TWO + TWO DIALOGUE BETWEEN INDIA AND USA – CRITICAL ISSUES

Maj Gen P K Mallick, VSM(Retd)

A joint statement issued at the end of the bilateral dialogue declared.“They welcomed the signing of a Communications Compatibility and Security Agreement (COMCASA) that will facilitate access to advanced defence systems and enable India to optimally utilise its existing US-origin platforms.”

I am reproducing the portion of COMCASA from my paper.

Sensitive Issues

Though no doubt that Indo – U.S relations have improved considerable since the cold war days, there are number of issues which need to be addressed to take the relationship forward. These are sensitive in nature and would required highest forms of diplomatic tight rope working, sagacity and maturity.

Trade. While the United States and India have made tremendous strides on defense cooperation and counterterrorism efforts, that progress has not translated into smooth and successful trade relations. India's exports to the US in 2016-17 stood at $42.21 billion, while imports were $22.3 billion. India has taken steps to increase imports from USA which helped narrow the gap by over $1 billion last year. India will be importing oil worth $2.5 billion from the US this year.

Trump administration has slapped steel and aluminum tariffs on India — inviting reciprocal duties on 29 American exports by India. India has said the duty imposed by the US has affected steel exports by $198.6 million and aluminum shipments by $42.4 million. India exports steel and aluminum products worth about $1.5 billion to the US every year. India has also dragged the US to the World Trade Organisation's (WTO) dispute settlement mechanism over the imposition of import duties on steel and aluminum. USA did not appreciate India’s move to take the question of U.S steel tariff to the World Trade Organisation (WTO).

The import duty has been imposed by India on chickpeas and Bengal gram, lentils, boric acid and binders for foundry moulds, domestic reagents, artemia, a kind of shrimp, certain kind of nuts, iron and steel products, apples, pears, flat rolled products of stainless steel, other alloy steel, tube and pipe fittings, and screws, bolts and rivets. However, there was no duty hike on motorcycles like Harley-Davidson imported from the US. India has put on hold the imposition of tariffs on the US imports of steel and aluminum from the country. Anticipating the 2+2 dialogue, India has postponed the enforcement of retaliatory tariff, thereby creating room for talks.

India has already lost two cases in WTO against the US -- poultry and solar sector. In 2016, India also dragged the US to WTO against the policies of eight American states for the renewable energy sector, alleging that the domestic content requirement norms are inconsistent with global trade rules. Besides, the country has filed a complaint against US decision to impose high fees on temporary working visas.

U.S. Business Concerns. U.S. has lodged six cases against India at the WTO. Some of the concerns of U.S. manufactures are given below.

US Trade Representative (USTR) Robert Lighthizer complained against India at WTO on export subsidy programmes: the Merchandise Exports from India Scheme; Export Oriented Units Scheme and sector specific schemes, including Electronics Hardware Technology Parks Scheme; SEZ; Export Promotion Capital Goods Scheme; and duty free imports. The USTR said these "apparent" export subsidies provide financial benefits to Indian exporters that allow them to sell their goods more cheaply to the detriment of American workers and manufacturers.

Through these programmes, it said India provides exemptions from certain duties, taxes, and fees; reduces import duty liability; and benefits numerous Indian exporters, including producers of steel products, pharmaceutical, chemicals, IT products, textiles, and apparel. Export subsidies provide an unfair competitive advantage to recipients, and WTO rules expressly prohibit them, it added.

India’s trade barriers and policy of capping prices of medical devices has caused heartburn among American manufacturers. American medical device manufactures worry that if the Indian model of price control is allowed to stand, other developing countries may soon follow suit.

