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Two Decades of India-Israel Relationship
02 April 2012

Observer Research Foundation (ORF), in association with the Institute for National Security Studies (INSS), Tel Aviv, organised a conference on "Two Decades of India-Israel Relationship" in Delhi from April 2, 2012.

The opening session of the conference brought out the warm relations between India and Israel based on identical set of values, concerns and challenges which formed the fundamentals of bilateral relations between India and Israel. There was compatibility between challenges and solutions, for instance the geographic realities of being in a difficult neighbourhood. However the leadership in both countries enjoyed bipartisan support on decisions to be made to think of Indo-Israeli relations in 5-10 years from now.

With the fading era of the Non Alignment Movement (NAM), the perception that Indian political coalitions determined the degree of intimacy between the two nations was changing.

The expansion of relations with Israel coincides with advent of terrorism and Islamic radicalism in India. Groups like Hamas or Hezabollah in Israel and the Lashkar-e-Taiba in India were a case in point. Terror groups were becoming interconnected globally especially with technology aided interactions. Therefore cooperation on counter terror and intelligence cooperation was but natural.

The economic growth had given India the confidence to delink its relations with Israel and with Arab world. With India emerging stronger, this was not a zero sum game and therefore India did not need to fear Arab pressure or that of oil embargoes. Improved relations with the US definitely helped boost Indo-Israeli relationships.

Israel’s own economy was going from strength to strength. With a GDP of $24.5 billion, per capita income of $26,000 and foreign trade accounting for 75 % of GDP, trade was an important plank for Israel. Forty percent of the exports went to European countries and 26.7% to USA. Israel invests as much as 4.4% of the GDP in research and development.

On the political and military front, exchanges had been impressive. India had emerged as one of the most critical defence ally and weapons buyer of Israel. The UAVs, AWACS, upgradation of Russian weapons with Israel help were all instances of a robust defence cooperation framework..

Three pillars of cooperation in the relationship were security, agriculture and civilian trade.

In terms of defence and security, the relationship was beyond the usual buyer-seller one. The qualitative difference was that weapons were being designed together. There was need for a solid joint venture to invest in together, possibly in defence like with Russia.

In agriculture, India had the responsibility of providing food for 1.1 billion people. The confidence in Indian farmers needed to be supplemented with technology transfer.

In trade, the figure had gone up from merely $180 million in 1992 to $5.15 billion in 2011 India is the 11th largest import source for Israel.

Once the (soon to be finalised) Free Trade Agreement is put in place the trade target could be $10-15 billion in next 5-10 years. The focus areas could then shift to Information Technology, renewable energy and biotechnology. More interaction between Indian and IS businessmen would expedite the process of trade integration. Investments in LNG and Railways of Israel by India were an option.

Future Pillars of cooperation were likely to include counter terrorism, water and energy.

On Counter-terrorism, the thought process was similar and there was a high scope for compatibility and there was a need to share benefits. On institutionalisation of counter terror measures, India’s federal structure was proving to be a challenge but this would be resolved soon.

On water, both were likely to suffer if the issues on water were not given enough attention and therefore there was an urgent need to cooperate. Israel was moving ahead with attempts to harness desalination technology and get an edge. The cost for one cubic meter of water treated had come down to as low as 55 cents.

Though the gas exploration has not started yet, Israeli petroleum ministry has visited India choosing over China and US for possible collaboration. Renewable energy was an important aspect of possible cooperation. Joint R&D measures needed to be instituted. Cooperation on natural gas was also a possibility. There were prospects of diversification based on expertise on liquidifying of gas. Israel itself had plans to exploit the vast amounts of natural gas (LNG) lying under the bed of the Eastern Mediterranean sea.

Other issues like optimising Indian investments to Israel, maintaining an active public diplomacy, summoning political will to tackle the developments in the West Asia and joint cooperation on Iran were also discussed.

The distinguishing features between India and Israel were laid out candidly. Fundamentally important among them was Israel’s ability and India’s inability to deal with terror decisively and make the groups pay a price. Israeli conventional and military asymmetry in its neighbourhood was considerably higher than the asymmetry enjoyed by India.

