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Subject: Bilateral Relations

1. Major World Events
2. India’s Interests in neighbourhood
3. Effects of our Policies

  • The significance of PM’s visit to the UAE

    Context

    Prime Minister Narendra Modi’s visit to the UAE on June 28 was his fourth, having visited the country earlier in August 2015, in February 2018 and again in August 2019.

    Why do the Gulf and UAE matters to India?

    • The UAE has given crucial support to India in the Islamic world, first by inviting our late External Affairs Minister Sushma Swaraj as a guest of honour at an OIC foreign ministers meeting in Abu Dhabi.
    • The UAE stood with us on Jammu and Kashmir following the abrogation of Article 370.
    • The Gulf is our third-largest trading partner.
    • The Gulf region is our principal source of hydrocarbons.
    • It is also a major source of foreign investment.
    • The region is home to some 8 million Indians who send in over $50 billion annually in remittances.

    Deepening bilateral ties

    • CEPA: In a virtual summit with Sheikh Mohamed in February 2022, both sides signed a Comprehensive Economic Partnership Agreement (CEPA).
    • CEPA is a significant milestone that was negotiated and finalised in just 88 days and promises to increase bilateral trade from $60 billion to $ 100 billion in five years.
    •  It is expected to help Indian exports in areas ranging from gems and jewellery and textiles to footwear and pharmaceuticals, apart from enhanced access for Indian service providers to 11 specific sectors.
    • Vision statement: An ambitious, forward-looking Joint Vision Statement titled, “Advancing the India and UAE Comprehensive Strategic Partnership: New Frontiers, New Milestones” was also issued.
    • The Dubai-based DP World and India’s National Skills Development Council signed an agreement to set up a Skill India Centre in Varanasi to train local youth in logistics, port operations and allied areas so that they can pursue overseas employment.

    New avenues for multilateral cooperation

    • The rapid normalisation of ties between the UAE and Israel following the Abraham Accords of August 2020 has also opened new avenues of trilateral and multilateral cooperation.
    • Technology, capital and scale: Some Israeli tech companies are already establishing a base in Dubai and seeking to marry niche technologies with Emirati capital and Indian scale. 
    • 2I2U: The US has announced that President Joe Biden’s forthcoming visit to West Asia will see a virtual summit of what it calls the 2I2U, a new grouping that brings together India, Israel, the US and UAE.

    Conclusion

    The UAE today is India’s closest partner in the Arab world. Both countries need to expand the areas of cooperation and deepen their engagement.

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    Back2Basics: Abraham Accords

    • The Israel–UAE normalization agreement is officially called the Abraham Accords Peace Agreement.
    • It was initially agreed to in a joint statement by the United States, Israel and the United Arab Emirates (UAE) on August 13, 2020.
    • The UAE thus became the third Arab country, after Egypt in 1979 and Jordan in 1994, to agree to formally normalize its relationship with Israel as well as the first Persian Gulf country to do so.
    • Concurrently, Israel agreed to suspend plans for annexing parts of the West Bank.
    • The agreement normalized what had long been informal but robust foreign relations between the two countries.

  • China’s interventions in the Horn of Africa

    China recently held the first China-Horn of Africa Peace, Governance and Development Conference.

    Why in news?

    • China has been investing across the African continent throughout the last decade.
    • The conference held in Ethiopia witnessed the participation of foreign ministries from the following countries of the Horn: Kenya, Djibouti, Ethiopia, Sudan, Somalia, South Sudan, and Uganda.

    Major objectives

    • No doubt that china predates small nations with debt-trapping the countries.
    • It focuses on increasing the infrastructural investments in African countries and converting them to security assets.
    • It asserted three objectives in Africa:
    1. Controlling the pandemic
    2. Implementing a Forum on China-Africa Cooperation (FOCAC) outcomes, and
    3. Upholding common interests while fighting hegemonic politics

    What is FOCAC?

    • The FOCAC promotes China’s role in the infrastructural and societal development of the Horn.
    • In the 2021 forum, the entire region of the Horn participated and four resolutions were adopted:
    1. Dakar Action Plan
    2. China-Africa Cooperation Vision 2035
    3. Sino-African Declaration on Climate Change
    4. Declaration of the Eighth Ministerial Conference of FOCAC

    How has China garnered goodwill in HOA?

    • HOA have benefited from China’s vaccine diplomacy.
    • Beijing has also initiated the “2035 vision for China-Africa cooperation”; it aims to transform the health sector, alleviate poverty, promote trade and investments, and expand digital innovation.
    • The vision also focuses on green development, capacity building, improving people-to-people exchanges and facilitating peace and security in the continent.

    What are China’s primary interests/investments in the Horn of Africa?

    China’s interests are related to four major areas: infrastructural projects, financial assistance, natural resources and maritime interests.

    (1) Infrastructure

    • Looking at Chinese investments in infrastructure, one of its landmark projects was fully funding the $200 million African Union headquarters in Addis Ababa.
    • It has also made significant investments in railways; it is building the Addis-Djibouti railway line connecting the land-locked country with Eritrean ports in the Red Sea.
    • China has also invested in the Mombasa-Nairobi rail link in Kenya, and has already delivered on railway projects in Sudan.
    • It also has a viable military hardware market in Ethiopia and has built over 80 infrastructural projects in Somalia, including hospitals, roads, schools and stadiums.

    (2) Debts and ‘assistances’

    • With respect to financial assistance, Ethiopia, is one of the top five African recipients of Chinese investments, and also has a debt of almost $14 billion.
    • China accounts for 67% of Kenya’s bilateral debt.
    • In 2022, China promised to provide $15.7 million assistance to Eritrea.

    (3) Mineral explorations

    • The third major Chinese interest in Africa is the presence of natural resources — oil and coal. Beijing has invested $400 million in Mombasa’s oil terminal.
    • China is also interested in minerals such as gold, iron-ore, precious stones, chemicals, oil and natural gas in Ethiopia.
    • South Sudan, a source for petroleum products, has had continued Beijing investment in the industry since the latter’s initial entry in 1995.

