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INDO- US RELATION
Wednesday, 04 January 2012 12:08

 

INDO- US RELATION

Despite being one of the pioneers and founding members of the Non-Aligned Movement, India developed a closer relationship with the Soviet Union during the Cold War. India's strategic and military relations with Moscow and strong socialist policies had an adverse impact on its relations with the United States. After the dissolution of the Soviet Union, India began to review its foreign policy in a non-polar world, following which, it took steps to develop closer ties with the European Union and the United States. Today, India and the U.S. share an extensive cultural, strategic, military and economic relationship.

Long considered a “strategic backwater” from Washington’s perspective, India emerged in the 21st century as increasingly vital to core U.S. foreign policy interests. India, the region’s dominant actor with more than one billion citizens, is often characterized as a nascent great power and “indispensible partner” of the United States, one that many analysts view as a potential counterweight to China’s growing clout. Since 2004, Washington and New Delhi have been pursuing a “strategic partnership” based on shared values and apparently convergent geopolitical interests. Numerous economic, securities, and global initiatives, including plans for civilian nuclear cooperation, are underway. This latter initiative, first launched in 2005, reversed three decades of U.S. non proliferation policy. Also in 2005, the United States and India signed a ten-year defence framework agreement to expand bilateral security cooperation. The two countries now engage in numerous and unprecedented combined military exercises, and major U.S. arms sales to India are underway. The value of all bilateral trade tripled from 2004 to 2008 and continues to grow; significant two-way investment also flourishes. The influence of a large Indian-American community is reflected in Congress’s largest country-specific caucus. More than 100,000 Indian students are attending American universities.

Thus, during the tenure of the Clinton and Bush administrations, relations between India and the United States blossomed primarily over common concerns regarding growing Islamic extremism, energy security and climate change.

According to some foreign policy experts, there was a slight downturn in India-U.S. relations following the election of Barack Obama as the President of the United States in 2009. This was primarily due to the Obama administration's desire to improve relations with China, and President Obama's protectionist views on dealing with the economic crisis. However, the leaders of the two countries have repeatedly dismissed these concerns. In November 2010, President Obama visited India and addressed a joint session of the Indian Parliament, where he backed India's bid for a permanent seat on the United Nations Security Council.

History

Historically, the relationship between India and the United States has been very strong. This is reflected in the visit of Swami Vivekananda who introduced Yoga and Vedanta to America. Vivekananda was the first known Hindu Sage to come to the West, where he introduced Eastern thought at the World's Parliament of Religions, in connection with the World's Fair in Chicago, in 1893]. Here, his first lecture started with the line "Sisters and Brothers of America," . This salutation caused the audience to clap for two minutes, possibly because prior to this seminal speech, the audience was always used to the opening address: "Ladies and Gentlemen". It was this speech that catapulted Vivekananda to fame. first, from his large audiences in Chicago and later at numerous other locations in the U.S., including Memphis, Boston, San Francisco, New York, Los Angeles, and St. Louis.

After Indian independence until the end of the cold war, the relationship between the U.S. and India was often thorny. Dwight Eisenhower was the first U.S. President to visit India in 1959. He was so supportive of India that the New York Times remarked "It did not seem to matter much whether Nehru had actually requested or been given a guarantee that the U.S. would help India to meet further Chinese communist aggression. What mattered was the obvious strengthening of Indian-American friendship to a point where no such guarantee was necessary."

During John F. Kennedy's period as President, he saw India as a strategic partner against the rise of communist China. He said "Chinese Communists have been moving ahead the last 10 years. India has been making some progress, but if India does not succeed with her 450 million people, if she can't make freedom work, then people around the world are going to determine, particularly in the underdeveloped world, that the only way they can develop their resources is through the Communist system." The Kennedy administration was disturbed by what was considered "blatant Chinese communist aggression against India" after the Sino-Indian War. In a May 1963 National Security Council meeting, the United States discussed contingency planning that could be implemented in the event of another Chinese attack on India. Defense Secretary Robert McNamara and General Maxwell Taylor advised the president to use nuclear weapons should the Americans intervene in such a situation. Kennedy insisted that Washington defend India as it would any ally, saying, "We should defend India, and therefore we will defend India".