Requirement of data localisation announced by the Reserve Bank of India (RBI) remains a controversial issue. American companies are also protesting the data localisation requirement for financial services companies. An American business leader said if the U.S were to impose such a requirement with regard to American consumers, the backbone of Indian BPO sector would be broken. “Imagine what will happen if the U.S decides that U.S data cannot be processed outside,” The RBI guidelines on data localisation “create constraints for companies. When supply chains and operations are global, this creates inhibitions to investment and innovation in India. Industry understand the concerns of the Indian government and is willing to work with it on finding a resolution”. In no way sensitive and classified data used by Indian BPO industry would be allowed to reside in severs located in India. On data security India may have to follow the path of European Union

The India-US business relationship is also growing. As The New York Times had reported, Walmart and Amazon are both investing heavily in India, while the number of Indian students in the US increased to 186,000 hitting double-digit growth for the fourth consecutive year. India is far too big a resource for the US, and a businessman president is not going to risk that.

The U.S. also would like more access to India’s agricultural market.

H1B Visa Issue. The crackdown on the non-immigrant visa programme has affected Indian skilled workers and IT professionals. On the contentious H1B visa issue, Indian interests are completely at odds with Trump’s politics. External affairs minister Sushma Swaraj had told Parliament in July that India will “forcefully” raise the issue of H1B visas with the US during the 2+2 dialogue and maintained that “growing restrictions on the visa rules by the Trump administration was a cause of concern to the Indian government, the Opposition members and the entire House.” The US' move to instead extend the suspension by five more months of premium processing for H-1B visas till February 2019 couldn’t have gone down well with New Delhi. In July, the National Foundation for American Policy, a US-based non-profit body, said there was a 42 per cent increase in the number of H-1B visa rejections for Indians.

U.S. view is that there has been no changes a number of H1B visa issue. In fact certain other countries complain how come India gets 17% of the total visa issued.

Communications and Information Security Memorandums of Agreement

CISMOA agreements—like the COMCASA being negotiated with India—are intended to provide the documentary justification to release command, control, communications, computer intelligence, surveillance, and reconnaissance (C4ISR) data to a foreign country. This includes data feeds that provide the “common operational/tactical picture.” Also included within the scope of this general program are topics such as configuration management; common standards; information security; information assurances; authority to engage in reciprocal use of each other’s communications systems; the framework for exchanging telecommunications support; and the services related to establishing an interconnection. CISMOA agreements are separate from information security agreements that are negotiated by the U.S. National Security Agency to enable access to secure networks. The general agreement signed by the US is called the Communication and Information on Security Memorandum of Agreement (CISMOA) but the name was changed to COMCASA to reflect its India-specific nature.

COMSEC requires a CISMOA agreement. CISMOAs are not to be confused with foreign military sales documents. The United States has multiple agreements concerning configuration management of tactical command, control, and communications standards, including with allies such as France and partners such as Singapore.

Over the past decade, India has been steadily purchasing military platforms like of P-8I and C-130J aircrafts from the United States that typically come with secure communication systems of US-origin. However, since India has thus far refused to sign the Communications Compatibility and Security Agreement (COMCASA), usually known as the Communications and Information Security Memorandum of Agreement (CISMOA) in US parlance, it has been forced to use lower-grade commercially available equipment in lieu of US-origin radio, communications security (COMSEC) and navigation equipment that apparently give American platforms an operational edge over similar systems available from elsewhere.

U.S. View. From a legal perspective, a reliance on ad-hoc arrangements can be problematic for U.S. commanders; from an operational perspective, continued use of workarounds in the absence of these frameworks will limit the range of options available to both Indian and U.S. commanders, particularly in responding to unforeseen circumstances. The foundational agreements are routine, and their negotiation is normally conducted at a much lower level than they have been in the case of India. These are merely framework agreements that facilitate exchanges of certain defense articles and services and do not limit India’s freedom of action.

India’s Concerns. 

Even though the US maintains that COMCASA is only ‘foundational’ in nature and ‘innocuous’ in import, there are genuine reasons for India to be concerned about the implications of this agreement. For instance, from an Indian perspective, it is worth considering whether COMCASA has the potential to compromise India’s operational security while protecting that of the US. COMCASA may also increase pressure on India to source all of its COMSEC equipment from US vendors in the future.

