India has no difficulty paying for its arms purchases. After all, three years ago it overtook China as the world's largest arms importer, a somewhat unenviable position (Delhi would rather be making its own weapons).
India also seems constitutionally incapable of pushing through the most important deals to fruition, in large part due to a bureaucracy and political class paralysed by real or perceived corruption. Last week's termination of a major helicopter deal is only the latest example of this problem.
In the late 1980s, India's purchase of artillery guns from the Swedish company Bofors became enmeshed in a massive bribery scandal. It was 'India's Watergate', and resulted not just in the blacklisting of Bofors but also a paralysis in parts of Indian defence procurement in the 25 years since.
India did eventually get the Bofors guns, which proved crucial in the 1999 Kargil War, but it now operates less than half the original number. It is desperate to replenish these and other artillery pieces, and has allocated US$4 billion for this purpose, but procurement has moved in fits and starts, with bribery allegations repeatedly causing tenders to be frozen.
This dynamic has similarly played out in a host of other areas too, as a leaked letter in May 2012 between then Indian Army chief VK Singh and Prime Minister Manmohan Singh demonstrated. VK Singh complained that 'the state of the major (combat) arms…is indeed alarming', and that 'large scale voids' in crucial equipment required urgent attention from government. He separately insisted that he had been offered a huge bribe to purchase 600 trucks for the Indian Army, but that no-one had acted on his complaints. In his recent autobiography, Singh went as far as to imply that an official in the Prime Minister's Office was responsible (although, it should be remembered, Singh has his own axes to grind).
Last week, these issues surfaced again when India cancelled a US$670 million contract with the Anglo-Italian firm AgustaWestland, won in 2010, for 12 AW101 helicopters over what were euphemistically termed 'integrity-related issues' — in other word, allegations of bribes.
India has already made nearly half the payment and received three helicopters, which it intends to keep. The former head of Finmeccanica, AgustaWestland's parent company, is now on trial for corruption in Italy, and cases have been filed in India against a former Indian Air Force chief and members of his family.
Many in India welcomed the news. The Hindu, for example, argued in an editorial that it 'has sent out a much-needed message to companies seeking a share of India's growing defence market: bribing their way past the door does not pay'. But it also has some serious consequences. In theory, it shouldn't affect India's military. The helicopters were intended for civilian use (transporting what India calls VVIPs) rather than battlefield roles. But some reports suggest that the air force might have to divert its Mi17s to take up the slack, as the Mi8s that previously did the job are coming to their end of their operational life. A source from the Special Protection Group, which guards the prime minister, even suggested that it could put Manmohan Singh’s safety at risk.
More importantly, and plausibly, the episode is likely to reinforce Indian officials' pathological fear of being accused of corruption, and thereby slow down even ostensibly clean deals, of which a great many are in the pipeline. The Hindu welcomed the deterrent effect on bribers, but noted that India had now blacklisted at least 15 foreign firms on corruption-related charges and that this was having a deleterious effect on its military (it should be noted that AgustaWestland is not being blacklisted, which means it remains in play for other key contracts). Now, even some nearly completed agreements, like the US$20 billion fighter jet deal in which the French Rafale beat out American and European rivals, are being seen (implausibly, in my view) as liable to cancellation and re-negotiation.
Indian procurement procedures are undergoing reform, but tinkering with the rules will not solve the problem. As a former Indian bureaucrat who handled army procurement in the 1990s wrote in the Indian Express last year:
This case (like others before it) will follow a predictable course: investigators will earn junkets to Rome, honest reputations will be damaged, major procurements will halt and procedures made even more tortuous and centralised. Meanwhile, rent-seeking, like water, will seek new outlets … Only systemic reform can change things. Naturally, that has few takers. Who would like to shut off such an important source of revenue?
The tone is being set from the top. India's defence minister AK Anthony, the longest serving in Indian history, has been derisively labelled 'Saint Anthony' for his 'obsession with honesty and transparency'. This sounds admirable, but some see Anthony as having been taken it to such extremes that a former Indian service chief called him 'the worst defence minister India has seen in the last 65 years', and, according to a veteran Indian defence journalist, his term one of 'failure and missed opportunities'. Last month, I wrote on The Interpreter about Anthony's refusal (like that of his predecessors) to create a Chief of Defence Staff or Chairman of Joint Chiefs of Staff post in line with the recommendations of a reform committee, a move that was attributed to his 'regrettable penchant for avoiding difficult decisions'.
As Indian politics undergoes its most important upheaval in years, with the two traditional parties roiled by an 'electoral insurgency' from a new citizenship-oriented challenger, Anthony may not be around for much longer. But the sluggish, opaque, and unpredictable process by which India acquires its arms will certainly outlast him.
Image courtesy of Wikimedia Commons.