For months now, it's been popular in the United States to whack China for its trade and currency policies. But India could soon become the next political whipping boy because it has been snaring U.S. hi-tech jobs. Recently unemployed computer professionals, labour unions and politicians have become alarmed that U.S. companies are moving growing numbers of information-technology jobs to India.

The Politics of Unemployment

Joblessness among tech workers in the U.S. is stubbornly high. Meanwhile, U.S. firms are exporting tech jobs to low-cost India. As an election nears, American politicians see votes in complaining about offshore outsourcing. In mid-September, technology workers staged a protest at a San Francisco conference promoting offshore outsourcing of service jobs to countries like India. The protesters were backed by a unit of one of America's most powerful unions, the Communications Workers of America. The unit, called the Washington Alliance of Technology Workers, or WashTech, was set up to fight the exodus of jobs overseas. The protesters carried such signs as "Chip in, don't chip out." A new group of unemployed computer specialists calling itself the Organization for the Rights of American Workers, or Toraw, protested at a similar job outsourcing conference in New York in July.

These sentiments were bolstered in mid-October when Intel Chairman Andy Grove warned at a software conference that a huge number of IT jobs could move from America to countries like India and China in the next decade. The hi-tech pioneer added that his California-based semiconductor manufacturing firm had "no choice" but to continue sending work offshore because of rising costs and the pressure to increase productivity.

It would be one thing if the protests and dire warnings stayed confined to angst-ridden words, but now American legislators are getting involved. Faced with an election next year, many smell a populist, potentially vote-attracting issue. On October 20, the House of Representatives' small-business committee held a hearing on the exodus of white-collar jobs. "At what point will we send so many jobs overseas that we won't have any jobs here to buy the products, regardless of where they're made?" asked the committee's chairman, Donald Manzullo of Illinois.

One of those who testified was California engineer Natasha Humphries, who was laid off in August by hand-held computing-device provider Palm Inc. several months after she was sent to India to train Indian engineers to perform her job. Humphries, who joined TechsUnited.org, a group created to protest against the departure of U.S. hi-tech jobs, believes that "offshoring has created a devastating economic climate."

There is an irony in Humphries' words that goes beyond her travelling to India to train the people who may have taken her job. Only a few years ago, American technology companies were accused of stealing some of the best and brightest engineering and scientific minds from India to meet a severe talent shortage. But now that the global economy has struggled for many months, technology unemployment in the U.S. is high and the jobs are moving to India.

Some industry insiders blame at least part of the unemployment problem on the U.S. programme of granting temporary work visas to hi-tech workers from India. Ron Hira of the Institute of Electrical and Electronics Engineers told the October 20 hearing that many of those who come to the U.S. under this visa scheme go home to set up or work for companies that compete with American companies. He called the visas for these workers "a subsidy promoting the movement of American jobs overseas."

This concern has prompted legislators in at least nine states to join the fight to slow job migration. New Jersey took the lead in drafting legislation after lawmakers learned that a company hired to help welfare recipients had moved its help-centre jobs to Mumbai. Legislation requiring state government contractors to use U.S.-based employees is still stuck in various committees. But the threat of the new law was enough to persuade the welfare-help contractor, eFunds Corp., to move the jobs back to New Jersey.

A flurry of comparable bills in several states has prompted India's National Association of Software and Service Companies, an umbrella grouping of some 850 companies, to hire high-powered lobbying firm Hill & Knowlton. "India is being made to look like the enemy in some parts of the media," says Nasscom's president, Kiran Karnik. "The popular mood is reinforced by politicians, and those statements make customers wary. They're concerned, as are we."

So far, none of the state-level bills have become law. If they did, however, "purely on a business plane, it wouldn't matter at all," says Karnik, since the bulk of India's outsourcing comes from private-sector customers, not from government contracts.

Cheap, Tech-Savvy Workers

Seeking to cut costs, U.S. multinationals such as General Electric, Honeywell and Citigroup have for years moved jobs to India, seeking to capitalize on the country's inexpensive but technology-savvy, English-speaking workforce. Nasscom estimates that job outsourcing to India saved U.S. companies $10 billion-11 billion in 2001 and was accompanied by a $3 billion increase in American exports to India that year.

