U.S. Delays Engines to India
NEW DELHI and WASHINGTON - An abrupt halt to work on installing U.S.-made engines in a new class of Indian Navy frigate in January sparked outrage in India.
Indian newspapers decried "Washington's penchant for imposing sanctions and restrictions." Rumors blamed an "over-enthusiastic State Department bureaucrat" and an ominous arms export policy review by the new Obama administration. Unnamed officials suggested that the United States had become an unreliable supplier of goods to the Indian military.
Now officials from both governments say it was all a misunderstanding.
Frank Ruggiero, acting assistant secretary for political-military affairs at the State Department, called it "a fairly large misunderstanding" over licensing requirements.
An Indian Defense Ministry official called it an impasse over a technical clause in Indian defense-procurement procedures.
The problem has been solved, Ruggiero said March 27, stressing there was no review of military sales to India, and none is planned.
The issue will be fully resolved in the next two weeks, the ministry official said.
Work on installing the engines has resumed, said Rick Kennedy, a spokesman for General Electric, which manufactured the engines.
Here's how the three parties explain this peculiar predicament: The Indian Navy is building a new class of frigates, India's first stealthy warships. The first ship, INS Shivalik, which was supposed to begin sea trials this spring, is to be powered by two GE LM2500 gas turbine engines.
The engines, which are used around the world in warships, ferries, supply ships and cruise vessels, can be exported without a license from the U.S. State Department.
But when they are sold for military use, they cannot be installed until the State Department approves a type of license called a "technical assistance agreement," or TAA.
GE did not realize it needed such a license until Jan. 22, Kennedy said. "The law on this is not black and white," but after considerable internal discussion, GE "decided to err on the side of caution." The alternative could mean significant fines, he said.
There was no stop-work dictum from the State Department, Kennedy said.
Ruggiero said that GE applied for a TAA until mid-February and the State Department issued the license March 12.
The wait caused about a two-month delay in engine work on the Shivalik, Kennedy said.
Resentment in India
The delay raised resentment in India, where defense and military officials were already chafing at the strings that come attached to many U.S. arms.
India has resisted End User Monitoring (EUM) agreements, Communications and Information Security memoranda and Logistics Supply Agreements, each of which impose restrictions on what foreign buyers can do with U.S.-made weapons.
None of those agreements apply to the engine deal, a State Department official said.
While Indian national security, defense and military officials have consented to EUM strictures, they bristle at being required to permit the physical inspection of weaponry and equipment supplied by the United States.
Under U.S. law, all nations buying sophisticated American military equipment must agree to various oversight provisions, including seeking Washington's permission before reselling it. Some 90 nations have accepted the conditions.
Indian and U.S. officials have been discussing EUM provisions for three years, but it has come to a head as U.S. contractors start to make inroads into the Indian market. In mid-February, a key U.S. official met with Indian officials at the Aero India show in Bangalore.
But for now, progress appears stalled until a new Indian government is elected May 16.
Alternate Engines?
As the engine installation delay dragged on, some Indian officials vowed to look for other engine suppliers. In the past, Indian warships have been powered by Russian and Ukrainian gas turbines.
A senior Indian Navy official said the U.S. license requirement confirmed Indian suspicions that the United States might not be a reliable supplier for the country's military needs.
But an Indian Defence Ministry official said it is too early to tell whether the engine flap has dented U.S.-Indian defense ties.
One local analyst agreed, noting that Washington had recently green-lighted the sale of jet-powered Boeing P-8I maritime patrol aircraft.
Ruggiero said defense trade relations with India remain good and trade is increasing.
U.S. sales of military items to India amounted to about $1 billion in 2008 and are expected to rise to about $2.5 billion in 2009, he said.
One troublesome deal "should not be treated as a case that might adversely affect the bilateral defense relations," said Deba Mohanty, senior fellow in security studies at the Observer Research Foundation.
"One needs to wait for a while to see the fate of some of the future deals which are in the pipeline," he said.
A Washington-based analyst said the dispute shows that the relationship has entered an interesting new phase.
"How badly does each side need the other, and how far is each willing to go to realize their partnership? [U.S. President] Barack Obama's election adds a new chapter to the maneuvering between the two states, one in which the expectation by the United States will be on India to meet it more than halfway," said Dhruva Jaishankar, a South Asian affairs analyst with the Brookings Institution.
Three of the 12 planned Shivalik frigates are under construction at Mazagon. The first was originally planned for launch this month. They are expected to cost $300 million each. They will carry land-attack Klub cruise missiles.
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