Kennedy's ambassador was the noted Canadian-American economist John Kenneth Galbraith. While in India, Galbraith helped establish one of the first Indian computer science departments, at the Indian Institute of Technology in Kanpur, Uttar Pradesh. As an economist he also presided over the largest (to that date) US-Foreign Aid program to any country.

From 1961 to 1963 the U.S. promised to help set up a large steel mill in Bokaro but the U.S. later withdrew the offer. The 1965 and 1971 Indo-Pakistani wars did not help U.S.-India relations. During the Cold War, the U.S. asked for Pakistan's help because India was seen to lean towards the Soviet Union. Later, when India would not agree to support the anti-Soviet operation in Afghanistan, it was left with few allies. Not until 1997 was there any effort to improve relations with the United States. Soon after Atal Bihari Vajpayee became Indian Prime Minister, he authorized a nuclear weapons test in Pokhran.

The United States strongly condemned the test, promised sanctions, and voted in favour of a United Nations Security Council Resolution condemning the test. United States President Bill Clinton then imposed economic sanctions on India. These consisted of cutting off all military and economic aid; freezing loans by American banks to state-owned Indian companies; prohibiting loans to the Indian government for all except food purchases; prohibiting American technology and uranium exports to India; and requiring the United States to oppose all loan requests by India to international lending agencies. However, these sanctions proved ineffective. India was experiencing a strong economic rise, and its trade with the United States only constituted a small portion of its GDP. Only Japan joined the U.S. in imposing direct sanctions, while most other nations continued to trade with India. The sanctions were soon lifted. The Clinton administration and Vajpayee exchanged representatives to help build relations. In March 2000, President Bill Clinton visited India. He had bilateral and economic discussions with Prime Minister Vajpayee. Over the course of improved diplomatic relations with the Bush administration, India has agreed to allow close international monitoring of its nuclear weapons development while refusing to give up its current nuclear arsenal. India and the U.S. have also greatly enhanced their economic ties.

After the September 11 attacks against the U.S. in 2001, President George W. Bush collaborated with India to control and police the extremely crucial Indian Ocean sea-lanes from the Suez to Singapore. The December 2004 tsunami saw the U.S. and Indian navies cooperating in search and rescue operations and reconstruction of affected areas. An Open Skies Agreement was made in April 2005. This helped enhance trade, tourism, and business by the increased number of flights. Air India purchased 68 U.S. Boeing aircraft, which cost $8 billion.

Former U.S. Secretary of Defence Donald Rumsfeld and U.S. Secretary of State Condoleezza Rice have made recent visits to India as well. After Hurricane Katrina, India donated $5 million to the American Red Cross and sent two plane loads of relief supplies and materials to help. Then on 1 March 2006, President Bush made another diplomatic visit to expand relations between India and the United States.

Military Relations

The U.S.-India defence relationship derives from a common belief in freedom, democracy, and the rule of law, and seeks to advance shared security interests. These interests include maintaining security and stability, defeating terrorism and violent religious extremism, preventing the spread of weapons of mass destruction and associated materials, data, and technologies and protecting the free flow of commerce via land, air and sea lanes.

In recent years India has conducted joint military exercises with the U.S. in the Indian Ocean.

Recognizing India as a key to strategic U.S. interests, the United States has sought to strengthen its relationship with India. The two countries are the world's largest democracies, both committed to political freedom protected by representative government. India is also moving gradually toward greater economic freedom. The U.S. and India have a common interest in the free flow of commerce and resources, including through the vital sea lanes of the Indian Ocean. They also share an interest in fighting terrorism and in creating a strategically stable Asia.

There have been some differences, however, which include U.S. concerns over India's nuclear weapons programs and the pace of India's economic reforms. In the past, these concerns may have dominated U.S. thinking about India, but today the U.S. views India as a growing world power with which it shares common strategic interests. A strong partnership between the two countries will continue to address differences and shape a dynamic and collaborative future.

In late September 2001, President Bush lifted sanctions imposed under the terms of the 1994 Nuclear Proliferation Prevention Act following India's nuclear tests in May 1998. The non proliferation dialogue initiated after the 1998 nuclear tests has bridged many of the gaps in understanding between the countries. In a meeting between President Bush and Prime Minister Vajpayee in November 2001, the two leaders expressed a strong interest in transforming the U.S.-India bilateral relationship. High-level meetings and concrete cooperation between the two countries increased during 2002 and 2003. In January 2004, the U.S. and India launched the Next Steps in Strategic Partnership (NSSP), which was both a milestone in the transformation of the bilateral relationship and a blueprint for its further progress.