    (4) Maritime interest

    • China’s first and only military base outside its mainland is in Djibouti.
    • During his visit in early 2022, Wang hinted at China’s willingness to develop Eritrea’s coast which would connect to China’s investments in land-locked Ethiopia.
    • The US has speculated that China wishes to build another military base in Kenya and Tanzania, thereby increasing its military presence in the region.

    Has the Horn of Africa been welcoming of China’s presence?

    • Africa has been keen on interacting with China.
    • Despite the wariness surrounding China’s projects in Africa, the governments have mostly been welcoming.
    • When conflict broke out in Tigray in November 2020, Addis Ababa appreciated Beijing for respecting Ethiopia’s sovereignty.
    • In December 2021, Kenya defended Chinese projects in the country; President Uhuru Kenyatta maintained that China-Africa partnership was mutually beneficial.
    • Similarly, in May 2022, the East African Community (EAC) welcomed Chinese investors to work in East Africa for the prosperity of the people.

    Beijing’s principle of non-intervention

    • Peace and stability is a mutual requirements for China and Africa.
    • For Africa, Chinese investments could lead to stable environments which could help the countries achieve their peace and development objectives.
    • For China, conflict in the region comes at a heavy cost.
    • In Ethiopia. when the conflict broke out, over 600 Chinese nationals, working on different projects, were evacuated, putting several investments at risk.
    • From a trading perspective, the region plays a significant role in achieving the objectives of the China-Africa Cooperation Vision 2035.

    Why is HOA important?

    • In the last decade, the region lying between Suez Canal and the Seychelles has emerged as a new geopolitical hotspot.
    • It has factors like impressive economic growth of regional countries, emergence of new security threats, and the ensuing major power rivalry driving the strategic trajectory of the region.
    • The straits of Bab el-Mandeb, which lies at the heart of this region, connects the energy-rich Middle East to Europe and, along with the Suez Canal, is considered a jugular vein for global trade.

    Indian footprints in the region

    • India has been paying greater attention to the region but still lags behind China.
    • India has bolstered defence cooperation with Oman and France (which holds territories in the Southwestern Indian Ocean).
    • It has signed logistics support agreements with these countries to ensure greater naval access in the region.
    • Reportedly, India was in talks with Japan to grant access to Indian naval vessels at the Japanese base in Djibouti.
    • India has also sought to open a military base in the Seychelles and plans to further enhance its naval presence in the Western Indian Ocean.

    These efforts are directed to increase Indian leverage and limit Chinese influence in the region.

    Lessons for India

    • China’s move towards peace in Africa indicates a shift in its principle of non-intervention.
    • It is China’s message that its presence in the continent has a larger objective and is not likely to be limited to the Horn of Africa.
    • This includes an aim to project itself as a global leader and boost its international status.
    • Further, the recent developments imply that China is focussing on a multifaceted growth in the continent for the long run.

     

     

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  • PM visits United Arab Emirates (UAE)

    PM Modi expressed gratitude to President of the United Arab Emirates Sheikh Mohamed bin Zayed (MBZ) al Nahyan for taking great care of 3.5 million Indian community in the UAE during the pandemic.

    India- UAE Relations: A backgrounder

    • The relation has greatly flourished especially after the accession of H. H. Sheikh Zayed Bin Sultan Al Nahyan, as the ruler of Abu Dhabi in 1966.
    • The greater push has been achieved in bilateral relations when the visit of Indian PM’s to the UAE in August 2015.
    • It marked the beginning of a new strategic partnership between the two countries.
    • Further, the Crown Prince was invited in January 2017 as the chief guest at India’s Republic Day celebrations.
    • In 2017 the two sides signed the agreement on Comprehensive Strategic Partnership (CSP).

    Significance of ties

    • Indian Diaspora in UAE: Around 3 million Indians are living harmoniously in the UAE.
    • UAE – A willing partner: As India seeks to enhance economic engagement and deepen security cooperation with the Gulf, it finds a willing partner in the UAE.
    • India being a natural partner: UAE’s ‘Look East’ find partners for its economic growth and with security concerns emanating from turmoil in West Asia and growing threat from terrorism.
    • Investments: UAE has a special place due to its business-friendly atmosphere, willingness to invest in the Indian economy.
    • India’s West Asia policy: The UAE occupies a key place in India’s West Asia policy. The high-level visit from both sides has given a new impetus to this partnership.

    Why UAE is tilting toward India?

    • Turmoil in West Asia: Geopolitical conditions as Iran is threatening continuously to close the Strait of Hormuz in case there is a conflict with Saudi Arabia or US.
    • Disappointment from Pakistan: UAE saw Pakistan as a partner and incorporated a deep economic and security relationship with it. But in the present day, Pakistan does not seem to be of much help to UAE.
    • India as a market: India is an important destination for oil and energy purchase. UAE also recognizes exhaustible nature of its fossil fuel reserves.
    • Returns on investment: UAE’s massive sovereign wealth funds can act as a great resource in the development of infrastructure in India.
    • Addressing Terrorism: There has been a rising convergence between India and UAE on the terror issue and both the countries talked of the need to combat terror groups without any discrimination.
    • Lack of regional consensus: Countries like Syria, Iraq, Libya and Yemen are suffering from violent conflicts. The Gulf Cooperation Council (GCC) has not produced expected results.

    Economic Significance of the UAE

    • UAE, due to its strategic location, has emerged as an important economic centre in the world.
    • In recent years, the UAE, through its ‘Vision 2021’, has sought to diversify its economy and reduce its dependency on oil.
    • Although the UAE has diversified its economy, the hydrocarbon sector remains very important followed by services and manufacturing.
    • Within services, financial services, wholesale and retail trade, and real estate and business services are the main contributors.

    India-UAE trade and investment ties

    • India is UAE’s third largest trade partner after China and the United States.
    • The UAE accounts for 8 percent of India’s oil imports and was fifth largest supplier of crude oil to India.
    • The aim is to boost bilateral merchandise trade to above U.S.$100 billion and services trade to U.S.$15 billion in five years.
    • As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.
    • The UAE’s investment in India is estimated to be around U.S.$11.67 billion, which makes it the ninth biggest investor in India.

