Success of Modi’s ‘Act West’ Policy Opens Doors to Gulf Potential
Prime Minister Narendra Modi deserves full credit for his West Asian diplomacy. With the exchange of visits by the Indian and Israeli Prime Ministers within six months, Modi’s most recent visit to Palestine, Oman and UAE, and the upcoming visit of Iranian President Hassan Rouhani, India has skillfully stepped over the numerous fault lines in the region.
Our ‘India First’ approach is likely to yield significant payoffs for India’s security, economic well-being and global standing.
India’s West Asia Balance
This is, by far, the most important external region for India, providing oil and gas that constitute 65 percent of energy imports, USD 35 billion in remittances from 9 million Indian nationals working there, and taking up 20 percent of our bilateral trade. With more than 700 flights a week, the region is, through the web of history, contemporary links, trade and expatriates, virtually a neighbour of India.
You may quibble with Modi’s ideological affinity for Israel’s distasteful policies, but when you do the math, you will see that Modi has, by and large, maintained an even keel in India’s relationship with the region.
There has been criticism that Modi’s visit to Palestine was a bit of ‘tokenism’ at play. Even so, given their plight, the visit by an Indian Prime Minister, howsoever brief, would have been a heartening one in the minds of the beleaguered Palestinians.
Not to mention, this gesture would also act as a signal to the other countries of the region, that despite ideological affinities with Israel, the BJP government would not abandon the long-term perspective.
Notwithstanding the economic aid and political support we give to the Palestinian cause, we are not big players in the prolonged end-game for the Palestinian state. There, it is entities like the US, Russia and the EU that count.
Foreign Investment from Gulf Region
During his last visit to UAE in 2015, Modi made a strong pitch to attract investment in India’s infrastructure. As a result, in 2017, the Abu Dhabi Investment Authority put USD 1 billion into the special HDFC affordable housing scheme, USD 1 billion in the NIIF, and USD 300 million in a renewable energy project.
Major port operator, DP World, announced that it would add another USD 1 billion to its existing USD 1 billion investment in India in May 2017. DP World has invested in five international gateway ports in India already.
This time around, India got its first oil concession in the Gulf. An OVL-led consortium got a 10 percent stake, out of the 40 percent available in the Lower Zakum field. And we finally sealed the strategic petroleum reserve agreement – which means that we should soon have six million barrels of UAE crude in our caverns in Puddur, near Mangalore. Significantly, among the agreements is a commitment by DP World to set up a major inland container terminal in J&K – a significant message to the troubled state.
India-Oman Longstanding Ties
The UAE’s role in Indian security goes beyond oil supply lines and expatriate population alone. The UAE is an important partner in our efforts to combat organised crime, smuggling and, most importantly, counter-terrorism. Since 2011, both countries are bound by an agreement on security cooperation.
But though the UAE has been willing to give up Indian terror suspects, they are less cooperative on issues relating to Pakistan, whose clandestine services allegedly use the Emirates as a gateway to push illegal currency and money to militants in India.
India and Oman have had strong ties throughout history. A look at the map will show you why. Unlike other Gulf countries, Oman is our neighbour across the Arabian Sea and opens out into the Gulf of Oman, which faces Pakistan and the Indian Ocean. It faces Chabahar in Iran and Gwadar, the Chinese-run port in Balochistan, Pakistan. Incidentally, between 1783 and 1958, Gwadar, a small peninsula with a fishing village, was actually a part of Oman.
India’s Economic Ties with Gulf
India and Oman signed a treaty of friendship navigation and commerce as far back as 1953. The special element in the relationship have been our defence ties. We signed an MOU on Defence Cooperation in December 2005 (renewed in 2016) and established a committee which has had nine rounds of meeting since its establishment in 2006 to enhance this cooperation.
India has had an arrangement for the Operational Turnaround (essentially berthing) of ships involved in anti-piracy patrols and for technical support for landing and overflight for Indian military aircraft. The two countries regularly carry out naval, coast guard and army exercises.
Economic relations are no less important. The USD 969 million Oman-India Fertilizer Company is India’s largest joint venture abroad, having been established in 2006. India imports the entire production of its urea and ammonia.
The agreement for the Indian Navy access to Duqm port’s Naval Dockyard is a useful development, but some Indian media commentary has needlessly painted this as a major move against China, not knowing that a Chinese company has signed a project to develop a USD 10.7 billion industrial city near the port. Indeed, last year, the Omanis had to get an emergency USD 3.6 billion loan to balance their general budget from a group of Chinese banks.
And in neighbouring UAE, the Chinese are in an even bigger way, building a giant container terminal and setting up several free zones.
‘Act West’ — India’s Very Own Policy
Duqm is a relatively small port – the largest tag goes to Port Salalah, which is in the western part of the country near Yemen and strategically located at the cross-roads of trade between Asia and Europe. However, Sohar, a deep sea port that has a free zone, is Oman’s fastest growing port.
In contrast to ‘Act East’ where India is tying up with countries like the US and Japan to enhance its clout, the ‘Act West’ policy is India’s own. Unlike the Indo-Pacific where the US leads, here, we lead and shape our own policy which is, in some instances clearly at odds with the Americans.
Unlike them, we do not recognise Jerusalem as Israel’s capital, and neither are we willing to take a hostile stand towards Iran. This will be evident later this week, when the Iranian president lands in New Delhi.
And unlike the Indo-Pacific where the payoffs are limited, West Asia offers us vast energy resources that are vital for our development, investment opportunities for our corporates, and jobs by the millions for our skilled and semi-skilled workers, engineers, and managers. Iran offers us a platform for connectivity to Afghanistan, Central Asia and beyond to Europe, and countries like Oman help us extend our reach into the western Indian Ocean.