In July 2005, President Bush hosted Prime Minister Singh in Washington, DC. The two leaders announced the successful completion of the NSSP, as well as other agreements which further enhance cooperation in the areas of civil nuclear, civil space, and high-technology commerce. Other initiatives announced at this meeting include: an U.S.-India Economic Dialogue; Fight Against HIV/AIDS; Disaster Relief; Technology Cooperation; Democracy Initiative; an Agriculture Knowledge Initiative; a Trade Policy Forum; Energy Dialogue; and CEO Forum. President Bush made a reciprocal visit to India in March 2006, during which the progress of these initiatives were reviewed, and new initiatives were launched.

In December 2006, Congress passed the historic Henry J. Hyde United States-India Peaceful Atomic Cooperation Act, which allows direct civilian nuclear commerce with India for the first time in 30 years. U.S. policy had opposed nuclear cooperation with India because the country had developed nuclear weapons in contravention of international conventions and never signed the Nuclear Non-Proliferation Treaty. The legislation clears the way for India to buy U.S. nuclear reactors and fuel for civilian use.

In July 2007, the United States and India reached a historic milestone in their strategic partnership by completing negotiations on the bilateral agreement for peaceful nuclear cooperation, also known as the "123 agreement." This agreement, signed by Secretary of State Rice and External Affairs Minister Mukherjee on October 10, 2008, governs civil nuclear trade between the two countries and opens the door for American and Indian firms to participate in each other's civil nuclear energy sector. The U.S. and India seek to elevate the strategic partnership further to include cooperation in counter-terrorism, defence cooperation, education, and joint democracy promotion.

Economic Relations

The United States is also one of India's largest direct investors. From 1991 to 2004, the stock of FDI inflow has increased from USD $11.3 million to $344.4 million, totalling $4.13 billion. This is a compound rate increase of 57.5% annually. Indian direct investments abroad were started in 1992. Indian corporations and registered partnership firms are allowed to invest in businesses up to 100% of their net worth. India's largest outgoing investments are manufacturing, which account for 54.8% of the country's foreign investments. The second largest are non-financial services (software development), which accounts for 35.4% of investments.

Trade Relations

The United States is one of India's largest trading partners. In 2007, the United States exported $17.24 billion worth of goods to India and imported $24.02 billion worth of Indian goods. Major items exported by India to the U.S. include Information Technology Services, textiles, machinery, ITeS, gems and diamonds, chemicals, iron and steel products, coffee, tea, and other edible food products. Major American items imported by India include aircraft, fertilizers, computer hardware, scrap metal and medical equipment.

The United States is also India's largest investment partner, with American direct investment of $9 billion accounting for 9% of total foreign investment into India. Americans have made notable foreign investment in India's power generation, telecommunications, ports, roads, petroleum exploration/processing, and mining industries.

In July 2005, U.S. President George W. Bush and Indian Prime Minister Dr. Manmohan Singh created a new program called the Trade Policy Forum. It is run by a representative from each nation. The United States Trade Representative is Rob Portman and the Indian Commerce Secretary is Minister of Commerce Kamal Nath. The goal of the program is to increase bilateral trade, which is a two-way trade deal and the flow of investments.

There are five main sub-divisions of the Trade Policy Forum which include: Agricultural Trade group- This group has three main objectives: agreeing on terms that will allow India to export mangoes to the United States, permitting India's Agricultural and Process Food Products Export Development Authority (APEDA) to certify Indian products to the standards of the U.S. Department of Agriculture, and executing regulation procedures for approving edible wax on fruit.

Tariff and Non-Tariff Barriers group- Goals of the group include: agreeing that insecticides that are manufactures by United States companies can be sold throughout India. India had agreed to cut special regulations on trading carbonated drinks, many medicinal drugs, and lowering regulations on many imports that are not of agricultural nature. Both nations have agreed to discuss improved facets on the trade of Indian regulation requirements, jewellery, computer parts, motorcycles, fertilizer, and those tariffs that affect the American process of exporting boric acid.