    Advanced technology and the knowledge economy

    (1) Technology

    • In 2018, India and UAE signed a MoU to generate an estimated $20 billion in the span of a decade.
    • The Emirates have stepped up efforts to invest in the development of the knowledge economy by expanding the “golden visa”.
    • Space is a new arena in which India and the UAE have collaborated through the work of the UAE Space Agency (UAESA) and the Indian Space Research Organization (ISRO).
    • Space cooperation between India and the UAE gained quick momentum during PM Modi’s visit to the Emirates in 2015.
    • The two countries are likely to work together on Emirates’ ‘Red planet Mission’.

    (2) Security and Defence Cooperation

    • Another significant pillar of India-UAE ties is reflected in their growing cooperation in security and defense sector.
    • With the spread of radicalism in Gulf and South Asia, India looks to enhance security cooperation with UAE to counter terrorist threats and combat radicalization.
    • ‘Desert Eagle II’, a ten day air combat exercise, was held between the air forces of India and UAE.

    Way Forward

    (1) Needs to ensure the execution of the investment projects with the required expertise

    • Potential areas to enhance bilateral trade include defence trade, food and agricultural products as well as automobiles.
    • Indian companies with expertise in renewable energy sector can invest in UAE.
    • In defence sector, there is a need to further enhance cooperation through joint training programmes.

    (2) Manifold Benefits of India-UAE Trade Agreements

    • With India’s newfound strength in exports, a trade agreement with an important country such as the UAE would help sustain the growth momentum.
    • As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.

    (3) Improving the relations with the GCC

    • As part of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, and Oman and shares a common market and customs union with these nations.
    • This FTA with the UAE will pave the way for India to enter the UAE’s strategic location, and have relatively easy access to the Africa market and its various trade partners.
    • This can help India to become a part of that supply chain especially in handlooms, handicrafts, textiles and pharma.

    (4) Solving the issue of UAE’s Non-Tariff Barriers (NTBs)

    • The UAE tariff structure is bound with the GCC (applied average tariff rate is 5%), therefore, the scope of addressing Non-Tariff Barriers (NTBs) becomes very important.
    • The reflection of NTBs can be seen through Non-Tariff Measures (NTMs) mostly covered by Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT).

     

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  • How Hanoi and New Delhi are fortifying defence ties

    Context

    The two countries recently deepened bilateral cooperation with the signing of the Joint Vision Statement on India-Vietnam Defence Partnership towards 2030 during the recent visit of Defence Minister Rajnath Singh to Vietnam.

    About the Joint Vision Statement

    • India and Vietnam Wednesday signed a Joint Vision Statement on India-Vietnam Defence Partnership towards 2030, “which will significantly enhance the scope and scale of existing defence cooperation”.
    • Boosting the scale and scope of defence cooperation: The Joint Vision Statement is aimed at boosting the scope and scale of the existing defence cooperation between the two nations.
    • Mutual logistic support: The two sides also signed a Memorandum of Understanding (MoU) on mutual logistics support.
    • Elevating CSP: This is the first agreement of its kind that Hanoi has entered into with any other country and elevates the standing of Comprehensive Strategic Partnership (CSP) which Hanoi shares with New Delhi since 2016 (along with only Russia and China).

    Enhanced maritime cooperation

    • Both countries find convergence in their approaches towards the maintenance of stability and security of the Indo-Pacific.
    • This approach has translated into diplomatic and political support in the context of developments within the region and manifested in the form of tangible and functional cooperation instruments — the most vital being bilateral defence partnership.
    • Because of the volume of maritime trade that passes through sea lanes of communication in the Indo-Pacific and potential as well as estimated energy reserves in these waters, maritime cooperation between countries in the region have expanded exponentially.

    Emphasis on the cooperative mechanism

    • The enhanced geostrategic prominence and attendant uncertainties vis-à-vis China’s expanding and often abrasive footprints in the Indo-Pacific have resulted in an overall increase in emphasis on cooperative mechanisms and frameworks across the region.
    • Defence partnership between the two countries has been growing steadily following the signing of the Defence Protocol in 2000 and today covers extensive navy-to-navy cooperation.

    Dealing with Chinese transgression

    • Vietnam has and continues to be one of the most vocal countries with respect to China’s periodic transgressions in the South China Sea.
    • Freedom of navigation: In India, Vietnam has found an equally uncompromising partner when it comes to the question of violations of freedom of navigation and threats to sovereign maritime territorial rights as enshrined under international maritime law.
    • New Delhi has supported Vietnam’s position in the South China Sea with respect to Beijing’s destabilising actions and coercive tactics backing by reiterating the irrefutability of the UNCLOS.
    • India has also not backed down from continuing ONGC Videsh Ltd (OVL)’s oil exploration project in Block 128 (which is within Hanoi’s EEZ) despite China’s protests.
    • Emphasis on naval diplomacy: It is also in the last few years that Vietnam has augmented its emphasis on naval diplomacy and strengthened its ties with the US alongside the extension of its engagement with India and other ASEAN members.
    • Despite the fact that the China factor has provided impetus to the solidification of ties, it is also important to consider that mutual cooperation is not driven solely by it.
    • Support in the rubric of Indo-Pacific: Both countries have expanded areas of collaboration and are supportive of each other’s individual and multilateral involvements within the rubric of the Indo-Pacific.

    Conclusion

    Convergences between New Delhi and Hanoi has naturally found expression in bilateral relations and the two countries are poised to develop their partnership further in the coming years.

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    Back2Basics: About UNCLOS

    • UNCLOS is sometimes referred to as the Law of the Sea Convention or the Law of the Sea treaty.
    • It came into operation and became effective from 16th November 1982.
    • It defines the rights and responsibilities of nations with respect to their use of the world’s oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources.
    • It has created three new institutions on the international scene :
      1. International Tribunal for the Law of the Sea,
      2. International Seabed Authority
      3. Commission on the Limits of the Continental Shelf

  • Caution in buying Russian cruide

    Context

    This week the Wall Street Journal and the New York Times both reported on India emerging as a major buyer of Russian oil.

