India’s interests and capabilities extend well beyond the sub-continent. This essay is part of a series that explores the geopolitical dimensions, economic ties, transnational networks, and other aspects of India's links with the Middle East (West Asia) — a region that plays a vital role in India's economy and future. More ...
The Narendra Modi government, which initially had only a marginal interest in West Asia and the Persian Gulf, changed its attitude after 2015 when the United Arab Emirates (U.A.E.) signalled a desire for a genuinely strategic relationship — one that included long-term investments in India and a willingness to dilute ties with Pakistan. Prime Minister Modi’s 2015 visit to the U.A.E. and subsequent events have seen India’s view of the region undergo a fundamental shift. This essay, the first of two parts, shows how New Delhi has come to regard the Gulf more as a source of investment and less as a source of energy and visas; and has begun to take a more strategic and military view of the region.
Elections and After
Prior to Narendra Modi’s election as India’s prime minister in April 2014, he had campaigned on an extensive domestic agenda and a modest foreign policy. In his initial months in office, Modi’s was a pragmatic but limited worldview. While incorporating bits and pieces of the religious-nationalist Hindutva school espoused by his Bharatiya Janata Party (BJP), Modi reflected the world through a prism of trade, investment and technology.
Modi spoke airily of using commerce to ease relations with India’s traditional rivals Pakistan and China. A long-standing United States visa ban against him made him wary of the Obama administration. His favorite countries, said those who met him soon after he assumed office, were “Japan and Israel.” In neither public statements nor private conversations did Modi mention West Asia, other than the odd reference to Israel.
West Asia intersected only marginally with Modi’s early foreign policy interests. His priority was what later came to be called the “Neighborhood First” policy.
West Asia intersected only marginally with Modi’s early foreign policy interests. His first priority was what later came to be called the “Neighborhood First” policy. The prime minister spoke of being troubled by the dislike and suspicion with which many neighboring countries held India and wanted this reversed. These were not the usual suspects, Pakistan and China, but the smaller neighbors such as Bangladesh and Nepal. Later, this policy was expanded to include Indian Ocean island states, including Mauritius and Seychelles.
Upon assuming office, Prime Minister Modi’s second priority was to restore foreign investor confidence in an Indian economy that was teetering on the brink of junk credit rating status. A subset of this policy was to aggressively reach out to India’s extensive diaspora.
His third foreign policy priority was to stabilize relations with the great powers. Modi and U.S. President Barack Obama held a successful summit in September 2014 and discovered, among other things, a common passion to address climate change. Modi reaffirmed India’s relations with Russia and sought to reset India’s troubled relations with China.
In pursuit of these three goals, Modi travelled overseas nine times in 2014, six of them to global meetings where he met multiple world leaders. In the first half of 2015 he made 17 overseas visits. Again, while Modi held summit meetings with 14 Pacific Island states and visited every single Central Asian capital, he did not visit any West Asian state.
In this initial foreign policy period, running roughly from April 2014 to July 2015, West Asia was a peripheral interest. There were small indications the Modi government had an eye to the Persian Gulf region — the center of India’s West Asian interests. But on the policy front there was nothing out of the ordinary. Everything was in keeping with India’s traditional Gulf policy.
A restatement of India’s long-standing West Asia policy was laid out by Secretary Shri Anil Wadwha, the senior diplomat in charge of the region, in April 2015. He iterated the standard Indian interests in the Persian Gulf: security of oil and gas supply lines, remittances and employment for the roughly seven million-strong Indian diaspora, trade and investment relations, and some skin-deep defense and security ties.
While expressing concern at the region’s political chaos, Secretary Wadwha stressed India was “non-prescriptive and non-judgmental” about events there. New Delhi was “not in the business of exporting democracy.” He saw India’s success as having ensured “bilateral relations with virtually all countries of the region have been progressing … we have managed to insulate our core interests from the negative fall-out of regional developments.” The country’s West Asia policy was, in effect, a bundle of individual relationships and India’s goal was to ensure there was no entanglement. “We would not wish to create parallel mechanisms that will affect our bilateral relations,” he said.
Wadwha repeated New Delhi’s standard arguments for keeping the region at arm’s length. One, as home to the world’s third largest Sunni and Shia populations, “we need to be sensitive to the perceptions of our own religious and ethnic mix in the population.” India had to be “cautious” that its “approach to the region should not be misconstrued as being partisan or sectarian.” He admitted India had been asked to play a “more active role in the Middle East,” however “we need to assess this based on our strategic leverages and realistic consideration of our strengths and limitations.” He critiqued the Arab Spring as having “exacerbated regional faultlines, heightened regional rivalries with competing ideologies and skewed the regional balance of power.”
Insofar as New Delhi had any solution for the turmoil in West Asia, it was to hope Washington would play its traditional role and restore order to the region.
