India – U.A.E: Leaning in

India and the UAE must address the challenges in their relationship

by S. Venkat Narayan

Prime Minister Narendra Modi personally greeted him at the airport—the third dignitary honored in such a way after U.S. President Barack Obama and Japanese Prime Minister Shinzo Abe. The visit on February 10 signaled the strong ties between both countries.

Modi himself was in Abu Dhabi last August, where he was received by the crown prince at the airport. The last Indian prime ministerial visit to the UAE had been in 1981.
“India is a regional force with leverage, and Indian-Emirati relations are witnessing a promising spring. What is new now is the coordination and cooperation on the strategic level which further enhances this relation,” UAE Minister of State for Foreign Affairs Anwar Gargash told the press corps at the sidelines of Sheikh Mohammed bin Zayed’s visit.

Nearly 2.6 million Indians live and work in the UAE, and both countries are each other’s top trade partners, so there are more than a few reasons for the nations to buttress their close partnership. Asia’s power hubs, India and China are being keenly examined by the UAE, which sees a huge potential for investment and trade. India is of particular interest, as the UAE relies on its Asian heritage to strengthen and forge new ties.

As India and the UAE plan to raise their bilateral trade to $100 billion by 2020, for example, it’s no secret that such state visits help oil the cogs of economic cooperation. Trade between India and the UAE was close to $60 billion for the full year 2014-2015, according to India’s government, making the UAE India’s third largest trading partner after the United States and China, with the trade balance tilting in favor of India which exports nearly $ 33.3 billion worth of goods to the UAE.

Since 2000, the UAE has ranked among the top 10 investors in India, with cumulative foreign direct investments (FDI) of $3.3 billion. The Arab gulf state has also put some $5 billion in portfolio investments into India and is the latter’s sixth top oil exporter, covering 9.3 percent of India’s need from crude.

Energy is a central pillar of the bilateral economic relationship. Modi and Sheikh Mohammed welcomed plans by the Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd. (ISPRL) to ink an agreement to establish a Strategic Petroleum Reserve in India. ADNOC has agreed to store crude oil in India’s maiden strategic storage, and give it two-thirds of the oil for free. India is building underground storages at Visakhapatnam in Andhra Pradesh, and at Mangaluru and Padur in Karnataka to store about 5.3 million tons of crude oil. “India has a huge economy, and Prime Minister Modi’s initiatives for structural reforms are encouraging signs. India needs to build a climate to attract FDI. UAE has funds, including sovereign funds, and India has [a] market. [These] complement each other,” Gargash had said at the time.

Now it appears that India has internalized the importance of its South Asian neighbors, and is hard at work, extending bridges across the region. “There’s been a clear shift in India’s policy towards the Middle East under Prime Minister Modi. His predecessor, Dr. Manmohan Singh had no coherent Middle East policy,” says Kanchi Gupta, an associate fellow at the Observer Research Foundation, an Indian thinktank.

Modi’s ascend to power as a prime minister stirred anxiety in the Muslim world given his background as the state’s chief minister in Gujarat. Anti-Muslim riots had rocked his state back in 2002 when he was ruling Gujarat with hundreds of Muslims killed in those riots. But “Modi has been proactive in engaging with leaders from the region and has successfully [allayed] their apprehensions,” Gupta adds.

Amicable as it may be, all relationships have their hiccups. But these aren’t always as clear cut between Indians and Emiratis. “We have political problems with India,” notes Dr. Abdulkhaleq Abdulla, professor of political sciences at Emirates University.
Those problems, Abdulla lays out, include UAE’s political issues “with Iran and Israel,” which have long established lucrative arrangements with India.

“Such challenges in the relationship need to be discussed,” he told Newsweek Middle East in a telephone interview. The UAE had downgraded its diplomatic relations with Tehran in January, on the back of a Saudi-Iranian feud. Saudi Arabia and other Arab states had severed diplomatic ties with the Persian state following an attack on the Saudi Embassy in Tehran by angry Iranians who protested the execution of Saudi-Shiite cleric Nimr Al Nimr that same month. The UAE, as a member of the Arab League also does not retain a full diplomatic relationship with Israel.

“So far, India has balanced its ties with Iran, Israel and the Arabs. The National Democratic Alliance (NDA) government, and Modi in particular, appear to be getting sucked into a broad grouping involving Israel, the GCC states, and Turkey against Iran, [Daesh] and its backers. This appears to be a short-sighted policy with great risks and blowback effects,” says Professor Aftab Kamal Pasha, director of the Gulf Studies Programme at the Jawaharlal Nehru University’s School of International Studies in New Delhi.

“As a democracy, will it be wise for India to assure regime security to ruling families who are the cause of the turmoil in many cases?” he asks. “Even these oligarchs’ supporters (U.S./West) urge control of extremism and modest reforms. India’s tilt towards Arabs or Sunnis will derail our traditional policy, which has stood the test of time,” he says. As such, India seems to be entering uncharted territory. “Modi believes in the risk theory: greater the risk, greater the profit. After all, his approach is that of a businessman, not of a statesman,” Pasha adds. But political travails aren’t the only concerns that need to be addressed, according to Dr. Abdulla.