Israel also enjoyed implicit support from the United States , whether it be with respect to neighbours like Egypt or at the Security Council and India did not have that cushion, in its policy vis-a vis China for instance. This also had to do with the fact that India could not as effectively influence US’ domestic debate as much as Israel could.

Challenges of increasing high level bilateral exchanges were outlined, including sensitivities of Indian Muslims. It was suggested that Israel’s engagement with countries like Pakistan, Bangladesh and Indonesia could make it politically easier for India. Indian External Affairs Minister’s visit to Israel was late in coming, but had been received well.

Arab Spring

With regard to the Arab Spring, it was suggested that long drawn changes in the region were not necessarily good and that the term ’Arab spring’ could be a huge misnomer. In the democracy versus dictator tussle, there had been no visitor and it was actually the Islamists who had won in the Secular versus Islamist struggle. Nation states were beginning to be divided by tribe and sectarian strife. The repercussions of this could be far reaching.

With Islamist regimes coming to power and Saudi and other Gulf States promoting a certain version of Islam, even countries like Pakistan becomes unmanageable. West Asia and Pakistan, more radicalised, could become a problem. Added to Taliban supremacy in Afghanistan, even Central Asia could be affected. It was convenient to present these developments as a democratic uprising because western commentators fell for the youth facebook line.

Iran

2012 is likely to be a crucial year in the Iranian issue. India and Israel had differences with respect to Iran.

India does not want Iran to go nuclear and has asked Iran to abide by NPT commitments. However it could not harbour an apocalyptic view of Iran. Military action against Iran was not going to be good for India. 10-12 % of India’s crude oil came from Iran, and energy prices would shoot up causing a lot of damage to the economy. Indian access to Afghanistan and Central Asia was through Iran. If Taliban came to power, Iran would become a natural partner. Major plans of investment in Iran had been put on hold due to US pressure. On the other hand, India had already lost much ground to China in Iran. India’s problem today is a nuclear and failing Pakistan and not Iran. China-Pak alliance further complicated the situation.

On the adverse vote on Israel, the importance of the Arab world, basically in energy security sphere was a key reason, 80% of India’s trade deals with Petroleum products. UAE is biggest trade partner, Qatar - the biggest natural gas and Saudi the biggest oil supplier. Foreign trade constitutes 40% of India’s GDP. Balance of payments has always been in deficit. The deficit is balanced largely by the inflows including remittances by Indian nationals working abroad especially the Arab countries. It constitutes 4% of the total GDP amounting to $55 billion. The remittances are 143% more than the total FDI inflows and 2067% more than the total foreign aid received by India annually.

In India, domestic sentiments and state voices play a role in making foreign policy too. For example, Tamil Nadu in Sri Lanka. Kerala accounts for 30% of the remittances that come from UAE and other Gulf countries. So Kerala will have a significant stake and influence in Indian policy towards Arab countries.

Indian vote therefore essentially reflects management of politics and not lack of sympathy to with Israel’s cause.

Israel’s concerns

The Israel delegation outlined that military option was not the preferred option for either the US or Israel, but the strategic goal was to prevent Iran from going nuclear. Iran going nuclear would lead to a domino effect leading to Saudi, Egypt and Turkey.

Iran is different from Pakistan because Iran’s stated intention is to destroy Israel , and if the Pakistan model concerned India, all the more reason for India to take all possible steps to prevent a nuclear Iran because a nuclear Iran would support terror networks and cause apart from that, also cause tremendous instability in West Asia.

Given the choice between a nuclear Iran and military operations, Israel would choose the latter.

The Israel delegates rejected the idea of fissures in US Israel relations because the support for Israel in US remained very high and public opinion was in Israel’s favour.

Metaphorically attributing the relationship to that like a family, it was said that in a multilateral world, families of nations should be chosen and despite any arguments there might be , since the interests like those of non-proliferation, security, peace and free economy the relationship would be sustained.

The delegates conceded that demography was the war that Israel is going to lose, but Israel could flourish in small territory and could defend itself even with small numbers.

Demography was one of the key reasons for support for two-state theory and there was hope that two-nation state solution would work out in future.

(This report was prepared by Kaustav Chakravarty, Akhilesh Variar and Abhishek Dadhichof Observer Research Foundation)