U.S. Sells Arms to South Asian Rivals-02-25-2010

U.S. Sells Arms to South Asian Rivals-02-25-2010

(AN OLD NEWS JUST FOR REFERENCE...VIBHA)
Quote:
The Obama administration is sharply expanding American weapons transfers to both India and Pakistan, longtime rivals about to sit down for peace talks Thursday.

The U.S. has sought to remain neutral in the thorny relationship between the nuclear-armed neighbors. But Washington hasn't been shy about pursuing weapons deals in the region, which officials say will lead to closer ties with each country while creating new opportunities for American defense firms.

The U.S. has made billions of dollars in weapons deals with India, which is in the midst of a five-year, $50 billion push to modernize its military.

At the same time, American military aid to Pakistan stands to nearly double next year, allowing Islamabad to acquire more U.S.-made helicopters, night-vision goggles and other military equipment. The aid has made it easier for Pakistan to ramp up its fight against militants on the Afghan border, as the U.S. tries to convince Islamabad that its biggest security threat is within the country, not in India.

During a late January trip to Islamabad, Defense Secretary Robert Gates said the U.S. would for the first time give Pakistan a dozen surveillance drones, a longstanding Pakistani request.

But India and Pakistan have each been irked when the U.S. made big-ticket weapons sales or transfers to the other. India lobbied against recent U.S. legislation giving Pakistan billions of dollars in new nonmilitary aid; the measure passed. A top Pakistani diplomat warned last week that a two-year-old civilian nuclear deal between the U.S. and India could threaten Pakistan's national security by making it easier for India to covertly build more nuclear weapons.

Washington's relationships with the two nations are very different. India, which is wealthier and larger than its neighbor, pays for weapons purchases with its own funds. Pakistan, by contrast, uses American grants to fund most of its arms purchases. A new U.S. counterinsurgency assistance fund for Pakistan is slated to increase from $700 million in fiscal year 2010 to $1.2 billion in fiscal year 2011.

"We do straight commercial deals with India, while Pakistan effectively uses the money we give them to buy our equipment," said a U.S. official who works with the two countries. "But we think that's ultimately in our national interest because it makes the Pakistanis more capable of dealing with their homegrown terrorists."

India is one of the largest buyers of foreign-made munitions, with a long shopping list which includes warships, fighter jets, tanks and other weapons. Its defense budget is $30 billion for the fiscal year ending March 31, a 70% increase from five years ago. The country is preparing its military to deal with multiple potential threats, including conflict with Pakistan. Tensions have recently flared between India and China over territorial claims along their border. China defeated India in a short war in 1962.

"For 2010 and 2011, India could well be the most important market in the world for defense contractors looking to make foreign military sales," said Tom Captain, the vice chairman of Deloitte LLP's aerospace and defense practice.

Russia has been India's main source of military hardware for decades, supplying about 70% of equipment now in use. Moscow is working to keep that position, with talks ongoing to sell India 29 MiG-29K carrier-borne jet fighters, according to an Indian Defense Ministry spokesman.

The Obama administration is trying to persuade New Delhi to buy American jet fighters instead, a shift White House officials say would lead to closer military and political relations between India and the U.S. It would also be a bonanza for U.S. defense contractors, and has dispatched senior officials such as Mr. Gates to New Delhi to deliver the message that Washington hopes India will choose American defense firms for major purchases in the years ahead.

Shortly after a late January visit by Mr. Gates—on the same tour that took him to Islamabad—In late January, the administration signed off on India's request to purchase 145 U.S.-made howitzers, a $647 million deal. Pentagon spokesman Geoff Morrell said Mr. Gates's visit didn't affect the substance or timing of the howitzer purchase.

That came days after India formally expressed its intent to purchase 10 cargo transport aircraft from Boeing Co. in a deal analysts say could be worth more than $2 billion. Last year, India spent $2.1 billion on eight Boeing long-range Poseidon reconnaissance aircraft for the Indian navy.

Still in the pipeline is India's planned $10 billion purchase of 126 multirole combat aircraft for its air force. U.S. firms Boeing and Lockheed Martin Corp. are vying with Russia and European companies for that deal, which would be a near-record foreign sale for the firms. An agreement last summer allowing the U.S. to monitor the end-use of arms it sells to India is expected to facilitate such deals.

"That's the biggest deal in the world right now," said Mr. Captain. "If it goes to an American firm, that would be the final nail in the coffin in terms of India shifting its allegiance from Russia to the U.S."

Successive U.S. administrations have worked hard to build closer military, economic and commercial ties with India. In its final days in office, the Bush administration signed a civilian nuclear pact with India which has cleared the way for American firms to build two nuclear plants in India in deals worth billions of dollars.

The Obama administration, which sees India as a valuable counterweight to China, is negotiating new export control and communications security agreements with New Delhi that would make it easier for American firms to sell more arms and high-technology equipment to India.

There have also been symbolic U.S. efforts to build warmer ties with India. When President Barack Obama threw his first state dinner recently, it was held in honor of visiting Indian Prime Minister Manmohan Singh.

Arvind Kadyan, a researcher at India's nonprofit Institute for Defense Studies and Analyses, said India was likely to continue to do big deals with Russia.

"That situation can't change overnight, because we have such a long association with them," Mr. Kadyan said.