    Background of rising fuel prices due to Ukraine crisis

    • A significant fallout of Russia’s invasion of Ukraine has been the rising cost of petroleum.
    • In response to the invasion, Western countries, including the United States and Europe, have imposed an array of sanctions against Russia.
    • Reduced purchases from Russia: Europe and the United States have seen the price of oil steadily rise after they reduced their purchases from Russia.
    • For now, Russia has been able to mitigate the impact of sanctions by selling crude, oil and coal at reasonable prices in greater volumes to newer bulk buyers like India, to combat Europe trying to wean itself off Russian crude.

    Why India increased purchase of Russian oil

    • India has chosen a different route.
    • Cope with rising fuel prices: We are the third-largest importer and consumer of oil in the world and have increased our purchase of Russian oil to cope with rising oil prices elsewhere.
    • We are also refining crude oil or turning it into products like jet fuel and diesel and selling it to Europe and other nations.
    • Curb inflation: Importing Russian crude also helps us curb inflation that has been made worse by rising fuel prices.
    • Halting the fall of the rupee: Procuring discounted Russian oil is an effort by the government to bring down prices and halt the decline in the value of the Indian rupee.
    • India’s behaviour is governed by our best interest, which is the most important element of any astute foreign and economic policy.

    Issues with purchasing oil from Russia

    • The European Union has announced a ban against insuring ships carrying Russian oil, to commence this December.
    • Insurance ban: Countries like India, China and Turkey that are increasing their oil purchases from Russia have six months to find a work-around to the insurance ban by using non-European insurance companies.
    • European companies own most of the ships carrying Russian oil to India.
    • These insurance sanctions will impact the companies that own these ships as well.
    • Dependence for batteries: Apart from geopolitical changes in the world indicating the rise of China, there is a major change: Electric vehicles and electric batteries substituting for non-renewable resources like petroleum and diesel.
    • India cannot afford to be dependent on an unhindered supply of electric batteries from China, given geopolitical considerations and border disputes between the two nations.

    Way forward

    • To weather the new electric era that will no doubt be dotted with territorial wars and national security concerns, India would do well to preempt shortages in the arena – by putting in place factories which will build the electric batteries that will power our futures.
    • What the invasion of Ukraine has taught us is that we need to be more self-reliant and have in-house energy sources.

    Conclusion

    India needs to factor in the implications of comprehensive western sanctions as it increases its purchase of discounted Russian oil.

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  • India and Australia

    Context

    India and Australia, which share common values and interests, must work together with resolve to shape the economic and strategic environment so that it continues to support collective security and prosperity.

    India-Australia ties: A background

    • The ties are a Comprehensive Strategic Partnership full of practical, tangible actions that strengthen ties and benefit the region.
    • India and Australia are a small group of countries to hold annual leaders’ summits and biennial 2+2 talks involving foreign and defence ministers.
    • The defence forces of both the countries are undertaking more complex activities together, such as in Exercise Malabar with the US and Japan.
    • We coordinate closely on maritime domain awareness.
    • This year both countries deployed P-8 surveillance aircraft to each other’s territories for joint patrols.
    • Australia has also committed to a package of partnership initiatives in our update to the India Economic Strategy.
    • Cooperation on climate and sustainability: India and Australia have great potential to cooperate on climate and sustainability.

    Why India matters to Australia

    • Securing supply chain: India’s economy, manufacturing capabilities and talent ensure it will play a key role in securing supply chains and restarting post-pandemic growth.
    • Balance of power: Its military has the capacity and capability to respond to natural disasters, help stabilise an uncertain region and contribute to an effective balance of power.
    • Technological and scientific capabilities: Its technological and scientific capabilities are gateways to a cleaner and more sustainable world.
    •  Commitment to democracy: Most of all, India’s people have the optimism, the commitment to democracy, the drive and the goodwill to make our region safer, freer and better.

    Vision for open, inclusive and resilient Indo-Pacific region

    • As the bilateral relationship deepens, both the countries must begin to work more together with others in the region.
    • Responding to humanitarian crises and natural disasters: There is enormous potential in the Indian and Pacific oceans, where we each have vital interests in combating climate change, illegal fishing and people smuggling and responding to humanitarian crises and natural disasters.
    •  Australia has a vision for an open, inclusive and resilient Indo-Pacific region.
    • It is a vision for a region that is more integrated rather than divided, where trade and investment flow freely based on agreed rules and treaty commitments, where disputes are resolved through dialogue in accordance with international law, and where a strategic culture that respects the rights of all states, big and small, prevails.
    • It is a vision that Australia share with partners like ASEAN, and partners like India.
    • Whether through joint activities with like-minded countries, or the support of regional and multilateral architecture, Australia is ensuring the region has options and balance.

    Conclusion

    India and Australia’s interests don’t just align, they are inextricably entwined. Expect this relationship to grow and prosper, our cooperation to deepen.

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  • In Sri Lankan crisis, a window of economic opportunity

    Context

    The commonality between Sri Lanka and the southern parts of India remains a less-emphasised yet significant aspect of India-Sri Lanka relations.

    Crisis in Sri Lanka and relief provided by India

    • The present economic crisis in Sri Lanka has pushed it closer to India for immediate relief.
    • India, as part of its ‘Neighbourhood First’ policy, has extended support to the people of Sri Lanka in the form of aid (close to $3.5 billion) to help secure Sri Lanka’s food, health and energy security by supplying it essential items such as food, medicines, fuel and kerosene.
    • The latest in the series was the signing of an agreement on June 10 between the Government of Sri Lanka and the Export-Import Bank of India for a $55-million short term Line of Credit to facilitate the procurement of urea for paddy crop in the ongoing ‘Yala’ season.
    • On its part, Tamil Nadu decided to provide aid of ₹123 crore, comprising 40,000 tonnes of rice, 137 types of life-saving drugs and 500 tonnes of milk powder.

    Sri Lanka-India sub-regional context

    • During his second term as Prime Minister, Mr. Wickremesinghe while delivering a lecture in Chennai, in August 2003, called for the development of the south India-Sri Lanka sub-region as a single market.
    • Such a market would provide more opportunities for the economic growth of both countries.
    • In 2016 he highlighted the fact that the five Indian southern States, with a total population of 250 million, had a combined gross state domestic product of nearly $450 billion; with the addition of Sri Lanka’s $80 billion GDP, the sub-region would have a $500 billion economy, having an aggregate population of around 270 million.

