[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                        THE REBALANCE TO ASIA: 
                    WHY SOUTH ASIA MATTERS (PART II)

=======================================================================


                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 13, 2013

                               __________

                            Serial No. 113-7

                               __________

        Printed for the use of the Committee on Foreign Affairs


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
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                       http://www.gpo.gov/fdsys/


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                                 ______
                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
TREY RADEL, Florida                  GRACE MENG, New York
DOUG COLLINS, Georgia                LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina         TULSI GABBARD, Hawaii
TED S. YOHO, Florida                 JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                  Subcommittee on Asia and the Pacific

                      STEVE CHABOT, Ohio, Chairman
DANA ROHRABACHER, California         ENI F.H. FALEOMAVAEGA, American 
MATT SALMON, Arizona                     Samoa
MO BROOKS, Alabama                   AMI BERA, California
GEORGE HOLDING, North Carolina       TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            BRAD SHERMAN, California
DOUG COLLINS, Georgia                GERALD E. CONNOLLY, Virginia
LUKE MESSER, Indiana                 WILLIAM KEATING, Massachusetts


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Walter Lohman, director, Asian Studies Center, The Heritage 
  Foundation.....................................................     9
Mr. Vikram Nehru, senior associate, Asia Program, Bakrie Chair in 
  Southeast Asian Studies, Carnegie Endowment for International 
  Peace..........................................................    21
Mr. Sadanand Dhume, resident fellow, American Enterprise 
  Institute......................................................    32
Mr. Sanjay Puri, founder and chief executive officer, Alliance 
  for U.S. India Business........................................    41

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Steve Chabot, a Representative in Congress from the 
  State of Ohio, and chairman, Subcommittee on Asia and the 
  Pacific: Prepared statement....................................     4
Mr. Walter Lohman: Prepared statement............................    12
Mr. Vikram Nehru: Prepared statement.............................    23
Mr. Sadanand Dhume: Prepared statement...........................    34
Mr. Sanjay Puri: Prepared statement..............................    43

                                APPENDIX

Hearing notice...................................................    60
Hearing minutes..................................................    61
The Honorable Eni F.H. Faleomavaega, a Representative in Congress 
  from American Samoathe Honorable Eni F.H. Faleomavaega, a 
  Representative in Congress from American Samoa: Prepared 
  statement......................................................    62
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    64


                        THE REBALANCE TO ASIA: 
                    WHY SOUTH ASIA MATTERS (PART II)

                              ----------                              


                       WEDNESDAY, MARCH 13, 2013

                       House of Representatives,

                 Subcommittee on Asia and the Pacific,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 11 o'clock 
a.m., in room 2172 Rayburn House Office Building, Hon. Steve 
Chabot (chairman of the subcommittee) presiding.
    Mr. Chabot. The committee will come to order.
    Good morning. I want to welcome all of my colleagues to 
this hearing of the Subcommittee on Asia and the Pacific and 
I'd like to extend a special thanks to our ranking member, Mr. 
Faleomavaega, who cannot be with us this morning as he is en 
route to Washington.
    We originally intended to have this hearing later this 
afternoon but moved it to this morning to accommodate President 
Obama's visit to the Capitol this afternoon.
    Mr. Faleomavaega graciously insisted we move forward 
without him, so I want to thank him and his staff for their 
flexibility. In his stead, I would like to welcome Mr. Ami 
Bera, who will sit in for the ranking member this morning 
during the course of this hearing and act as the ranking member 
of this subcommittee.
    I'd also like to thank our witnesses for being here today 
and for their flexibility as well. Mr. Bera and I will make 
opening statements now and other members will be recognized for 
a minute to make a statement if they would wish to do so. We 
try to keep ours to 5 minutes if at all possible.
    Today's hearing is a continuation of the hearing we held 2 
weeks ago with Assistant Secretary Robert Blake and Acting 
Assistant Secretary Joseph Yun, which gave the administration 
the opportunity to address how it plans to increase South 
Asia's role as part of the strategic rebalance toward Asia. I 
think it's fair to say that there was bipartisan support in 
this room regarding the critical strategic importance of South 
Asia, particularly with India, to U.S. interests in the broader 
Indo-Pacific region. I want to emphasize today that I do not 
believe the administration's rebalance will succeed unless the 
U.S. does more to build a stronger relationship in that part of 
the world.
    That said, 2 weeks ago we did not hear from our witnesses 
how the administration specifically plans to tackle the myriad 
of challenges the U.S. confronts in enhancing its engagement in 
that region, or tangible actions the administration intends to 
pursue to emphasize South Asia's critical importance and better 
integrate India into the regional architecture. Today, I hope 
that we can explore these challenges and examine actions the 
United States can take to further U.S. interests and foster 
stronger relations throughout the Indo-Pacific region.
    The interconnection of U.S. economic, political and 
security objectives can be found in and along the Indian Ocean 
Rim. Economically, the region is a lifeline of international 
trade, carrying half the world's container ships, one-third of 
the bulk cargo traffic, and two-thirds of the world's oil 
shipments. Woven together by trade routes, it is a geographic 
area upon which the world greatly depends, and containing 
nearly a third of the world's population, the significant human 
resources and technological capabilities within the Rim-land is 
extraordinary.
    It is certainly no surprise that China and India regard 
this region as critical, where economic interests meet security 
interests. Consequentially, actions and decisions made in this 
region will undoubtedly have a direct impact on the economy of 
the United States and on creation of American jobs. Since these 
actions will also help to shape the political landscape, it is 
now more important than ever that the U.S. focus on enhancing 
economic openness, political freedom and democratic governance 
in this region where so many nations are in the midst of 
political transition.
    The opportunities we see in South Asia are at the same time 
challenges, and one of the biggest challenges we face is 
building a more dynamic relationship with India. It is vitally 
important for the U.S. that India takes a more active role in 
developing the Indian Ocean region and increases its engagement 
in the Asia Pacific; however, the real question is, how can we 
help India do this? India is still excluded from various 
security and economic groups, particularly U.S.-led global 
nonproliferation and arms control groups and a range of 
economic associations.
    Now, India wants the U.S. to play an active role in 
maintaining regional security and promoting economic 
cooperation to balance what it calls ``China's irredentist 
encroachment on the Global Commons.'' At the same time, India 
has been both unwilling and ostensibly unable to assume a 
leadership role as an international actor commensurate with its 
size and power. Indian leadership has been hampered by 
corruption, endemic poverty, and its acute dependence on 
unreliable regional allies. U.S.-India cooperation will likely 
remain incremental and measured as long as India strives to 
maintain its strategic autonomy.
    While we could fault India on the sluggish bilateral 
relationship, for being overly focussed on maintaining its 
strategic independence and acting more reactionary than 
proactive and engaged, that would not bring about the change we 
want to see. We need to build on the strengths of the 
relationship, find ways to foster trust with India, and help 
India integrate into the international system. I believe there 
are steps the Obama administration can take to do this that it 
is not presently pursuing.
    Assistant Secretary Robert Blake stated at our first 
hearing that, ``While it may not get the same attention as our 
relationships with countries of East Asia, U.S. engagement in 
South Asia remains central to our reinvigorated outreach to the 
entire continent.'' Well, frankly, South Asia has never been 
considered central to the rebalance in the first place. To that 
end, while South Asia is unlikely to play the central role, I 
am hopeful that it can increase its presence on the world 
stage.
    An increased engagement strategy with South Asia will help 
the United States secure its long-term goals in Asia in a 
number of ways: Maintaining freedom of navigation, preventing 
the spread of radical Islam and terrorism, upholding human 
rights and helping to prevent the proliferation of nuclear 
weapons.
    For the strategic rebalance toward Asia to be successful, 
not only does South Asia need to play a more active role, our 
policies need to have clear objectives and precise markers of 
success. The U.S. also needs to remain committed. 
Unfortunately, 2 weeks ago we did not hear specific steps the 
administration is taking or planning to take to address these 
many challenges. I look forward to hearing from our witnesses 
today and examining policy options the U.S. can take to 
strengthen America's engagement strategy in Asia.
    I would now like to recognize Mr. Bera who, again, is 
sitting in as ranking member for Mr. Faleomavaega today. We 
welcome him and we welcome his opening statement at this time.
    [The prepared statement of Mr. Chabot follows:]