The two nations have discussed matters such as those who wish to break into the accounting market, Indian companies gaining licenses for the telecommunications industry, and setting policies by the interaction of companies from both countries regarding new policies related to Indian media and broadcasting. This group has striven to exchange valuable information on recognizing different professional services offered by the two countries, discussing the movement and positioning of people in developing industries and assigning jobs to those people, continuation of talks in how India's citizens can gain access into the market for financial servicing, and discussing the limitation of equities.

The two countries have had talks about the restriction of investments in industries such as financial services, insurance, and retail. Also, to take advantage of any initiatives in joint investments such as agricultural processing and the transportation industries. Both countries have decided to promote small business initiatives in both countries by allowing trade between them.

The majority of exports from the United States to India include: aviation equipment, engineering materials and machinery, instruments used in optical and medical sectors, fertilizers, and stones and metals.

Below are the percentages of traded items India to U.S. increased by 21.12% to $6.94 billion.

  1. Diamonds & precious stones (25%)
  2. Textiles (29.01%)
  3. Iron & Steel (5.81%)
  4. Machinery (4.6%)
  5. Organic chemicals (4.3%)
  6. Electrical Machinery (4.28%)

Major items of export from U.S. to India: For the year 2006, figures are available up to the month of April. Merchandise exports from U.S. to India increased by 20.09.26% to U.S. $2.95 billion. Select major items with their percentage shares are given below

  1. Engineering goods & machinery (including electrical) (31.2%)
  2. Aviation & aircraft ( 16.8%)
  3. Precious stones & metals (8.01%)
  4. Optical instruments & equipment (7.33%)
  5. Organic chemicals (4.98%)

Ties under Obama administration

Just days into President Barack Obama’s term, Secretary of State Hillary Clinton and India’s external affairs minister agreed to “further strengthen the excellent bilateral relationship” between the United States and India. Soon after, President Obama issued a statement asserting that, “Our rapidly growing and deepening friendship with India offers benefits to all the world’s citizens” and that the people of India “should know they have no better friend and partner than the people of the United States.” As part of her confirmation hearing to become Secretary of State, Clinton told Senators she would work to fulfil President Obama’s commitment to “establish a true strategic partnership with India, increase our military cooperation, trade, and support democracies around the world.”

Despite such top-level assurances from the new U.S. Administration, during 2009 and into 2010, many in India became increasingly concerned that Washington was not focusing on the bilateral relationship with the same vigour as did the Bush Administration, which was viewed in India as having pursued both broader and stronger ties in an unprecedented manner.

Many concerns have arisen in New Delhi, among them that the Obama Administration was overly focused on U.S. relations with China in ways that would reduce India’s influence and visibility; that it was intent on deepening relations with India’s main rival, Pakistan, in ways that could be harmful to Indian security and perhaps lead to a more interventionist approach to the Kashmir problem; that a new U.S. emphasis on non proliferation and arms control would lead to pressure on India join such multilateral initiatives as the Comprehensive Test Ban Treaty and the Fissile Material Cut-off Treaty; and that the Administration might pursue so-called protectionist economic policies that could adversely affect bilateral commerce in goods and services.

New Delhi has long sought the removal of Indian companies and organizations from U.S. export control lists, seeing these as discriminatory and outdated. Assistant Secretary of State for South and Central Asian affairs Robert Blake contends that much progress has been made in this area, with less than one-half of one percent of all exports to India requiring any license. India also continues to seek explicit U.S. support for a permanent seat on the U.N. Security Council, support that has not been forthcoming. The Obama Administration recognizes a “need to reassess institutions of global governance” and asserts that India’s rise “will certainly be a factor in any future consideration of reform” of that Council.

Secretary of State Clinton was widely seen to have concluded a successful visit to India in July 2009, inking several agreements, and also making important symbolic points by staying at Mumbai’s Taj Mahal hotel (site of a major Islamist terrorist attack in 2008) and having a high profile meeting with women’s groups. While in New Delhi, Clinton set forth five key “pillars” of the U.S.-India engagement: (1) strategic cooperation; (2) energy and climate change; (3) economics, trade, and agriculture; (4) education and development; and (5) science technology and innovation.