Implementation of the COMCASA would involve data sharing that could reveal the location of Indian military assets to Pakistan or other third parties. It would “enable Washington to monitor Indian communications in operations where the United States may be neutral or even adversarial, such as contingencies relating to Pakistan” or that sensitive communications and information could be shared with third parties, including Pakistan.

U.S. view is that data feeds to foreign governments can be modified, so the United States could restrict access by India and Pakistan such that their communications and information would not be shared with each other despite using a common platform with the United States. But U.S. controlling the complete communications of the high value platforms and in extreme situations where in a conflict situation when the U.S. and India have opposite views would give USA the leverage to incapacitate the communication setup would not go well with Indian Armed Forces.

It makes no sense for India to bind itself to U.S. procedures in the absence of regular joint operations, particularly restrictions that might make India too reliant on the United States for major systems, supplies, and upgrades. Implementation of the COMCASA would be too burdensome for the Indian military, given U.S. procedures.

There is no clear need for these agreements, given the recent ascendancy of bilateral defense cooperation and the use of workaround agreements, such as the recently renewed Fuel Exchange Agreement can always be agreed upon. In July 2009, India had reluctantly signed the End-User Monitoring Agreement, under U.S. pressure, to allay their apprehensions about the usage of the U.S. defense equipment being procured by India. But, this agreement was signed after extended negotiations that eventually ensured that it kept intrusive, “monitoring” American inspectors away from Indian military bases.

Any self respecting democratic country like India will be concerned about intrusive American access to Indian military communication systems, and about the violation of Indian sovereignty due to visits by US inspectors to Indian bases to inspect the COMCASA-safeguarded equipment.

There is also a fear that a lot of Russian-origin and indigenous Indian military platforms may not be compatible with COMCASA.

What is the Issue of Secure Communication. Secure communications require high-grade encryption algorithms and encryption key management. An encryption algorithm operates the key over messages to produce an encrypted message that any intruder who has no access to the keys would not be able to break. This also implies that all communication devices in a network need to be compatible with one another by incorporating the same encryption algorithms. Now COMCASA requires that US operators perform functions such as keying for the encryption. Indian operators will not be allowed to even participate in the maintenance of these systems. India will not be comfortable with the presence of US designated personnel on Indian procured US platforms for long durations of their operational life. In the COMCASA scheme of things, the US will basically end up controlling the entire communications and message flow for the sake of ‘interoperability’. Long term analysis of the message flow could end up revealing tactical doctrines adopted by Indian forces in combat.

Since communication devices and links currently in use with Indian Forces cannot interact with US-provided systems, it implies that any attempt to establish interoperability between a part of India’s inventory and participating US forces could actually lead to reduced ‘intra-operability’ within India’s own military. COMCASA-covered equipment/platforms will become ‘incompatible’ with the rest of India’s inventory. This could lead to calls to ‘overhaul’ the Indian military’s entire network to COMCASA-compliant standards through wholesale import of US systems. Short of which India would have to willfully acquiesce to the creation of a divide in its inventory, thereby reducing the flexibility of field commanders to deploy available resources during action.

Since the Indian forces are unlikely to operate with the U.S. forces in a conflict situation, it is unnecessary to bind Indian forces down to U.S. codes and operating procedures as it is much better to have our own speech secrecy and communication/data transfer equipment than the U.S. ones.

Between 2010 and 2018, India bought $15 billion worth of aircraft, howitzers, helicopters and missiles from the US. The US is India's second-largest supplier of defence hardware, having provided frontline equipment such as Chinook medium lift helicopters, Apache helicopter gunships, P-8I Poseidon long-range maritime surveillance aircraft, C-130 medium transport aircraft and C-17 heavy lift aircraft. At least three of these platforms have seen repeat orders from India, helping the US realise its strategic aim of weaning India away from dependence on Russian equipment and toward U.S. hardware. This relationship is set to continue, with India's defence ministry approving the purchase of 24 MH-60R multi-role helicopters worth $1.8 billion from the US as a government-to-government deal.