    
    
    
    
                              ----------                              

    Mr. Bera. Thank you, Mr. Chairman, and thank you for 
calling this series of hearings in the--on the importance of 
South Asia.
    America's pivot to Asia is critical at this juncture and is 
really a much needed evolution in our foreign policy. Far too 
often when we think about American diplomacy in Asia we have 
historically thought of this in terms of our long-standing 
allies in Japan, in South Korea and, more recently, in the 
shift toward China.
    However, Mr. Chairman, as you've pointed out, as we look at 
our future, South Asia become increasingly important and 
critical to our relationship with South Asia is the U.S. 
relationship with India.
    It's a strategic relationship both economically and 
strategically to stabilize this region. Late last year, 
President Obama remarked that the U.S.-India relationship is 
one of the most important partnerships of the 21st century.
    Economically, we clearly see the opportunities and a robust 
trading relationship with India is vital as we start to 
accelerate our economic recovery and start to create jobs here 
at home. In fact, in my home state of California, exports to 
India are worth over $3.7 billion annually. It is a vital 
relationship.
    Agricultural exports are especially important. According to 
the Department of Agriculture, exports to this sector in 2012 
topped $440 million. Exports in tree nuts alone were worth $324 
million. So opening up India's markets to our goods and 
services certainly are very strategic for us. We must continue 
to expand our economic relationship.
    India is also emerging as a key strategic partner of the 
United States. You know, we're establishing deeper 
relationships with other nations throughout Asia using India as 
a strategic partner.
    Our own interest in promoting regional stability make it 
imperative that the U.S. participate along with India in these 
regional organizations as well. In fact, as we talked about a 
few weeks ago at the hearing, as we begin drawing down our 
troops from Afghanistan, India and the U.S. share a common 
interest in promoting regional peace and international 
security.
    India also has a critical role in holding and maintaining 
some of the gains we've made in helping anchor the stability in 
Southeast Asia. The United States is depending on India to 
serve as a regional economic anchor and a provider of security 
in the broader Indian Ocean region.
    Three weeks ago, I had the opportunity to question 
Assistant Secretary of State Blake as he returned from a 
trilateral meeting with leaders of India and Afghanistan. 
Testifying before this committee, he restated our common vision 
for a strong, peaceful and prosperous region.
    He also spoke about working together on common challenges 
and opportunities including combatting violent extremism and 
increasing regional trade and economic integration. As the only 
Indian-American in Congress, I'm curious to hear from our 
witnesses how this important relationship continue to grow.
    I'm also curious to hear from our witnesses as to the 
challenges of growing this relationship and what we can do in 
this body, working with the administration, to overcome some of 
those challenges.
    Again, Mr. Chairman, I'll yield back the rest of my time. 
Thank you.
    Mr. Chabot. Thank you very much, and we'll now yield 1 
minute to members if they'd like to make an opening statement, 
and we will do it in the order in which they arrived.
    The gentleman from North Carolina, Mr. Holding, is 
recognized, if you'd like to make a statement.
    Mr. Holding. Thank you, Mr. Chairman, for hosting the 
second part of the subcommittee's hearing as we continue to 
examine the importance of South Asia.
    As was demonstrated several weeks ago by Part I of the 
hearing, numerous questions still remain surrounding the 
implementation of this administration's pivot to Asia and the 
Pacific.
    I thank our witnesses for their time and testimonies and I 
look forward to the answers you are going to give us and shed 
some light on the administration's pivot.
    So thank you, Mr. Chairman, and I yield back.
    Mr. Chabot. Thank you very much.
    The gentleman from California, Mr. Sherman, who is the 
ranking member of the Terrorism, Nonproliferation, and Trade 
Subcommittee, is recognized for 1 minute.
    Mr. Sherman. Thank you, Mr. Chairman.
    It's time to stop punishing India for becoming a nuclear 
state. India did not sign the NPT and cannot be called a 
violator of an agreement it did not sign and it has a good 
record on preventing proliferation.
    Pakistan is the most problematic and least stable of the 
world's current nuclear states excepting North Korea and is one 
of the great intractable problems in difficult situations that 
we face in our diplomacy.
    If we could create a peace between India and Pakistan, a 
lasting peace, then the Pakistani military could no longer 
claim its outside role. It would have to assume a role 
consistent with Pakistan's economy and population rather than a 
role the size or as close as they can get to the size of the 
Indian military, and that would be very important to bringing 
Pakistan democracy and stability.
    I yield back.
    Mr. Chabot. Thank you very much. I believe the gentleman 
from Pennsylvania, Mr. Perry, is recognized for 1 minute.
    Mr. Perry. Thank you, Mr. Chairman, and I too want to 
applaud you for this second series of hearings.
    I'm interested in hearing the information as well. I'm also 
concerned about the administration's rhetoric regarding the 
strategic importance of the region but it doesn't seem to be 
balanced with appropriate actions and I'll be interested to 
hear the testifiers' viewpoint on what those actions should be 
so we can get beyond the rhetoric and put something in place 
that's tangible that we can see and that is productive.
    So I appreciate your presence here today. I'm looking 
forward to it, and I yield back.
    Mr. Chabot. Thank you very much. The gentleman from 
Georgia, Mr. Collins, is recognized.
    Mr. Collins. Thank you, Mr. Chairman.
    I appreciate it and, again, I appreciate you having these 
hearings and following because it's just a strategic emphasis 
that seems to be overlooked only except in times in crisis. And 
we can talk about a pivot. We can talk about wanting to be 
there.
    But if you only look at it in terms of the importance of 
when it becomes an issue or when something happens, that's a 
problem and that's what I've seen in this area for too long. 
What I like about these hearings and the previous week's 
hearing is its focusing on what can we do to strengthen not 
only the political relationships, the economic relationships 
but also the very strategic relationships.
    If you look at our commitment from a military perspective 
and others over the past few years they have been dominated a 
lot in this area or concerns about this area.
    So I appreciate, Mr. Chairman, you doing this and I'm 
looking forward to continuing the hearing.
    Mr. Chabot. Thank you very much, Mr. Collins, and I believe 
Mr. Brooks from Alabama is next.
    Mr. Brooks. Thank you, Mr. Chairman, for calling this 
hearing.
    Certainly, the southern part of Asia is extremely important 
in world affairs and I look forward to learning from the 
insight that will be shared by these witnesses.
    Mr. Chabot. Thank you very much.
    And last but not least, Mr. Connolly, if you would like to 
make a 1-minute opening statement, you're welcome to do so.
    Mr. Connolly. Thank you so much, Mr. Chairman.
    I have three hearings at the same time this morning and I 
want to welcome my friend, Sanjay Puri, to the--to the witness 
table. Thank you so much for holding this hearing.
    I was just in India with a very large group under the 
auspices of the Aspen Institute--a large group of Members of 
Congress--which I think demonstrates this repivoting to Asia in 
a very complex but very important region. And so I'm looking 
forward to the testimony today, especially about the logic 
behind the so-called repivoting to Asia and what it means to 
the United States long term.
    Thank you, Mr. Chairman.
    Mr. Chabot. Thank you very much, Mr. Connolly, and we'll 
now introduce our very distinguished panel here this morning.
    First, Mr. Walter Lohman is director of the Heritage 
Foundation's Asian Studies Center. Before joining Heritage, Mr. 
Lohman served as senior vice president and executive director 
of the US-ASEAN Business Council for 4 years. He oversaw the 
Council's mission of building U.S. market share in Southeast 
Asia.
    In the late 1990s, Mr. Lohman was the Council's senior 
country director representing American interests in Indonesia 
and Singapore. In 2002, he served under Senator Jesse Helms, 
advising him on issues affecting East Asia. From 1991 to 1996, 
he served as a policy aide to Senator John McCain on foreign 
policy, trade and defense issues. We welcome you here this 
morning.
    Next, we'll hear from Vikram Nehru, who is a senior 
associate in the Asia Program and Bakrie Chair in Southeast 
Asian Studies at the Carnegie Endowment for International 
Peace. He is an expert on development economics, growth, 
poverty reduction, debt sustainability, governance and the 
performance and prospects of East Asia.
    From 1981 to 2011, Mr. Nehru served in the World Bank where 
he was chief economist and director for poverty reduction, 
economic management private and financial sector development 
for East Asia and the Pacific. In this capacity, he advised the 
governments of developing countries in Asia on economic and 
governance issues. We welcome you here, Mr. Nehru.
    Sadanand Dhume is a resident fellow at the American 
Enterprise Institute where he writes about South Asian 
political economy, foreign policy, business and society with a 
focus on India and Pakistan. He is also a South Asia columnist 
for the Wall Street Journal and has worked as a foreign 
correspondent for the Far Eastern Economic Review in India and 
Indonesia. We welcome you here, Mr. Dhume.
    Last but not least, Sanjay Puri is president and CEO of the 
Alliance for U.S. India Business. As an expert on U.S.-India 
relations, Mr. Puri regularly leads delegations of business and 
political leaders to India and is a frequent public speaker on 
U.S.-India relations and the political impact of the Indian-
American community.
    Mr. Puri played an instrumental role in the passage of the 
U.S.-India Civil Nuclear Cooperation Agreement. He's also the 
founder and chairman of the board of Optimos Incorporated and 
Information Technology Company based in Reston, Virginia, and 
before founding Optimos he worked at the World Bank.
    Without objection, all of the witnesses' prepared 
statements will be made part of the record. Each witness will 
have 5 minutes and there is actually a lighting system there 
that you'll see. When the yellow light comes on that means you 
have 1 minute to wrap up. When the red light comes on, we ask 
that you please terminate your statement at that time, if 
possible, or very closely thereto.
    We will begin with you, Mr. Lohman. You're recognized for 5 
minutes.
    Mr. Lohman. Great. Thank you, Mr. Chairman.
    Mr. Chabot. If you would all, when you speak, pull the mic 
close to you and make sure it's on. Thank you.

