“In a letter to India’s PM, Mohamed bin Zayed expresses thanks for the kind invitation to attend India’s Republic Day celebrations”, adding, in a second tweet: “Our strong relations are deeply rooted in history; our strategic cooperation has increased, driven by our mutual aspirations to develop it.”
While such mutual acknowledgements and appreciations are nothing new, what is new is the freshness and vibrancy in a relationship that had been allowed to sink into a sense of indifference and apathy. This applies not just to the UAE, where Prime Minister Narendra Modi visited in August 2015 (reciprocated by Shaikh Mohammed bin Zayed in February 2016), but to virtually all the other countries of the Gulf Co-operation Council (GCC).
Much of the fault lies on the side of past Indian governments. Note, for instance, that the last visit to the UAE before that of Modi was in 1981 by Indira Gandhi.
This is the sort of inattention paid to a country that happens to be one of our largest trading partners (nearly $60 billion in two-way trade in 2014-2015), and where over a million Indian expatriates reside (out of more than 2 million in the GCC as a whole).
Things are changing, and fast. There are a number of reasons for this, and one cannot give all the kudos to the current government. But it must be credited with recognising the opportunities and grasping them with vigour.
Relations with virtually every GCC country is on the fast track – namely, Saudi Arabia, the UAE, Oman, Qatar, Kuwait and Bahrain. And they have taken a very robust strategic dimension; defence related engagements have picked up across the board, and it would be fair to say that the GCC now views India as a net security provider in the Arabian Sea, as a trusted partner in those waters.
What is becoming clear is that India is now beginning to ease into an enhanced defence engagement with these countries bilaterally. This is, again, not something new in that the momentum has been building for years. But now the geo-political environment is primed for a much closer partnership. Consider these realities:
Iran is now out of the woods, and back in the good books of the US (relatively speaking). This changes the regional dynamics significantly, given that the GCC states are either in an antagonistic posture with Tehran, or managing a very delicate balancing act.
The US seems to gradually disengaging from the region, from a strategic perspective, or so it would appear to those who have observed President Obama’s reluctance to engage with the GCC quite as intensively as they might have liked (considering especially Washington’s Iranian outreach).
Pakistan, long a reliable supplier of soldiers for rent to the GCC countries, has of late developed a distaste for overseas deployments of its men in uniform. At a time of need, when the GCC countries requested Islamabad to support them in their military campaign in Yemen, Pakistan refused. From the Gulf rulers’ point of view, that refusal showed an untrustworthiness that will be hard to ignore.
In all the above cases, India can be a force of positivity for the GCC states. A long-standing relationship of trust and loyalty with Iran means New Delhi can be an effective go-between in the event the relationship between Tehran and the Gulf countries deteriorate.
The US, having carefully observed India’s role in the region and having dramatically expanded its own relationship with New Delhi, is happy to have a responsible power shouldering some of the security management burdens in the strategically vital area between the Strait of Hormuz and the Horn of Africa, at the mouth of the Red Sea.
As for Pakistan, it will surprise no one that the GCC states are well aware that their strengthening ties with India are bound to make Islamabad extremely uncomfortable. From their point of view, considering Islamabad’s posture on Yemen, that is a happy by-product (not the objective) of a natural growth in the content and sophistication of their engagement with New Delhi.
As India’s economy grows and as the commercial linkages with the GCC develop in quantity and quality, we can be certain that military co-operation will expand apace.
The UAE and India have already instituted a $75 billion India Infrastructure Fund. Undoubtedly, Saudi Arabia and Qatar will join the fray in a comparable way. It is not inconceivable that, within the next decade, India could have security agreements with these countries that will envisage a protective role.
The Modi government has hit the ground running in terms of its relationship with the GCC states, and is now sprinting ahead. The invitation to Shaikh Mohammed bin Zayed Al Nahyan is a harbinger of much more to come.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.