Administration officials have claimed the measures will hobble India’s economy. Even so, Congress is looking to expand them.
Additional economic sanctions — especially unilateral ones — won’t be very effective. In the past 30 years, U.S.-backed economic sanction schemes have failed in the overwhelming majority of cases. They’re likely to fail against India, too; only modest economic punishment will be inflicted.
Moreover, the purpose of additional sanctions is unclear. Indian leaders have already signaled that they will end testing and stop stockpiling plutonium if sanctions are lifted and they are allowed to buy U.S. civilian nuclear technology. That’s a reasonable request, especially since India has never exported nuclear and missile technology to rogue regimes.
Fortunately, many of the measures directed against India so far can’t properly be called sanctions. Instead, they simply halt wasteful foreign aid and corporate welfare spending. Three types of sanctions are currently in place.
First, the United States has ended direct aid payments. That’s the kind of sanction taxpayers can live with: It stands to save them $142 million in fiscal 1998 alone. The Indian people will also benefit in the long run as their government’s unhealthy addiction to foreign aid is broken.
For decades, the U.S. Agency for International Development and the multilateral development agencies supported by Washington have helped expand the state sector at the expense of India’s private sector. Direct U.S. aid from 1946 to 1996 amounted to nearly $50 billion, the bulk of which went to the government.
Despite the flow of dollars, economic reform in India has been tediously slow, even backsliding in recent years. Research economist Peter Boone of the London School of Economics confirms the dismal record of foreign aid to the developing world. After reviewing aid flows to more than 95 countries, Mr. Boone found that “virtually all aid goes to consumption” and that “aid does not increase investment and growth, nor benefit the poor as measured by improvements in human development indicators, but it does increase the size of government.”