STATEMENT OF MR. WALTER LOHMAN, DIRECTOR, ASIAN STUDIES CENTER, 
                    THE HERITAGE FOUNDATION

    Mr. Lohman. Thank you, Mr. Chairman, Mr. Bera, other 
members of the committee. It's an honor to be here. I 
appreciate the invitation. It's also an honor to be here with 
several of my friends that I work with on an everyday basis. 
You've lined up a good set of folks.
    I guess I'm going to start out with the challenges part and 
maybe my friends here can fill in more the opportunity. I've 
entitled my remarks, ``The Importance of Reality in U.S-India 
Cooperation in East Asia.''
    I know it's a little bit provocative but I do want to make 
it clear that I'm a big supporter of closer U.S.-India 
relations and strategic cooperation in East Asia if we can find 
ways to do it and we can find ways to improve on things that 
we're currently involved in. It's just that I think we need to 
be realistic about the prospects, for the sake of American 
interests.
    China is the big geopolitical challenge to the U.S. but if 
we're of divided mind on how to deal with China, imagine how 
the Indians feel about the issue. India shares an armed and 
troubled border with China. For us, China is a geopolitical 
issue. For India, it's a local issue.
    China is also a huge economic opportunity for India and 
they have a lot of common concerns in dealing with the problems 
of the developing world, which they both inhabit, and also as 
emerging very large economies.
    Furthermore, India has its own diplomatic history--a 
tradition of nonalignment that still infuses its rhetoric 
today. It wasn't so nonaligned during the last 60 years but 
that's okay. I mean, that's the national myth, that they are 
nonaligned, strategic autonomy.
    That means India is kind of prickly to deal with. It means 
it's prickly. It's not petty. It's not unserious. We may not 
agree with many of its positions, elements of its policy. But 
it's a sincere one and something that we have to account for.
    It's similar in Southeast Asia, and given that Southeast 
Asia is geographically what separates India from the rest of 
East Asia and given that India's ``Look East'' policy has been 
in effect there for the longest time, my written testimony 
focuses a great deal on India's involvement in Southeast Asia 
and the potential for U.S. cooperation with them there.
    But the world view in Southeast Asia is similar to India in 
that the Association of Southeast Asian Nations in the first 
place was created to give the region a little bit of space, a 
little bit of independent room for action.
    That mode has been questioned at times but, again, that's 
the spirit of the region. That's the myth that motivates their 
current diplomacy.
    Indonesia is the center of gravity in ASEAN. How does their 
foreign minister describe ASEAN? As ``a new world paradigm 
where there is no longer need for competition,'' particularly 
between the U.S. and China. And ``where all countries can 
gain.''
    And there's nothing new or unique about Minister 
Natalegawa--that's the Indonesian foreign minister--about his 
thinking on this. It reflects Indonesian foreign policy going 
back many decades to its founding, to independence and it 
infuses--that spirit infuses all of ASEAN's diplomatic culture.
    So here we are, the United States, trying to make common 
cause with India, a country proud of its ``strategic 
autonomy,'' and a geostrategic competition with China in a 
region that has little concerted interest in that competition.
    With the regional organization, ASEAN, I must say that it's 
failing in its effort to manage the single biggest security 
problem in the region right now, which is the competing 
influence and disputes in the South China Sea.
    Is Southeast Asia concerned about the down side of China's 
rise? Depending on the country that you're talking about, 
absolutely. But it's also concerned about a too powerful United 
States.
    That's something that we miss in the day-to-day headlines 
here in our concern about China. It just so happens at this 
moment in history the Chinese are making our diplomacy easier 
and actually pushing many of the ASEAN members in our 
direction.
    So where does this leave us in a conversation about why 
India matters in America's East Asia policy? It matters because 
of India's long-term potential. Assistant Secretary Blake last 
month put the time horizon on this endeavor at 50 years.
    For the sake of leaving American strategic options open 
over the coming decades, the U.S. should facilitate India's 
active involvement in the regional diplomatic architecture, a 
formal dialogue, bilateral and multilateral and day-to-day 
coordination among officials should be welcomed--joint military 
exercises, too.
    My only constructive criticism is a warning that we proceed 
knowing that a U.S.-India strategic convergence is limited and, 
indeed, it's a long-term exploratory endeavor. We need to focus 
on the things that count the most to America's position in East 
Asia, which is our forward deployed military, our alliances and 
our support for free commerce throughout the region. Thank you.
    [The prepared statement of Mr. Lohman follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Chabot. Thank you very much.
    Mr. Nehru, you're recognized for 5 minutes.

STATEMENT OF MR. VIKRAM NEHRU, SENIOR ASSOCIATE, ASIA PROGRAM, 
BAKRIE CHAIR IN SOUTHEAST ASIAN STUDIES, CARNEGIE ENDOWMENT FOR 
                      INTERNATIONAL PEACE

