Thursday, March 7, 2013

Friends with Benefits


Kanwal Sibal 
(Member, VIF Advisory Board)

The back-to-back visits of the president of France, Francois Hollande, and the Prime Minister of Britain, David Cameron, last month have put the spotlight on India’s relationship with Europe. Some belittle the importance of this relationship as Europe is seen as economically crisis-ridden, lacking in dynamism, to be declining militarily and too prone to act as a super NGO in propagating its values. The belief that economic, political and even military power is shifting towards Asia underlies this depreciation of our partnership with Europe. While the relative decline of the United States of America is recognized, its recovery is considered more certain than that of Europe. The high growth rates in India in recent years, the projection that India will become the third largest economic power by 2030 and the bracketing of India with China has also inflated our sense of self-importance vis-à-vis Europe.

Some pundits have the gumption to say, without being too self-conscious of India’s own glaring governance failures that allow abysmal levels of poverty to persist, that if France is to become a partner more in sync with a new post-liberalization India, the key would be to make itself meaner and leaner at home. This refers to the hard decisions France needs to take on welfare costs and government-spending. The United Kingdom, which is financial-services reliant, is scoffed at as a serious economic partner in view of its eviscerated manufacturing sector and the economic crisis afflicting it, a reality seen to limit the scope of any substantial UK investment in India’s infrastructure. The non-committal language of the India-UK joint statement on British participation in a possible Mumbai-Bangalore industrial corridor reflects this.
Yet, the European Union is India’s biggest trade and investment partner. India weathered well the US financial crisis, but the Eurozone turmoil has affected it appreciably. India and the EU are negotiating a free trade agreement in which both France and Britain have an important say. France and the UK, as the fifth and sixth largest economies in the world respectively, are all-important partners for a rising India. France has great strengths in the nuclear, space and defence sectors, and these, along with urban development and infrastructure areas got highlighted during Hollande’s visit. The UK too has several advanced defence technologies to offer and its strengths — healthcare, education and other services — came under focus during Cameron’s visit. Both, as permanent members of the United Nations Security Council, weigh critically on international security issues. Both engage with India within the G-20. In the World Trade Organization and climate change negotiations, India has to contend with European positions determined with French and British participation.

Some argue that France is not as much a diplomatic and strategic asset for India as before because the US is setting the pace for global accommodation of India, and Paris and London now follow in Washington’s wake. But this argument exaggerates both the degree of strategic convergence between India and the US and the degree of US hegemony over Europe. Such thinking implies that we should simply adjust ourselves to US’s strategic priorities and the vagaries of its political processes and moods. Such strategic over-reliance on any one country is hardly compatible with India’s global ambitions. Partnership with a country like France, still attached to its independence in decision-making, helps India to maintain its strategic autonomy.

Despite a remarkable improvement in India-US ties, our respective views differ on, for instance, handling Pakistan, its role in terrorism and its nuclear activity supported by China, the end-game in Afghanistan and overtures to the Taliban. Views are also different on the sanctions on Iran and military threats against it that have squeezed India’s oil trade and potentially imperil its interests in the Gulf, the bombing of Libya, the regime-change being promoted in Syria and the willingness to accommodate extremist religious forces in the Arab world. On some of these issues, as for example, seeking accommodation with the Taliban and the responsiveness to Pakistani ambitions in Afghanistan, Britain is ahead of the Americans and India needs to press it to be more transparent with it on British diplomacy in the region. France is with the US on Iran and Syria, but it has ceased supplying advanced or new military platforms to Pakistan in deference to India’s sensitivities, which the US disregards. With both countries, strengthened counter-terrorism cooperation is an asset for combating a threat to which India is especially vulnerable because its epicentre lies in Pakistan next door.

Britain and France are allies of the US and therefore on political and security issues, though not on economic issues, their policies have considerable convergence. But the edgy competitiveness between France and the Anglo-Saxon world for political space should not be underestimated either, not to mention their clashing versions of capitalism, with the French welfare model with strong unions and labour laws inviting relentless American and British broadsides. All three compete quite ferociously with each other in India, as the 126 fighter aircraft contract demonstrated. The US felt mortified at the loss of the contract to the Europeans, and the British continue to question India’s wisdom in choosing the Rafale over the Eurofighter and still hope the deal to get somehow unravelled to their advantage. Hollande’s visit, however, saw both sides noting the progress of ongoing negotiations on the medium multi-role combat aircraft programme and looking forward to their conclusion. This was, no doubt, much to the discomfiture of the British. As compared to the highly legalistic, intellectual property rights ridden US approach to technology transfers, the French are much easier partners in this regard. All in all, France is way ahead of the US in meeting India’s defence needs in terms of aircraft, submarines, missiles and so on. France is negotiating a major project of joint development and manufacturing of a short range surface-to-air missile with India’s Defence Research and Development Organization, which, until President Barack Obama’s India visit, was under US sanctions. Cameron supports greater cooperation between DRDO and the UK Defence Science and Technology Laboratory. French and British supplies of defence equipment are, furthermore, not accompanied by intrusive end-use monitoring requirements, as is the case with US supplies.

France has much more advanced nuclear reactors to offer India than the US. Its civilian nuclear deal with India excludes many controversial provisions of the India-US deal and provides for “full civilian nuclear cooperation”— a code word for the transfer of enrichment and reprocessing technologies, which the US has excluded from the purview of its cooperation with India. France is ready to work with India within the framework of the rules of our Nuclear Liability Act, which the US companies refuse to do. As agreed during Cameron’s visit, India and the UK will now begin negotiations on a civil nuclear cooperation agreement. Indo-French cooperation in space has been intensive, with Arianespace launching India’s INSAT satellites, the launching of jointly-developed satellites on Indian launchers — the SARAL being the second — and France using the PSLV to launch its SPOT 6 satellite in September last year. The two countries are drawing up a long-term plan of cooperation in satellite technology, an area that remains outside the scope of India-US cooperation. The UK is not India’s partner in space.

Both Hollande and Cameron manifestly want deeper ties with India. We have an opening to build stronger partnerships with both.

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