Link West showing early signs of success

Link West showing early signs of success
Link West showing early signs of success

Prime Minister Narendra Modi's policy of renewing and redefining India's millennia-old civilisational bonds with the Middle East are bearing concrete fruit in the form of strategic alliances and investments in India's infrastructure sector. Mention the Middle East to an Indian and he will immediately associate it with oil, deserts, Dubai and, very possibly, a non-resident relative stationed there. None of the above provides a misleading picture of the region; equally, none of them paints the complete picture either. Today, the Middle East means a lot more to India any or all of the above, though each of them remains an important component. India's energy basket India is the world's third largest consumer of oil and gas, after China and the US. It has to import more than 70 per cent of this requirement as domestic production has not kept pace with demand. And it is the Middle East that meets more than 50 per cent of total Indian demand for hydrocarbons valued at more than $50 billion per year. But in recent years, the relationship has gone far beyond that of simple vendor-client ties. For one, the rise in India's political and economic profile in recent decades has led to a concomitant increase in its strategic interests across the globe - and this has raised the stakes in its relationships with other countries. From benign power to strategic ally The Middle East has traditionally been the US sphere of influence. But the gradual decline of American power has paved the way for a resurgent Russia and an emerging China to muscle their way into the region. With Russia playing a major role in the Syrian civil war and China leveraging its economic heft to its strategic advantage, India, obviously, could not sit back and risk getting left out of the game. Its policy planners are already grappling with China's string of pearls strategy designed to encircle it from all sides. For China, the Middle East is not only a source of oil and energy but also an important transit point in the trade routes it is setting up to connect its home markets to those Europe, Africa and beyond. It is far less judgmental than the US in choosing friends and has positioned itself as a friend to both Saudi Arabia and its strategic rival in the region, Iran. A serious challenge to its energy security in the form of increased Chinese presence in the Middle East would not be a thing Indian planners would be comfortable with. This, and the threat of terrorism emanating from ISIS as well as Pakistan-backed groups, has prompted India to forge closer strategic ties with important Arab states such as Saudi Arabia, the United Arab Emirates and Qatar, but more on that later. Important trade partner The GCC is among India's most important trade partners. Not only is the region the source of more than $50 billion worth of oil and gas for India, it is also the destination for $55 billion of merchant and project exports from India and accounts for almost a fifth of India's export basket. The main exports from India are projects, petrochemicals (mainly from the plants of Reliance Industries and Essar Oil in Gujarat), gems and jewellery and consumer goods. But the biggest export from India to the GCC nations is human capital. At last count, more than 7.5 million Indians were employed in the Gulf - as blue collar construction workers, in white collar technology jobs, in middle and senior management, in medicine, engineering, teaching and business. They ensure a massive inflow of remittances back to India. In 2015, they sent back $36 billion, making them India's most valuable export to the Middle East. Strategic calculus Take a map of Asia and a compass. Place the needle on New Delhi and draw an arc that extends beyond the southernmost tip of Sri Lanka. The two ends of the arc will touch the Middle East and the Malacca Straits, respectively. This, then, is India's natural sphere of influence. The British Raj realised India's locational advantage. As a result, New Delhi became their de facto Asian head office. Aden, an important British outpost in the Middle East was part of British India and the Trucial States, as the UAE was known as, interacted with the British authorities in India. And the Indian rupee was the common currency of many Gulf states. All this changed with Indian Independence in 1947. The successor Indian state was too weak to project power overseas and so, frittered away the strategic advantage that came with the country's unique location bang in the middle of the world's energy basket and the world's busiest trade route. The change in the relationship is already bearing fruit for India. GCC countries have, in recent years, extradited criminals and terrorists wanted in India. This is in sharp contrast to the benign neglect such requests were treated with until a few years ago. Important investors India will need about $1 trillion over the next decade to build and refurbish its creaking infrastructure and raise it to global standards. The Abu Dhabi Sovereign Wealth Fund has committed $75 billion for this purpose although the fine print of the investments has not been worked out yet. Qatar, one of the world's richest countries, too, has shown interest in investing in India. The government is also approaching other oil rich members of the GCC to invest part of their corpus of national savings in India. As evidenced from the commitment made by Abu Dhabi, this can evolve into a win-win partnership - the Gulf states can get safe and assured returns while India receives much needed funds to modernise and upgrade its infrastructure. The Middle East muddle For four and a half decades since Independence, Indian policy planners looked at the Middle East through the prism of the Congress party's domestic political compulsion to safeguard its Muslim vote bank. Thus, there was stiff opposition to upgrading the consular-level relations with Israel. That changed in 1992 when, ironically, a Congress Prime Minister, P.V. Narasimha Rao established full diplomatic relationship with the Jewish state. And contrary to what many had feared, the Arab world did not turn its back on India, did not stop oil exports to this country and did not order Indian workers to leave. As subsequent events showed, this new relationship has helped India's security situation vis-à-vis Pakistan and has helped the Indian armed forces keep abreast of the latest defence technologies. (This issue of IGB has a separate feature on Israel; so, this report will not delve any deeper into this relationship). The Iran tangle Much before it learnt to walk the tightrope between Israel and its Arab neighbours, New Delhi had to learn to walk on eggshells while navigating its relationship with Iran. Due to a variety of regional and religious factors, Arab states, most notably Saudi Arabia and UAE, did not see eye to eye with Iran. With the US weighing in on the side of the Arab states because of its own problems with Iran, India was caught in a delicate spot. It enjoyed good diplomatic relationships - as well as millennia-old civilisational ties - with both sides. So, choosing sides was not an option. But Indian planners will be keeping their fingers crossed that the proxy regional wars the two sides are fighting don't get out of hand because any increase in tensions in the Middle East leads to a spike in crude oil prices. Since every one dollar rise in crude prices leads to an increase of $1 billion in India's import bill, Indian wariness about violence in the Middle East is well founded. The Qatar imbroglio If Iran, Israel and the Arab grouping wasn't already a handful to deal with, a new front has been opened in the Middle East. Saudi Arabia, the de facto leader of the Arab bloc, the UAE, Bahrain and Egypt abruptly decided to cut of all diplomatic and other relations with follow Arab state Qatar, accusing it of funding terrorist organisations, maintaining relations with Iran and encouraging Al Jazeera to go after the ruling elites of other Arab states. The severing of relations included withdrawal of ambassadors, and imposing trade and travel bans. Qatar has denied supporting terrorism, and pointed to its support to the US-lead war on terror and the fact that it hosts the largest US military base in the region. The roots of this crisis can be traced to the decision of the Qatari royal family to normalise relations with Iran in order to develop the South Paras gas field, the world's largest, which is shared by the two countries. The wealth from the sale of gas has allowed Qatar to chart an independent foreign policy much to the chagrin of its powerful Arab neighbours. India is among the largest importers of Qatari gas and condensates, which power several fertiliser, cement and power plants in India. But experts said New Delhi had no cause for worry as of now as the Saudi Arabia-led side is unlikely to impose sanctions on Qatar or threaten an oil embargo on countries that buy Qatari gas. Narendra Modi's outreach Since coming to power, Prime Minister Narendra Modi has paid special focus on India's ties with the countries in the Middle East. His visit to the UAE in 2015 was the first by an Indian head of government in more than three decades. Then the two back-to-back visits by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan to India in 2016 and 2017 clearly showed that Modi's Link West policy, which focuses on strengthening India's engagements with its neighbours across the Arabian Sea is bearing fruit. Then, external affairs minister Sushma Swaraj's visits to Bahrain, Oman and Israel underlined the importance the Modi government gave to ties with the Middle East.

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