The migration of these jobs wasn't a big issue when the U.S. economy was roaring and companies had a hard time filling job openings. But that attitude changed abruptly with the dotcom bust in 2000 and subsequent recession in the industry. Today, despite a tentative recovery, U.S. technology jobs remain scarce.

The exact number of jobs that have moved to India isn't known. The Communications Workers of America estimates that 400,000 white-collar jobs have already been lost, particularly to India, and projects that a good proportion of 3 million more expected to migrate offshore by 2012 will go to India as well. "This is not about protectionism," says Marcus Courtney of WashTech, the union affiliate that organized the San Francisco protest. "We have to find a way to engage in globalization so that it doesn't come at the expense of our best workers."

More of Courtney's anger is directed at U.S. companies than at India. "This is an issue about how companies want to increase profits at the expense of highly-skilled American employees," he says.

Others believe the figures cited by labour unions are exaggerated. Economist Rafiq Dossani of Stanford University cites Nasscom statistics estimating that India had 171,500 "business processes" jobs by March 2003, up from 106,000 a year earlier. And that number is expected to grow annually by about 45% over the next five years to be nearly 1 million by 2008. But even that heady growth is substantially less alarmist than what labour unions warn will be India's job-grab from America.

"Am I concerned that the U.S. information-technology industry will end up in India over the next year?" asks Harris Miller, who heads the Information Technology Association of America that includes America's leading multinationals. "That's rubbish. Only about 6%-8% of the all information-technology outsourcing will move offshore. Now it's only 2%."

Miller argues that the best way to protect U.S. jobs is to promote free trade. He believes that there are steps the U.S. government could take to bolster job growth, including such measures as establishing a tax credit for companies that engage in research and development. Miller also says that the current surplus of hi-tech workers in the U.S. will dissipate as the baby-boomer generation retires.

Others add that sending work offshore leads to important benefits to the U.S. John Chen, who heads Sybase, the software giant, argues that "when we spend $1 in India and China, 65 cents comes back" in the form of orders for hi-tech equipment.

Still, the new breed of hi-tech activists can boast of at least one recent success. They helped persuade a majority in the U.S. Congress to let lapse on September 30 a measure that had temporarily tripled the number of foreign professional workers, many from India, admitted to work in the U.S.--to 195,000 a year up from the usual 65,000.

But this victory may be short-lived. Utah Senator Orrin Hatch, the influential chairman of the Senate Judiciary Committee, is in the early stages of floating a proposal that would introduce a variety of exemptions that would effectively circumvent the 65,000-visa limit. If the proposal succeeds--and that's not assured--the number of hi-tech workers admitted into the U.S., many from India, could again top 100,000 a year.

Any moves to expand the number of visas for foreign hi-tech workers will likely be opposed by groups such as Toraw, the one founded last December by recently unemployed information-technology workers. These are people like John Bauman, a computer expert who lost his job in Connecticut a year ago. Toraw is lobbying Connecticut and other state governments to pass legislation making it illegal for a company in the U.S. to bring in a foreign worker and lay off an American employee within six months. "We'd like to see tax incentives for companies that don't offshore work and tax penalties for every job offshored," says Bauman. "I'm going to tell my kids to go into [car] repair so they can't be offshored," he adds.

If tech jobs in the U.S. remain scarce, the biggest uncertainty as to whether the U.S. ultimately takes action on the issue of outsourced jobs is the U.S. election coming up in November 2004. "It's anyone's guess as to which way the political roulette wheel will spin," says Vivek Paul, vice-chairman of Wipro, one of India's largest software firms. "We will definitely see more posturing, but the question is: Will we see regulatory action?"

Still, even if outsourcing opponents are big election winners, analysts doubt that India will face the strident critiques that China is likely to experience in the months ahead.

"There's no constituency for bashing India," says James Steinberg, a foreign-policy analyst in the Brookings Institution think-tank. Steinberg, who served as No. 2 in the Clinton administration's National Security Council, points out that it's politically easier in the U.S. to attack Beijing's communist government than the world's largest democracy. On top of that, American politicians raise a lot of money from Indian Americans. Says Steinberg: "There are only two countries that get an applause line when they're bashed [in the U.S.]: China and France."