    Mr. Nehru. Thank you very much, Mr. Chairman, Congressman 
Bera, distinguished members of the subcommittee.
    Thank you very much for giving me the honor to testify 
before you today. Your invitation to this hearing asked us for 
policy options that would enhance the strategic rebalancing 
toward Asia and further U.S. interests in the Indo-Pacific.
    As an economist, I have viewed that question through an 
economic lens and wish to emphasize four points. First, in 
America's rebalance toward Asia, central importance must be 
given to building a constructive relationship of mutual trust 
and respect with China.
    China's economic integration with its neighbors, especially 
Southeast Asia, has been one of the most important factors 
behind its transformation into an economic powerhouse.
    Geographical proximity, declining transport and 
communication costs and a relatively free trade and investment 
environment have created East Asian production networks that 
have captured benefits of scale and specialization to become 
highly competitive in international markets.
    The forces of economic integration are unlikely to weaken 
in the foreseeable future and may even strengthen.
    Worryingly, however, Asia's rapid economic integration is 
occurring at a time when many issues between the countries in 
the region such as competing claims on the South China Sea 
remain unsettled. China's sheer size gives it a clear advantage 
relative to its neighbors and its assertiveness in the region 
appears to have increased in direct proportion to its rapidly 
growing military and economic strength.
    Extrapolate that forward and it gives cause for concern 
about the prospect for peaceful and cooperative solutions to 
disagreements between China and its neighbors. America's 
strategic rebalance toward Asia, therefore, comes at a crucial 
time in restoring the balance of power in the region, 
maintaining the freedom of navigation, keeping open the sea 
lanes of communication and increasing the prospects for 
settling disputes through dialogue and negotiation--all 
critical ingredients for continued prosperity in the region.
    At the same time, building a constructive relationship with 
China should be a central element of the rebalance toward Asia 
and in building that relationship the narrative should focus 
less on security dimensions and more on practical cooperation 
and issues that matter to both countries.
    Fortunately, as the economic gap between China and the 
United States shrinks, the areas of convergent interests 
expand. For immediate interests of both sides could be the 
mutual development of clear safety standards throughout the 
food chain from farm to retail, fashioning a multilateral 
investment treaty, improving the governance of international 
financial institutions to better reflect new economic realities 
in the global economy and even crafting a multilateral 
cybersecurity agreement.
    Over the last 2 days, National Security Advisor Tom Donilon 
called for such an agreement and the Chinese foreign ministry 
announced just yesterday it was ready for such talks. These are 
encouraging developments in a very difficult area.
    My second point is the importance of engaging India with 
the same intensity as China. India's preeminent position in 
South Asia gives it a pivotal role in the region and a natural 
counterpoint to China's emergence as Asia's predominant 
economic and military power.
    Not only are India's long-term strategic interests in the 
region broadly convergent with America's, the U.S. has many 
options available to assist India in developing its national 
power and becoming a positive force for peace and prosperity in 
the region.
    These policy options could include assisting India's energy 
security by allowing it to import shale gas from the United 
States, responding favorably to India's defense modernization 
needs, supporting its membership in APEC and even using India's 
competitive capabilities in launching American satellites for 
civil and scientific purposes.
    My third point is the importance of engaging Southeast Asia 
which needs to be given its due weight in the overall strategy. 
The U.S. needs to apply a comprehensive strategy toward the 
countries of the region, much as has been done in Indonesia, 
that addresses economic, social and security issues.
    Most countries in the region would benefit from such a 
comprehensive approach but none more so than Myanmar, where 
conditions are the most fragile and the forces for freedom, 
democracy, human rights and free markets deserve all the 
encouragement that they can get.
    There is also a need to boost the capability of ASEAN 
itself so it can set priorities and implement and monitor its 
collective decisions collectively--effectively. My last point 
is the importance of advancing trade and investment 
liberalization in Asia.
    Recognizing that the last stages of trade negotiations are 
the most difficult, it is important for the TPP negotiations to 
be completed successfully and the agreement given swift 
approval by Congress.
    Perhaps the dark horse in the trade area is the Trans 
Atlantic U.S.-EU FTA, the free trade agreement announced 
recently by President Obama. It could potentially form such a 
large market--50 percent of global GDP, $4 trillion in cross 
border investment--that it would attract other countries to 
join and perhaps over time could even include India and China.
    In conclusion, Mr. Chairman, the U.S. rebalancing strategy 
toward Asia is timely and a lot has been accomplished since it 
was announced 18 months ago. I think Congress and the 
administration can advance America's core interests in this 
rapidly growing and strategically vital region.
    Thank you once again for giving me the opportunity to speak 
here. I look forward to taking your questions.
    [The prepared statement of Mr. Nehru follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Chabot. Thank you very much.
    Mr. Dhume is recognized for 5 minutes.

  STATEMENT OF MR. SADANAND DHUME, RESIDENT FELLOW, AMERICAN 
                      ENTERPRISE INSTITUTE

    Mr. Dhume. Thank you, Mr. Chairman. Thank you, Congressman 
Bera and all distinguished members of the subcommittee for this 
opportunity to testify today on the rebalance to Asia and why 
South Asia matters.
    I won't go over what I've gone into in greater detail in my 
written testimony but what I want to leave you here with in my 
opening comments is four broad points about the rebalance and 
the role of India.
    The first is that the rebalance is only going to work if 
the U.S. continues to lead in Asia through strength, and over 
here it's very important for us to remember the lessons of the 
past 60 years--the lessons of the post World War II period 
where the U.S. as the dominant military power has presided over 
an unparalleled period of prosperity in Asia, including the 
rise of Japan, South Korea, Taiwan and then the eradication, to 
a large degree, of poverty in Indonesia, Thailand and Malaysia 
and, in more recent decades, the rise of China and India. All 
this has been underpinned by U.S. strength.
    What this means is that as we head to defense cuts and we 
head to potentially the lowest level of defense spending as a 
percentage of GDP since 1970, it's very important that we keep 
that in mind as something that will be problematic because as 
we look to build the kinds of partnerships and alliances with 
friends in Asia it's important for the U.S. to be seen--to be--
not only to be leading but to be seen to be leading from a 
position of strength.
    The second big point is that we can't really pivot away 
from the troubles of the Middle East and the broader Muslim 
world. I know that psychologically for many of us here in the 
United States Asia Pacific and the Middle East really occupy 
very different parts of our mind and different parts of our 
imagination.
    We think of the Asia Pacific more in terms of economic 
opportunity. We tend to think of the Middle East and the AfPak 
region more in terms of turmoil.
    However--and I think this is why it's important to have 
India so central to this discussion today--India really 
symbolizes, in a way, how that distinction is a false 
distinction. Just last month, we had a terrorist attack in the 
southern Indian city of Hyderabad where 17 people lost their 
lives. All of us still remember the Mumbai attacks of 2008.
    So, broadly speaking, the pivot--paying more attention to 
Asia makes sense but this cannot be at the cost of ignoring 
more traditional security challenges and it cannot be at the 
cost of ignoring what is happening particularly in Afghanistan 
and Pakistan with its problems of radicalization, terrorism, 
nonproliferation and so on.
    My third point, as also emphasized by my colleagues, is 
that a stronger Indian role in the Asia Pacific is, indeed, in 
U.S. interests for many reasons that have come up in the 
testimony and that are fleshed out in more detail in my written 
testimony as well.
    India is a democratic pluralistic nation of 1.2 billion 
people. It has one of the largest and most powerful navies in 
Asia. It's an English-speaking country.
    Most countries in Southeast Asia view India as 
nonthreatening. It is seen as a much more benign presence than 
China, partly because it doesn't have territorial disputes with 
the countries of Southeast Asia, partly because it is much 
smaller and partly because it doesn't have the same kind of 
Chinese diaspora in many of the countries, which is seen as 
having a disproportionate economic weight in the domestic 
affairs of countries such as Malaysia and Indonesia.
    So for all these reasons, India is seen as benign and that 
makes it a natural partner for the United States. Also, there's 
a cultural element to this.
    The big religions of Southeast Asia--Buddhism and--well, 
Hinduism as a cultural element even though it's not there as a 
dominant religion anymore and to a certain degree even Islam--
all came from India. So that--sort of the cultural links that 
bind India, especially to Southeast Asia, cannot be 
overemphasized.
    My final point is that India's capacity and will to play a 
role in the region that we in the United States would like it 
to play hinges largely on its ability to sustain high economic 
growth, and over here we need to be a little worried.
    Over the past 6 years, growth in India has gone from about 
10 percent--nearly 10 percent to about 5 percent, and if this 
halving is not--if this is not--if this is just a blip there is 
nothing to worry about.
    But if India is in fact entering a period of sustained 
lower growth then its capacity and its will to play the larger 
role both as a role model and in terms of its diplomatic and 
military clout in the region will seriously come under 
question.
    So to sum up on that last point, it is in fact in the U.S.' 
interesta in Asia to pay attention to the Indian economy and to 
ensure to the degree possible that India in fact fulfils its 
economic potential.
    Thank you. I look forward to taking your questions.
    [The prepared statement of Mr. Dhume follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Chabot. Thank you very much.
    Mr. Puri, you'll be recognized for 5 minutes.

