WASHINGTON, Dec. 28 (UPI) -- A nuclear deal with Washington and a pivotal role in global trade talks rocketed India to international attention in 2005, but ties with Iran and the pace of economic liberalization could keep it from a permanent place at the top table of global politics.
New Delhi had one less thing to worry about this year, too -- its poor ties with Pakistan. Relations between the two countries, which were born almost simultaneously in August 1947, are at their best since that time. Ties with China, always frosty but especially so since their brief but bitter 1962 war, are on the upswing. But most tellingly for India, its ties with the United States are at their best-ever level.
That was capped during a visit in July to Washington by Prime Minister Manmohan Singh. In a landmark deal, the Bush administration tacitly recognized India as a nuclear power and agreed to supply it with civilian nuclear technology in exchange for New Delhi separating its civilian and military nuclear facilities.
The deal, in essence, rewrote the rules of the nuclear nonproliferation treaty, the cornerstone of global proliferation efforts through the Cold War era, because India is not a signatory to the pact. Despite opposition from the U.S. Congress and some nonproliferation advocates, the two sides are working toward implementing the deal and it's certain to be one of the issues discussed by President Bush during his visit to India in early 2006.
Washington sees India as a key ally in the region and as part of an alliance of democracies that includes Japan and South Korea in Asia, and Turkey and Israel in the Middle East against growing Chinese influence. New Delhi, however, has hedged its bets and is increasing its own dialog with Beijing -- especially in bilateral trade and energy.
Trade between India and China has exploded by 521 percent over the past five years to $11.35 billion this year from $1.8 billion in 1999-2000, according to the Associated Chamber of Commerce and Industry, an Indian trade body. During the same period, trade with the United States rose just 63 percent to $19.5 billion, despite the high-profile U.S. concerns about the outsourcing of service sector and computing jobs to India.
Besides being the two most-populous countries in the world with the two fastest-growing economies, India and China also have an insatiable desire for energy to feed their economic engines. After initially competing against each other for foreign contracts, the two decided to team up against competition from the global oil energy majors, striking key deals in Syria and Iran, both the focus of U.S. criticism and sanctions for their policies in the region.
Friendly relations with countries deemed problematic by the West gives India additional leverage in global diplomacy. This was seen most recently with discussions in the International Atomic Energy Agency over Iran's nuclear program. After initially voting to refer Tehran's program to the U.N. Security Council, New Delhi played a key role in getting talks between Tehran and the European Union to continue.
Then there was what many see as India's most glorious moment this year -- its leading role along with Brazil at the World Trade Organization talks in Hong Kong this month.
India managed to bring together the poorest countries for the so-called Group of 110 to push for a deal on agriculture, non-agriculture market access and a duty-free quota-free package for the least-developed countries. The deal struck in Hong Kong was seen as the first in the organization not dictated by the West.
But if there are silver linings, there must also be clouds. And of those, India has plenty.
Friendly relations with countries like Tehran and continuing negotiations over a gas pipeline from the Islamic republic to India via Pakistan have irritated many on Capitol Hill who say New Delhi must choose its friends more carefully.
"India (will) pay a very hefty price for their total disregard of U.S. concerns vis-à-vis Iran," said Rep. Tom Lantos, D-Calif., earlier this year before New Delhi voted against Tehran at the IAEA.
Military exercises with India notwithstanding, Washington also counts Pakistan as a key ally and the two South Asian neighbors will continue to battle for attention and over the disputed Kashmir region.
Then there is the pace of economic liberalization. Despite a stock market boom that saw India's benchmark Sensex grow by 40 percent this year, high oil and raw material prices will see more modest returns over the next year, analysts say. The government says it is committed to further opening up its economy but there is widespread opposition to this among the ruling Congress Party's Communist allies. At the same time, there is international pressure on New Delhi to privatize its state-owned firms and open up the retail sector to companies like Wal-Mart Inc.
This in the long run represents India's biggest problem.
How can the world's second-most-populous country, with the second-fastest-growing economy -- an acknowledged high-tech superpower with recent multibillion investments announced By Microsoft Corp. and Intel Corp. -- reconcile its breakneck growth with nearly 70 percent of its population still living on less than $2 a day?
Can a country be a global military, diplomatic and economic power when some two-thirds of its people have not heard the term "trickle-down economics" let alone felt its benefits?
Does New Delhi have more of a responsibility to its own position in the world than to the vast majority of its people?
In the end, it will be these questions India must answer if it is to make the leap from regional power to global prominence.
It will be a long 2006.