Remarks
Robert D. Hormats
Under Secretary for Economic, Energy and Agricultural Affairs
East-West Center
Washington, DC
July 11, 2011


MR. LIMAYE: Welcome to the East-West Center. My name is Satu Limaye, I’m the Director here. We have a really remarkable program with Mr. Hormats, Under Secretary Hormats and Assistant Secretary Blake.

Before I start, in addition to welcoming you I just wanted to make a couple of remarks about the East-West Center and some of our activities and let you know what we do.

First of all, just very briefly, we’re an education, research and exchange organization established by the U.S. Congress in 1960. We are in some sense related to the State Department because our funding comes through the Education and Cultural Affairs element of the Department of State. Our headquarters is in Honolulu. And those of us for our sins get sent to Washington in the summer. [Laughter]. That’s the institute. Of course we have a web site so I’d encourage you to go on and look at the number of programs we run between the United States and Asia to build relationships.

The second thing I thing I want to say is that this is a particularly welcome event for us because we’re heavily involved in work on South Asia and U.S.-India relations. Assistant Secretary Blake has spoken before to our South Asia journalist program. As you saw, we have a number of publications on India and on South Asia, a number of visiting fellows here.

Thirdly, I just wanted to say that we’re particularly delighted about this program today because we’re just about to launch, some of you have seen our Asia Matters for America web site and brochure which maps out U.S.-Asia interactions nationally, by state, and by congressional district. We’re just about to launch the India one. So we’re delighted to kick off this event and relate this to how U.S. and India interact not only at the bilateral national level, but by every state and every congressional district across things like trade, investment, students immigration, ethnicity, et cetera, et cetera. So we’re delighted about that prospect.

Finally I want to say how pleased I am to be able to work with Vinod Jain and the U.S.-India World Affairs Institute, and of course our colleagues at the State Department. I thank all of you for your cooperation, and of course the staff here at the East-West Center including Alison Hazell. Vinod, I turn it over to you.

MODERATOR: Good afternoon. My name is Vinod Jain and I head the India-U.S. World Affairs Institute. Some of you know me. It’s my great pleasure to welcome you and welcome Secretary Hormats and Secretary Blake to this event.

Before I introduce them let me just say a couple of words about who we are. We are an autonomous, non-profit organization set up in 2006 to promote positive and better relations between India and the United States. We have done a few quite interesting things including a publication we brought out last year from India-U.S. World Affairs Institute and the University of Maryland where I actually teach, and FICCI. That’s How America Benefits from Economic Engagement with India. It actually has a quote from Secretary Clinton at the back, quoted from the book.

Also we are doing an event in about two weeks at the Asia Society on India-U.S. Economic Engagement.

Let me just introduce our speakers today. Dr. Robert Hormats is the Under Secretary of State for Economic, Energy and Agricultural Affairs at the U.S. Department of State. He was formerly Vice Chairman of Goldman Sachs International where he joined in 1982. He served as Assistant Secretary of State for Economic and Business Affairs from 1981 to 1982, Ambassador and Deputy U.S. Trade Representative from ’79 to ’81, and Senior Deputy Assistant Secretary for Economic and Business Affairs at the Department of State from 1977 to 1979. He also served as a senior staff member for International Economic Affairs on the National Security Council from 1969 to ’77, and he was the senior economic advisor to Dr. Henry Kissinger, General Brent Scowcroft and Dr. Zbigniew Brzezinski. Formerly a visiting lecturer at Princeton, he has also served on the Board of Visitors of the Fletcher School of Law and Diplomacy and the Dean’s Council of the John F. Kennedy School of Government at Harvard. Mr. Hormats received a BA in Economics and Political Science from Tufts in 1965. He earned an MA in 1967 and a PhD in International Economics in 1970 from the Fletcher School of Law and Diplomacy.

Ambassador Blake is Assistant Secretary of State for South and Central Asian Affairs at the U.S. Department of State. He entered the Foreign Service in 1985 and is a career Foreign Service Officer. He has served at American embassies in Tunisia, Algeria, Nigeria and Egypt -- so these are hot spots right now. [Laughter]. And also had a number of positions at the State Department in Washington, D.C. including Senior Desk Officer for Turkey, Deputy Executive Secretary and Executive Assistant to the Under Secretary for Political Affairs. Ambassador Blake served as Deputy Chief of Mission at the U.S. Mission in New Delhi from 2003 to 2006, and as Ambassador to Sri Lanka and Maldives from 2006 to mid-2009. Mr. Blake earned a BA from Harvard College in 1980 and an MA in International Relations from Johns Hopkins School of Advanced International Studies Studies. Welcome.

UNDER SECRETARY HORMATS: Thank you very much, Vinod, for your very kind introduction and thank you also for this terrific book. I’m looking forward to reading it. I know a lot of hard work went into it and I think it will be very useful in preparation for our visit to India which is coming up in a very short period of time.

I also want to thank all of you for coming tonight. I’m honored to join leaders of the Indian-American community and have the opportunity to discuss U.S.-Indian relations and our upcoming Strategic Dialogue meeting.

I’m also very pleased to appear here tonight together with my very good friend and great colleague Ambassador Bob Blake. We work together very closely and I have admired his leadership and his skills and his commitment to relations in the region and particularly to Indian-American relations which he has been a champion of and has devoted a lot of his time and energy to.

I also want to particularly mention Tezi Schaeffer. Tezi and I went to India, I guess it was 30 years ago or something like that. [Laughter]. For what was the sort of earlier version of the Strategic Dialogue. It was called the Bilateral Commission, something like that. Anyway, I can still remember our terrific trip together years ago.