   STATEMENT OF MR. SANJAY PURI, FOUNDER AND CHIEF EXECUTIVE 
           OFFICER, ALLIANCE FOR U.S. INDIA BUSINESS

    Mr. Puri. Mr. Chairman, Ranking Member, and members of the 
subcommittee, thank you very much for the opportunity to 
testify before you today.
    From energy security to defense cooperation to bolstering 
our economic ties and increasing opportunities for high-skilled 
workers to come to the U.S. or go to India, there are serious 
obstacles facing the U.S. as we rebalance to Asia.
    However, I believe our mutual interests and shared values 
can get us where we need to be if the U.S. is committed to 
deepening the U.S.-India relationship, which is one of the most 
defining of the 21st century.
    My esteemed colleagues have talked about a much more 
strategic level but I will try to address what Chairman Chabot 
and a lot of the people in the hearing have asked for--specific 
simple solutions.
    I don't think we can boil the ocean in this relationship so 
I offer four potential opportunities for us: Enhanced education 
collaboration, which can change the dynamics of this 
relationship; STEM teacher exchange, which can be a game 
changer for the U.S.; the need to allow exports of natural gas 
to an energy-starved India; and starting to look beyond New 
Delhi to different states in India.
    I'll just briefly elaborate on those four points. Enhancing 
education collaboration--a Hindu proverb states that you can 
change a nation through education and I'm a firm believer in 
this proverb because I think it holds the key for changing 
U.S.-India relations.
    For all the short-term fixes we might talk about today, I 
believe education is a long-term solution which is required for 
the U.S.-India partnership to thrive.
    The Alliance for U.S. India Business, which is an 
organization which I lead, we have been at the forefront of 
enhancing dialogue in both countries to create opportunities 
for building higher-quality education because we believe that 
building global partnerships between U.S. and Indian 
universities will strengthen the bonds between our two nations.
    Some of the top CEOs and policy leaders in India today are 
educated from our universities. They take with them the 
knowledge, values and experiences of the United States.
    They take with them the generosity of the American people 
and it automatically creates economic and cultural bridges 
between the two countries. It is not a coincidence that Indian 
companies which are led by American-educated CEOs are much more 
active in the U.S.-India economic relationship.
    Students from India coming to the U.S. are the second 
largest group coming to this country. They contribute about $1 
billion to us--to the United States. But demand for higher 
education in India is also increasing.
    India needs 500 universities and 33,000 more colleges in 
the next 8 years, which is a $50 billion market. It also needs 
vocational and technical institutes, which is another $2 
billion market opportunity.
    But where will this additional capacity come from? If it 
comes from Indian universities partnering with universities and 
colleges in the states that you represent, I believe we will be 
on our way to making the kind of difference that needs to be 
made.
    We are working and we have taken over a hundred university 
presidents, deans, provosts to India and they're engaged with 
over 1,000 of their counterparts in India. There are student 
exchanges, faculty exchanges and R&D going on.
    This is a win-win relationship that happens. No jobs are 
lost on either side. Jobs are created, strong cultural bonds 
are created and corporate--and the values are shared. So I 
think that's a very important point that we should consider.
    The second point I would make is regarding STEM education. 
The United States has a tremendous shortage of STEM teachers at 
the K-12 level. It is especially very acute in rural, inner 
city and remote areas in especially some of your districts. How 
can we expect our kids to have strong science and math skills 
when they don't have good teachers or have no teachers?
    India has a tremendous pool of science and math experts 
that also speak English. We should consider a specialized 
short-term program that qualifies these teachers and brings 
them over for a short duration so that we can create our own 
pool of STEM experts for the future. Currently, we are working 
with several states to create a pilot program.
    The third opportunity I see is for us to export gas to an 
energy-starved India. Currently, India competes with China and 
Japan for buying LNG from Qatar and Australia. India is talking 
to Iran for a gas pipeline.
    Well, if we were able to export gas to India, if we can 
find economically viable and environmentally clear mechanism, 
it would do three things. It would create economic opportunity 
in the U.S. through exports, it would reduce India's dependence 
on the Middle East for gas and also build a more strategic 
relationship based on their desire for energy independence.
    And the final point I would make is that we should start 
looking beyond New Delhi toward states. India has entered an 
era of coalition politics. The states are much more assertive 
and powerful. We need to start building ties with the states 
because sometimes policy paralysis gets to New Delhi.
    And there are several dynamic states in India like 
Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu that we 
should engage with. These states are leaders with national 
aspirations and are looking to produce results through good 
governance and we can have a collaboration with them in 
agriculture, energy, education, technology and homeland 
security.
    And our economic cultural interest would be much better 
fostered working with them. We recently took a delegation to 
the state of Punjab, which is the breadbasket of India, and 
their chief minister, who's the equivalent of our governor, met 
with the agriculture secretary from Iowa, and he wants to do a 
farmer-to-farmer exchange. He wants to send farmers from his 
state to Iowa, and Iowa farmers there so that they can have 
best practices.
    And I can tell you that will do more than any other big 
strategic document that you could sign for the future.
    I thank you for your time and for holding this important 
hearing and I look forward to answering your questions.
    [The prepared statement of Mr. Puri follows:]

    
    
    
    
    
    
    
    