Insofar as New Delhi had any solution for the turmoil in West Asia, it was to hope Washington would play its traditional role and restore order to the region. As Secretary Wadwha put it: “India believes the US … remains an important player for regional stablity” and, in an oblique reference to China, felt other countries which have “gained in appeal as a counterweight to the West in the region” had questionable “economic capacity and sustainability.”
This was boilerplate West Asia policy for New Delhi.
One point the new government did raise repeatedly was to specifically urge Gulf sovereign wealth funds to invest in Modi’s ambitious infrastructure and manufacturing plans.
These appeals began within a few months of Modi’s elections and became embedded in any official comment relating to West Asia. When the Qatari emir, Sheikh Tamim bin Hamad Al Thani, came visiting in March 2015, he was invited to put some of his country’s wealth into India’s “mega industrial manufacturing corridors.” It was the only point where the Persian Gulf intersected with Modi’s domestic agenda. But India also approached a number of other countries about investments in its infrastructure.
Abu Dhabi Turnaround
In early August 2015, the Indian government announced that Prime Minister Narendra Modi would be making a state visit to the United Arab Emirates on August 16-17. This came as a surprise to most. While the U.A.E. had always been one of India’s largest trading and investment partners there had been little strategic or political meeting of minds between the two. Though senior Indian officials had been making visits to the region during the first six months of the Modi regime, they had focussed on Israel and Iran and had given little attention to the U.A.E.
The U.A.E., along with most of the Sunni Gulf monarchies, had a long-standing military relationship with Pakistan under which Islamabad promised to provide boots on the ground in case of a major security crisis. Part of this relationship seems to have been based on an understanding that Pakistan would deploy its nuclear arsenal in support of these monarchies in case Iran crossed the nuclear threshold. India had assumed no in-depth military ties with these countries was possible under these conditions. This was especially true in regard to the U.A.E., which had been one of only three governments to recognize the original Taliban regime in Afghanistan.
Modi’s visit was notable for the scope of agreements that he signed with Abu Dhabi’s Crown Prince Mohamed Bin Zayed.
In the defense and security space, the two agreed to work together on terrorism finance, hold half-yearly meetings between their respective national security advisors, consider the manufacture of arms in India and strengthen defence relations through regular military exercises. Underpinning this was an acceptance that, “the need for a close strategic partnership between U.A.E. and India has never been stronger or more urgent, and prospects more rewarding, than in these uncertain times.” India and the UAE also agreed to coordinate efforts “to counter radicalisation and misuse of religion.” This included facilitating regular exchanges of religious scholars and intellectuals.
In the economic sphere, the statement spoke of a “transformative economic partnership,” the first adjective being used by New Delhi for relationships it sees as having the potential to structurally change the trajectory of India’s growth.
The tangible side to this was a U.A.E. commitment to invest $75 billion in India from its main sovereign wealth fund “including through the establishment of a U.A.E.-India infrastructure investment fund” to help “India’s plans for rapid expansion of next generaiton infrastructure, especially in railways, ports, road, airports and industrial corridors and parks.” The U.A.E. also agreed to store a portion of its strategic oil reserves in Indian reservoirs which would help make these reservoirs commercially viable. The subtext was an understanding, not in the statement, that India could tap these reserves in case of an emergency.
These official statements only partly reflected what had gone on before. According to a number of Indian officials, the Abu Dhabi royal family had taken the initiative and asked for a Modi visit New Delhi’s response had been to note the U.A.E.’s relationship with Pakistan and how Pakistani-backed terrorists often found physical and financial haven in Dubai, the U.A.E.’s commercial hub. Abu Dhabi responded that these issues were not off the table.
New Delhi followed this up with a number of trips to the U.A.E. by National Security Advisor Ajit Doval. Officials say Abu Dhabi proved agreeable to most of his suggestions, including a willingness to debar people of the ilk of Dawood Ibrahim and attach their financial assets — though reports that the U.A.E. raided Ibrahim’s properties before Modi’s visit were false.
These understandings paved the way for Modi’s visit, with the clincher being the U.A.E.’s offering to divert a portion of its largest wealth fund’s $1 trillion capital stock to boost the Indian economy. There was a gap of just “two to three months” between the initial invitation and Modi’s arrival, says a political aide of the prime minister.
In the Indian assessment, the Abu Dhabi royal family was driven by four strategic concerns.
One, Abu Dhabi, concerned about the fallout that the global financial crisis had on Dubai in particular, was eager to change the U.A.E.’s reputation as a black hat financial haven into something more respectable. “Their vision is to make Dubai more like Singapore,” said an Indian official. “In that picture, India and its large corporate make more sense than Pakistan.”
Two, the U.A.E. was infuriated by Pakistan’s refusal to send its soldiers to fight in the Yemen civil war. Like Saudi Arabia and Kuwait, the U.A.E. had come to see that war as part of a larger Sunni-Shia struggle for the mastery of the Gulf. Pakistan’s refusal to join the war was seen as a violation of the understanding that underpinned years of UAE support to the Pakistani establishment.
