When Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, crosses the Arabian Sea today for a state visit to India, a number of new paradigms are likely.
It would be the second bilateral summit within six months of Prime Minister Narendra Modi’s groundbreaking state visit to the UAE last August. This quickened pace is the diplomatic analogy of a marathon being replaced by a sprint.
The official visit will be equally split between New Delhi, the capital, for political dialogue, and the business hub of Mumbai, which has a long association with the UAE, being just a stone’s throw across the Arabian Sea.
The delegation accompanying Shaikh Mohammad Bin Zayed will include some Federal Ministers and around 80 businessmen. By some measure, it is the most significant visit of its kind since the UAE’s founder, the late President Shaikh Zayed Bin Sultan Al Nahyan, visited India in 1992.
The short interregnum between the two summits has been replete with intensified bilateral contact. These include ministerial-level bilateral meetings: the Joint Commission in September 2015 and the High Level Task Force on Investments in November 2015 and February 2016.
Indian Finance Minister Arun Jaitley also visited the UAE in December 2015. The enhanced operational cooperation, from anti-terrorism to consular matters, has been productive. These precursors have set the stage for a historic visit poised to catapult the politico-economic ties from ‘cordial’ to ‘strategic’.
However, before this ambitious strategic partnership is realised, the two sides would need to assess the evolving bilateral, regional and global contexts and reorient their strategies. The most pressing issue is the sharp decline in the price of oil — a commodity that has hitherto underpinned bilateral trade. Bilateral trade stood at $59 billion in 2014-2015 (Indian exports to the UAE was $30.49 billion; India’s UAE imports was $20.31 billion) having declined by 15.7 per cent from the previous year. In fact, bilateral trade in 2015 was nearly a third off its peak of $75.46 billion in 2012-13 — with Indian exports down by a sixth and imports from the UAE nearly half their record.
The significant decline on both sides of the trade equation belies those who see oil prices as a zero-sum game between producers and consumers. The UAE’s oil supplies to India grew marginally in 2015 to average around 309,000 barrels per day; the country remained India’s sixth largest supplier with 7.7 per cent share of global Indian oil imports.
Mutual investments have been buoyant: Indians continue to be the largest buyers of property in Dubai, investing Dh20 billion in 2015. The UAE’s investments in India also remained largely unaffected by the global tumult. For instance, a recent Indian news report put Abu Dhabi Investment Authority’s investments in India at over Rs217 billion (over $3.3 billion) in September 2015.
The people-to-people contacts have also continued to flourish without any noticeable change in Indian expatriates’ arrival in the UAE. However, it remains to be seen whether the remittances can cross the 2015 record of $12-14 billion.
Thanks to a 26 per cent rise to 1.6 million, Indians regained the top spot as tourists in Dubai in 2015. In other words, every ninth tourist in Dubai was from India.
The past six months have also witnessed a number of fast-paced regional and global developments with implications for bilateral ties. Economically, such far-reaching changes included the emergence of a buyer’s market in oil, the lifting of sanctions on Iran and the slowing down of the Chinese economy. The south-west Asian region has continued to face serious political and security challenges. Terrorist groups, notably Daesh (the self-proclaimed Islamic State of Iraq and the Levant), Al Qaida and Lashkar-e-Taiba, have been on rampage in various parts of the region. Other geopolitical developments, such as proximity talks on Syria and tensions between Saudi Arabia and Iran, can have profound consequences ranging from sectarianism to oil.
Such a chequered backdrop gives the forthcoming UAE–India Summit heightened topicality and remit. The two leaders share a vision comprising bilateral synergy and regional harmony. Their first priority is likely to be economic ties, where they have been robust and resilient. New drivers are, nevertheless, needed to reach the ambitious goals set at the first summit, including a 60 per cent growth in bilateral trade over the next five years and $75 billion of UAE investment in Indian infrastructure projects.
The oil sector requires particular attention in order to stabilise its traditional role. Among the possible measures could be fostering the long-term integration of the oil economies through mutual strategic investments. Other economic drivers could be the creation of a set of SPVs (Special Purpose Vehicles) for UAE investments in India’s infrastructure and manufacturing (similar to Modi’s ‘Make in India’ campaign), and co-production of defence inputs and urban renewal.
India can be relevant to a number of ambitious projects in the UAE such as the Amal Mission to Mars, the creation of a knowledge-based economy, renewable energy and the human resource development. The two sides can also collaborate in setting up the UAE-style Free Zones in India to leverage lower wages and the economy of scale.
In political, defence and security domains, the enhanced bilateral cooperation can go a long way to insulate them from terrorism and volatility prevalent in many parts of the region.
The forthcoming India visit by Shaikh Mohammad Bin Zayed would make him the first Arab leader to have held two summits with Prime Minister Modi. They should build upon this special relationship and create a win-win synergy. This would help augment bilateral ties and strengthen regional stability.
Mahesh Sachdev is a retired Indian diplomat who served as Ambassador to Algeria, Norway and Nigeria. He is currently President of New Delhi based UAE–India Business Council.