The MH-60Rs are meant to operate off Indian warships and address an acute shortfall of helicopters. Warships are currently being inducted into service without helicopters. Another significant deal under discussion, after being cleared for sale by the U.S. last year, is for the MQ-9 'Guardian' High Altitude Long Endurance (HALE) drones.

Not only can the Guardian HALEs operate at an altitude of over 40,000 feet, nearly twice the altitude of the navy's existing Heron Medium Altitude Long Endurance drone fleet from Israel, they can also stay aloft for 24 hours.

Besides this, US companies like Lockheed Martin and Boeing are working hard to win the tenders for combat aircraft and helicopters. Accounting for about 15 per cent of our total procurement, the US was the second biggest supplier of arms to India in the five years ending 2017. Our Parliament’s Standing Committee on Defence has reported that U. S. firms concluded 13 contracts with India worth roughly $4. 3 billion over the last three years while Russia secured 12 contracts for only $1. 2 billion

Most of our weapons platforms are of Russian or European origin. Indian Navy has nuclear powered submarines SSN 1 Chakra (ex-RUS Akula II), Aircraft Carriers Vikramaditya (ex-FSU Kiev mod) , MiG-29K/KUB Fulcrum FGA ac; 6 Ka-28 Helix A ASW hel/Ka-31 Helix B AEW hel). Indian Air Force has 3 squadrons(sqn) with MiG-29 Fulcrum; MiG-29UB Fulcrum, 4 sqn with Jaguar IB/IS, 6 sqn with MiG-21 Bison, 1 sqn with MiG-21M/MF Fishbed, 4 sqn with MiG-27ML/MiG-23UB Flogger, 3 sqn with Mirage 2000E/ED/I/IT, 11 sqn with Su-30MKI Flanker, 1 sqn with Jaguar IM, 1 unit with Gulfstream IV SRA-4, Airborne Early Warning & Control, 1 sqn with Il-76TD Phalcon, Tanker, 1 sqn with Il-78 Midas, Transport, 5 sqn with An-32/An-32RE Cline, 1 (comms) sqn with B-737; B-737BBJ; EMB-135BJ, 4 sqn with Do-228; HS-748 and 1 sqn with Il-76MD Candid. ( Source Military Balance 2017.)

There is no way all the above weapon platforms can be converted into COMCASA compliant.

India is already operating the high value platforms recently acquired from USA with slightly degraded commercial grade secrecy communication equipment.

An indigenous Airborne Early Warning and Control System (AEW&C) christened 'Netra'. Mounted on a Brazilian Embraer-145 jet is already operational with IAF. A complex tactical software has been developed for fusion of information from the sensors, to provide the air situation picture along with intelligence to handle identification/classification of threat. It has battle management functions, built in-house, to work as a network-centric system of Integrated Air Command & Control System (IACCS) node. This system has been developed and evaluated through collaborative efforts between the DRDO and the Indian Air Force. The IAF is already using the Israeli Phalcon AWACS on the Russian IL-76 heavy-lift aircraft to detect aerial threats from jets or missiles even from a distance of 400 km away. It can be safely assumed that a reliable and safe communication system with high grade secrecy would be operational. In any case cryptography has reached such level that is extremely difficult to crack the algorithms. Only very few agencies like NSA of USA is capable of doing that. Indian industry and R&D establishments can be tasked to develop an indigenous high grade crypto communication system. Signing COMCSA does not give any appreciable advantage.

The fact that COMCASA could lead to the secrecy of tactical doctrines getting compromised besides imposing greater complexity costs on India’s communication systems demands that a detailed study of the ground realities and practical implications of signing COMCASA be made prior to deciding on a course of action.

CAATSA

Congress’s enactment of the Countering America’s Adversaries Through Sanctions Act (CAATSA), which President Trump signed into law in August 2017. Sections 231 and 235 of the law struck at the heart of the Indo US strategic partnership.. Section 231 requires that the president impose sanctions on any entity that “engages in a significant transaction with . . . the defense or intelligence sectors of the Government of the Russian Federation”. Section 235 describes the sanctions that may be imposed, which include, but are not limited to, prohibiting “any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which the sanctioned person has any interest” and forbidding “any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the sanctioned person.”

