The Hindu Business Line : US elections: Implications for India

Mr George W. Bush has won another term as the President of the US. What are the implications for the world, especially India? Alok Ray says that an inkling may be had from the stand he took vis-à-vis his challenger Senator John Kerry in the we ll-publicised debates that discussed various issues of import to the US and the world at large.

THE US Presidential elections have given the incumbent, Mr George W. Bush, another four years in office.

But the important question is: How India and the rest of the world will be affected by the outcome. The campaign debates may have significant pointers.

First, the war on global terrorism: No doubt, the Iraq war was the No. 1 issue before the American electorate. The toll is mounting everyday, and people are watching their boys die on prime time television. No weapon of mass destruction (WMD) has been found. On this, Mr Kerry's position was that he did support the war in the belief that the former Iraqi President, Mr Saddam Hussein, was manufacturing WMDs. Now that he knew better, he wanted to bring American soldiers home as quickly as possible. As a way out, he suggested a broader global coalition that would train Iraqi military and civilians for managing the country's affairs. He criticised Mr Bush for not pursuing Osama bin Laden more relentlessly while he was cornered in the Tora Bora mountains of Afghanistan. Mr Kerry felt that by opening the war in Iraq, American forces were diverted from the real terrorists, the Al Qaeda. There is no evidence linking Mr Hussein with the terrorists who attacked the US on 9/11. Moreover, had Mr Bush allowed the UN inspectors some more time to do their job, the non-existence of WMD would have been clearly established.

Mr Bush's position, on the other hand, is that a global coalition is no more a realistic option. Even if it is a wrong war, Americans now have no option but to fight it out, if necessary by itself. According to Mr Bush, the US has the right to make a pre-emptive strike anywhere in the world to protect American lives, with or without global support. Mr Kerry, in turn, criticised Mr Bush's policy on the ground that Iran and North Korea were far bigger nuclear threats than Iraq. Rather than relying on multilateral efforts (with help from China, Russia and Japan), Mr Bush should have tried bilateral diplomacy with Korea and Iran.

The stands taken by both were inconsistent. Mr Kerry criticised Mr Bush for straying from the path of a global multilateral effort in Iraq but wanted to pursue bilateral diplomacy with Iran and North Korea on the ground that multilateral efforts are not being effective there. Mr Bush, on the other hand, abandoned multilateral action against Iraq but favoured of multilateralism in the case of North Korea and Iraq.

Mr Bush is claiming that his aggressive pre-emptive actions in Afghanistan and Iraq have been successful in that no terrorist attack has take place in US after 9/11. It looks like (from earlier opinion polls and the recent ballot counting) that the majority of Americans still believe that strong pre-emptive strikes a la Mr Bush is a better guarantee for US security than any multilateral global coalition. Most Americans do not care about the loss of non-American lives and, hence, will support even a "wrong war" if it is in US interest, unless the number of American casualties get unacceptably high.

Most American voters were not happy with the way the war in Iraq has gone but they were not sure about the credentials and the ability of Mr Kerry on the matter either. As Senator McCain (a well-respected Republican) made it clear, the current US involvement in Iraq is going to continue for a long time, regardless of who wins. The war, according to him, is not against the Democrats but against Al Qaeda and global terrorists, wherever they are.

At the height of the Vietnam War, campuses reverberated with protest rallies. No such thing is visible now. Perhaps, the reason is simple. Unlike the Vietnam War, this war is being fought by professional US army personnel, with no drafting of civilian students. So, the question of the "morality" of the Iraq War is not being debated in the college campuses.

The second big issue of concern for India is the outsourcing of jobs from the US. Mr Bush is much more in favour of outsourcing of jobs to countries such as India and China as long as American business is gaining. Mr Bush is clearly pro-business as opposed to Mr Kerry (or Democrats in general) who is more pro-labour. Though Mr Kerry did not oppose outsourcing as such, he thought that the US tax laws give American companies a lot of tax advantages when they move their business and profits abroad. He was in favour of changing tax laws to create a level playing field so that the US labour, in his words, will not be subsidising the export of jobs abroad with their tax money. Mr Kerry apparently did not mind if jobs went abroad even after a level field was created.

Mr Bush thinks that the basic problem is not one of tax laws but of lack of skills among American workers. So, his solution is in terms of improving the quality of school and college education as well improving the access of vocational training courses to the US public.

Neither Mr Bush nor his critics point out that even if Americans have the necessary skills, jobs will go abroad so long as comparable skills are available abroad at a fraction of American wages. No amount of rhetoric can stop that. The most that the US policy can do is prevent foreign workers from coming here by stricter immigration restrictions but that would reduce the competitiveness of American companies in US. Eventually it would hurt American jobs as companies will not be able to sustain competition from cheaper goods and services produced abroad. So, regardless of who became President outsourcing would have continued to happen.

The third issue centred around the skyrocketing costs of medical treatment and prescription drugs in the US. This has some implications for Indian drug companies. Mr Kerry was in favour of cheaper import of drugs from Canada. Mr Bush is against it on the ground that it may not be safe, especially if "unsafe" imports from developing countries find their way through the Canadian route.

Mr Bush is basically protecting the US drug companies which may not be able to compete with cheaper imports. So, if Indian drug companies can set up manufacturing facilities in the US and produce generic drugs at lower costs, especially as part of collaborative arrangements with American companies or multinational corporations, they should prosper. Ranbaxy has already shown the way by following this strategy. It already sells more drugs in the US than in India.

(The author, a Professor of Economics at IIM Calcutta, is currently a Visiting Professor of Economics at the University of Rochester, US. He can be contacted at alokray15@yahoo.com)

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