I also want to thank the East-West Center and the India-U.S. World Affairs Institute for co-hosting this very important event. By helping to facilitate dialogue between policymakers, business leaders and community leaders, you play a very significant role in advancing common understanding and cooperation between our two countries and our communities.

Indeed, engaging with India’s very highly accomplished Diaspora is a key priority of the Department of State. Secretary Clinton’s vision for the 21st Century, one of the things that is critically important to the statecraft that she has been leading, is connecting with communities and the United States and abroad and she believes this is essential to developing and sustaining long term partnerships. So this kind of event and the kind of cooperation that you foster is very much a part of person-to-person, community-to-community, business-to-business 21st Century diplomacy and statecraft. I’ll talk a little bit more about this a bit later.

The importance that Ambassador Blake and I attach to maintaining close ties with India and to all of you who have helped build the foundation upon which our government-to-government, business-to-business and community-to-community relationships rest is a particularly important one, so it is highly appropriate today that we honor the contributions of Indian-Americans in helping to advance U.S.-Indian relations.

In shaping this partnership agenda with India our governments are challenged to keep up with the breathtaking growth and the ties of people-to-people and business-to-business relations. We as governments sometimes are not in the lead in this process. Sometimes, indeed many times, what we do is led by the business community and the Indian-American communities and the kind of work you do. This book is a good example because it gives us a very good opportunity to understand the richness of the economic ties and I think it helps the American people to understand the enormous stakes we have in India. This kind of information is very valuable, so we’re deeply indebted to you for providing this and for the kind of links that you have forged with Americans and between Americans and Indians in this group and in others.

In my role in overseeing economic affairs of the State Department I can personally attest to the fact that private sector and business ties are one of the main drivers of the very dynamic U.S.-Indian relationship.

I can also personally attest to how incredibly far our relationship and our partnership have progressed over the years. I think those of us who have been working on India for a number of years are really not only pleased but enthusiastic about how far the relationship has come over the course of the last couple of decades, and we see enormous possibilities for the future, and one of the reasons we’re working together on this trip and on many other things is that we see enormous potential, and that potential really fills us with a great deal of enthusiasm.

I’d like to begin before I get into the details of what I would like to say, by providing a few personal reflections.

My ties to India go back a long way, to the 1960s, even before Tezi and I went there, when as a grad student I and a few friends traveled throughout India for a month on buses, on trains, a variety of modes of transportation. It was a wonderful way, particularly when you’re a grad student in your twenties, to see India in all its various dimensions. We went from Delhi down to Mumbai, to Trivandrum, Hyderabad, Madras, C Mahabalipuram, and all the way up to the northern part of India to Kolkata in Eastern India. So we had a great opportunity to see a lot of India from the tops of buses and various parts of trains. [Laughter]. It was a great way to meet Indians and see India and get a sense of the India you don’t see when you just fly into Mumbai or New Delhi.

Another link goes back several years later. By coincidence I was introduced to a young professor who had studied at Oxford and Cambridge but was at the time teaching at the University of Delhi. He was visiting the United States. We had a mutual friend who lived on R Street here and we ended up, because it snowed that night, sleeping on cots in the basement of this friend. He was about our age. That friend became a lifelong friend indeed, this professor from Delhi, and his name was Manmohan Singh. [Laughter]. So if you want to sleep in the basement with friends, you can meet very good friends and people who you will see the rest of your lives, so it was a very nice experience for both of us and I’ve had the chance to stay at his house several times in Delhi when he was Finance Minister, and head of the Reserve Bank of India. So there are a lot of very personal memories for me in my trips through India and the various people I’ve met over the last several decades.

Nearly 20 months ago President Obama and Prime Minister Manmohan Singh met here in Washington to open a new chapter in relations between our two great nations -- the world’s oldest and largest democracies.

The two leaders emphasized our countries’ shared values. pluralism, tolerance, openness and respect for fundamental freedoms and for human rights. They noted how these values are increasingly important for securing global security and sustainability.

In their joint statement President Obama and Prime Minister Singh resolved, and I quote, “To harness the shared strengths and to expand U.S.-Indian global partnership for the benefit of their countries, for peace, stability and prosperity in Asia, and for the betterment of the world.”

President Obama’s trip to India last November produced another watershed moment in our rich ties. It demonstrated once again that a partnership holds benefits for both of our countries as well as for the world.

Our two nations are now cooperating on nearly every important challenge of our times, from counter-terrorism to non-proliferation; from economic growth to reconstruction in Afghanistan; from food security to economic security. We value India as an important partner in the G20 and we see India as an important partner in addressing the great challenges that both of our countries and indeed the world faces in the 21st Century.

To further strengthen our already strong cooperation, Secretary Clinton will be traveling to India next week for our second Strategic Dialogue. During her trip to India Secretary Clinton will conduct high level government-to-government meetings in Delhi and she will also visit Chennai. This will mark the first visit by a serving U.S. Secretary of State to Chennai which has emerged as a hub for trade, investment and people-to-people engagement that is driving the U.S.-Indian relationship.

I am also eager to get back to Chennai, one of the cities I visited on my bus trip throughout India. Not only because I was there before, but also because I had a particularly pleasant experience at the nearby ruins of Mahabalipuram. I’m not sure whether she’s going to get there or not, but I hope she does and if she doesn’t I’m going to try to wake up very early one morning before she wakes up and go there because it is really one of the spectacular things not only in India but really in the world.

The Secretary and her counterpart, Indian Minister for External Affairs, Minister Krishna, launched their dialogue in 2009. Its goal is to provide a framework and strategic direction for the huge range of bilateral government-to-government activity we now have underway between our two countries.