Beyond the Economy
Beyond the economy, millions of unskilled and semi-skilled workers from India, constitute a dominant force in the UAE, but to Dr. Abdulla, they also constitute a threat. The UAE “needs to discuss the labor issue and the kind of problems they [Indian migrant workers] can present to the country. They are two and a half times in number as the UAE citizens and that should be addressed in a brotherly way,” he adds. The UAE is a host to the second largest Indian expat community in the Gulf after Saudi Arabia. About 65 percent of Indian expats work in blue-collar jobs while about 20 percent are professionals. In 2013, they remitted home over $15 billion. There are more than 50 Indian schools, four universities, and five registered associations in Abu Dhabi and one in each of the other six emirates.

The crown prince took a more conciliatory approach. During his recent visit, he praised the Indian community’s role and contribution to UAE’s development. The two sides plan to hold an India-UAE Joint Labor Committee meeting in the first quarter of 2016 to conclude bilateral Memorandum of Understanding (MoU) on labor issues.

Terrorism, A Common Enemy
Meanwhile, both countries appear to see eye to eye on the fight against terrorism, and have strongly condemned extremism and terrorism in all their forms and manifestations, irrespective of the motivation or identity of the perpetrators. They condemned the use of religion, by some states, to justify, support and sponsor terrorism against other countries, and as an instrument of state policy.

India and the UAE have a standing agreement on security cooperation, with a joint security committee that convenes on a regular basis. The two sides have agreed to enhance cooperation in counter-terrorism operations, intelligence sharing and they both collaborate in terms of the production of defense equipment in India.

With the U.S. dependence on Gulf oil diminishing drastically, a reluctance to be proactive in Syria to counter Daesh, and the recent lifting of international sanctions on Iran, a sense of insecurity appears to have descended over the Middle East, particularly in the smaller states.

“There is so much turmoil in the Middle East. Many states in the area are feeling insecure and are looking up to India to play an important role. Why isn’t India showing its flag in the Gulf?” asks one Indian analyst who wished asked not to be identified.
However, under Modi’s dispensation, many senior Indian leaders have interacted with their counterparts in the Middle East.

President Pranab Mukherjee recently visited Palestine, Jordan and Israel. Modi himself has met the late Saudi King Abdullah, Saudi Crown Prince Salman bin Abdullah and Israeli Prime Minister Benjamin Netanyahu, among others. Modi also plans to visit Israel and Saudi Arabia later this year.

“Our vigorous engagement with the world is beginning to show results. The world sees India as an attractive destination for investments,” says Nalin Kohli, the ruling BJP’s national executive member.

“In the 22 months since Modi assumed office, he has possibly interacted with more heads of state or government across the globe than his predecessor may have done during his ten years in office. The world now looks at a new India with hope and expectation. So many countries are keen to invest in a big way in our ambitious projects such as Make in India, Start-up India, Smart Cities, Clean India etc. that their success appears guaranteed,” adds Kohli.

The senior-level official trips between India and the UAE form the first step in steering India’s relations with Arab Gulf states in a more strategic direction. The booming bilateral cooperation in multiple sectors could yet herald India’s long-awaited giant leap into the Middle Eastern theater.

However, Modi’s seemingly excessive enthusiasm to befriend governments in the Middle East has also attracted criticism. “India has had close ties with GCC (Gulf Cooperation Council) states for a long time in multiple areas. They host a large work force from India and are good trading partners and robust investment partners,” says Pasha.

“But they used to look to the West/U.S. and sometimes Pakistan for matters concerning security. Since the Arab uprisings in Tunisia, Libya, Bahrain, Yemen and other states, and more especially after the Iran-U.S. nuclear deal and the threat from [Daesh], they are looking for new security partners after having failed to get real support from Pakistan and Turkey,” he adds.

“By dangling sovereign wealth fund investments, [the] UAE wants to take a great leap forward in its ties with India in numerous fields.”

Deeper Roots

India has a long history of relations with the Middle East. Emperor Ashoka had ties with ancient Egypt’s Ptolemy II. Arab traders settled on India’s eastern coast. One of the earliest mosques in the world was built in Kerala in 629AD. Islam entered India on a mass scale during the Mughal rule. India’s 1.28 billion people include 150 million Muslims, forming the world’s third largest Muslim population after Indonesia and Pakistan.

The Arab Gulf is home to seven million Indian workers, who send home more than $40 billion annually. The region is also the source of nearly 60 percent of India’s energy needs, and one of India’s largest export destinations and a major source of remittances. “This region has a very strong bearing on India’s security and stability in our neighborhood,” says Anil Wadhwa, secretary (East) in the Ministry of External Affairs. That looks set to continue.

CORRECTION: The print version of this article incorrectly spelled the author’s name. It has been corrected in this article and the error regretted.


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