Abstract
Primarily originating as a trading community, the Arab Gulf (GCC) states have benefitted from the oil boom. As oil money flowed in, the Gulf became dependent that gave them the rentier status. The oil boom saw a big influx of Indian's going to the region for work. The number of Indian expatriates are in millions, that send enormous remittances. Similarly, the bilateral trade between the two also increased. The Gulf is one of the largest regional - bloc trading partner for India. The economic and political upheaval post 2011 has made the Gulf States more volatile. The Arab Uprisings (2010-11), Iranian nuclear deal, the Qatar crisis, Yemen war or the US Shale revolution has changed the regional geopolitics. The paper is an attempt to look into the increased level of engagement and enrichment of the bilateral ties between India and the Gulf. The dipping oil prices in 2014 has pressed the Gulf producers to pursue policies that will help them reduce their oil dependence and diversify their economy. India imports more than 80 per cent of its oil needs from West Asia. Consequently, it will be topical to probe into the geopolitical scenario that engages the India - Gulf relations. It looks at the energy dimension of the relations, especially when the Gulf is an important source of hydrocarbons for India. The conflicts in the region are borne by the fact that that there is a competitive geopolitics for acquiring strategic positions; and, ports is crucial component of this competition. The paper explains that the changing pattern of relations has become more calculated and strategic.
Keywords: hydrocarbons, expatriates, trade, geopolitics, ports, India, Gulf.
India – Gulf relation dates back in history. The two have civilizational linkage, as the Indian Trading community traded with the Gulf counterpart. Since then, millions of expatriate population live and work in the Gulf. This expatriate community also remits millions of dollars to India. India and the Gulf has been a favorable place for students as well as a tourist destination. The Cold War years saw India's non-alignment movement towards the region. Thus, non - interference in domestic politics was an important component of India's foreign policy. Eventually, looking at the progress of the relationship between the two, high level meetings are often. Prime Minister Modi visited UAE in 2018 and 2019; and, received the highest civilian award the 'Order of Zayed' in 2019.
The changing geopolitics of the region are complex, yet intricate and complicated that have altered the socio - economic fabric of these countries. The rentier nature of the Gulf economies has made high oil price essential to meet their finances. This is true and has been a doable practice due to the low cost of production in these countries. The transportation sector has also revamped itself. The increased significance of the sea lanes did bolster the vessel engineering. Today, hydrocarbons are transported through Very Large Crude Carriers (VLCC), Ultra Large Crude Carriers (ULCC) and other tankers such as the Panamax (large tankers that can fit through the Panama Canal) and the Suezmax (large tankers that can fit through the Suez Canal).
The magnitude at which piracy has grown, surfaced the insurance industry. Thereby, any episode in these shipping lanes is an attention seeking event for the extractive (oil and gas) sector and is immediately noticed by the insurance industry. It is well noticed by the people in power that oil in West Asia is a crucial factor in the running of global industries. Oil is an easily traded commodity, and the Gulf countries have been trusted suppliers of oil, especially for Asia. Between 2002 and 2012, China accounted for just under 50 per cent of world oil-consumption growth (or nearly 75 per cent in combination with India and Southeast Asian countries), compared with -30 per cent for the European Union and the US, taken together1
After the British withdrawal, the US interests were very profound and specific to West Asia's resource management. This did draw a new geopolitics and mapped the region according to Washington's design. Nevertheless, the 11 September 2001 incident ruptured the trust and created a gap that was attempted to be filled by Asia, making it important in West Asia's policy.
The rise of US shale oil / gas further created a rift, as US became a net producer and exporter; from net importer of oil due to enhanced franking technology. Thereby, a complete change in the energy geopolitics with the market flooded with oil. Shale's emergence did leave OPEC in dilemma in a sense, how to keep the non - OPEC players off the market and re - gain its market share. OPEC as a bloc achieved a lot of respect and say in the market, which otherwise individually was not possible. In the last decade, West Asia has been an area of conflict of wider scale - the fall of dictators, Shia - Sunni conflict for supremacy and regional hegemony, the interference of external players among others. The changes of large magnitude have twisted relations and compromised many states of their sovereignty and dominated by bigger actors in the region. These changes will make a mark for a long time in the coming decades. The changes have affected the regions social fabric and economic characteristic.
Energy and Other Trade:
Since liberalization, India's performance has been tremendous in the external sector. Growth has also encouraged its global potential. At this juncture, India is seen as a significant partner all around the world and the Gulf is not left behind. Its volume of trade has expanded steadily. The Gulf countries have proved to be trusted partners, when it comes to trade and a steady flow of energy to Asia in general and India in particular. The Gulf economies are comparatively stable with substantial quantities of hydrocarbon reserves.
The payment for oil in dollars against the US on condition to give protection to the oil monarchies was duly accepted, making 'US dollars' a currency in which oil was sold and bought. Unlike the years of oil scarcity when control over the Middle Eastern (West Asian) energy resources was the dominant narrative of regional geopolitics, the new text is to contain the influence of the region, riddled with prolonged conflict1 . Aspiring for the BS VI standards, renewable sources, and lately the COVID - 19 pandemic restricted India's oil imports. India‘s oil imports from Saudi Arabia, traditionally the largest supplier of crude to India, dropped 8 per cent to 36 MT last financial year and rose 10 per cent to 9.17 MT in the quarter ended June 20183
Apart from oil exports outside the Gulf, the domestic demand of these states is also mounting. UAE and Saudi Arabia border Oman by land; and, Iran and Pakistan by sea. This brings tremendous potential for Oman. The Dolphin Gas Pipeline Project is to facilitate the gas requirement for UAE and Oman from Qatar's offshore North Field. As of March 2020, India imported gas from Qatar, Saudi Arabia, UAE, Kuwait and Oman, worth 7941.38 mil. US$, 2461.08 mil. US$, 1958.4 mil. US$, 855.23 mil. US$ and 702.34 mil. US$ respectively1 . Oman is an important oil exporter, particularly to Asian markets like India and China. And, with the region in turmoil and a comparative stability, Omani oil will be crucial in time to come. Also, Oman is a part 37 of the GCC inter-connected grid system, which allows electricity transfers between the six GCC states. This suffices the regional energy security.
flows in 2018-19, 17 per cent higher than the previous year1 . Abu Dhabi Investment Authority (ADIA) bought 1.16 per cent stake in Reliance Industries digital unit for Rs 5,683.50 crore, days after Abu Dhabi sovereign wealth fund Mubadala Investment Co picking up 1.85 per cent in Jio Platforms for Rs 9,093.60 crore on June 51 . Apart from other trade, the oil boom in the region welcomed the Indian labour population. However, the Nitaqat policy implemented by the Gulf countries like Saudi Arabia guarantees jobs for the locals.
Geopolitics and Ports:
The significance of ports cannot be undermined as they are crucial connectivity points and therefore they become a part of larger geopolitics in West Asia, where the Gulf plays an important role. Ports play a significant role in any crisis, as they are the gateway for necessities of the people; as well as they make up a strategic asset for any country. Chabahar port in Iran is crucial as it connects Iran with other immediate neighbours. India is to build and operate two berths in Chabahar Port Phase-I with a total capital investment of $85 million and annual revenue expenditure of $23 million on a 10-year lease1 . Development of the Chabahar port also is an attempt to carefully handle the development of Gwadar port (in Pakistan) by Beijing. Even when the port doesn't come in the Gulf (GCC) sphere, the implications have a wider impact for the GCC, especially the UAE and Saudi Arabia. Gulf's relations with Islamabad are of brotherly nature; nonetheless, New Delhi holds an important place in the Gulf's investment pattern.
The post-Cold War era observes multipolarity, with the rise of China. Geopolitical competition for the access of ground and markets make the control of these ports vital. Port Duqm in the Sultanate of Oman is also seen as an important connectivity point. An MoU signed between PM Modi and Sultan Qaboos talks of the military cooperation between the two countries. The port is in close proximity with Chabahar and Gwadar. It comes under Special Economic Zone (SEZ) and therefore, there will be huge investment in the future. The peaceful nature of the Sultanate adds to the buoyant element of the port that will generate employment and investment.
