Washington, July 15: Two years ago, it was Electro Motive Diesel, a Chicago-based diesel locomotive manufacturer, and General Electric that US President Barack Obama was lobbying for with India. Today it is Wal-Mart Stores Inc that the White House is pitching for.
There is much more to Obama’s weekend criticism of Indian regulations on foreign direct investment than any ideological or egalitarian considerations for the promotion of free enterprise. The President, running for re-election, is unabashedly piggybacking on India’s potential to do business with American conglomerates in order to raise money from such companies for his campaign war chest.
“In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow,” Obama told PTI, according to a report put out today by the news agency.
The American business community, “one of the great champions of the US-India partnership… they tell us it is still too hard to invest in India,” the President complained without being overly prescriptive on how the Manmohan Singh government should deal with the country’s economic slow-down.
Three weeks ago, Obama personally sent out an email to his supporters through his re-election campaign web site in which he lamented that “I will be the first President in modern history to be outspent in his re-election campaign, if things continue as they have so far.”
A recent US Supreme Court decision lifting a slate of restrictions on campaign donations has come as a boon to Republicans in the coming presidential election, allowing the party’s affluent supporters to loosen their purse strings in favour of Obama’s opponent in November, Mitt Romney.
“I am not just talking about the super PACs (political action committees) and anonymous outside groups – I am talking about the Romney campaign itself. Those outside groups just add even more to the underlying problem. The Romney campaign raises more than we do.”
Obama has been scrambling to keep up with Romney in fundraising, accepting donations as small as three dollars per person for his re-election and offering all kinds of gimmicks to get money from voters.
One such gimmick is to enter the names of all donors, even those who give three dollars, into a lottery for a seat at a dinner hosted by the President and the First Lady, Michelle Obama. Another incentive is to draw lots for donors for a seat on Obama’s campaign bus when it goes to the respective areas where donors live.
“These dinners (for lottery winners) represent how we do things differently. My opponent spent this past weekend at a secretive retreat for the biggest donors to both his campaign and the super PACs that support him,” the email said.
More than 2.2 million Americans have chipped in with small amounts for Obama as they did four years ago for his maiden campaign for the White House, but Democrats are disheartened that Republicans are raising more money this year and most of it is coming from big corporations and their owners.
By championing the cause of multinationals and others here with a business stake in India “which continues to grow at an impressive rate” despite a slowdown in the global economy, Obama is sending out a message to America Inc that he is prepared to fight for them.
During his visit to India in 2010, which was pivoted on economic links designed to create jobs in the US, Obama told an entrepreneurship summit in Mumbai that “I am pleased that two US firms are finalists for a major locomotive tender”.
That reference was to American bids to manufacture diesel locomotives in India, a project with an initial investment of Rs 1,200-1,500 crore. General Electric, one of the bidders, is already a success story in Indo-US business relations while the second company, Electro Motive Diesel, is based in Obama’s home state of Illinois.
Now, nearly two years later, Obama has a vested interest in seeing restrictions on foreign multi-brand retail eased in India because the American retail giant, Wal-Mart, is in the forefront of a campaign to allow such investment, opposed by Bengal chief minister Mamata Banerjee and some others.
Wal-Mart is one of the few US corporations that are openly supporting Obama’s healthcare plan, especially its individual mandate for insurance cover.
When George W. Bush was President, Wal-Mart donated hugely to Republicans and very little to Democrats.
Although the company continues to give money to Republicans, it has stepped up donations to Democrats to the point where the contributions are even. Obama would like to keep it that way till November and tap other companies which have similar stake in India.
The script for Obama’s latest gripe about investment restrictions in India has been written by the US-India Business Council, which wrote to the White House a few months ago that “what is apparent is that political power is devolving to strong state leaders, and the vacuum at the Centre is allowing forces in government to move on issues that are harmful to India’s investment climate”.
That letter, which was leaked, complained that “the compulsory license case, the procurement bills, the effort to expand the Essential List of Medicines are all examples where there is little political benefit, which indicates that the bureaucracy has a hand in moving these initiatives.”
When Obama came into office in 2009, he got into a confrontation with representative organisations of American industry and commerce. That proved costly for Democrats in 2010, when big business helped Republicans wrest control of the House of Representatives and whittle down the grip of Democrats in the Senate where they had a filibuster-proof majority earlier.
Obama eventually made conciliatory gestures to corporate America and the criticism now of India’s lack of openness to foreign investment is a risk-free step to court the US business community on an issue in which they have an interest.
A similar campaign by Obama and other Democrats against outsourcing of American jobs to India and China can be expected as the election campaign picks up. Obama hopes to put Republicans on the defensive on the outsourcing issue as he believes Romney has skeletons in his cupboard in this regard from the time he was an entrepreneur and ran several companies.
If Obama’s sincere intention was to influence Indian policies, he would have picked up the phone and talked to Manmohan Singh or written to him, especially now when the Prime Minister is in charge of the finance portfolio. But that will not bring as much dividend in election fundraising as public posturing on the issue will yield when election money is critical.