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    Mr. Chabot. Thank you very much, Mr. Puri, and I'd like to 
thank all the members of the panel for their testimony this 
morning.
    I think it was all very excellent, and we'll now recognize 
members for 5 minutes to ask questions and I'll recognize 
myself for that purpose.
    There have been recent reports that local territorial 
disputes with China in fact have sharpened since Secretary of 
State Clinton's call for America's Pacific Century.
    Is it just a coincidence that these conflicts between China 
and Vietnam and China and the Philippines and China and Japan, 
et cetera, have intensified since the so-called ``pivot'' to 
Asia? Could China be operating under the impression that their 
neighbors have become emboldened by the protection offered by 
increased military cooperation with the United States, for 
example? What other unstable dynamics, in addition to 
increasing tensions in the East and South China Seas, are 
likely to be generated in the near or distant future that could 
undermine our so-called Asia ``pivot''?
    I welcome any of the members of the panel to respond. Mr. 
Lohman?
    Mr. Lohman. I would actually say it's just the opposite. 
That is, that the U.S. attention to the region and attention to 
the complaints of our allies--in some cases--in the case of the 
Philippines, a treaty ally--is a response to the pressure that 
the Chinese are putting on friends in the region and that 
impetus is coming from within China.
    It's coming from a couple decades of patriotic education, 
things emphasizing their rights in those waters. There is also 
a media environment there that only gives people the outlet to 
criticize the United States or criticize the Philippines or 
criticize Japan, but allows them to sell newspapers. So how are 
they going to sell newspapers? They're going to criticize in 
the harshest possible terms.
    So there's a certain dynamic in China, I think, that is 
driving their claims and their aggressiveness in their ``near 
seas'' and the U.S. is responding to those largely because our 
friends and allies are coming to us asking us to help.
    Mr. Chabot. Mr. Nehru?
    Mr. Nehru. Let me add to Mr. Lohman's point. Actually, 
China's claims in the South China Sea have been in existence 
for a long time, certainly for several decades. But they have 
never really pursued these claims actively.
    But as their capabilities, especially naval capabilities, 
capabilities of the officials that regulate the law enforcement 
commission, the capabilities for--of local governments, which 
are the coastal regions, and their Coast Guard capabilities 
have increased, they have gradually extended their enforcement 
out into the South China Sea and that's led to some of these 
interactions.
    So I would agree with Mr. Lohman. I don't think it's 
necessarily the U.S. pivot. I would just like to add one more 
point and that is the Vietnam issue really arose because of the 
passage of the Vietnam Maritime Law which included some of the 
islands in the Paracels as they were embodied in the law 
itself.
    And that, I think, created enormous concerns in China and 
created a reaction because until that point it had never been 
embodied in any Vietnam--Vietnamese law.
    Mr. Chabot. Thank you.
    Let me get my second question in and then I'll address that 
to Mr. Dhume and Mr. Puri.
    As a way to help India become more economically integrated 
within the region, should the U.S. support India's 
participation in the Asia Pacific Economic Cooperation--APEC 
forum and if so, why? And why has India not yet been invited 
and how could APEC help India? Are there any risks that the 
U.S. faces by inviting India to join. If you wanted to comment 
at all on TPP--all of those things.
    I have 1 minute between the two of you to try to do it. So 
Mr. Dhume?
    Mr. Dhume. Well, I'll comment very briefly. The short 
answer is yes, the U.S. should support India's entry into APEC.
    I think the broader--the broader principle at work over 
here is that the U.S. should support greater Indian integration 
into political and economic institutions in Asia and APEC is 
one of them.
    The reason that it hasn't been there is that India has not 
traditionally been seen as a Pacific power. It's an Indian 
Ocean power. But I think that's--you know, those are just 
details and the broader idea should be to include India in all 
these institutions.
    Similarly, the TPP--I think India is very far away from 
being in the TPP right now. But the principle behind the TPP, 
again, should be--should be expansive, inclusive and I believe 
that is the--that is the general idea behind it.
    Mr. Chabot. Okay. Thank you.
    Any thoughts on those things, Mr. Puri? Anything you'd like 
to add?
    Mr. Puri. No. I think my colleagues have talked about it 
and I think the United States should support India in terms of 
joining the APEC.
    Mr. Chabot. Okay. Thank you very much. My time has expired.
    The gentleman from California, the ranking member today, is 
recognized for 5 minutes.
    Mr. Bera. Thank you, Mr. Chairman, and thank you for the 
panelists. Your testimony was riveting.
    Mr. Puri, you touched on the importance of the educational 
partnership and I'm a direct product of that. My parents, you 
know, immigrated here as students from India in the 1950s, as 
have many immigrants.
    As we think about the Indian-American community, we've 
prospered and we've done very well here in the United States 
and have continued to give back to the United States 
economically, academically and so forth, and I'd ask any of the 
panelists to think about the role of the Indian-American 
community here domestically as we strengthen the partnership 
with India and, you know, what advice you would give to the 
community here to help accelerate this relationship and how to 
use that.
    Mr. Puri. Well, I think the community here is already 
engaged in the dialogue. I mean, you're seeing some of us 
already here. So that's in the process.
    But I think, to me, maybe I'm--I really believe education 
is very, very important because we look at those students who 
come from India as a big source of revenue because they pay 
full fare. But they also contribute a lot in terms of 
technology.
    But you got to understand that in India there is a huge 
education market. Every Indian parent will sell their land or 
other things to educate their children.
    It's a $50 billion market but it also builds very, very 
strong bonds. Having done two major conclaves, I can just tell 
you that if we get engaged then there's the benefits, 
especially we have started engaging corporates in there. So the 
last delegation we took Iowa--we took companies from Iowa with 
us, Principal Group and others, John Deere, et cetera.
    The benefits are to those companies. Benefits are to the 
United States. Benefits are to India and to the educational 
institutions. So I think that's a win-win situation.
    And we should start looking at STEM teachers here too 
because there's a crying need and, you know, Mr. Bera, some of 
the math and science experts that exist in India. It's 
incredible. They are currently being taught from Skype. 
Students here are being taught from Skype in India so we could 
do a lot better in doing those things.
    Mr. Bera. Mr. Dhume?
    Mr. Dhume. Thank you.
    This is a question right after my heart. I spent a lot of 
time thinking about this. I would say that you could divide 
that question into two parts, really. There is a--there are the 
practical ways in which Indian--the Indian-American community, 
which is about 3 million strong, can contribute.
    It's a wealthy and educated community that can give back in 
terms of business ties, Indian-American-owned companies 
investing and so on.
    But I, in fact, think that the more important thing is the 
contribution of this community to India in terms of ideas. This 
is a community that has prospered in the United States 
precisely because the United States has got certain really big 
things right in terms of its ideas of pluralism, in terms of 
its ideas of tolerance, in terms of its ideas of economic 
freedom.
    And so I think that if I had so summarize this in a 
sentence I would say the key role for the Indian-American 
community in terms of giving back to India is to take the 
principles that have made the U.S. prosperous and strong and 
find ways to promote those ideas in an Indian context.
    Mr. Bera. Right. Thank you.
    Let me try to get my second question in here. We've talked 
a lot about the U.S. relationship with China versus the U.S. 
relationship with India.
    You know, is it possible during the rebalance--the Asian 
rebalance--for the U.S. to enhance both relationships or are 
they in conflict? And I'd direct that to Mr. Lohman or Mr. 
Nehru.
    Mr. Lohman. Briefly, yes, I do think you can enhance both 
relationships. That's the difficulty because it makes for a 
very complex set of relationships. We're trying to improve 
relations with China at the same time we're balancing against 
it and we're trying to come to the defense of our friends in 
the region.
    We're trying to get the Indians involved in that effort and 
we're not even clear on what the object of our effort is in 
East Asia.
    So I think it's possible. I think it also very much 
complicates the situation.
    Mr. Nehru. I would add that actually it's essential because 
I think India would find it very difficult if it felt that 
there was a G-2 being created between the United States and 
China that it was excluded from any future developments in the 
Asia Pacific region that was solely the product of the 
relations between those two countries.
    Mr. Bera. Great. Thank you.
    I'll yield back my time.
    Mr. Chabot. Thank you very much.
    The gentlemen yields back. The gentleman from North 
Carolina, Mr. Holding, is recognized for 5 minutes.
    Mr. Holding. Thank you, Mr. Chairman.
    Mr. Lohman, a few weeks ago at Part I of our hearing on the 
rebalance to Asia and the importance of South Asia we heard 
from the administration officials that the pivot is going to 
require a balance of diplomatic, military and economic 
interests, and I'd ask you how you'd rate this balance thus far 
and which one of these three areas is going to present the 
greatest challenge moving forward?
    Mr. Lohman. I think the military presence is the one that's 
going to be the biggest challenge because of what's going on 
here in Washington with budgets. I think that's the biggest 
problem.
    But in terms of ranking the various elements of it, I think 
