 
Amid uptick in nativism, an upsurge of diversity in U.S. legislature
Amid an upsurge of white nationalism and nativism in middle America, one of its more liberal states has bucked the trend by electing four women of subcontinental- origin, including a Hindu, a Sikh and a Muslim, to its legislature. The swearing in of Senator Yasmin Trudeau on Monday, January 14, joining Senator Manka Dhingra and Senator Mona Das, marked the first time in American history that Muslim, Sikh and Hindu lawmakers have served together in any state or federal legislative body.