As evidence of the truly whole-of-government character of our partnership with India, Assistant Secretary Blake, myself, and a host of other U.S. government officials will be joining the Secretary in India next week, and we’re bringing a lot of very top people from the Export-Import Bank, from OPIC, from a whole range of agencies, Department of Energy, many agencies. So this demonstrates not only the leadership of Secretary Clinton and Assistant Secretary Blake who have really been the people who have been organizing and making this happen, but a lot of other agencies are very eager to participate as well.

I won’t attempt to describe all 21 dialogues and working groups that our two Ministers oversee -- Bob knows them all and can repeat them word for word. [Laughter]. That would last a very long time. But I do want to highlight some of the accomplishments over the last year and preview the great potential of our partnership over coming years. I’ll just confine myself to a very few of the many issues that we’re going to be discussing.

One issue is trade. Our robust commercial relationship provides an example of how our strong and growing people-to-people ties complement and in fact are often well out in front of our government efforts.

The U.S. and India share not only common values and interests, but also common innovation-based cultures focused on cutting edge research and dynamic entrepreneurship. We believe in the free flow of ideas, information, and creative juices. We thrive on freedom of the press and the robust interplay of diverse views.

Given that we share strong cultures of innovation, risk-taking and creative thinking, the potential for increased U.S.-Indian scientific and business collaboration is enormous. In fact our two countries already work together in a wide range of areas resulting in enhanced trade and investment and mutual job creation. Trade between the U.S. and India has doubled twice in the past ten years. It continues to grow and drive our economic partnership.

In 2010 two-way trade was up almost 30 percent from the year before. In Delhi and Chennai we will consider ways to further expand these numbers.

Indian foreign direct investment in the United States was $5.5 billion at the end of 2009, growing at approximately 35 percent between 2005 and 2009, making India the seventh largest growing source of FDI in the United States. We welcome such investment, we welcome more and more of it, and we will also discuss this while we are in India.

It is unfortunate that some economic barriers continue to make it hard for U.S. exports to gain access to certain portions of India’s markets, especially in agricultural goods. Restrictions in retail, insurance, defense and other key areas continue to limit the expansion of American firms and U.S. and Indian firm partnerships in India. We would like to see more of those partnerships. We will also discuss these topics during our trip.

We must encourage and recognize the benefits of market openings that will allow trade and investment between our two countries to grow and to thrive to the mutual benefit of both.

Let me also talk a bit about defense. Another aspect of our trade includes defense deals. India has embarked upon a military modernization program. It is expected to spend more than $35 billion over the next five years on defense acquisitions. Despite one recent disappointment we are pleased that India continues to look to U.S. suppliers to facilitate its defense modernization. U.S. firms have already won almost $8 billion in defense sales in the past four years including the purchase by the Indian Air Force of ten Boeing C-17 airlifters, transfer of the former USS Trenton to the Indian Navy, the Indian Air Force’s purchase of six C-130J aircraft the first of which arrived on time and under budget in February, and the purchase of eight P-8 long range maritime patrol aircraft.

Our defense cooperation complements the ongoing state of complex joint exercises that continue to demonstrate the constructive ways American and Indian militaries can work together.

Let me now turn to the issue of visas. U.S. visa issuances to Indians are another good indicator of our thriving relationships. For the past four years Indians have received about half of all H1B visas issued worldwide, and more than 44 percent of all L1 intra-company transfer visas. 650,000 Indians traveled to the United States in 2010, an 18 percent increase over the year 2009. And of course India has historically been one of the largest sources of international students in our colleges and our universities with over 100,000 students coming here to study last year.

We welcome these talented and dynamic students, a source of talent, energy and innovation in our universities and many of them work in the United States after their university years and we welcome the energy and the entrepreneurialism they bring to our private sector as well.

Mirroring the Indian enthusiasm for the United States, we would like to see more Americans go to India for tourism, business trips and exchanges. I particularly hope we can exceed the 2,700 Americans who studied in India last year.

The U.S.-India Higher Education Summit planned for this fall in Washington will bring hundreds of educational institutes together from both of our countries. The Summit is aimed at fostering American students’ participation in India’s educational system and at the growing number of Indians studying in the United States as well.

I also hope the Diaspora will continue its work in helping to strengthen U.S.-India educational cooperation.

Let me now turn to the very interesting subject of innovation. In a partnership marked by vigorous, knowledge-based systems, the potential for cooperation on innovation, science and technology and other aspects of technological interaction is enormous. Governments can provide the right frameworks and policies to support this enormous and growing potential and we’re doing just that.

For example, the National Oceanic and Atmospheric Administration just established what we call a Monsoon Desk, helping bring monsoon forecasting data to India’s farmers in cooperation with the Indian Space Research Organization, ISRO. We also have established a new public/private partnership, the Science and Technology Endowment Fund which will award $2-2.5 million per year to promising technology projects that produce material benefits for both of our countries. And under our partnership to advance clean energy we have established a Joint Clean Energy Research and Development Center that will mobilize up to $100 million in public and private sector funds. This new Energy Research Initiative is the most innovative joint clean energy undertaking we have done with any country, ever.

Many of these subjects require public/private partnership approaches. Diaspora communities in particular can leverage their very unique on-the-ground insights and expertise to help facilitate such partnerships. Indeed, by promoting linkages among entrepreneurs, scientists, professors, business leaders and others, the United States and India can work together through collaborative, innovative partnerships to help find solutions to some of the world’s most pressing problems.

I also want to take a moment to recognize India’s important regional and global leadership. Prime Minister Singh’s recent visit to Kabul underscored India’s strong initiative to support international efforts to rebuild a secure, stable Afghanistan. The Prime Minister raised India’s assistance pledge by $500 million to a total of $2 billion. India has assisted with critical infrastructure such as power stations and the parliament building and small development projects like health care facilities and water wells.

