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Pakistan looms large as Clinton flies to India

ATHENS (Reuters) - Secretary of State Hillary Clinton hopes to cement gains in ties with emerging global power India when she flies to New Delhi on Monday ties while heading off new frictions with fragile U.S. ally Pakistan.

Clinton’s two-day trip to India, her second as secretary of state, follows President Barack Obama’s visit last November and underscores Washington’s growing bonds with the world’s second most populous country and its $1.6 trillion economy.

Clinton will meet Indian leaders for a U.S.-India “strategic dialogue” session, regular meetings designed to get officials from both sides working more closely together, and comes nearly a week after deadly triple bomb attack on India’s financial hub of Mumbai.

She will then move on to Chennai, the eastern port city which has become a hub for U.S. trade and investment, including a major auto engine plant for Ford Motor Co..

U.S. officials say Clinton’s trip will demonstrate the breadth of cooperation -- which ranges from expanding military and intelligence work to educational exchanges and nuclear and other hi-tech energy projects.

But the pending U.S. drawdown of forces in Afghanistan and Indian relations with traditional rival Pakistan will both be in focus as Indian security fears grow following Wednesday’s attacks on Mumbai.

U.S. officials and political analysts say that Clinton will urge India to stay the course and not raise tension, concerned that any overreaction by New Delhi could upset an already fragile U.S. relationship with Islamabad.

“She will encourage India to do all it can to engage Pakistan, to find areas where they might be able to break down some of their barriers and build some kind of confidence in each other,” said Karl Inderfurth, a former senior State Department official under the Clinton administration and now at the Center for Strategic and International Studies.

It will not be an easy sell -- although analysts say India itself is increasingly worried over the stability of its neighbor and has its own reasons for moving cautiously.

No one has claimed responsibility for last week’s Mumbai blasts, the worst such attack since Pakistan-based militants struck India’s financial hub in 2008, killing 166 people and raising tensions with Islamabad.

Indian police have questioned members of a home-grown militant group, taking some of the immediate heat off Pakistan.

But both New Delhi and Washington suspect that elements of the Pakistani establishment may not be fully onboard with the U.S.-led fight against Islamic militants, doubts underscored in May when U.S. forces killed al Qaeda leader Osama bin Laden in a compound not far from Islamabad without telling the government in advance.

“The Indians see the United States as finally waking up to the problem of Pakistan, and they will not want to interject themselves into that process,” said Ashley Tellis, an India expert at the Carnegie Endowment for International Peace.


Clinton will update Indian Prime Minister Manmohan Singh and other officials on Pakistan, as well as on U.S. plans to draw down about a third of the 100,000 U.S. forces from Afghanistan during the next year.

Indian officials are concerned an overly hasty U.S. departure could benefit the Taliban and by extension Pakistan, and Clinton will outline how Washington plans to both stay engaged amid growing talk of a political settlement.

Despite shared concerns, which include China’s growing assertiveness and traditional friendship with Pakistan, Clinton will spend much of her time highlighting U.S.-India economic ties -- a relationship both sides say holds great promise, but has yet to fulfill its potential.

The United States was disappointed when India rejected U.S. bids for an $11 billion fighter aircraft contract in April, but still hopes to profit from New Delhi’s ongoing military shopping spree such as a $4.1 billion purchase of Boeing C-17 military transport planes in June.

U.S. firms want to take a slice of India’s $150 billion nuclear energy market but have lagged state-backed rivals from Russia and France.

U.S. power giants such as General Electric are hoping to get a foothold after a landmark 2008 nuclear cooperation accord, although progress has been slow.

Washington has been pushing India to water down a law passed in 2010, which would force all private nuclear reactor builders to take on uncapped compensation in the event of a nuclear disaster and is considered tougher than in other nuclear power-producing countries.

And U.S. hopes for Indian moves to open up potentially lucrative sectors such as insurance and large-scale “big box” retail have been repeatedly set back, while outsourcing of U.S. jobs to cheaper Indian workers has also been a concern.

Editing by Paul de Bendern and Nick Macfie