Three, like many Gulf countries who had allied themselves to the West, the U.A.E. was increasingly wary of the direction of Washington’s policy in the region. This was accentuated by the Obama administration’s desire to reduce U.S. involvement in West Asia and consider a rapprochement with Iran. India’s rising military and economic capabilities and signs the United States was moving towards seeing India as its geopolitical successor in the Indian Ocean region, led Abu Dhabi to conclude it was worthwhile to invest more in relations with India. The subsequent killing of five U.A.E. diplomats in Afghanistan by the Taliban or the Haqqani Network, both groups believed to have the backing of the Pakistani military, only strengthened the case for an India tilt.
Finally, the Al Nayhans were worried about the violent and extremist schools of Islam that had come to dominate its neighborhood. India had both the third largest Shia and Sunni populations but was home to more quietist Islamic traditions. The idea that India and the U.A.E. could work together in promoting such strands of Islam also interested Abu Dhabi’s rulers.
The U.A.E. state visit can be seen as a turning point for the Modi government.
The U.A.E. state visit can be seen as a turning point for the Modi government. Until then, it had tended to see the Persian Gulf and the larger West Asian area as having little to offer to the increasingly radical policies of the prime minister’s economic and governance agenda. With his emphasis on technology-heavy policy areas like renewable energy and cashless finance, Modi had seen the developed world as his natural overseas partners.
The Abu Dhabi royal family also indicated to Modi that it was speaking on behalf of other Gulf monarchies. Modi was to subsequently visit Qatar and Saudi Arabia and receive further promises of large-scale investment.
The prospect of being able to tap such a large pool of politically-guided investment capital was particularly attractive to India. Though the Modi government had ambitious infrastructure plans, it was facing a cyclical downturn in domestic private investment and finding it hard to attract risk-averse Western pension and insurance funds for long-term infrastructure projects.
The Gulf monarchies were more prepared to make their funds available through the government-to-government channel rather than the normal, market-based foreign investment route. In a pattern seen with Japan earlier, New Delhi was trying to leverage the geopolitical interest of a foreign government to make the latter commit to long-term capital investment. This was a needed push as many of the Gulf countries, the U.A.E. included, had bitter memories of previous attempts to invest in India.
An additional benefit of working with the U.A.E. was isolating India’s regional rival, Pakistan, and raising the barrier for Pakistani-based terrorist groups to obtain funds from or transit through the Gulf.
An additional benefit of working with the U.A.E. was isolating India’s regional rival, Pakistan, and raising the barrier for Pakistani-based terrorist groups to obtain funds from or transit through the Gulf. Modi’s earlier whirlwind tour of Central Asia had been marked by the signing counterterrorism agreements with a similar purpose. The U.A.E. was a much larger catch given its central role as Pakistan’s an overseas financial hub.
New Delhi has been more cautious in its engagements with Riyadh. India was persuaded that the present ruling faction of the Saudi royal family was genuinely interested in moving closer to India and away from Pakistan. In fact, Modi seems to have a developed a degree of trust in the present Saudi rulers.
But New Delhi believed the Saudi-Pakistan military relationship, though weakening, was still considerable, a view confirmed by Saudi Arabia’s subsequent creation of a Sunni-centered Islamic Military Alliance Againt Terrorism headed by a former Pakistani chief of army staff. Second, while Riyadh spoke of investing more in India, it gave no firm numbers because of its own financial difficulties. Saudi Arabia instead looked for large-scale energy investments, both upstream and downstream, to signal intent but kept away from a long-term commitment. Third, there was scepticism in India that the Sauds would ever be able to ween themselves off their extreme Wahhabi ideology. Finally, the assessment was that other elements of the royal family did not share the views of those on the throne and there was a strong likelihood of a regression to the older Islamicist and Pakistani-oriented policy stance.
Nonetheless, Saudi Arabia did show a different face to India. Saudi officials say they provided intelligence to help India identify the Pakistani terrorists who carried out an attack on Indian air force base in Pathankot in January 2016. Saudi Arabia, say Indian officials, also became “more responsive” to New Delhi’s complaints about Saudi-based funding for extremist Islamic mosques and seminaries inside India. Until the visits after Modi’s election, Riyadh had never accepted strong language on counterterrorism in their joint agreements with India. 
Modi also visited Qatar, but Doha’s interests were more geared to the energy relationship though it did ask for a step-up in military cooperation. New Delhi’s interest was Qatar’s promise to invest $35 billion in India’s petrochemical infrastructure. Doha, in a nutshell, wanted stronger political ties with one of its major customers in an increasingly competitive international gas market. Qatar has long provided over 90 percent of India’s imported natural gas. But with India emerging by early 2016 as the fastest-growing import market for both gas and oil, other countries had begun to look more closely at the Indian market, including the U.S. and Australia.
Note: Part 2 coming in October ...
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