Event ReportsPublished on Apr 25, 2013
The Fourth India-Saudi Arabia Workshop held recently in Delhi felt that India must play an active role in ensuring peace and stability in the region, which should not be limited to maritime security. It also stressed the need to move forward the relationship to a genuine strategic partnership.
India-Saudi Arabia relations must move forward to a genuine strategic partnership

Over one century of good bilateral relations between India and Saudi Arabia must move forward into going beyond commercial ties into a genuine strategic partnership. This was the feeling expressed by participants at the Fourth India- Saudi Arabia Workshop held in Delhi on April 25, 2013.

The workshop, organised by Observer Research Foundation with the support of the Public Diplomacy division of the Ministry of External Affairs, felt that, with both countries interested not only in the continuous flow of oil but rather to diversify and broaden their commitments to each other, India must play an active role in ensuring peace and stability in the region, which should not be limited to maritime security and concerns over oil pipelines.

Saudi Arabia too must work towards making their trade and investment relationship with India more balanced, the participants from India and Saudi Arabia felt. From the Kingdom of Saudi Arabia, a delegation of academics participated in the day-long discussions.

The central idea of the workshop was to consolidate the ongoing dialogue that could help transform the bi-lateral relationship between the two nations from a transactional one into a closer, more strategic relationship. Topics discussed at the workshop included Gulf security, the Arab Spring and economic cooperation issues along with bilateral relations, aimed at creating a meaningful intellectual partnership.

Recognising that the continued flow of oil is necessary for India to grow into a major power, it is important that both countries work towards diversification and reciprocity in their bilateral relations. India has begun to actively participate in Saudi Arabia’s diversification efforts. For example, the Tata group has signalled its intent to open a factory to assemble Jaguar and Land Rover motor vehicles, which is expected to start production by 2017. It is worth noting that India receives almost US$ 40 billion annually from remittances sent by over 6.5 million Indians living in the Gulf, of which about 2.3 million live and work in Saudi Arabia.

One of the thoughts voiced during the discussions was that a rising India will need to re-orient its policies to accept a larger role and shoulder a greater burden within the region and internationally. In an increasingly volatile and unpredictable region, states need to overcome the tendency to view Saudi Arabia merely as an oil exporter and work towards enhancing peace and security in the Persian Gulf. Within this larger framework of Gulf security, the current tensions centred on Iran were also discussed. The participants discussed the possible destabilising effects of Iran’s revolutionary fundamentalism and its nuclear posture. The possible emergence of a regional nuclear counterbalance was also discussed.

Gulf Cooperation Council (GCC) countries see Iran’s intransigence as not limited to its nuclear ambitions, based on their understanding that it is very unlikely that nuclear weapons will actually ever be used. However, more disconcerting is the fact that the threat of nuclear war emanating from the possession of nuclear weapons will embolden Iran and add to its efforts at regional destabilisation.

Considering the fact that India depends on the Gulf region for over 90% of its energy needs, it was argued that India would need to take a more holistic view of Iran. The India-Iran relationship thus could be seen as being somewhat similar to the special relationship that Saudi-Arabia shares with Pakistan. At the same time India understands the need to promoted regional stability and some participants put forth the idea that regional stability might be enhanced by initiating a dialogue among nuclear powers which could include China, Pakistan, India, Iran and representatives from the GCC or the Arab league.

Amongst other security in West Asia, the participants discussed the conflict in Syria which is fast degenerating into a humanitarian crisis. The conflict has caused a serious degree of polarisation as it is being largely fought along sectarian lines. This protracted stalemate could potentially lead to the balkanisation of the country.

With regards to the situation in Egypt, it was noted that there is a need to understand that there is an alternative narrative from the one that has found mainstream media attention. Although it has been suggested that the growth of political agitation was facilitated by social media and other platforms, which received only tacit support from the army, toppled the Mubarak regime in the North African country, a contrary argument suggests that the movement was orchestrated by the army, who worked closely with the Muslim Brotherhood to galvanise their grassroots presence while maintaining control over the hard power institutions in the country as well as retaining a stronghold on large parts of the economy.

In concluding the discussion on security, the discussants agreed that the West Asia has been shaken by the events of the Arab Spring, which must be understood not as a singular event but rather a process. The Arab Spring has brought to light that there is a singular absence of institutional infrastructure to enable political change, since most regimes in the region remain preoccupied with ensuring their survival. The process has also resulted in the predominance of political Islam as a major force to fulfil the new civic demands of the people.

The final session of the day was held on issues pertaining to economic cooperation between Saudi Arabia and India. The economic relationship is significantly imbalanced, with India importing $25.6 billion from the Kingdom but exporting just $2.7 billion. Saudi Arabia’s major imports include foodstuff, machinery, chemicals and vegetables and these are all sectors in which India can participate. Additionally it was argued that with over $626 billion in investments in the West, yielding only marginal returns of approximately 0-2%, Saudi Arabia stand to lose money. India on the other hand can offer higher financial returns, a large and growing domestic market, cost competitiveness and the fastest growing middle class in the world to encourage a greater degree of investment from Saudi Arabia.

With India already importing 70-80% of its energy needs and the net total of these imports growing at 9-10% per annum, India’s economic relationship with Saudi Arabia is of great importance. One fact that is often overlooked is that India’s economy is heavily dependent on oil - not only imports but in exports as well. The single largest exporter from India is a petroleum and petrochemicals company. India's refining capacity is projected to be 310 million metric tonnes (MMT) in 2016-17. With our current Petroleum, Oil and Lubricants demand of 153 MMT expected to touch 186 million by 2016-17, the balance will be available for exports.

As India does not figure amongst the top exporters for Saudi imports, it has been suggested that India must seek to attract Saudi investors. Climate change has had a negative impact on the Kingdom of Saudi Arabia’s domestic production of food items, and this is a potential area of great value, for both countries to cooperate for mutual benefit. The Saudi government has encouraged investors to invest in agriculture, especially in those countries with large tracts of arable land. Both India and Saudi Arabia could work towards developing joint projects for food production in Africa, which is being developed as the next global breadbasket. The Government of Saudi Arabia has already formulated and launched the King Abdullah Initiative for Agro-Investment Overseas to enable such cooperation.

With regards to the Saudi policy of ’Nitaqat’, concerns were raised that this would potentially upset the large expatriate community of Indian working in the Kingdom. However, it was clarified that this initiative is aimed at creating employment and improving employment standards for Saudi nationals, and is not being done at the expense of foreign nationals

(This report is prepared by Kartikeya Khanna, Research Assistant, Observer Research Foundation, Delhi)

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