We also greatly appreciated the Prime Minister’s public support of Afghan-led reconciliation efforts. Prime Minister Singh likewise has also shown leadership and courage in advancing the current thaw in Indian-Pakistan relations. Following the cricket diplomacy initiative launched by Prime Ministers from both sides the Commerce Secretaries of the two countries met in Islamabad and announced commitments to enhance trade and commercial ties.

India’s economic rise presents a huge opportunity for Pakistan, a bilateral breakthrough could provide a catalyst for wider regional economic integration in South and Central Asia. The pace of economic integration in the Asia Pacific region as a whole over the last two decades has been unprecedented and should serve as an example for other regions. It should, and I believe it can, be replicated in South Asia as well. Hundreds of millions of people would benefit from such increased collaboration.

Our co-host for tonight, the East-West Center, which focuses on promoting stable and prosperous Asia Pacific region relationships understands this well and has some very creative ideas for further progress in this area.

Let me now turn to one additional subject, the U.S.-Indian partnership and people-to-people ties.

The global strategic partnership between the United States and India is founded on shared values and exceptional people-to-people ties, but we must remember that this is a long-term project. Neither country can take this relationship for granted. We need to work together to ensure that the spirit of President Obama and Prime Minister Singh’s November 2009 Summit is carried forward through concrete steps. It is important to build the political support in Washington and Delhi as well as in Mumbai and Manhattan to take this relationship further. We need to think more ambitiously about what we can achieve and where our partnership will go over the rest of the 21st Century.

India is on track to have the largest population on the planet by 2030 and it might have the largest economy by 2050. Economic growth, development, innovation and its overall growth balance as opposed to some other countries where they have uneven balance, India has a very balanced growth model, will come to define the rise of India and its growing influence in the broader Asian region and globally.

India is a rising giant whose influence is being felt not only in the Indian Ocean but in the Americas, in Africa, in the Middle East, and in Central Asia. Its rise is fueled by a young, optimistic, dynamic, educated population and this is going to be one of the great stories of our era.

Our strategic relationship can make the world more secure and more democratic while our commercial partnership can produce novel goods and services, cures for life-threatening diseases and new sources of clean energy among other things. It can create millions of new jobs in each of our countries. Together our people, our businesses, our governments, our scientists and our diverse intertwined knowledge-based societies will write the next chapter in the U.S.-India partnership. Together we can help shape one of the defining global partnerships of the 21st Century.

Thank you very much.

[Applause].

Before I turn the floor over to my friend and colleague Assistant Secretary Bob Blake for the Q&A, I would like to introduce a very special video message from a very special person, Secretary of State Hillary Clinton. The Secretary recorded this message to personally acknowledge the importance to the U.S.-India Strategic Dialogue, the significance of our bilateral relationship, and the uniquely important role of the Diaspora in advancing both, and to thank you very much for your participation in this very important project.

Now I’ll turn the floor over to Secretary Clinton.

SECRETARY CLINTON: [Recorded]. Good evening, everyone. I am delighted to send greetings to each of you as you come together to find new ways to advance our cooperation with the Indian Diaspora community.

Indian-Americans have contributed so much to the fabric of our society. We know that you are scholars and business leaders, politicians and artists, musicians, academics, physicians, lawyers, and so much more. And you have helped to cement the bonds between India and the United States.

Next week I will be in New Delhi for the second U.S.-India Strategic Dialogue where we will discuss new ways to advance our goals on a variety of important issues. We are working together to create economic opportunity for people, to fight terrorism and violent extremism, to halt the spread of nuclear weapons. We are addressing climate change and giving more people and nations a pathway out of poverty.

But we know that governments alone cannot solve all of today’s problems. That’s why we need your ideas and we need your energy and your commitment to help us meet some of the most complicated and pressing challenges of our times.

You and our Diaspora community will help write the next chapter of the U.S.-India partnership.

I want to thank the Indian-American community and everyone here tonight for your efforts in helping to bring our two great nations, two great democracies even closer together. And for contributing in your own ways to a brighter future for all of our people.

Thank you very much. [Full Text and Video available at http://www.state.gov/secretary/20092013clinton/rm/2011/07/168004.htm]

[Applause].

ASSISTANT SECRETARY BLAKE: Since I’m an Assistant Secretary and he’s an Under Secretary my notes are very much shorter. [Laughter].

I want to just begin by thanking Under Secretary Hormats for coming. When I suggested that he consider coming he instantly agreed to do that. I think that’s very typical of his always generous willingness to make use of his time to help advance our partnership, so I really want to thank him. I’m so glad that he told the anecdote about Manmohan Singh. He’s been regaling us with many others in the course of our last two years. He’s got some other stories, but you’ll have to get them on another occasion.

UNDER SECRETARY HORMATS: When we’re not on television. [Laughter].

ASSISTANT SECRETARY BLAKE: I also just want to thank him, he’s too modest to ever say it, but he’s actually been a real leader in developing our economic partnership. He’s the head of our Agricultural Dialogue which has really made some quite important steps forward and again I think we’ll be talking more about that in the course of the Strategic Dialogue.

So again, a very warm thanks to Bob for all that you have done on behalf of this relationship.

UNDER SECRETARY HORMATS: Thank you.

ASSISTANT SECRETARY BLAKE: I just wanted to say a very few words about the Strategic Dialogue itself and some of the things that we’re going to be focusing on, and then we’ll open it up to questions.

