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HomeDiplomacyUS announces major Indo-Pacific engagement but Chinese loans are quicker

US announces major Indo-Pacific engagement but Chinese loans are quicker

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Two key announcements suggest a way forward in US ties with the region but they are a long way off from Chinese initiatives.

New Delhi: For the first time since President Donald Trump assumed power, the US is throwing its full weight behind a re-engagement with the Indo-Pacific, making no bones about its ambition to stare down China’s dramatic rise as a world power.

Significantly, Trump has taken a major step forward, from the Bush and Obama administrations, by easing high technology export controls for India, granting it the same status as its NATO allies Australia, Japan and South Korea.

However, the Trump administration’s announcement of $113 million to support initiatives in the digital economy, energy and infrastructure across the Indo-Pacific is a drop in the ocean compared to what the Chinese government has promised several countries in the region.

In Sri Lanka, for example, investment in the Hambantota port has touched $1 billion, while Beijing’s commitment for the China-Pakistan Economic Corridor (CPEC) is more than $60 billion already.

The two key announcements came Monday in Washington DC by US Secretary of State Mike Pompeo and US commerce secretary Wilbus Ross, speaking separately at the US Chamber of Commerce.

India welcomes ease of tech export controls

The ministry of external affairs swiftly welcomed the technology export control decision Tuesday morning.

“It is a sign of trust, not only in the relationship but also (in) Indian’s capabilities as an economy and as a security partner, because it also presupposes that India has the multilateral export control regime in place which would allow the transfer of more sensitive defence technologies,” India’s ambassador to the US Navtej Sarna said.

The decision to ease technology controls is a shot in the arm for India’s global reputation. It comes a month before the India-US 2+2 foreign office and defence dialogue, which will take place in Delhi in early September.

It also indicates a strategic decision in the Trump administration to stay the course with India and end the mismatch in expectations between the two sides. Fact is, the several postponements on the India-US dialogue, the many personnel changes in Washington as well as the continuing irritation over bilateral trade has led to a recent drift in the relationship.

“(The decision) provides India greater supply chain efficiency, both for defence, and for other high-tech products,” Ross said, adding that the elevated status would have affected about $9.7 billion worth of Indian goods purchases over the past seven years.

Also read: In US-China trade war, will India become a dumping ground for Chinese goods or can it benefit?

A case for private investment

Pompeo conceded that the Asian Development Bank in Manila had said that developing countries across the Indo-Pacific needed $26 trillion to develop infrastructure by 2030, and since “no government or combination of governments has that kind of money, (except for the) private sector”, these countries would have to open themselves up to investment from private companies.

“Only if countries make themselves welcoming to private investment will those trillions of dollars get off the sidelines, into their economies, and into productive enterprises that bring jobs and prosperity to their peoples. For that to happen, Indo-Pacific leaders must prioritise transparency, anti-corruption, and responsible financing,” Pompeo said.

Pompeo’s statements are clearly meant to encourage the region to buy American. But if Chinese goods are cheaper, Pompeo may have competition. The US has a chance if its government-secured loans are less expensive than the money China lends, as a result of which a slow wave of bitterness is unfolding across Asia and the Pacific.

Mike Pompeo’s full remarks are found here.

Also read: In between lakeside lunches, Modi should tell Xi that India wants peace on the border


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