    Challenges

    • Possibility of greater economic collaboration: Whether this bonhomie can lead to greater economic collaboration between Sri Lanka and south India, not necessarily Tamil Nadu alone, given the historical baggage, is anybody’s guess.
    • Baggage of history: Some sections of the Sinhalese still hold the view that India had been a threat to Sri Lanka and it can still be a threat to them.
    • The manner in which the Rajapaksa regime unilaterally scrapped in February 2021 a tripartite agreement signed in 2019 with India and Japan for the development of Colombo’s East Container Terminal was a reflection of the historical baggage.
    • This perception can be traced to history when Sri Lanka was invaded by rulers of south India who humbled the Sinhala kings.
    • In the aftermath of the 1983 anti-Tamil pogrom, the support provided by the Indian government to Tamil rebels only strengthened this perception.
    • Modest investment in Sri Lanka’s development: Despite India’s open willingness to take part in the development of Sri Lanka after the civil war, the scale of its involvement has been modest.
    • Incomplete projects due to lack of political will: After the cancellation of the tripartite agreement, India was later provided with projects such as the West Container Terminal, the Trincomalee oil tank farm and a couple of renewable projects, there were several proposals that envisaged India’s participation but did not see the light of day.
    • Another project, a collaboration between NTPC Limited and the Ceylon Electricity Board, was cancelled.
    • Other projects too such as the development of the Kankesanthurai harbour and the expansion of the Palaly airport in Jaffna, both envisaging Indian participation, would have become a reality had there been show of political will from the other side.
    • The project of building a sea bridge and tunnel, connecting Rameshwaram to Talaimannar, remains on paper.

    Way forward

    • Infrastructure development: Even now, there is enormous scope for collaboration between the two countries in the area of infrastructure development.
    • Cross-border energy trade: The economic crisis has revived talk of linking Sri Lanka’s electricity grid with that of India.
    • If this project takes off, the first point of interconnectivity on the Indian side will most likely be in Tamil Nadu.
    • India has cross-border energy trade with Bangladesh, Nepal, Bhutan and Myanmar.
    • Facilitating people-to-people interaction: The apprehension in the minds of sections of the Sinhalese majority about India being a threat can be dispelled only by facilitating greater people-to-people interaction, including pilgrimages by monks and other sections of Sri Lankan society to places of Buddhist importance not only in north India but also in the south (Andhra Pradesh).

    Conclusion

    Much more will have to be done but the opportunity created by the current circumstances should be utilised to bring Indian and Sri Lankan societies closer — a prerequisite to achieving an economic union between Sri Lanka and the southern States of India.

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  • What West Seti Power Project can mean for India-Nepal ties?

    India will be taking over an ambitious hydropower project in Nepal — West Seti — nearly four years after China withdrew from it, ending a six-year engagement between 2012 and 2018.

    What is West Seti Hydel Project?

    • The West Seti Dam is a proposed 750-megawatt (MW) hydroelectric dam on the Seti River in the Far-Western Development Region of Nepal.
    • Particularly, it is a storage scheme designed to generate and export large quantities of electrical energy to India.
    • The project is envisaged to provide Nepal 31.9% electricity free.
    • Besides, locals affected by the project are being given a share of Nepali Rs 10 million plus 30 units of electricity per month free.

    Why in news now?

    • The project was earlier accorded to a Chinese company.
    • But Nepal feared that India won’t buy power from China-executed projects.

    Significance: India -Nepal Power Relations

    • Nepal is rich in power sources with around 6,000 rivers and an estimated potential for 83,000 MW.
    • India has formally approached Nepal on many occasions, seeking preferential rights over Nepali waters should it match offers coming from elsewhere.
    • India is viewed as a feasible power market for Nepal.
    • India has undertaken to harness or expressed intent to harness major rivers in the north.

    Issues in project execution

    • There has been some uncertainty in Nepal over India’s inability to deliver projects on time.
    • An ambitious Mahakali treaty was signed back in 1996, to produce 6,480 MW, but India has still not been able to come out with the Detailed project Report.
    • The Upper Karnali project, for which the multinational GMR signed the contract, has made no headway for years.
    • Major reasons for stalling of these projects was a lack of consensus over power purchase agreement with India.
    • Also, seismic sensitivity of the Himalayan Region is the prime consideration.

    What has helped build faith recently?

    • India under PM Modi has been successful in executing the 900-MW Arun Three Project in eastern Nepal’s Sankhuwa Sabha.
    • After a standoff between Nepal and India led to the economic blockade of 2015, equations changed after Deuba took over last July, replacing Oli.

    Benefits for Nepal

    • Nepal has a massive power shortfall as it generates only around 900 MW against an installed capacity of nearly 2,000 MW.
    • Although it is currently selling 364 MW power to India, it has over the years importing from India.

    Hurdles from Nepal’s internal crisis

    • Nepal’s Constitution has a provision under which any treaty or agreement with another country on natural resources will require Parliament’s ratification by at least a two-thirds majority.
    • That will also mean homework will be required before any hydro project is signed and given for execution.

    Way forward

    • Until India agrees to value Nepal’s water and the existing focus on power is not reviewed, mutual distrust may continue.
    • India must start executing its projects timely.
    • And its success is expected to restore India’s image in Nepal and give it weightage in future considerations for hydropower projects, when competition is bound to be tough.
    • West Seti, therefore, has the potential to be a defining model for Nepal India’s power relations in future.

     

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  • India-Iran Relations

    Context

    Iran’s Foreign Minister Hossein Amir-Abdollahian’s three-day visit to India, last week, was the first ministerial-level visit from Iran since Ebrahim Raisi assumed the Iranian presidency in August last year.

