Will Delhi And Washington Finally Bury The Hatchet?

It will be a momentous occasion, long awaited by New Delhi. On Mar. 20, Bill Clinton will become the first U.S. President to make a formal state visit to India since President Dwight D. Eisenhower in 1959. The week of meetings with Prime Minister Atal Bihari Vajpayee could mark the start of an important new strategic relationship--despite decades of animosity between the world's two largest democracies during the cold war, when India allied with the Soviet Union and the U.S. backed Pakistan.

The U.S. and India seem readier than ever for a diplomatic breakthrough. True, India refuses to cooperate with the U.S. on nuclear nonproliferation. And Indian officials are miffed that Clinton will travel to Pakistan to meet with General Pervez Musharraf, who came to power in a coup last fall. Nevertheless, momentum is building toward nurturing a friendship. To many U.S. strategists, India resembles China of the early 1980s: a giant awakening from a long economic slumber that seems destined to emerge as a global player. It is a view New Delhi aims to develop. "What India wants from the U.S. is a better appreciation of her potential, problems, and concerns--both security and economic," says Sudheendra Kulkarni, a Vajpayee aide.

In many ways, India these days is a natural U.S. partner. Its democratic values contrast sharply with those of China and the nuclear-armed Pakistani dictatorship. A closer relationship with India could bring benefits to regional security, says a senior Administration official. Eventually, India might be persuaded to sign the Comprehensive Nuclear-Test-Ban Treaty, though U.S. officials don't expect India to agree to do so during Clinton's visit. And while the U.S. would not turn away from China, it might value an alliance with India if China keeps strengthening links with Russia. India is a promising economic ally as well. Its strengths are in software design and electronics engineering--skills needed by U.S. industry.

But Clinton will have to strike a delicate balance on his journey in embracing India without alienating Musharraf, who would be more dangerous as an isolated rogue leader. How Clinton fares may depend in part on how he tiptoes around issues such as Kashmir, the disputed territory between India and Pakistan. Vajpayee wants to keep the spotlight off Kashmir, but Washington would like Pakistan and India to launch negotiations over the conflict.

Unlike a decade ago, a powerful force has emerged to push Washington into New Delhi's embrace: the U.S. business lobby. From Enron Corp. to Microsoft Corp., U.S. companies have invested $12 billion in India, which has been opening its economy since 1991. Investment barriers in such sectors as telecom and power are falling fast. Corporate America pushed hard in 1998 to get the Administration to ease economic sanctions it imposed after India announced nuclear tests. Now, business wants restrictions lifted completely. "So much progress has been made by U.S. corporate efforts in India, it's time the U.S. political establishment backed them up," says Sanjay Bhatnagar, CEO of Enron India and chairman of the 300-strong American Business Council in India. Adding to the pressure is India's 1.5 million-strong emigre population in the U.S., which includes countless Silicon Valley tycoons and execs at the likes of McKinsey & Co. and Citigroup.

It will take more than one summit to overcome the tensions that have long divided India and the U.S. But barring a war with Pakistan or renewed xenophobia, India is on the map as a future power Washington wants on its side.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE