Prime Minister Narendra Modi is attending two summits this week – he is a ‘special invitee’ at the 48th G7 Summit at Schloss Elmou in Germany. After that, he has a bilateral summit in Abu Dhabi with the UAE President Sheikh Mohammed bin Zayed Al-Nahyan on June 28. Though the pundits may consider the second event as a sideshow, some statistics are enough to prove them wrong.
If the U.S. is exempted, no G7 country comes close to the UAE as India’s trading partner, exports market, Indian diaspora base and their inward remittances. According to our official Foreign Direct Investment data, the UAE invested more in India in 2021 than Germany and France combined. Unlike the UAE, none of the G7 countries has yet signed a bilateral Comprehensive Economic Partnership Agreement (CEPA) with India.
Both summits are important to India, but unlike the interlocutors in the Bavarian Alps, our Prime Minister is unlikely to be hectored in Abu Dhabi about where not to buy oil from or how much Indian wheat and sugar must be sold. The agenda is likely to be more constructive and benign.
India-UAE synergy
The current India-UAE synergy and amity are largely due to Prime Minister Modi’s tending. This would be his fourth visit to Abu Dhabi and sixth summit with Sheikh Mohammed over the past seven years. These have re-energised this historic, but long-dormant, relationship. The visits have plenty to show — from Emirati investments in Jammu and Kashmir to a CEPA. After a COVID-19-induced three-year hiatus, a Modi-Sheikh Mohammed summit was desirable to infuse a fresh momentum.
In protocol terms, Mr. Modi would commiserate the passing away of UAE President Sheikh Khalifa bin Zayed on May 13 and the appointment of Sheikh Mohammed, 61, as his successor. As Sheikh Mohammed has been the de facto President since Sheikh Khalifa suffered a stroke in 2014, the change at the helms means little in the practical term. However, this being the only second transition at the top since the formation of the UAE in 1971, it is significant. It symbolises political stability and continuity in a turbulence-prone region. Mr. Modi would probably be the first non-Arab leader to be received in Abu Dhabi after the 40-day State mourning ended on June 22. Thus, the Abu Dhabi summit would be a useful opportunity to recalibrate the bilateral ties and open new vistas following the operationalisation of the bilateral CEPA from May 1.
Changes since the pandemic
Significant changes in the bilateral, regional and global context have taken place since the two leaders last met in August 2019. Both countries have successfully contained the COVID-19 pandemic and can pool their experiences. Their bilateral trade grew by 68% in 2021-22 to $72.9 billion, a new record. While both exports and imports grew, the trade deficit reached $16.8 billion, also a new record. Thanks to the CEPA, the robust economic revival, higher oil prices and larger Indian imports, trade is likely to grow even higher in 2022-23. The corrective mechanism built into CEPA would, hopefully, prevent the deficit from going out of hand. As the UAE collects petrodollars, India, the world’s fastest-growing major economy, could be a lucrative market for investments in areas such as petrochemicals, pharmaceuticals, renewables, infrastructure, manufacturing, logistics, start-ups, etc. A lot has already been done to streamline the manpower sector, including skilling the young Indian labour force to suit the Emirati requirements, but more can be done. The two sides can collaborate for the eventual reconstruction of the war-ravaged regional countries such as Yemen, Syria, Somalia, Iraq, Libya and Afghanistan. In the bilateral political domain, the two sides have cooperated efficiently on security and anti-terrorism, but they need to do more to fight money laundering and the flow of illicit narcotics.
A complex area
The South West Asian region is a complex and evolving area. The UAE has disrupted the longstanding Arab Israeli stalemate by normalising relations with Israel in 2020. The two sides have recently signed a bilateral CEPA. After pursuing a muscular regional foreign policy against political Islam and in regional hotspots such as Syria, Yemen, Libya, Sudan, and Somalia, Abu Dhabi seems to have decided to stage a phased withdrawal and improve ties with Syria, Qatar and Turkey. The ties with Saudi Arabia remain somewhat edgy, due to policy divergences and economic competition. Similarly, Abu Dhabi has developed some ruction with the Biden presidency in the U.S. and is diversifying its strategic options with Russia and China. It has conspicuously ignored the plea by the U.S. and other Western countries to raise its oil production. India, the UAE’s second-largest trading partner, and largest source of tourists and manpower, can be a useful ally.
Against this ongoing regional and global flux, the India-UAE summit is both topical and opportune and can have an impact beyond the bilateral context.
Mahesh Sachdev, a former Indian Ambassador, is President, Eco-Diplomacy and Strategies, New Delhi
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