By Pinak Ranjan Chakravarty Observer Research Foundation
31 October 2019
PM Modi’s second visit to Saudi Arabia within three years marks the growing strategic convergence of interests between India and Saudi Arabia, in the context of the changes that have marked the international order in the last decade and a half. PM Modi delivered the keynote address at the third edition of the Future Investment Initiative (FII). The FII, first organised in 2017 is also dubbed as “Davos in the Desert”. It is the brainchild of Crown Prince Muhammad.
The FII is organised by the Kingdom’s sovereign wealth fund (Public Investment Fund) under ‘Vision 2030’, the policy which seeks to transform the economy of Saudi Arabia from an oil-based economy to a more diversified economy. Under “Vision 2030”, Saudi Arabia has identified eight countries – India, China, UK, US, France, Germany, South Korea and Japan – for forging strategic partnerships.
The US Factor in India-Saudi Relations
The oil-rich Kingdom’s historic strategic alliance with the USA was sealed during the reign of the Kingdom’s founder Abdul Aziz Al-Saud. The basic compact between Saudi Arabia and the USA was predicated on the USA providing security to the Saudi Royal family in return for steady supply of oil at cheap prices. This ensured stability in the Kingdom and assured supply of oil to the USA and the world. The Saudis also invested much of their petrodollars in the USA and in the Western developed countries. The rise in oil prices, beginning in the 1970s, after the 1973 Arab-Israeli war, led to more accumulation of petrodollars for investment. This was a win-win situation for the USA and its Western allies.
The USA, a net importer oil till a few years ago has turned a net exporter, following the shale oil revolution that has made the USA self-sufficient in oil. This compact has now frayed since the USA’s strategic interest is no longer underpinned by the supply of oil. This decaying strategic compact and the rise of regional rivalry with Iran, has forced Saudi Arabia to diversify its strategic interests by its version of “Look East” policy by seeking greater trade, oil markets and investment opportunities in Asia.
With age old ties with India it was a natural choice for Saudi Arabia to seek closer economic engagement with the growing Indian economy. Moreover, India’s energy requirement has increased manifold and Saudi Arabia has sought to fill the void left by the loss of Iran as a supplier of oil, owing to sanctions imposed by the USA. Saudi Arabia is today the second largest supplier of oil to India. Over 26 lakhs Indians work in Saudi Arabia, providing valuable services to the Saudi economy and precious inward foreign exchange remittance to India.
Upward Trajectory of India-Saudi Relations Since 2006
The changes in the international order and the growing and substantive bilateral ties, spurred closer ties, beginning with the visit of King Abdullah bin Abdul Aziz to India in 2006, as Chief Guest for the Republic Day Parade. Since then, bilateral ties have taken an upward trajectory, with strengthening of security and defence cooperation. Saudi Arabia has deported several Indians involve in terrorist activities in India and intelligence sharing mechanism on counter terrorism has been functioning smoothly.
The rise of Mohammad bin Salman, a son of the current King Salman bin Abdul Aziz, to the position of Crown Prince, has brought a reformer into the most powerful position in the Saudi ruling hierarchy. Crown Prince Muhammad has made pivotal changes in both domestic and external policies of the Kingdom. Internal restrictions, like ban on women driving or travelling without a male family escort, ban on public screening of movies, ban on music performances in public and several other measures that made the Kingdom an outlier among nations in the 21st century, have been pushed through at the initiative of the Crown Prince. These changes are bringing about domestic social realignment and modernizing society at a pace never seen before in the Kingdom.
What Does the Future Hold for the Two Countries?
In the keynote address at the global FII meet, PM Modi outlined India’s future economic and social priorities under the title “What’s next for India”. He highlighted investment opportunities in the infrastructure sector, as India builds national grids for electricity, gas pipelines, optical fibre, transportation, highways, ports, gas terminals, innovation, start-ups etc, together with imparting skills for the new technological age to over 400 million young Indians. Highlighting India as cost effective destination he quipped about India being able to send a spacecraft to the moon at a cost less than a Hollywood movie. He reiterated that India remains committed to reforms across all economic and social sectors.
In his keynote address, PM Modi pointedly raised the issue of the growing disenchantment with the United Nations (UN). In a telling comment he said:
“We have to think whether the UN has risen to the occasion when it comes to conflict resolution. I had raised this issue when the UN turned 70 but much discussion couldn’t happen. I hope this topic is discussed more actively when the UN turns 75. Unfortunately, the UN has not evolved as an institution that we desired. It has lagged in reforms. Powerful countries have seen UN as an instrument rather than an institution”
India’s Successful Partnerships in Middle East Despite Regional Rivalries
A principal takeaway from the visit includes the bilateral strategic compact with the signing of an MoU to establish a Strategic Partnership Council (SPC), headed jointly by PM Modi and Crown Prince Muhammad. The SPC will include important Ministers from both sides handling strategic portfolios. Other takeaways include Saudi ARAMCO’s participation in India’s Strategic Petroleum Reserve and a huge Saudi investment in Asia’s largest greenfield refinery in Raigad.
The RuPay card has been launched, making Saudi Arabia the third country in the region, after Bahrain and the UAE, to join this digital platform that will help financial transactions by individuals, particularly expatriate Indian citizens. Other areas of cooperation have been identified in agriculture, food processing and water technologies.
India’s strategic collaboration with Saudi Arabia and the UAE has been possible because of convergence of interests across a wide template. The success of India’s foreign policy in the West Asian region is underscored by successful strategic partnerships with all countries regardless of regional rivalries and conflicts.
Rendering Pakistan’s ‘Islamic’ Card Redundant
Strategic partnerships with Saudi Arabia and the UAE have also ensured that overlapping national interests override the Islamic card that Pakistan invokes, in pursuit of its hostile policy towards India, particularly on Jammu and Kashmir. Pakistan’s use of state-sponsored terrorism is like putting a deposit in a bank on the verge of bankruptcy.
Both Saudi Arabia and the UAE have shown full understanding of India’s action in Jammu and Kashmir and regard it as India’s internal matter, much against Pakistan’s urging and fulmination. It is also noteworthy the Saudi visit coincided with the delegation of MPs from the EU Parliament to Jammu and Kashmir, as part of a new outreach to deal with stray and motivated international criticism. The course has been set for India-Saudi Arabia ties and the sky is the limit for future collaboration.
This commentary originally appeared in The Quint.