Strategic fire-sale

American relations with the world’s largest democracy, India, were much in the news last week. Secretary of State Condoleezza Rice made a stop in New Delhi, and spoke enthusiastically about the two countries’ shared values and improving ties. Shortly thereafter, confidence in both were shaken when an American company’s plant in India was sacked by demonstrators angry that a prominent Indian politician (who happens to be Hindu extremist associated with past sectarian violence) was denied a visa to tour the United States.

Another story that could have far-reaching and possibly very adverse implications for Indo-American relations went nearly unremarked, however – apart from attention from CNN’s Lou Dobbs and his intrepid investigative staff: The impending transfer, at fire-sale prices, of a strategically vital, American-owned global fiber-optic network to an Indian concern with close ties to its government and military.

Going, Going…

The Indians appreciate that ownership of such a network, built out over four years at a cost of some $3.4 billion, is an essential building block to commercial preeminence in the 21st Century. The growing demands of the U.S. military for the bandwidth necessary to transfer in a secure fashion immense quantities of video and other data in real-time to commanders and forces all over the world transform this fiber optic infrastructure being sold by Tyco into something else altogether – a force-multiplier of immeasurable value.

That would, of course, only be true if two conditions apply: First, the people who own the fiber optic network are willing to have our armed forces utilize their cable. It is noteworthy that the Indian company trying to buy the Tyco infrastructure, VSNL, several years ago refused to allow a fiber optic connection to be made to the U.S. base at Diego Garcia.

Second, the U.S. military has to have confidence that its message traffic will not be intercepted. The beauty of fiber optic communications systems is that they are very hard to penetrate – unless, that is, you own the infrastructure and, therefore, have physical control of its cable lines. If the next owner of Tyco’s global network is a company 26% owned by the Indian government and a major supplier to India’s military and intelligence services, the Pentagon could not be sure its "mail" is going unread by potentially unfriendly eyes.

A Strategic Partner?

Strategically minded national security types hope that India will prove in the future a reliable, democratic friend of the United States. But, it could turn out otherwise. While the Indians have as much, if not more, to fear from China’s increasing power-projection capabilities and expansionist ambitions, growing trade and warming political relations between the two emerging giants may obscure that danger. India is also forging worrying energy partnerships with Iran, even as it has retained its close ties forged with the Kremlin during the Cold War.

In short, the United States cannot afford to view the proposed sale of the Tyco Global Network as it has too many similar fire-sales of sensitive American-owned assets in recent years (including, notably, IBM’s transfer to Communist China of its personal computer division). It is not merely another commercial transaction, one in which vital U.S. economic and national security interests will be assured by whatever outcomes are determined by globalized market forces.

For example, the reported sale price of $130 million would be less than a third of what it will cost the Defense Department just to provide secure, high-bandwidth fiber optic links between various components of the Nation’s new missile defense system in the South Pacific, Alaska and the continental United States. It is unclear what the price tag would be if the U.S. military had to replicate the full Tyco network – even if it could get the myriad approvals required from other countries required to do so.

Needed: Adult Supervision

Unfortunately, as things stand now, the only impediments to the early transfer of a true national asset to a potentially problematic foreign owner are two, all-too-often pro forma bureaucratic exercises: the grant of a Federal Communications Commission license to transfer ownership and a possible Committee on Foreign Investment in the United States (CFIUS) review.

Last Thursday, the FCC agreed to consider VSNL’s request for the former under "streamlined" procedures. Whether the secretive CFIUS is even considering this sale is unknown at the moment. Even if it is, the committee has scarcely ever turned down such transactions. This is hardly a surprise, given that CFIUS is chaired by the Treasury Department – an agency that is charged with encouraging the repatriation of U.S. dollars through the sale of American properties to foreign investors.

In the Tyco Global Network case, though, too much is riding on the outcome to allow this national asset to be turned over to non-American owners without real and rigorous adult supervision. The executive branch and, if necessary, the Congress should consider alternative arrangements to preserve full, unrestricted and secure U.S. use of this fiber optic infrastructure – not least by the American military.

The Bottom Line

There are ample reasons to want to improve relations between the world’s most powerful democracy and its most populous one. Fortunately, there are also plenty of ways to do that without holding a fire-sale to India of one of this country’s strategic assets and true national treasures.