I think what you’re going to find is we’re going to focus on a combination of bilateral and strategic issues during Secretary Clinton’s visit. She’ll have one day in Delhi which will be comprised mostly of government-to-government meetings and then one day, as Under Secretary Hormats said, down in Chennai where we’ll emphasize much more the people-to-people and business and other ties that we have between our two countries.

In our government-to-government talks, on the strategic side she’s going to focus primarily on where we want to take this relationship forward. I think that’s primarily in India’s growing role in Asia and our ability to try to work more closely with India. And secondly, India in the wider region around particularly in Afghanistan and our hopes that we can significantly expand regional economic integration for the benefit not only of Afghanistan, but also Pakistan and India. India being such an important part of that future vision because of the tremendous growth that Under Secretary Hormats outlined.

In terms of some of the bilateral progress, I think we’re going to be focusing mostly on the future and where do we take this relationship next. One area of course that will be a continued focus always will be counter-terrorism so you can expect some announcements there. Our Deputy Secretary for Homeland Security Lute will be part of the delegation for these meetings. Another one will be to continue of course the sustained economic progress. Under Secretary Hormats talked extensively about all the current efforts that we have underway. Of course we want to see sort of the next generation of economic reforms in India that will help to sustain that progress and help India to become the third largest economy in the world, but also a hugely important market for the United States, but also equally important this synergy that Under Secretary Hormats talked about between our scientists, our businesses and our innovators. We see so many different opportunities to work together.

He mentioned one of them which is energy. Our Deputy Secretary Dan Poneman of Energy will be along as well, and there are so many exciting opportunities in the energy field, and again, a lot of that will be announced in the course of the dialogue. A very important piece of that, of course, also is the nuclear piece of this where again, American companies are very excited about the civil nuclear energy cooperation possibilities. India, as you know, during the President’s visit last year committed to ratifying the Convention on Supplementary Compensation, the big nuclear liability law, so I expect that will be another subject of discussion.

Last but not least of course, the people-to-people part that Under Secretary Hormats described so eloquently. We’ll have several new initiatives to announce in that respect not only on education, but also in some other ways that we can encourage continued growth of Indians coming to the United States, but also more Americans going to India. I just wanted to in that respect talk a little bit about a very new and important thing that we’re going to be doing which is subnational engagement.

We have a wonderful dynamic leader that the Secretary hired by the name of -- who is here. Rita Jo Lewis. She’s right there in the back in blue. If I can speak for you, Reta, she’s the Special Representative for Global Intergovernmental Affairs. Essentially what that means is that Rita’s going to be very involved in promoting subnational engagements: state-to-state engagement, city-to-city engagement and university-to-university engagement and so forth. This is I think going to be a real growth area of our relations over the next several years. I’m so happy that Rita Joe is here, but even more happy that she’s going to really be launching this.

We have similar initiatives underway in several other countries like Brazil, and it’s been a great success. Rita, thank you so much for what you’re doing, but also thanks for coming tonight.

To conclude, I also wanted to mention again what the Secretary said which is how grateful we all are for all of the contributions the Indian Diaspora here in the United States make. I have a senior advisor who may also be here, Mitul Desai. Mitul and I are working extremely hard -- there he is in the back -- to figure out ways where we can put together a coalition and an alliance of groups to make it easier for Indians in the Diaspora here and other Diaspora communities as well, to make contributions to development and all the other things that are important things we’re working on.

We’re going to try to develop tax deductible mechanisms that will allow for a lot of these people-to-people things that we talked about. We’re not going to announce it at the Strategic Dialogue, but we do believe there are some quite important opportunities there. Once we get this in place I think it’s going to be a really tremendous way to match and really publicize a lot of the terrific opportunities that are taking place in India. We will be able to do due diligence on them, to be able to assure donors in the United States that these are in fact worthy projects that they can contribute to and that they can be assured that the money is going to the right place without any fears of diversion of money or corruption or anything like that.

I’m very very excited about this, and it’s just one small piece of our wider effort to reach out to all of the Diaspora community.

Again, I’d just like to thank all of you for coming. I’d like to thank our host tonight for putting this on, and we’d be glad to take your questions or comments.

Thank you.

[Applause].

QUESTION: Let me ask you the same question which I asked today at the State Department briefing.

ASSISTANT SECRETARY BLAKE: Uh oh. [Laughter]. I hope we say the same thing in response. [Laughter].

QUESTION: In a different way, sir. First of all, President Obama when he went to India he was speaking at the U.S.-India Business Council event in Mumbai, and then we had a function here at the U.S. Business Council just recently and Ministers came from India. And then just very recently at the Treasury Department the Finance Minister of India and also of course Treasury Secretary Geithner among others, a big delegation.

My question is, now the Secretary’s announcement today at the State Department, she is visiting India. Where do we go from here as per a U.S.-India relations are concerned in everything? That’s maybe for Secretary Robert Blake, but Mr. Secretary for you, as energy is concerned, U.S.-India energy relations, innovation cannot come without electricity in India. There is electricity lacking in India and we’ve been talking for many many years. First U.S.-India civil nuclear agreement is [inaudible], still trucks are not rolling from the U.S. to India, within India as far as this relation is concerned.

What’s holding up [inaudible] to bring energy in India so then both countries can grow in development.

Thank you, sir.

ASSISTANT SECRETARY BLAKE: I would say first of all, I think I outlined already in my public remarks what we’re going to be doing so I won’t repeat that. But on the energy side I would just say that nothing’s holding it up. As Under Secretary Hormats said in his remarks, we’re moving ahead pretty smartly on a whole range of things. Not just on clean energy and the development partnership that he described, but things like shale gas development. That’s been an enormous development here in the United States over the last several years, so we’re working now with the U.S. Geological Survey to help explore the options in India and we believe there are some quite significant possibilities there so we want to help India to determine what those are and then hopefully allow American companies to work with their Indian counterparts to develop some of those.