President Bush's week-long swing through six Asian nations is long overdue. Despite being home to half the world's population and the globe's most dynamic economies, Asia has received scant attention from this administration. Unfortunately the president has only one subject on his agenda -- the war on terrorism. The president is touching lightly, if at all, on the other issues that matter most to this region -- economic globalization, China's growing presence, and political instability fed by economic disparities. This is not surprising. The Bush administration doesn't seem to think much about global economic issues. And when it does speak, as it has recently on the issue of currency manipulation by China and Japan, the administration's policy is confusing and contradictory. In Asia, the single-minded focus on terrorism leaves an opening for others -- China first of all -- who are more in tune with the region's concerns. "I've never seen a time when the U.S. has been so distracted and China has been so focused,'' Ernest Bower, the head of the U.S. business council for Southeast Asia, told a business magazine.

Regional economic bloc

Faced with multiple challenges, the countries of Southeast Asia have accelerated plans to create a regional economic bloc like the European Union. The Chinese, followed closely by India and Japan, are embracing the idea, proposing the creation of a vast East Asian free trade area that would encompass nearly 2 billion people, but notably not include the United States. When national security adviser Condoleezza Rice briefed reporters on the president's trip, the focus was almost entirely on security issues. Bush's itinerary is designed to highlight the nations working closely with the United States to combat Al-Qaida-linked Islamist terror groups in Southeast Asia -- Singapore, the Philippines, Indonesia and Thailand. Or to reward those who are backing the war in Iraq -- Japan and Australia. Even at the annual Asia Pacific Economic Cooperation summit in Bangkok, Bush plans to `"stress the need to put security at the heart of APEC's mission because prosperity and security are inseparable,'' Rice said. No one can argue with that basic proposition. The example she cited was the terrorist bombing a year ago in Bali, Indonesia, which shut down tourism, a vital source of income for Indonesians. But let's not look at that link through the wrong end of the telescope. We need to grapple with the poverty and income inequality in Indonesia, the world's largest Muslim-populated nation, which feeds growing Islamic radicalism.

China drives growth

East Asia has largely emerged from the financial crisis that swept through this region in 1997-98 and sent countries such as Indonesia into economic collapse. Economic growth should pick up to almost 6 percent next year, the World Bank has predicted. But much of this is driven by China's rapid growth, which is in turn sparking a sharp rise in trade within the region, much of it between countries in the region and China. These countries look warily on this rising giant. China is sucking away foreign investment from places like Silicon Valley that used to flow to them, and with it, jobs. At the same time, progress toward a global free market that ensures fair competition has stalled. The world trade talks in Cancun last month collapsed in rancor, and the United States seems content now to pursue its own bilateral trade deals with favored countries such as Singapore and Australia.

10-nation association

This has encouraged the 10-nation Association of Southeast Asian Nations to accelerate plans to create a European Union-style economic community. The Chinese sent a huge, high-powered delegation led by their premier to their recent meeting, signed a friendship treaty with the group and pledged to negotiate a free-trade zone with the group. "The Chinese are moving in in a big way,'' says Stanford University expert Donald K. Emmerson. Where is the United States in all this? "We're outside, and our businesses are going to be outside,'' says Brookings Institution global economic expert Lael Brainard. "The Bush administration needs to get a handle on this.'' If it doesn't, the United States will wake up one day from its infatuation with unilateralism and return to Asia to find that the furniture has been rearranged and the locks have been changed.

Stanford, December 1, 2003 -- Arthur Bienenstock, Vice Provost and Dean of Research and Graduate Policy, and Coit D. Blacker, Director, Stanford Institute for International Studies (SIIS), announced today that professor Stephen D. Krasner has been appointed deputy director of the Institute, effective January 1, 2004.

Krasner, the Graham H. Stuart professor of international relations, is also a senior fellow at the Institute and director of its Center on Democracy, Development and the Rule of Law (CDDRL).