In November 2009, President Obama hosted his inaugural state visit when Prime Minister Singh dined at the White House. Despite the important symbolism, the resulting diplomacy was seen by many proponents of closer ties as disappointing (if not an outright failure) in its outcome, at least to the extent that no “breakthroughs” in the bilateral relationship were announced. Yet from other perspectives there were visible ideational gains: the relationship was shown to transcend the preferences of any single leader or government; the two leaders demonstrated that their countries’ strategic goals were increasingly well aligned; and plans were made to continue taking advantage of complementarities while differences are well managed. Perhaps most significantly, the visit itself contributed to ameliorating concerns in India that the Obama Administration was insufficiently attuned to India’s potential role as a U.S. partner.

President Obama’s May 2010 National Security Strategy noted that, “The United States and India are building a strategic partnership that is underpinned by our shared interests, our shared values as the world’s two largest democracies, and close connections among our people”: "Working together through our Strategic Dialogue and high-level visits, we seek a broad based relationship in which India contributes to global counterterrorism efforts, nonproliferation, and helps promote poverty-reduction, education, health, and sustainable agriculture. We value India’s growing leadership on a wide array of global issues, through groups such as the G-20, and will seek to work with India to promote stability in South Asia and elsewhere in the world."

June 2010 Strategic Dialogue

In June 2010, the United States and India formally reengaged the U.S.-India Strategic Dialogue initiated under President Bush when a large delegation of high-ranking Indian officials led by External Affairs Minister S.M. Krishna visited Washington, DC. As leader of the U.S. delegation, Secretary of State Clinton lauded India as “an indispensible partner and a trusted friend.” President Obama appeared briefly at a State Department reception to declare his firm belief that “the relationship between the United States and India will be a defining partnership in the 21st century.”

The Strategic Dialogue produced a joint statement in which the two countries pledged to “deepen people-to-people, business-to-business, and government-to-government linkages … for the mutual benefit of both countries and for the promotion of global peace, stability, and prosperity.” It outlined extensive bilateral initiatives in each of ten key areas: (1) advancing global security and countering terrorism; (2) disarmament and non proliferation; (3) trade and economic relations; (4) high technology; (5) energy security, clean energy, and climate change; (6) agriculture; (7) education; (8) health; (9) science and technology; and (10) development. Secretary Clinton confirmed President Obama’s intention to visit India in November 2010.

President Obama’s Planned Travel to India

While U.S.-India engagement under the Obama Administration has not (to date) realized any groundbreaking initiatives as was the case under the Bush Administration, it may be that the apparently growing “dominance of ordinariness” in the relationship is a hidden strength that demonstrates its maturing into diplomatic normalcy. In this way, the nascent partnership may yet transform into a “special relationship” similar to those the United States has with Britain, Australia, and Japan, as is envisaged by some proponents of deeper U.S.-India ties.

As the U.S. President planned his November 2010 visit to India, an array of prickly bilateral issues confronted him, including differences over the proper regional roles to be played by China and Pakistan; the status of conflict in Afghanistan; international efforts to address Iran’s controversial nuclear program; restrictions on high-technology exports to India, outsourcing, and sticking points on the conclusion of arrangements for both civil nuclear and defence cooperation, among others.

According to some foreign policy experts, Obama's India visit was going to change US approach towards India permanently. This was later proved when President Obama saw India as prominent Future Power on world stage and declared it as one of the important ally to US. US President Obama openly Supports India's Bid for a permanent Seat in the United Nations Security Council.

Analyst expressed their views immediately that US now sees India with the same trust as it sees its main ally Briton, Australia and Japan. Obama's India Visit is seen by Foreign relation experts as the most successful US Presidential Visit.

Foreign policy issues

According to some analysts, India-U.S. relations have strained over Obama administration's approach in handling the Taliban insurgency in Afghanistan and Pakistan. India's National Security Adviser, M.K. Narayanan, criticized the Obama administration for linking the Kashmir dispute to the instability in Pakistan and Afghanistan and said that by doing so, President Obama was "barking up the wrong tree". The Foreign Policy too criticized Obama's approach towards South Asia saying that "India can be a part of the solution rather than part of the problem" in South Asia and suggested India to take a more proactive role in rebuilding Afghanistan irrespective of the attitude of the Obama administration. In a clear indication of growing rift between India and the U.S., the former decided not to accept a U.S. invitation to attend a conference on Afghanistan. Bloomberg reported that since 2008 Mumbai attacks, the public mood in India has been to pressure Pakistan more aggressively to take actions against the culprits behind the terrorist attack and this might reflect on the upcoming general elections in May 2009. Consequently, the Obama administration may find itself at odds with India's rigid stance against terrorism.