We also have OPIC, the Overseas Private Investment Corporation is going to be announcing some very important new initiatives in the renewable energy field, in solar, and basically bringing private equity and their own resources to bear to encourage more investment in this area.

So we’re doing what government does best which is to create the new parameters to allow the private sectors to succeed and offering some very modest incentives on our part that can then be capitalized by the private sector. So I think you’re going to see quite a lot of new growth in this area. Again, I’m so happy that Dan Poneman of the Department of Energy is going to be leading the delegation on behalf of Secretary Chu.

UNDER SECRETARY HORMATS: I’d just underscore what Assistant Secretary Blake said, that we think we are moving ahead on a lot of fronts. The question of solar, we think there is more opportunity there. And we combine American and Indian scientific and technological capabilities there. We think this can be an enormously important area.

The shale is something that we’re advancing on here quite rapidly as you know with the fracking technology. The U.S. Geological Survey can determine whether India’s shale will allow fracking. Not all shale is susceptible to fracking technology as you probably know, and the U.S. Geological Survey is very good at determining whether it is or isn’t.

We’ve made progress on the nuclear front and our hope is that we can continue to make progress on that front. A few things need to be clarified but we hope that is an interesting opportunity for India and for American companies. So we see a lot of cooperation between our two countries on this topic.

QUESTION: This afternoon I attended a very important meeting for the United States and the U.S. Chamber of Commerce. The whole idea in the mind of everybody not in the meetings but the others is economy and jobs. And unless that is solved or something is done, [inaudible] said that he mentioned two countries, China and India. I would like to put a specific question, in what way India can help in creating jobs in America? They are talking so many economic areas, but I think jobs is the main thing which his going to be an engine of economic growth for the U.S., so specifically.

ASSISTANT SECRETARY BLAKE: I have one question for you. Did Rita Joe put you up to this? [Laughter].

I joke, because one of our focuses is in fact exactly that, is to encourage Indian investment. First of all let me say that India’s already doing a lot. As the Under Secretary said they’re the seventh fastest growing source of foreign investment into the United States. I think it’s now $5.5 billion was the most recent figure that I saw, so there’s quite a lot of important work that’s already going on.

This study also talks about a lot of the mergers and acquisitions that have taken place. I think it’s more than $20 billion. Many of them were companies that were often failing. So a little bit of injection of capital will help to increase jobs in that sense as well, so I think that’s an important benefit to note.

The trade is, as I said, expanding very rapidly. It’s doubled twice over the last seven years and 30 percent just in the last several months, so things are booming. But nonetheless, there’s always more we can do. We’re all looking forward to this next generation of reforms inside India. I think that will help a lot.

But the other area that we want to work with Reta Joe Lewis on is getting more American governors and more American mayors and others to come out to India and explore the possibilities. They too now are very interested in attracting more trade and investment from India and it shouldn’t just be to Delhi. They should be going to Andhra Pradesh, they should be going to Chennai, they should be going to Gujarat because that’s where a lot of the real poles of growth are in India now.

That’s why we want to take this subnational engagement forward.

UNDER SECRETARY HORMATS: I think those are the right ones. As you know in the past we’ve explored the idea of a Bilateral Investment Treaty. There are a lot of technical issues related to Bilateral Investment Treaties that need to be discussed but we’re happy to do those too. We don’t have a model yet but we’re working on that within the executive branch and the Congress, but there are a number of technical issues that can be discussed and there are a number of ways we think we can help Indian and American companies invest in one another’s countries. We think those kinds of conversations are very useful as Assistant Secretary Blake has said. So that would be very important.

We want to see mutual job creation. We want to see job creation in both countries. And Indian investment in the U.S. has been an important source of jobs. We’re very welcoming. The President just made a statement a few weeks ago welcoming foreign investment in the U.S. The Department of Commerce has taken an initiative to welcome investment in the U.S. So we think that can be very helpful for Indian-American cooperation.

So those are the various areas. But also the science and technological cooperation that can produce enormous technological breakthroughs. And they’re not at one another’s expense. I think one thing the press tends to see this as sort of a zero sum game. We don’t see it as a zero sum game. We see it as an opportunity for both of our countries to cooperate.

One interesting example is automobiles. India is a huge seller of automobiles. It’s relatively small automobiles. Indian companies work with American companies, Ford and others. Where do they sell them? They don’t sell back in the United States, they sell in other emerging economies. So American companies benefit, Indian companies benefit, and the consumers who get these cars that are sold in India benefit. So there are lots of areas where it’s a win/win situation. I think it’s important to see that and not the sort of stereotypical view is I win/you lose, you win/I lose. We can all do better.

And then scientific cooperation is enormous. India’s scientific capabilities in medicine, for instance. Remarkable. New technologies. American companies sell diagnostic equipment to India. India has very good clinics. India partners with American companies on a whole range of medical diagnostic and surgical equipment, things like that. There are a wide range of areas where we can create jobs together.

ASSISTANT SECRETARY BLAKE: Since we took Tezi’s name in vain, we should probably give her a first right of response.

UNDER SECRETARY HORMATS: I really have my trepidations. [Laughter].

QUESTION: I’ll try to do justice to your trepidations -- [Laughter].

UNDER SECRETARY HORMATS: I’m sure you will.

QUESTION:

Actually I wanted to ask both of you to follow up a bit on two thoughts that Ambassador Blake threw into the debate.

The first is the question of India’s role in Asia and our cooperation there. What do you see as the priority areas? And do you see any likely change in the composition of the institutional structure?