New Delhi has a long history with Moscow, going back to the Cold War days. India became dependent on the Soviet Union only after its requests for advanced military equipment had been turned down by the West. India’s reliance on Russia for technical assistance with its strategic weapons programs will likely persist for some time to come. About 65% of our defence equipment is of Russian origin.

India aims to negotiate the purchase of at least five complete Russian S-400 systems with a price tag of close to $6 billion. For months, the two sides have been aiming to reach an agreement on the deal before Russian President Vladimir Putin’s visit to India, planned for early October for annual summit talks. The $6 billion deal puts India in the cross hairs of CAATSA. As Brahma Chellaney writes in Nikkei Asian Review, “America has overtaken Russia in recent years as the top arms seller to New Delhi, and also emerged as a source of oil and gas supply to India. But these evolving ties cannot at this stage replace India's links with Russia and Iran. The US has basically transferred defensive military systems, while Russia has sold India offensive weapons, including a nuclear-powered submarine and an aircraft carrier.”

Russian weapons in Indian hands do not pose any direct threat to America’s national security interests.

There is doubt that the S-400 system is the best of its kind in the world and that the combination of the Patriot surface-to-air missiles and the Theatre High-Altitude Air Defence system the Americans have offered is not a match

The secondary sanctions rely on third parties to target Russia’s defence industry, stifle its sale of equipment and effect a change in Russian behavior. If the contract passes through, it would deal a major blow to the US' target of making the punitive measures against Russia work. Considering the nature of the US-India strategic partnership and India’s pivotal role in US Indo-Pacific strategy, Secretary of Defence Mattis took the lead in urging Congress to exempt a small set of U.S. partners—in particular, India, Indonesia, and Vietnam—from the sanctions obligations associated with CAATSA. But it seems Secretary of State is not on the same page. The US Congress last July permitted Trump to take a decision on waiver application for allies such as India, Indonesia and Vietnam if the administration can certify that a country is reducing defence equipment imports from Russia, expanding cooperation with the US in defence deals and the carve-out is in keeping with US security interests. The move was largely interpreted as an exception meant for India that had clarified its intent of going ahead with the S-400 deal despite the threat of sanctions.

It now emerges that this was a premature and even misleading conclusion. Randall Schriver, the Pentagon’s assistant secretary of defence for Asian and Pacific Security Affairs, said in Washington that an impression “that we are going to completely protect the India relationship, insulate India from any fallout from this legislation no matter what they do… is a bit misleading. We would still have very significant concerns if India pursued major new platforms and systems (from Russia).”

Iran. India is the second-largest importer of Iranian oil after China. India is reliant on oil imports for its consumption needs and 83% of its oil comes from external sources. India imports a tenth of its crude oil from Iran. Pricing of oil imports is very important for India as a number of factors such as economic growth and inflationary trends are tied to it. Iran sanctions' impact on India could also impede its transportation corridor to Afghanistan via Iran, which includes the Chabahar Port modernization project. This joint India-Iran project, which circumvents any need to cross Pakistani territory, highlights the strategic importance of Tehran for New Delhi. 

The United States is pushing countries to halt oil imports from Iran after Trump withdrew from a 2015 deal between Iran and six world powers. US sanctions on Iran's energy sector are set to be re-imposed after a 180-day "wind-down period" ending on November 4.The US is willing to offer a waiver to countries that make a “significant” reduction in imports. Without this exemption, countries dealing with Iran after the deadline will risk getting cut off from the US financial system. India has been seeking a waiver from the US, although it is unwilling to reduce imports anytime soon. 