Robert Blake, assistant secretary of United States' Bureau of South and Central Asian Affairs, dismissed any concerns over a rift with India regarding United States' AfPak policy. Calling India and the United States "natural allies", Blake said that the United States cannot afford to meet the strategic priorities in Pakistan and Afghanistan at "the expense of India".

Economic relations

President George W. Bush shakes hands with India's Prime Minister Manmohan Singh during his visit to India in 2006, at Hyderabad House, New Delhi.

India strongly criticized Obama administration's decision to limit H-1B visas and India's External Affairs Minister, Pranab Mukherjee, said that his country would argue against U.S. "protectionism" at various international forums. The Vishwa Hindu Parishad, a close aide of India's main opposition party the Bharatiya Janata Party (BJP), said that if the United States continues with its anti-outsourcing policies, then India will "have to take steps to hurt American companies in India." India's Commerce Minister, Kamal Nath, said that India may move against Obama's outsourcing policies at the World Trade Organization.However, the outsourcing advisory head of KPMG said that India had no reason to worry since Obama's statements were directed against "outsourcing being carried out by manufacturing companies" and not outsourcing of IT-related services.

In May 2009, U.S. President Barack Obama reiterated his anti-outsourcing views and criticized the current U.S. tax policy "that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York." However, during the U.S.-India Business Council meet in June 2009, U.S. Secretary of State Hillary Clinton advocated for stronger economic ties between India and the United States. She also rebuked protectionist policies saying that "[United States] will not use the global financial crisis as an excuse to fall back on protectionism. We hope India will work with us to create a more open, equitable set of opportunities for trade between our nations."

In June 2009, United States provided diplomatic help in successfully pushing through a US$2.9 billion loan sponsored by the Asian Development Bank, despite considerable opposition from the People's Republic of China.

Strategic and military relations

In March 2009, the Obama administration cleared the US$2.1 billion sale of eight P-8 Poseidons to India. This deal, and the US$5 billion agreement to provide Boeing C-17 military transport aircraft and General Electric F404 engines announced during Obama's November 2010 visit, makes the U.S. one of the top three military suppliers for India, following Israel and Russia.

India expressed its concerns that Obama administration's non-military aid to Pakistan will not be used for counter-insurgency, but for building up its military against India. However, Robert Blake, assistant secretary of Bureau of South and Central Asian Affairs, said that the Pakistani Government was increasingly focused at fighting the Taliban insurgency and expressed hope that the people of India would "support and agree with what we are trying to do".

Concerns were raised in India that the Obama administration was delaying the full implementation of the Indo-U.S. Nuclear Deal. The Obama administration has also strongly advocated for the strengthening of the Comprehensive Test Ban Treaty and has pressurized India to sign the agreement. India's special envoy, Shyam Saran, "warned" the United States that India would continue to oppose any such treaty as it was "discriminatory". In June 2009, U.S. Secretary of State Hillary Clinton said that the Obama administration was "fully committed" to the Indo-U.S. civil nuclear agreement.

U.S. Chairman of the Joint Chiefs of Staff Mike Mullen encouraged stronger military ties between India and the United States and said that "India has emerged as an increasingly important strategic partner [of the U.S.]". U.S. Undersecretary of State William Joseph Burns said, "Never has there been a moment when India and America mattered more to each other."

2010 visit by President Obama

In November 2010 Obama became the second U.S. President after Richard Nixon (in 1969) to undertake a visit to India in his first term in office. On November 8 Obama became the 2nd U.S. President ever to address a joint session of the Parliament of India. In a major policy shift Obama declared U.S. support for India's permanent membership of United Nations Security Council. Calling India-U.S. relationship a defining partnership of 21st century he also announced removal of export control restrictions on several Indian companies and concluded trade deals worth $10 billion which are expected to create/support 50,000 jobs in the U.S. during this visit.

Last Updated on Friday, 04 May 2012 03:07
 

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