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US reviewing sanctions policy: Rocca

The United States reassured India on Tuesday that efforts were under way to scrap the economic sanctions it imposed in 1998, but took a swipe at the country's "far from optimal" investment climate.

Assistant Secretary of State on South Asian affairs Christina Rocca blended goodwill with criticism in her speech to business leaders in New Delhi on the future of a bilateral relationship, which has blossomed despite India's nuclear tests of 1998.

She took India to task for protectionist trade policies, its investment climate and its failure to provide an effective system for the protection of intellectual property.

But she had good news on the sanctions, which Washington imposed on New Delhi after its nuclear tests, saying India had "a role and a responsibility to play in helping secure stable, peaceful conditions in South Asia and beyond".

"In this connection, as I hardly need to tell you, a review on our sanctions policy is now under way."

"And we will need to work closely with Congress to see how the current situation might be changed. Getting beyond sanctions would do much to deepen the bilateral relationship."

A chorus of officials in the Bush administration have said in recent weeks that sanctions should be dropped -- at least in the case of India if not Pakistan, which was also hit by sanctions after it responded to India with nuclear tests of its own.

At her confirmation hearing in May, Rocca told the Senate that sanctions had, in her opinion, "outlived their usefulness".

The sanctions prevent the sale to India and Pakistan of US nuclear energy equipment, rocket motor technology, supercomputers and military equipment. They also restrict certain companies from doing business in the United States.

CANDID ASSESSMENT

Rocca said the Bush administration was committed to strengthening and intensifying relations with India, and noted that the past few years had seen "the beginning of a transformation" in ties with the world's largest democracy.

"Now is the time to complete that transformation," she said.

Rocca said non-proliferation remained an important goal of US policy, but Washington wanted to broaden its engagement with India on defence to include potential areas of co-operation.

The Clinton administration held several rounds of talks with New Delhi to reconcile its proliferation concerns with India's plans to build a "minimum nuclear deterrent".

But the two sides, once on opposite sides of the Cold War, have moved closer since then and President George W Bush won warm backing from New Delhi for his controversial nuclear vision.

Rocca said the recent summit between India and Pakistan, which ended without even a joint statement because of differences over the Kashmir territorial dispute, was "a good first step".

"The serious and constructive atmosphere of these talks tell me that both sides are committed to resolving their differences, even if this turns out to be a lengthy process".

Turning to India's decade-old drive for economic reform, Rocca had some polite criticism.

"During the past 10 years, India has achieved considerable progress in liberalising its trade policy," she said.

"But, in our candid assessment, the level of protectionism remains too high. This suits some vested interests, I suppose, but clearly impedes overall economic efficiency."

She said the problems clouding India's "entire investment climate" could be summed up with a five-letter word, "Enron".

US energy giant Enron Corp has threatened to walk out of its $2.9-billion Indian Dhabol project due to a row with the authorities over payment defaults and high tariffs.

"I have to emphasise that it will be difficult for international investors to view India favourably until it is resolved, and in a reasonable manner," Rocca said.

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