    Chabahar Port - A Rethink is Needed | Vivekananda International Foundation

    Background

    • Bilateral relations between India and Iran span millennia marked by meaningful interactions.
    • Both countries shared borders until 1947 and share several common features in their language, culture and traditions.
    • The diplomatic links were established on 15th March 1950, when both countries signed a Treaty of Friendship and Perpetual Peace.
    • However, Iran’s joining of Baghdad pact in 1954 and the Cold War politics prevented both countries from having closer relations until the 1990s.
    • Islamic Revolution of 1979, hostage of US diplomats, Iran-Iraq War and Tehran’s support for Hezbollah and Hamas among others resulted in a range of political and economic sanctions, leading to Iran being isolated at a global level
    • In the 1990s, both countries’ interests converged around energy, Central Asia and security, mostly around the Pakistan-Afghan region.
    • This resulted in the signing of ‘The Delhi Declaration’, which provided the vision of the countries’ defence and strategic partnership and “Tehran Declaration”, which set forth the areas of possible cooperation

    India-Iran relations: A shared vision for equitable, pluralistic and co-operative international order

    • The “Tehran Declaration” signed during former Prime Minister Atal Bihari Vajpayee’s visit to Iran affirmed the shared vision of the two countries for an “equitable, pluralistic and co-operative international order”.
    • It recognised then Iranian President Mohammad Khatami’s vision of a “dialogue among civilisations” as a paradigm of international relations based on principles of tolerance, pluralism and respect for diversity.
    • Advancing the standing in global order: Two decades later, as India strengthens new partnerships within its regional vision centred on the Indo-Pacific, both countries remain driven by the goals of advancing their standing at the regional and global level.
    • Both are keen to project themselves as independent strategic actors determined to play a role in shaping a new multipolar order in their shared Eurasian neighbourhood and also at the global level.

    Why does India need Iran?

    • Energy security: Conventionally, for energy security
    • Iran is amongst India’s top oil suppliers
    • Strategic importance: Since the 1990s, Iran’s importance has become ‘strategic’
    • Security reasons: Iran’s cooperation is critical for India’s security given that
    • Pak supports terrorism in India
    • Influence in Afghanistan: India’s influence in Afghanistan is marginal.
    • Countering Pakistan: India needs Iran to moderate Pak’s influence in West Asia
    • Iran is a leader in the Muslim world.
    • Access to Afghanistan and Central Asia

    Significance of Iran for India

    • Geopolitical logic in relations: The sanctions imposed by the US on Iran after it withdrew from the nuclear deal in 2018 may have virtually destroyed India-Iran trade, especially India’s energy imports from Iran, but the geopolitical logic underpinning relations between the two countries remains firm.
    • Land bridge to Central Asia and Eurasia: Iran has sought to leverage its crossroad geographical location straddling the Persian Gulf and the Caspian Sea, India has come to see it as its land bridge to Central Asia and Eurasia.
    • INSTC: Despite the difficulties posed by decades of American sanctions, Iran has, along with India, Russia and a few other countries in the Eurasian region, continued to work on the multi-modal International North-South Transport Corridor (INSTC).
    • During Raisi’s visit to Moscow, the two sides had pledged to redouble their efforts to build the railway line between Iran’s Caspian port of Rasht and Astara on the Iran-Azerbaijan border.
    • Alternative Caspian Sea Route: The activation of an alternative Caspian Sea route speaks volumes about the positive outlook of Iran, India and Russia on this corridor despite a variety of geopolitical challenges.
    • Iran’s Chabahar port, where India is developing two berths that it will lease for commercial operations for 10 years, is also a story of perseverance in the ties between the two countries.

    Irritants in Indo-Iran ties

    • India’s relations with Saudi Arabia, US and Israel:  Growing Saudi-India-US-Israel relations have irked Iran.
    • In retaliation, Iran, for the first time, has linked the plight of Muslims in Gaza, Yemen, and Bahrain, with those in Kashmir
    • Iran-Pak-China ties: Warming Iran-Pak-China ties have annoyed India.
    • Sluggish Chabahar port development: Slow Chabahar port development has annoyed Iran.
    • China-Iran strategic partnership:
      • An economic and security partnership deal between Iran and China was recently made public, creating a global alarm, especially for India and the US.
      • The foundation for this deal was laid during Chinese President Xi Jinping’s visit to Iran in 2016
      • The draft agreement involves Chinese investments worth $400 billion into the Iranian economy over 25 years.
      • Of this, $280 billion will be allocated for the oil and gas sector and the remaining funding will be for other core sectors like banking, telecommunications, ports and railways.
      • In return, China would get a steady supply of Iranian oil at a heavily discounted rate during the same period.
      • This deal creates a win-win situation for both countries.
      • It lifts Iran’s sanction-hit economy and helps China set a firm foothold in the Middle East.

    US sanctions:

    • Iran’s aim to develop nuclear weapons has come under strong criticism from Trump Administration since the beginning.
    • Thus, the US has withdrawn from the Iran nuclear deal in 2018 after it was signed in 2015 and imposed unilateral sanctions on Iran.
    • The US’ sanctions and aggressive policies have created a situation of economic and geostrategic uncertainty.
    • Indian investors are wary of having businesses in Iran for the fear of the US.
    • Also, India deviated from the policy of not abiding by unilateral sanctions by ceasing to purchase Iranian oil.
    • Due to this, Iran did not back India’s bid to mobilise international support against Beijing’s aggression in the Ladakh.

    Other issues:

    • Iran is against India’s decision to abrogate Article 370 and 35A.
    • It has called on India and Pakistan to show restraint and prevent the killing of innocent Kashmiris, revealing possible close ties between Pakistan and Iran.
    • Iran also voiced against “extremist Hindus and their parties” during the 2020 Delhi riots.
    • Apart from these issues, Iran also sidelined India’s ONGC from exploration rights at its Farzad B Gas field, stating that it will engage the company at a later date.