In 2018, UAE and Saudi Arabia launched war on Yemen causing serious casualties. The port of Hodeidah at the Red Sea is important port and is the transit point for as much as 70 per cent of the country‘s critical food and humanitarian aid1 . The second biggest port after Aden, Hodeidah is lifeline of the Yemeni's. The Saudi's and UAE allege that the port is an entry point for arms and ammunition from Shia Iran. In fact, to some extent the war on Yemen by the Gulf heavyweights has been for the control of the strategic asset, the port of Hodeidah.
India‘s influence on the region is seen through its culture, movies and likewise many other components which act as its soft power in the Gulf. Prime Minister Modi's visit to the countries in the region is a clear evidence that New Delhi thinks more seriously about the Gulf than just being a trading bloc. The construction of the first Hindu temple in Abu Dhabi in April 2019, emphasizes the growth of engagement between India and GCC as a whole. Looking at the growing bilateral trade, the expatriate population and energy requirements, the high level meetings and economic commercial exchanges from India have also enhanced this cooperation.
In addition, the future vision of the Gulf countries and India is to look at alternative and renewable sources of energy like solar. The International Solar Alliance (ISA) is clear illustration of this move towards renewable energy. India being one of the 67 countries that have signed and ratified the ISA Framework Agreement, Saudi Arabia and UAE from the GCC. The US idea of reforms in West Asia has been artificial and manufactured to seek its own plan. The arrangement laid out by the US was to control the oil flows that were of strategic nature. Therefore, the reform agenda which is to pursue democracy in West Asia has actually pushed the region in disorder. It is well evident from the Iraqi experience, post Saddam. The 2010-11 Arab Uprising entails the downfall of the regional autocratic regimes. While, the monarchies have been successful in using money from oil sales to suppress the people's demands, the monarchy of Bahrain has survived the Uprisings.
The regional crisis can also be seen through the bigger players‘ outlook towards any dissent, for instance, the killings of Jamal al Khashoggi in 2018. The initiatives taken by the Gulf economies for transformation are through the Vision documents. These Vision documents have come in the light of drastic changes in the global oil markets with low oil prices towards a non - oil economy. With passing time, the oil boom in the Gulf changed the lifestyle and brought modern day lavishes at their door. Today, the region sees a multipolar system with external actors like China and Russia involved to exercise their strategic and geo-economic hold. It is no longer American centric, as other external players are engaged in the regional developments. For the GCC, oil boom has been a blessing that had led to a rapid economic growth, which has eventually led to a substantial stake in the development of global economy. And, energy has become the centre point of further ties between the Asian economies like India and the GCC.
Russia's role in West Asia multiplied, as the US role or pattern of interference took a back- step. This made Moscow strategically active in the region. Its role in the Syrian crisis is well - known. According to Perthes, Both Riyadh and Tehran tend to see each other as their main rival for regional leadership, and hence as a threat1 . Apparently, the regional powers (Saudi Arabia - Iran) and their rivalry for influence and supremacy further increases the risk of conflict and defragmenting of the weak and smaller states in the region. Thus, it can be seen that in these crisis times, New Delhi has been successful in engaging the Gulf states in a balanced manner, than involving itself in alliance formations.
References:
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10 See, Horton Michael ( August 10, 2018), "What the Battle for Hodeidah Means for Yemen and the Region", The Jamestown Foundation. Accessed 1st August 2020. See, https://jamestown.org/program/what-the-battle-for-hodeidah-means-for-yemen-and-the- region/#:~:text=Hodeidah%20is%20Yemen's%20most%20important,critical%20food%20and%20h umanitarian%20aid.&text=Even%20if%20Hodeidah%20is%20captured,of%20the%20war%20in% 20Yemen.
11 Perthes, Volker (2018), "Conflict and Realignment in the Middle East", Survival, 60:3, p. 98.
