Learning the art of deal-making

This column first appeared in Mint, on December 8, 2014. Like other products of the Brookings Institution India Center, this is intended to contribute to discussion and stimulate debate on important issues. The views are those of the author.

Three recent bilateral agreements have the potential to dramatically change India’s relations with major powers and its role in the emerging global order, even though two of them do not involve New Delhi. They also reveal that the Narendra Modi government is quickly learning the import of the art of the deal.

The first was the 12 November US-China joint announcement on climate change. Quietly negotiated over nine months, the agreement was announced at the Asia-Pacific Economic Cooperation summit in Beijing and caught the world, particularly India, by surprise. The deal commits the US to reduce its emissions “by 26%-28% below its 2005 level in 2025 and to make best efforts to reduce its emissions by 28%” and for China “to achieve the peaking of CO2 emissions around 2030” and “to increase the share of non-fossil fuels in primary energy consumption to around 20% by 2030”. It also calls for greater scientific cooperation and technology transfer between the two.

It also isolates India the world’s third-largest polluter as the recalcitrant opponent to a global agreement at the Paris conference next December. Despite this, India’s stand at the ongoing conference in Lima reflected no flexibility in its position; it reiterated the “common but differentiated responsibilities and respective capability” mantra, even though it is becoming untenable. Second, on the eve of the G-20 summit, the US and India reached an agreement which paved the way for a Trade Facilitation Agreement at the World Trade Organization (WTO). The two agreed to a mechanism under which members will not challenge food security programmes under the WTO’s dispute settlement procedures. Such a mechanism the agreement noted “will remain in place until a permanent solution regarding this issue has been agreed and adopted”.

While this was, clearly, a vindication of India’s stand, it was also a victory for the US, which was able to save the WTO agreement from certain train wreck. The agreement also signalled the ability of New Delhi and Washington to work together on contentious issues to pave the way for global agreements.

Finally, soon after the G-20 summit, came the bombshell: a military agreement between Russia and Pakistan, which pledged to “enhance the combat capability” of their armed forces. In particular, it called for arms sales, counter-narcotics and counter-terrorism cooperation, military exchanges and joint naval exercises. Although there was some indication of this development when Russia lifted its arms embargo in June, the announcement coming on the eve of President Vladimir Putin’s visit to India was nonetheless a rude jolt.

Despite perceptions to the contrary all three agreements provide India an opportunity to advance its own interests and be regarded as a key actor in the emerging global order.

In the wake of the Pakistan-Russia defence pact India the largest importer of Russian weapons could impress upon Putin the need to qualitatively step up the transfer of military technology and to throw open its coveted design bureaus. That would be a worthy compensation for Moscow’s Pakistan folly.

Similarly, instead of being cornered by the US-China climate agreement, New Delhi could seek to use the same template to reach a similar or even better agreement with Washington during the visit of President Barack Obama next month. In turn, India could offer a qualified peak date of around 2045 or earlier and to increase the share of non-fossil fuel to 20%, subject to appropriate international financing and technology transfer. This would not only enhance India-US relations but also spare India from being blamed for a failure in Paris.

As the US-India agreement to break the WTO logjam has shown, the Modi government has the confidence and skills to strike deals. It should now perfect this art with other deals.