    Way forward

    • As India is treading a fine line in balancing relations with the US, China and Iran while striving to augment its political influence in West Asia, embracing one country over the other is not an option for India.
    • Therefore, a multilateral foreign policy is a way forward.
    • India must retain its involvement in the Chabahar port development because of the geostrategic significance.
    • In the immediate term, India should improve its multi-alignment credentials to absorb investments into the port projects from the public and private sector, boost maritime cooperation among littoral countries to enhance the transit of goods, and foster regional partnership for the Chabahar port development.
    • Based on the mutual geostrategic and energy interests, India could collaborate with Japan under the Asia-Africa Growth Corridor.
    • Japan’s participation would enhance the multilateral characteristics of the transit hub in the region, unlike the China-owned Gwadar port. This will further enhance multilateral investments to solidify regional economic partnerships that enable the sustainability of the port.
    • Also, India needs to evolve a better strategy on Iran beyond waiting to see how the US may react, beyond having to issue a clarification in response to Iran’s sudden provocations and beyond allowing voids of partnerships that China may fill.
    • In order to do so, India must create a new alliance of countries having similar geostrategic interests, which are also facing issues with US’ unrealistic and aggressive foreign policy strategy and China’s expansionistic policies.

    Conclusion

    While the revival of the nuclear deal could give a fillip to India’s economic ties with Iran, India’s interests in continental Asia will be served well by heeding to the calls for developing a long-term roadmap for bilateral relations.

     

  • Back in news: India- ASEAN Relations

    The Foreign Minister of Myanmar is unlikely to be part of the 24th ASEAN-India Ministerial summit.

    What is the news?

    • Myanmar’s absence is the souring ASEAN-Myanmar.
    • This is after the coup that overthrew the Aung San Suu Kyi government in Myanmar.
    • This shows India’s concern over the junta in Myanmar which has refused to enter into a negotiation

    What is ASEAN?

    • ASEAN is a political and economic union of 10 member states in Southeast Asia.
    • It brings together ten Southeast Asian states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – into one organisation.
    • It was established on 8th August 1967 in Bangkok, Thailand with the signing of the Bangkok Declaration by the founding fathers of the countries of Indonesia, Malaysia, Thailand, Singapore, and the Philippines.
    • The preceding organisation was the Association of Southeast Asia (ASA) comprising of Thailand, the Philippines, and Malaysia.
    • Five other nations joined the ASEAN in subsequent years making the current membership to ten countries.

    India-ASEAN Relations: A Backgrounder

    • Look-East Policy in 1992 gave an upthrust to India -ASEAN relation and helped India in capitalizing its historical, cultural and civilizational linkages with the region.
    • India entered into a Free Trade Agreement (FTA) in goods with the region in 2003 which has facilitated the bilateral trade which now stands at approximately USD 76 Billion.
    • Further, the launch of Act East Policy in 2014 has added a new vigour to India-ASEAN relations.

    Significance of ASEAN to India

    • ASEAN’s centrality in India’s foreign policy – A cohesive, responsive, and prosperous ASEAN is central to India’s Indo-Pacific Vision and India’s Act East Policy and contributes to Security and Growth for All in the Region (SAGAR).
    • Economic – ASEAN is the one of the largest market in the world comparative to the EU and North American markets.
      • It’s also the 4th most popular investment destination globally.
    • Investment opportunities for Indian businesses – Cost of production is lower in Laos, Cambodia, and Myanmar, which means that Indian firms can gain significantly by investing in these countries.
    • Countering China – Cooperation between India and ASEAN is crucial to counter China’s power projection in the region. Both have territorial and border issues with China, disputes over the South China Islands and waters for ASEAN and over land boundaries for India.
    • Integration with regional and global supply chains – Increasing engagement with ASEAN is pivotal to facilitate India’s integration with regional and global supply chain movements.
    • North-East development – Connectivity projects with the ASEAN nations keeping Northeast India at the centre can ensure the economic growth of the land-locked north-eastern states.
      • Collaboration with the ASEAN nations is necessary to counter insurgency in the Northeast, combat terrorism, etc.
    • Maritime security – The Indian Ocean carries 90% of India’s trade and its energy sources. Presence of choke points such as the Malacca strait makes the South-East Asian region significant for countering traditional and non-traditional maritime threats like piracy and terrorism.
    • Indian Diaspora – About 9-8% of the population in Malaysia and Singapore is of Indian origin, in Myanmar-4% and Indonesia about 0.5%.

    Areas of Cooperation

    • Economic Cooperation – ASEAN is India’s 4th largest trading partner.
      • India signed FTA in goods in 2009 and an FTA in services and investments in 2014 with ASEAN.
      • India has a Comprehensive Economic Cooperation Agreement (CECA) with various countries of the ASEAN region which has resulted in concessional trade and a rise in investments.
    • Political Cooperation – ASEAN-India Centre (AIC) was established to undertake policy research, advocacy and networking activities with organizations and think-tanks in India and ASEAN.
      • Delhi Dialogue – Annual Track 1.5 event for discussing politico-security and economic issues between ASEAN and India.
    • Financial Assistance – India provides financial assistance to the ASEAN nations through various mechanism like ASEAN-India Cooperation Fund, ASEAN-India S&T Development Fund and ASEAN-India Green Fund.
    • Connectivity – India has been undertaking several connectivity projects like India-Myanmar-Thailand Trilateral (IMT) Highway and the Kaladan Multimodal Project.
      • India is also trying to establish a Maritime Transportation Agreementwith ASEAN and also Plans for a Railway link between New Delhi in India to Hanoi in Vietnam.
    • Socio-Cultural Cooperation – Programmes to boost People-to-People Interaction with ASEAN are organized, such as inviting ASEAN students to India, Special Training Course for ASEAN diplomats, Exchange of Parliamentarians, etc.
    • Defence Cooperation – Joint Naval and Military exercises are conducted between India and most ASEAN countries.
      • Vietnam has traditionally been a close friend on defense issues, Singapore is also an equally important partner.
    • Maritime Cooperation – adopted Delhi Declaration and decided to identify Cooperation in the Maritime Domain as the key area of cooperation under the ASEAN-India strategic partnership.
      • India is developing its maiden deep-sea port in a strategically located Sabang port in Indonesia.

    REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP) AGREEMENT

    • RCEP is a Free Trade Agreement (FTA) that has been signed between 15 countries including the 10 ASEAN members, China, Japan, South Korea, Australia, and New Zealand.
      • RCEP was first proposed in 2011 with an aim to create a consolidated market for the ASEAN countries and their trade partners.
      • RCEP now forms the world’s largest trade bloc, covering over 2.2 billion people and accounting for 30% of the world’s economy.
    • Though India was a part of the RCEP’s negotiations, it dropped out in November 2019, citing significant outstanding issues that remain unresolved.

    Reasons behind India pulling out of RCEP

    • Trade imbalance with RCEP members – India’s trade deficit with RCEP countries has almost doubled in the last five-six years.
    • Chinese Angle – From a geopolitical perspective, RCEP is China-led or is intended to expand China’s influence in Asia. India has already signed FTA with all the countries of RCEP except China.
    • Signing of RCEP can lead to cheaper products from China flooding the Indian market.
    • Lack of adequate protection for domestic industries – India’s proposals for strict Rules of Origin (to prevent routing of products from non-RCEP countries) and an Auto-trigger mechanism to impose tariffs when imports crossed a certain threshold which were not accepted.
    • Lack of Service component – Most developed RCEP countries where India can export services, have been unwilling to negotiate wide-ranging disciplines in services that can create new market access for trade in services in this region.
    • Concerns by local industries – A large number of sectors including dairy, agriculture, steel, automobiles, etc had expressed serious apprehensions on RCEP citing dominance of cheap foreign goods would dampen its business.
    • India’s FTA experience – India’s FTAs has generally led to greater imports than exports, giving rise to high trade deficits with FTA partners like South Korea, Japan, and ASEAN.

    Possible Implications of India not joining RCEP

    Protectionist image – Withdrawal from RCEP along with other recent measures like call for self-reliance under Atmanirbhar Abhiyan, etc can be perceived as India taking a protectionist stance in terms of trade policy.

    Lost opportunity for India’s export sector – RCEP was envisaged to strengthen Asian supply chains, bring in investments and boost the member countries’ competitiveness in global markets.

    Effect on bilateral ties with RCEP countries – There are concerns that the decision will hamper India’s bilateral trade with RCEP member countries as they would be inclined to bolster trade within the bloc.

    Lost opportunity in securing a position in the post COVID world: RCEP is expected to help member countries emerge from the economic devastation caused by the pandemic through access to regional supply chains.

    Arguments for reviewing India’s decision

    • Global Economic Stagnation due to Covid-19 pandemic – RCEP can serve as a bulwark in containing the free fall of the global economy and re-energising economic activity.
      • RCEP presents a unique opportunity to support India’s economic recovery, inclusive development, and job creation even as it helps strengthen regional supply chains.
    • Economic Realism – India should deter seeing RCEP only from the Chinese perspective.
      • India can draw inspiration from Japan & Australia, as they chose to bury their geopolitical differences with China to prioritise what they collectively see as a mutually beneficial trading compact.
    • Strategic Need – RCEP’s membership is a prerequisite to having a say in shaping RCEP’s rules, which is necessary to safeguard India’s interests and the interests of several countries that are too small to stand up to the largest member, China.
    • As the summary of the final agreement shows, the pact does cover and attempt to address some issues that India had flagged, including rules of origin, trade in services, movement of persons. Therefore, this makes the case of India to review its decision and look RCEP through the lens of economic realism.

    Challenges in India-ASEAN Relations

    • China factor – India’s effort in this regard is meagre when compared to China’s dominance in the region
      • China’s assertive military, political and economic rise, as well as the South China Sea disputes have divided ASEAN without unanimity amongst them.
    • Economic challenges – India has an unfavourable balance of trade with the ASEAN nations.
    • RCEP deal – India walking out of RCEP can become a sticking point between India and ASEAN, since India’s domestic market was considered a key element in the RCEP negotiations.
      • India has not signed RCEP for various reasons like non-transparency in RCEP, RCEP’s non-accounting of India’s service sector relaxations, etc.
      • By not signing the RCEP India also lose access to new market opportunities created in East Asia.
    • Slow development in Bilateral relations – Many bilateral deals with these nations are yet to be finalised, leading to the halting of various aspects of diplomatic ties.
    • Delayed projects – Though India has committed to many connectivity projects, they have not been completed at the rate on par with China
      • China, on the other hand, through its BRI, is able to gain the trust of these countries.

    India’s pulling out of the RCEP deal shows the limitations of the ties with the ASEAN nations. Maintaining cordial ties, both bilaterally and multilaterally with these nations is essential for both India’s economic and security interests.

    South-East Asian nations are looking at India to take on a greater role for the economic integration of the region and for ensuring an open and inclusive Indo-Pacific. Many of the members of the ASEAN perceive India as a much-needed counterbalance to China.

    Way Forward

    • An alternative economic corridor based multimodal connectivity such as Mekong-India Economic Corridor may be promoted, which will connect Indian coast with unexplored Southeast Asian coast and beyond.
      • Strengthening land, air, and sea linkages will enhance people-to-people flows, as well as boost business, investment, and tourism.
      • With China having three times more commercial flights than India to Southeast Asia, improving air connectivity between India and ASEAN countries should also be high on the agenda.
    • India has proposed setting up of an ASEAN-India Network of Universities (AINU) to enhance our educational ties.
    • India can become the military partner after the Atma Nirbar Bharat, Make in India projects are successfully implemented.
      • No ASEAN country has close military ties with China as they never trusted China for military alliance.
    • Concept of QUAD must be expanded to include the ASEAN countries and become a QUAD+ arrangement.
      • Vietnam and Indonesia have expressed a positive note on QUAD in the region.
    • Digital technologies – Given the reluctance of ASEAN states to take help from Chinese giants in the field (due to concerns regarding China’s ability to own data), Indian IT sector may take some advantage.
    • Strengthening cultural connect – Tourism can be further encouraged between India and the ASEAN with some creative branding by the two sides.

    Failure of South Asian Association for Regional Cooperation (SAARC) has made India look outside South Asia towards countries of Southeast Asia for economic and political cooperation.

    The ASEAN region has become strategically important for India due to its growing importance in the world politics. And for India to be a regional power as it claims to be, continuing to enhance its relations with ASEAN in all spheres must be a priority.