"I am enormously grateful to Steve for his willingness to do double-duty at the Institute, as he already directs our Center on Democracy, Development and the Rule of Law," said SIIS director Blacker. Stanford is in the midst of an important transition -- evolving from a predominately national university to an institution with true global reach -- and I expect SIIS to be deeply involved in that process. Having Steve on board in a directing capacity will enhance our ability to think and act effectively at this important juncture in the development of the Institute."

Stephen D. Krasner came to Stanford University in 1981. He was the chair of the political science department from 1984 to 1991. Between 1986 and 1992, he was editor of International Organization. In 2002, he served as director of governance and development at the National Security Council. He was a fellow at the Center for Advanced Studies in the Behavioral Sciences (1987-88) and at the Wissenschaftskolleg zu Berlin (2000-01). He is a fellow of the American Academy of Arts and Sciences and a member of the Council on Foreign Relations.

His writings have dealt primarily with the political determinants of international economic relations, American foreign policy and sovereignty. His major publications include "Defending the National Interest: Raw Materials Investment and American Foreign Policy" (1978); "International Regimes," ed. 1983); "Structural Conflict: The Third World Against Global Liberalism" (1985); "Exploration and Contestation in the Study of World Politics," co-editor (1999); "Sovereignty: Organized Hypocrisy" (1999), and "Problematic Sovereignty: Contested Rules and Political Possibilities," editor (2001).

Krasner received his B.A. from Cornell, M.A. from Columbia and Ph.D. from Harvard. Before coming to Stanford, he taught at Harvard and UCLA.

Stephen Stedman, senior fellow at the Stanford Institute for International Studies (SIIS), has been appointed research director for the United Nations' new High-Level Panel on Threats, Challenges and Change. Stedman will leave for New York City next month for the remainder of the academic year.

On Nov. 4, U.N. Secretary General Kofi Annan appointed Stedman and 16 members of the blue-ribbon commission, which is chaired by Thailand's former Prime Minister Anand Panyarachun. The panel is charged with examining current global threats and analyzing future challenges to international peace and security. The group will not formulate policies on specific issues or on the United Nations' role in specific places, but it will advise the organization on reforms necessary to cope with emerging challenges. The panel will complete a 10,000- to 15,000-word report by late next year.

Stedman, a senior fellow at the Center for International Security and Cooperation (CISAC) at SIIS, has served as a consultant to the United Nations on issues of peacekeeping in civil war, light weapons proliferation and conflict in Africa, and preventive diplomacy. His most recent co-authored publications include Ending Civil Wars: The Implementation of Peace Agreements (2002) and Refugee Manipulation: War, Politics and the Abuse of Human Suffering (2003).

Asked about the genesis of his new appointment, Stedman said he has developed relations with a set of people at the United Nations during the last six years. "A lot of the work I've done has had resonance in the U.N.," he said. "Policymakers read it and they understand I have sympathy for people who have to make tough decisions."

CISAC co-director Scott Sagan said the appointment is a "great tribute to the quality and policy relevance of the work that Steve has done over his career."

Stedman said his biggest challenge will be producing a report "that is both hard-hitting and has the potential for leading to change. There is a general sense within the U.N. that, basically, the effectiveness and legitimacy of the organization has been called into account. When Kofi Annan announced his intention to create the panel, he declared that the U.N. was at a crossroads where it needed to rethink how it can effectively provide collective security in today's world."

In addition to Panyarachun, the panel members include such international policy figures as former Norwegian Prime Minister Gro Harlem Brundtland; former Australian Minister of Foreign Affairs Gareth Evans; former U.N. High Commissioner for Refugees Sadako Ogata of Japan; former Russian Prime Minister Yevgeny Primakov; and retired U.S. Lt. Gen. Brent Scowcroft, former national security adviser.

APARC Professor Donald K. Emmerson, together with IIS Director Coit D. Blacker and Hoover Institution Fellow Larry Diamond (both of CDDRL), discussed "Democracy vs. Liberty" on the television program "Uncommon Knowledge."

Is democracy - that is, free elections - to be desired at all times for all nations? Or are nations more successful when they establish the rule of law, property rights, and other constitutional liberties first? For the United States, this is no longer an academic question. America is deeply involved in nation-building in Afghanistan and Iraq. Should the establishment of democracy in these countries be the first priority for the United States, or is securing public order and the rule of law more important?