you have to recognize that the diplomatic element of that is 
completely dependent on the other two.
    If you don't have an economic footprint in the region, if 
it's not big, if it's not something that can compete with the 
other powers or if you don't have the forward deployed military 
that we have had there for the last 70 years protecting the 
global commons, diplomats go to the table with a lot less 
behind them and they're a lot less effective.
    Mr. Holding. Switching gears just a little bit, and I'm 
going to open this up to the whole panel but starting with Mr. 
Lohman, if you could elaborate on what role you believe 
Pakistan and the current relations between the U.S. and 
Pakistan will play in the administration as a pivot.
    Because, you know, certainly we provide Pakistan with 
enough aid that, I think, that we have seen that we're not 
getting everything in return that we had hoped for with giving 
this aid.
    And with Pakistan being a nuclear weapon state and the 
instability that we've seen over the years, you know, the 
concerns that you might have as we look at relations between 
Pakistan and India.
    Mr. Lohman. I think for the most part Pakistan is 
irrelevant to East Asia. East Asia is a place of opportunity. 
It's not a place of conflict. It's not somewhere where 
Pakistan's normal toolbox is going to be of much use to anyone.
    But I think if they could do something they could help 
facilitate a good outcome in Afghanistan--that is, they could 
stop making our life more difficult in Afghanistan because 
especially getting involved in East Asia, if India is not 
comfortable with what's going on there--it's not comfortable 
with what's going on in Pakistan and Afghanistan--it's not 
going to be able to get more involved in East Asia.
    So I think Pakistan could be a more constructive player in 
the AfPak theater. That would be the best thing it could do. 
Other than that, there's really no role that it can play in 
East Asia.
    Mr. Holding. I'd like to open that up for some further 
comment from the panel.
    Mr. Dhume. I'd like to agree with Mr. Lohman. I mean, in a 
nutshell, the role of Pakistan in the pivot it could play a 
role of a spoiler, and the reason it could--the way it could 
play the role of a spoiler is by essentially destabilizing the 
two countries on its border--Afghanistan and Pakistan--by the 
use of jihadist proxies that it has done in the past.
    So I think the U.S. role, as I emphasized in my opening 
comments too, the U.S. role in South Asia, in Afghanistan and 
Pakistan, remains important mostly to ensure that Pakistan does 
not play that role of a spoiler, does not turn India westward 
looking at its core immediate domestic security concerns by--
caused by things such as terrorism.
    So in that sense, Pakistan is a player in it but not in a 
broader sense, as Mr. Lohman emphasized to you.
    Mr. Holding. Well, if foreign aid to Pakistan isn't gaining 
us the influence and control over the situation that we might 
hope, what is the solution?
    Mr. Dhume. I think it's--we're not going to get--we're not 
going to get to a perfect situation where the problem is 
solved. But we can try and improve it. It should be a 
combination of carrots and sticks.
    I do believe that there needs to continue to be aid in 
order to influence Pakistan, to strengthen liberal voices 
within Pakistan society, to try and turn the discourse within 
the Pakistani military toward democratization.
    So I think to that extent there has to be continued aid. 
There also have to be carrots. There also have to be sticks--
sorry. There has to be a capacity to target people within the 
Pakistan establishment who continue to foment terrorism.
    I think the drone program is essential and perhaps we may 
have to look at a time where the drone program is, depending on 
advances in technology, perhaps stepped up, even though it is 
unpopular in Pakistan.
    So I think this is going to be an ongoing thing. It's not 
going to go away in the next year or 2 or even 5. But, broadly 
speaking, you have to remain engaged and you have to recognize 
that there is going to be an element that is played by--element 
that is played by aid but also an element of force that has to 
be on the table in that region.
    Mr. Holding. Thank you. Mr. Chairman, I yield back.
    Mr. Chabot. The gentleman's time has expired.
    The gentleman from the Commonwealth of Virginia, Mr. 
Connolly, is recognized for 5 minutes.
    Mr. Connolly. Thank you so much, Mr. Chairman, and thank 
you for noting we are a commonwealth, one of four.
    Talking about Pakistan just a little bit, Mr. Nehru and Mr. 
Dhume in particular, as much as the United States is concerned 
about internal stability in Pakistan and the ability of the 
government to deliver on cooperation in the fight against 
terrorism and reestablishing control over unpoliced parts of 
the state, its relationship with its own military and so forth, 
surely India's got to be concerned about growing instability.
    This is a huge country. It's got nuclear weapons. What are 
India's responsibilities and obligations to Pakistan in terms 
of trying to help with stability? Mr. Dhume, you listed some 
options for us. What about India?
    Mr. Dhume. I think India has broadly acted quite 
responsibly toward Pakistan. You saw that in the response of 
India after the horrific Mumbai attacks of 2008. There's a 
broad consensus in India that Pakistan should not be allowed to 
fall apart and that means encouraging primarily a more robust 
economic relationship.
    India has granted most favored nation trading status to 
Pakistan about a decade and a half ago. Pakistan has yet to--is 
in the process of reciprocating that but that has not fully 
been--fully been done.
    But in a nutshell, the Indian policy toward Pakistan will 
continue to be more economic relations, more people-to-people 
contact, a robust engagement with liberal elements within 
Pakistani society the same way we do.
    And so it's quite--in many ways, there's a real confluence 
of interest between the U.S. and India in Pakistan because both 
countries view this similarly. Of course, the U.S. has more 
tools. The U.S. has military tools that are--such as the drone 
program, which India does not.
    But broadly speaking, both countries are trying to pull 
Pakistan or nudge Pakistan in the same direction where it's a 
country that begins to focus more on the welfare of its own 
citizens and less on exporting terrorism and other problems to 
countries on its borders.
    Mr. Connolly. Mr. Nehru?
    Mr. Nehru. Well, I'm actually not an expert on Pakistan. I 
concede that to Mr. Dhume. But let me just add one point.
    I do believe that economic relations are going to be 
critical between those two countries, and if India is able to 
continue to grow rapidly, the incentives on the Pakistani side 
will increase over time to increase its trade with India simply 
from an economic perspective.
    And therefore, actually economic growth in India--continued 
economic growth in India will be a very important feature or 
factor in improving economic relations between the two 
countries and I believe that then will be the key to an 
enduring peace.
    Mr. Connolly. Speaking of that, Mr. Puri, and I see you 
want to--you want to come at this as well so feel free to do 
so. But can I just tack a question on, particularly to you?
    Speaking of the Indian economy, I mean, the Indian economy 
was growing at 7, 8 percent. It's now down to about 5 percent.
    In my recent visit to India, one of the refrains I heard 
particularly from non-Indian nationals but also from some 
Indian nationals was the bureaucracy, the red tape of doing 
business in and with India is so oppressive that it's actually 
contributing to some diminishment of robust economic growth and 
discouraging investment in the country, especially with 
American companies. I wonder if you'd comment.
    Mr. Puri. Well, I'll just address the Pakistan issue that 
he raised and you raised.
    I think Pakistan is a perception problem also for the 
United States and India. Every time I go to India the people 
always ask me, why do you guys always side with Pakistan--why 
do you guys side with Pakistan? You give them so much money.
    So it is a perception issue and a perception problem for 
India. Mr. Dhume----
    Mr. Connolly. Which, by the way--excuse me--is ironic since 
the Pakistanis would--if you had a similar visit you'd hear why 
is American repivoting to India--why are you so favorable to 
India.
    Mr. Puri. I know. India is a democracy, has a strong media. 
The other issues, obviously, if--you know, Indian politics also 
dictates if there is a serious attack the public wants some 
action.
    When there was this Bombay attack, they were at the verge 
of responding because the public wanted some action just like 
any other democratic government would do. So that's the thin 
line that India always walks in terms of Pakistan.
    Now, coming to the economic issue, which I agree--red 
tapeism, governance issues--and that's why I addressed the 
issue that United States should start looking and companies 
should start looking at states where they can actually do 
business, where there is less red tape, whether it's 
Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu because there 
are those core states where you can actually do business, do 
business fast and get things done and those states are growing 
at 15 percent, 14 percent.
    And yes, there are other states which are growing at much 
less.
    Mr. Connolly. Yeah. Thank you very much. Thank--my time is 
up, Mr. Chairman.
    Mr. Chabot. Thank you. The gentleman's time has expired.
    The gentleman from Georgia, Mr. Collins, is recognized for 
5 minutes.
    Mr. Collins. Thank you, Mr. Chairman. I appreciate that.
    Mr. Dhume, I have just a quick--I don't want to spend the 
time here but you had mentioned--you brought up the sticks and 
carrots with Pakistan. Especially in light of and from my 
background in military and others maybe is it--maybe it's just 
a perception issue.
    Should we--in using your analogy of carrots and sticks it 
seems to me we need to be using more sticks here than carrots. 
I mean, it just--at this point, we're not seemingly able to 
penetrate, I think, from my perspective. I'd like to hear your 
thoughts just briefly on that.
    Mr. Dhume. I think the real problem we've had since 9/11 in 
Pakistan is that we've been good at wielding a really big 
stick, which is what we did after 9/11 when we sort of went to 
the Pakistanis and said that listen, you need to change your 