On the Iran-related sanctions, no waiver for India is still in sight. With global shipping operators already pulling back from Iran business and oil prices rising, India’s energy-import bill is increasing. If India continues to import oil from Iran, it will have to find a way to pay for the supplies because the State Bank of India has already told refiners it can’t support Iranian purchases during sanctions. The government is yet to identify a bank that can be used to channel Iranian oil payments. India has already begun to reduce purchases of Iranian oil and expects to buy even less going forward. There is also the problem of making technical adjustments to refineries if a new form of crude oil is imported as it would require time, effort and resources. India has invested heavily in its petrochemical industry to cater for Iranian crude.

Washington is also seeking to sell more oil and gas to India, besides pressing it to switch imports from Iran to Saudi Arabia and other US allies. However, next-door Iran, offering discounted pricing, will remain critical to India’s energy- diversification strategy.

.

Indo Pacific. Washington clearly sees India as a regional counterweight to a growing China and an essential part of the 'Quadrilateral', an informal grouping of democracies comprising US, Japan, Australia and India.. On May 30, the US officially renamed its Hawaii-based Pacific Command as the Indo-Pacific Command, INDOPACOM. It's the oldest and largest US command, which Pompeo said "stretches from the west coast of the US to the west coast of India". INDOPACOM, Pompeo recently said, did not only have geopolitical aims but also geo-economic cooperation plans. It is not very clear how do we define Indo Pacific.

The inter command boundary between Pacific and Central command lies aling Indo Pak border. While India falls in jurisdiction of Pacific Command, Pakistan, Afghanistan and other countries west of them falls under central command. While USA wants India to take more active part in Malacca straights and South China Sea, it is not willing to yield space to wards our western sea board in Arabian Sea from where our most of energy imports come and we have huge interest in trade and diaspora in Middle East and West Asia.

Pakistan. In India’s neighbourhood, Washington and New Delhi are still not on the same page. However things are improving. The "cancellation" of some $300 million in military aid to Pakistan is a signal to Pakistan. This is yet another marker in a further deterioration of US- Pakistan ties, even though Pakistani foreign minister Shah Mehmood Qureshi is making light of it. Last month, the US also suspended military training — which is another blow, since Pakistan is one of the largest recipients of aid under the head of International Military/Education Training (IMET). Military aid also includes counter-narcotics assistance, and bilateral and multilateral exercise support. All of that was meant to improve Pakistan's capability to fight terrorism. As the recent escalated violence in Afghanistan indicates, that is clearly not happening. Pakistan will approach IMF for loans to tide over its immediate financial crisis. How will Secretary of State will ensure that the loan will not be utilized to repay Chinese loan?

A Taliban led regime in Afghanistan will be disastrous for the world except Pakistan. India is of the view that the problem is Pakistan, solution lies in Afganistan whereas US is of the opposite view. What are the kind of structures USA is envisioning to end the war in Afghanistan?

Recently elected Prime Minister of Pakistan Imran Khan cannot deliver US objectives in Afghanistan. The Pakistan Army will never allow it, and it knows well that the US still needs some hand holding in Afghanistan. Mr. Pompeo and lower-level defense officials had a stop in Pakistan for part of Wednesday to meet with officials there, including the country’s new prime minister, Imran Khan, and the head of the military. U.S. relations with Pakistan have soured in recent years amid accusations by the U.S., and denials by Pakistan, that Pakistan tolerates terrorist groups operating from within the country.

Military Exercises

The two countries hold elaborate navy-to-navy maneuvers, air exercises and even drills involving Special Forces, but war games involving all three arms represent a scaling up of defense cooperation. This is now being planned. “We do more military exercises with India than with any other country in the world,” said Alice Wells, deputy assistant secretary for South and Central Asian affairs, in a recent news conference.

No recent event illustrated India's diplomatic balancing act more than the August 24 military manoeuvre 'Exercise Peace Mission', between all eight members of the Shanghai Cooperation Organisation (SCO), including the armies of India, China, Pakistan and Russia, in Chebarkul, Central Russia. One an old strategic partner, the other a strategic challenge and the third, an old foe. All three of them have reasons to make common cause against the US.