WCA May 2008

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Wire & Cable ASIA – May/June 2008 29
Spotlight on: India
Aircraft sales, overseas study boost
US-Indian relations
Even as tensions between the US and Russia are on the rise
– over America’s prompt recognition of the new Republic of
Kosovo, among other issues – relations between the US
and India, which once bought most of its arms from Russia,
are improving steadily. India on 29th January announced that
it had placed a $2 billion order for military transport planes
and helicopters with Lockheed Martin (Bethesda, Maryland).
As noted by Ken Fireman of Bloomberg News (19th
February), the deal is the latest product of an Indian-US
relationship that has ‘moved from chilly co-existence to the
closest rapport since India achieved independence in 1947.’
Another, bigger such contract may be in the offing, as
Lockheed and Boeing Co (Chicago) compete for a $10
billion order to provide India with 126 fighter jets. If it
materialises, the deal would contribute heavily to annual
US-Indian trade, which totalled more than $41 billion
last year. The connection holds considerable potential.
After China, India has the world’s fastest-growing major
economy.
Mr Fireman wrote: “In addition to the hard numbers
of military and software sales, the warmer relationship
[between India and the US] is reflected in less tangible
things,” such as cultural and educational ties. He cited
the New York-based non-profit Institute of International
Education as reporting that more Indian college students
going abroad choose the United States than any other
country. In 2007, according to the New York-based
promoter of educational exchanges, 83,833 Indians spent
time at American colleges.
Britain, once the destination of choice for Indians studying
abroad, was in 11th place, with 8,438 students from India.
A grace note to the deal for transport planes and helicopters
is India’s purchase, last year, of the transport vessel USS
Trenton for $48.4 million. The vessel, which enhances
India’s ability to project its power in the Indian Ocean, is
now known as INS Jalashva.
America courts India,
but keeps an eye on China
On 28th February, in New Delhi, US Defense Secretary
Robert M Gates denied that the Bush administration
initiative to strengthen America’s ties to India was planned
with specific reference to China. But Pentagon officials
acknowledged that, in the course of Mr Gates’s two days
of meetings with Indian government attachés, considerable
discussion time was devoted to China.
To be sure, Mr Gates also put strenuous effort into preparing
the ground for future arms deals with Indonesia and
Australia, as well. Both of these overtures required some
finessing, and perhaps some back-pedalling.
After more than a decade of estrangement between the
US and Indonesia over human rights abuses laid to the
Indonesian military, Mr Gates pledged more active Pentagon
support to those very forces. In Australia, which has
expressed interest in acquiring the high-tech F-22 fighter jet
in use by the US Air Force, Mr Gates promised to look into
whether a Congressional prohibition against such purchases
might be lifted.
Even so, the focal point of Mr Gates’s swing around Asia
was clearly India, which – with its landmark nuclear energy
pact with the United States stalled – required an alternate
avenue of approach. Its surging economy and strong
desire to upgrade its ageing weaponry make India one of
the world’s most active arms markets. But it cannot have
been lost on US officials that India can also serve as a
counterweight to China’s regional heft.
A senior defence official traveling with Mr Gates said as
much, although on condition of anonymity. This source
told reporters that, given China’s military strength, it was
essential for the US to cement security relationships with
other powers in Asia ‘not in an aggressive sense, but
certainly as a hedge.’
Mining and minerals
Chinalco joins forces with
Pittsburgh-based Alcoa to buy
a 12% stake in mining giant Rio Tinto
The 1st February announcement, in Shanghai, of the joint
purchase by Aluminum Corp of China (Chinalco) and
US-based Alcoa Inc of a $14.05 billion (12%) stake in Rio
Tinto was clearly intended at thwarting Anglo-Australian
miner BHP Billiton Ltd’s unsolicited takeover bid for the
London-based multinational mining group. If the blocking
effort succeeds, state-owned Chinalco’s commitment
will represent the largest-ever foreign investment by a
Chinese company.
That investment could perhaps go higher, in light of a
memo filed by Rio Tinto with the Australian Stock Exchange
on 13 th February, a copy of which was obtained by Reuters.
Signed ahead of the $14.05 billion Chinalco-Alcoa offer for
a 12% stake in Rio Tinto, it suggested willingness to tap a
budget of up to $24 billion for a share of up to 14.9%.
The unusual joint Chinese-US initiative (again, if it is
successful) would close out BHP Billiton from a very
substantial source of supply at a time of strenuous endeavor
to secure access to natural resources. Rio Tinto is one of
the world’s largest mining companies and its second-largest
producer of iron ore. The company wholly-owns Hamersley
Iron, in Western Australia, where its partners on some
projects include several Chinese corporations; it also
owns 59% of the Iron Ore Co of Canada. Rio Tinto posted
a pre-tax profit in 2006 of approximately $10.2 billion on
turnover of $25.4 billion.
The eagerness of Chinalco – the biggest aluminium maker
in China – for even a minority stake in Rio Tinto is proof,
if any were needed, of the pitched battle being waged by
Statue of Liberty Image from BigStockPhoto.com
Photographer: Marty