The second was the word economic integration. Do you see a role for the United States in encouraging economic integration within South Asia, or are we talking about greater economic integration between the United States and India? Some brave souls have talked about a free trade area at some point down the road.

ASSISTANT SECRETARY BLAKE: Let me take a first crack at those.

In terms of the role in Asia, I think what we’d like to do is just talk more about integrating India into all of the Asian institutions, particularly institutions like the East Asia Summit, but others as well. As all of you know, India has had a Look East policy for many years but has also actively pursued trade and defense and other ties with many of the East Asian countries.

We have our own very strong ties with those countries. We’re just starting a trilateral dialogue for the first time between the United States and India and Japan. We’re open to considering other such trilateral or even quadrilateral initiatives of some sort. I think we’ll probably talk about that.

Again, we think we have many many common interests in Asia that we should try to build on and again, we think it’s very much in our interest and I think all of the East Asian countries think it’s very much in their interest to have India more fully integrated into all of these institutions. So it’s a win/win.

On the economic integration, that’s a very very important question. I think I would put it in the context of Afghanistan’s development where as all of you know, Afghanistan is now engaged in this very important process of transition that we hope will culminate at the end of 2014 with the withdrawal of most foreign troops and Afghanistan assuming responsibility for its security. But there’s an equally important economic transition that’s going to have to take place. Not necessarily by that date but over time, where Afghanistan will be able to stand on its own feet. But to do so we’re going to have to help them to develop their infrastructure, not just domestically, the railroads and other infrastructure, electricity such as what India is already providing so much of, but also to integrate them more fully into both Central Asia and to South Asia. There are a number of important projects that are already underway like the Turkmenistan-Afghanistan-Pakistan-India pipeline for which there’s been quite a lot of progress over the last several months. That would be kind of real, concrete projects linking up these regions.

Similarly the Afghanistan/Pakistan Transit Trade Agreement. President Karzai was recently in Pakistan and he and President Zardari agreed to implement the Afghanistan/Pakistan Transit Trade Agreement. And just as important, they agreed to extend it to Central Asia now which is important.

I think over time we’ve been very encouraged by the progress as Under Secretary Hormats said of the progress between the Commerce Secretaries of India and Pakistan. If that process continues to develop over time one can see a vision of transit trade encompassing India as well, and Kazakhstan trucks traveling through all of Central Asia, through Afghanistan and Pakistan and into India and even beyond. That would be a truly game-changing opportunity. I think it would also be a game-changing opportunity for India. They would then have direct access to Central Asia. They’d be able to invest more both in Central Asia and Afghanistan. And that would have enormously stabilizing and positive effect on that region.

So that’s what I was really talking about on the economic integration context.

QUESTION: I have one question. That is when we talk about the Strategic Dialogue Dr. Manmohan Singh and President Obama a couple of years ago discussed the concept of Knowledge Initiative. Now the spirit of the Knowledge Initiative somehow or the other is drifting into a fragmented kind of connections in terms of technology, scientists and research on the other side education. But I have done some study regarding United States, Japan and India. What we have found in terms of the national competitiveness, that the root cause of America’s growth and prosperity is its whole knowledge infrastructure, what I call CKI. The CKI, unless that kind of an agreement is made between India and United States to inculcate all the components in knowledge engagement, we are missing some aspect of this linking.

For example, just an example. There are other aspects. Libraries. In the United States if you really look at libraries, they are part of the whole knowledge infrastructure. So if you look at, if you want to expand the capacity for research you need level increase. So research capacity or knowledge capacity we have to proceed with and I think Dr. Manmohan Singh’s knowledge initiative had that spirit behind it, but somewhere or the other it has been drifted into education and other fragmented situations,.

And we talk about economic engagement. It can also be the part of economic engagement. United States had economic engagement with many countries for a long period of time. The question is the knowledge engagement. Can economic engagement be expanded to the concept of knowledge engagement? If you look at it from that perspective I think it will help both the countries, enhancing the capacity to produce, disseminate, evaluate and assess the knowledge aspect.

UNDER SECRETARY HORMATS: You make some very important points and let me just describe what we’re I think trying to do and what I see evolving. I think the one thing we know is that the central elements of the knowledge exchange or the core knowledge development that you speak of really is going to have to be done primarily by the private sector, not by the government. The government can set a very positive tone and we think both governments have done so with the statements the Prime Minister has made and the statements the President has made and the kind of interaction that we have between government researchers.

One example that I touched on and we’ve worked on very closely together is to use American science, I mentioned the Monsoon Desk, which is to use American space science along with Indian agronomists to transfer information from satellites, weather forecasts, to benefit the average Indian citizen farmer.

So what we need to do more and more of, and I think is going on by sort of a natural sort of viral kind of interaction, is to have American scientists and Indian scientists work together. This comes as a result of exchanges in universities. When Indian students study here they get to participate in research in this country. Then they can either stay here or take it back to India. It works when American companies and Indian companies get together and do tie-ups of various types.

So basically what we’re really looking at here, as you correctly pointed out, it’s not just education. Education is part of it but it really has to be a rich dialogue in the private sector. A rich dialogue of research and development in universities and among scientists. I think this really is what’s happening.

I went to school in Boston and every year I go up and give a talk at MIT. You look at the number of students out there. These are not courses in physics, these are courses in economics. The number of students who were Indian has just grown exponentially.

I can only imagine if it’s that way in economics it’s probably double that in physics and science and nuclear engineering labs at MIT and CalTech and Carnegie and other places of that sort.

So I think that education is part of it, but what’s even more important is the entrepreneurialism that goes on, the fact that these people who are educated here in many cases stay here and work for American companies. That is where a lot of the innovation is taking place.