behavior and if you don't change your behavior you're going to 
suffer extremely grave consequences.
    What we've been less good at is wielding smaller sticks and 
that's what you need in the day to day, and just historically 
it's not something--you know, it's an awkward--Pakistan puts us 
in an awkward position because we know how to be friends and we 
know how to be adversaries.
    But this sort of in between stage where Pakistan is 
technically an ally of sorts but in fact has--its population is 
extremely hostile to the United States and its army and its 
intelligence agencies, in fact, have actively funded and 
trained elements that have attacked U.S. troops in Afghanistan, 
it's problematic.
    I think drones are part of the solution but they're not the 
whole solution. We have to be looking at things like targeted 
sanctions at top ISI officials. So more sticks, I agree with 
you, but they have to be--they have to be smaller sticks than 
the ones that we've had traditionally.
    Mr. Collins. Well, I tend to agree with you and that's why 
I wanted to give you a chance to clarify that because I do 
believe there needs to be more, as you call, little sticks. But 
I think that's something--a whole another hearing that we could 
do and especially if we're discussing drones and other issues 
that's coming apart here.
    But I want to turn to Mr. Nehru--a question of economics 
for you. The--there's been a lot of discussion on China and 
especially currency manipulation and the issue there of what 
can we do to stop the currency manipulation.
    But there's also another side of that as far as--and so the 
question would be is if China were to allow the RMB exchange 
rate to be adjustable based on market supply and demand, would 
the U.S. see a net increase in cheaper exports to China or what 
other aspects could we see there?
    I know it's talked about a lot but I'd like to hear sort 
of--a balanced approach is the word thrown around in Washington 
these days.
    Mr. Nehru. Well, this is a--this is a very technical 
question. But let me just make the following point. If China 
were ever to allow its exchange rate to completely respond to 
market forces it would mean that there would have to be no 
convertibility restrictions between the renminbi and other 
currencies.
    So there would have to be basically no capital controls. 
And for that to happen, you would have to have a financial 
sector that is very stable. Now, China saves 55 percent or 
close to 55 percent of its GDP. That's a large amount of 
savings, which are chasing increasingly riskier and riskier 
investments within China.
    You bring down those capital controls and a lot of that--a 
lot of those savings will pour out of the country and actually 
seek higher rates of return in the rest of the world. In fact, 
already one estimate says that $250 billion leaves China 
illegally, illicit capital outflows seeking higher returns 
outside China.
    When you have a large capital outflow from a country, the 
renminbi will depreciate, not appreciate. So you might have, in 
fact, an effect which is counter to what you would expect. So I 
would just say that this is a complex issue and has to be dealt 
with carefully.
    Mr. Collins. Well, that's why I wanted to bring it up 
because it's an issue sometimes that's spoke of as a fix-all, 
if you would. It's brought up as well, if we just fix this 
manipulation then we have, you know, an open market or a lower 
cost, and there's some things.
    But I wanted the--what you said there was, I think, 
something we all need to look at again in the bigger scheme of 
things is how we deal with not only the illegal outflow of 
capital that's coming out of China but if we did bring those 
down where would it go and how would it be, you know, met. And 
so I appreciate the answer.
    Just sort of a broad question, very quickly, and we may not 
have a--finish--I just want to finish this way. We're focused 
many times on the--on the big players there--India, you know, 
Pakistan, China, Afghanistan, of course, and others.
    I think at a certain point, Mr. Chairman, the other areas 
in that integral part of that Southeast Asia--the Nepals, the 
Bangladesh, the Sri Lankas--those are all an interesting part 
that, I think, play into a part of what we're doing on the 
economic side.
    Mr. Chabot. Don't forget Bhutan.
    Mr. Collins. And Bhutan and the rest. As you go along--and 
I appreciate us bringing this because I believe it is something 
important for not only America but also taking the entire area 
to task.
    So, Mr. Chairman, I yield back.
    Mr. Chabot. Thank you very much, Mr. Collins. We appreciate 
your questions.
    And our last questioner this this afternoon will be the now 
ranking member of this committee, the gentlelady from Hawaii, 
Ms. Gabbard.
    Ms. Gabbard. This is one of the few places where things 
happen fast, right, Mr. Chairman?
    Thank you, gentlemen, for your--for your insight and for 
being here today with this very important discussion. As we all 
have recognized, the countries of South Asia are vital 
strategic, economic and security partners for our country and 
we experience this as a day-to-day reality in my state of 
Hawaii, where our economic vitality and success is largely 
dependant on our working relationships with many countries in 
Asia and the Pacific and understand and welcome the region's 
participation in particular with multilateral organizations 
such as APEC.
    My first question is, really, going to focus on the 
economic impact here, specifically with visas and how we can 
improve the system that we have so that there is mutual 
economic benefit.
    With H-1B high-skilled workers visas, Indian nationals 
currently receive about one-third. Of those overall visas, 
we've heard from our colleague from California how he has--he 
and his family have personally been recipients or part of that 
success story.
    What ways can we improve this current temporary visa 
program so that our economy here can benefit from these high-
skilled worker programs? I open that to whoever.
    Mr. Puri. Well, I think there are a lot of solutions 
already that are floating around. But what happens is in 
Washington when you have a big comprehensive immigration debate 
some of these things get pushed aside.
    There are so many different models. You look at the Canada 
model, which is a point-based model based on skills. You look 
at Australia's model, which is, you know, they have just come 
out with a bonded visa that you put--if you want to get some of 
your family members in you put $10,000 and if they don't go 
back you lose that.
    But as far as skilled visas are concerned, I think we 
really lose out when people come here to go to school for 
graduate studies and Ph.D.s, et cetera. We should absolutely 
figure out a way to keeping them here and maybe put together a 
point-based system that is necessary.
    But what happens is today if somebody gets a green card but 
his or her spouse is in India, because of the waiting time that 
happens with India it takes them 10 years to bring their spouse 
here, which is not humanly right and also is a great motivator 
for that person to go back no matter what skills that person 
has.
    So we really have to take a look at not just skill but also 
family-based immigration policy that we are looking at.
    Ms. Gabbard. Thank you.
    The second follow-up question, similarly along the same 
vein, is talking about how we can increase the capacity to 
process visas from fast-growing countries like India, largely 
which would allow for increased tourism and other visitors to 
the U.S.--really seeing an opportunity there for a huge 
infusion into our economy with minimal outlay either in 
infrastructure or other ways.
    Wondering if you could talk about some opportunities that 
exist there as well as possibly some concerns with opening up 
the visa waiver program to countries like India, for example, 
or the global entry program and seeing how we can develop more 
bilateral Trusted Traveler arrangements.
    Mr. Dhume. I could be mistaken but my understanding of the 
visa--are you talking about the visa waiver or are you talking 
about a lottery?
    Ms. Gabbard. Visa waiver.
    Mr. Dhume. Yeah. I think that that would sort of not be 
realistic at this point simply because of the pressures of 
immigration that would--that would perhaps follow.
    But I do think that, to get back to Mr. Puri's point, what 
is important essentially in terms of looking at visa issues 
with India is the focus on attracting and retaining highly-
skilled immigrants, particularly people with math and 
engineering skills, and I think that ought to be the focus.
    In terms of processing times and so on, I don't have the 
figures at the top of my fingertips but I can tell you 
anecdotally that things have improved quite dramatically if you 
were to go to the Embassy in New Delhi or any of the 
consulates.
    You know, there used to be a time where to get a visa to 
the U.S., you know, there were long lines and so on. I think of 
streamlining has taken place, especially in terms of 
management. And so things in that direction have--things have 
broadly gone in the right direction in terms of processing and 
handling and so on.
    I mean, I'm sure there's always room for more improvement 
but that's my sense of it.
    Ms. Gabbard. Thank you. Mr. Lohman?
    Mr. Lohman. I just wanted to quickly add I think Mr. Bera 
suggested earlier or asked whether there was something that the 
Indian community should be doing. This actually would be a good 
issue to rally around.
    I mean, on the U.S.-India nuclear agreement the Indian 
community got very involved and is really largely responsible 
for it happening. This would be the sort of thing you could 
also rally the community around and make happen.
    Ms. Gabbard. Thank you. Thank you, gentlemen.
    Mr. Chabot. Thank you. The gentlelady's time has expired.
    We would like to thank all the witnesses for their really 
excellent questions and answers this afternoon. Their testimony 
was really very good--I think very helpful to members.
    I would ask unanimous consent that members have 5 
legislative days to revise and extend their remarks and submit 
written questions if they'd like to do that. If there's no 
further business to come before the subcommittee, we're 
adjourned.
    Thank you.
    [Whereupon, at 12:16 p.m., the subcommittee was adjourned.]
                                     

                                     

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