I’ll just give one example, but there are many. The cell phone industry in the United States, you go out and it’s centered mostly in San Diego. You look at the people who founded those companies, or who have been the chief engineers of those companies, or have financed those companies, a huge number are Indians. They don’t do this because the government tells them to do it. They do it because they’re smart, they’re innovative and they’re very entrepreneurial. I think you see more and more of this going on. My view is if the government creates the right environment and sponsors some research and the government as we’ve both mentioned is sponsoring a considerable amount of research, but the research is very small compared to the huge output, and I can assure you that both the Prime Minister of India and the President of the United States both understand this and are going to do this.

One of the things we’re hoping the Secretary will do when she goes to Chennai is go to a center that engages in research. This is private sector. There are centers, when I was there a little while ago I went up to Amritsar and went to Khalsa College. You see a lot of interaction between people there and Americans.

So I think when you add the educational sector, the private sector, the scientific sector, there is a rich opportunity.

And I will say as opposed to some other countries, there’s a trust level about protection of intellectual property that I think is very important. I think one of the key things that will strengthen this further is to make sure that that trust level, that protection of intellectual property remains very high and grows. The one thing that will kill all of this is if there’s distrust on the protection of intellectual property because that’s the way you collaborate. But I’m very positive about this.

I have to leave in a minute.

ASSISTANT SECRETARY BLAKE: One more question.

QUESTION: While we are here talking about threatening India and U.S. relationship, at present U.S. and Pakistan relationship at the lowest level since [inaudible], and we still are friendly with Pakistan, spending billions of dollars. We don’t have an option, and we are trying other alternatives. It sounds ironic that befriending India and arming Pakistan. We’re not [inaudible] policy, but that’s my question.

UNDER SECRETARY HORMATS: That’s very appropriate since this is a good opportunity for Assistant Secretary Blake I will leave knowing that the answer will be a good one.

ASSISTANT SECRETARY BLAKE: Thank you, Bob.

[Applause].

ASSISTANT SECRETARY BLAKE: Thank you for that question. Let me just say as the Secretary and others have said, our relations with Pakistan are quite complicated these days, particularly after the action against Osama bin Laden. But the fact remains as the President said several times during his visit to India, it’s very much in our interest and it’s very much in the interest of India to continue to engage Pakistan. Pakistan faces innumerable challenges now between the economic situation, widespread energy and electricity shortages, the security challenges that it faces. It’s suffered more than any other country in terms of terrorism. So do we want Pakistan to do more? Certainly. But I would say also that it’s very much in our interest to work with them, and I would steer you away from emphasizing too much our military cooperation. If anything has changed under President Obama it’s been our efforts to expand our civilian assistance under the famous Kerry/Lugar/Berman legislation. And I think we have made a sincere and concerted effort to do that and we will continue to do that.

We also, it’s very much in our interest to help Pakistan, give them the resources to fight a counter-insurgency war which we very much want them to do, particularly in the frontier areas with Afghanistan. So as you all know, they’ve been focused for many years on fighting a war against India, not against these kinds of counter-insurgency challenges.

So we need to give them the training, we need to give them the equipment to be able to do that kind of, to fight that kind of war.

Again, I say that without apology. I think that’s a very important thing. I think even the Indians would say that’s something they should do.

I also think -- I don’t want to speak for the Indian government of course, but I do believe that they’ve made a decision that it’s important for them also to engage Pakistan. Let’s remember that Pakistan has not fully met all of the conditions that India established for trying to get relations into a better place. They haven’t, in fact, finished the trial of the Mumbai suspects. They haven’t dismantled a lot of the camps that still exist. And yet India’s made the decision, the correct decision, that it’s important to engage Pakistan.

As a result of that I think there’s been some quite good progress on things like the Commerce Secretary talks. The Home Secretaries have met.

It’s a beginning. I don’t want to overstate this. But I do believe it’s important for that to continue. So I’m sure this will be something we’ll talk about in the course of the Strategic Dialogue because Pakistan is one of the most important countries for us right now, certainly for India as well.

Last question.

QUESTION: I have a question, a two-part question on energy. The first is on what Under Secretary Hormats mentioned on fracking. I think in the U.S. as well there’s widespread evidence available that it damages the water table. Is that any part of the advice you’re giving to India as you take that deal forward?

My second question relates to the nuclear liability law. As you know the bill has been passed. On earlier occasions I believe the U.S.’s view has been it would be left to the commercial negotiations between companies to take that forward. But you mentioned today that it might be part of the discussions.

So my question is, what exactly will you be discussing and does it involve going back to changing the law?

ASSISTANT SECRETARY BLAKE: First on the question of fracking. We are very much aware of the environmental issues that you talked about. It’s a growing domestic issue here in the United States. So we very much want to share not only the best available technology about finding these resources in India, but also some of our best available technology and our experience in how to deal with some of these environmental challenges. It’s very important for India to be aware, to have the complete picture of not only what the opportunities are, but also what some of the risks are.

So yes, certainly we will be sharing that information.

On the nuclear liability legislation, as I’ve said previously from everything we’ve heard from our friends in the Indian government they remain committed to what they said in the Joint Statement during President Obama’s visit. I think nuclear energy remains part of their vision for their energy future. I do expect that they will ratify the Convention on Supplementary Compensation before the end of the year as they committed. I think they will also be working on new legislation to implement their liability law. But in terms of what that contains, obviously I’ve got to refer you to the Indian government. That’s for them to respond to.

But certainly we hope that would be consistent with the CSC.

QUESTION: That’s part of your discussions this time?

ASSISTANT SECRETARY BLAKE: I expect so, yeah.

QUESTION: Thank you very much.

[This is a mobile copy of U.S.-India Strategic Dialogue]