India’s Israel-UAE Balancing Act As PM Modi to Tour Middle East

Modi is all set to embark on a three-nation Middle East tour from the second week of February 2018.

6 min read
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India is all set to give a new thrust to its ‘Look West’ foreign policy and also counterbalance its ties with Israel by engaging the Arab world, as Prime Minister Narendra Modi is all set to embark on a three-nation Middle East tour from the second week of February to Oman, the United Arab Emirates (UAE) and Palestine.

This visit is symbolic, as it will show not just the domestic audience but the world that the Modi government is engaging with one and all, without fear or favour and without any predilections or prejudice.

This trip is an attempt by the Modi government to strike a balance between India's ties with the Islamic world on the one hand, and with Israel on the other. PM Modi has recently visited Israel, and Israeli PM Benjamin Netanyahu is currently on an official visit to India.


UAE Investment in India Crucial

Forget about Oman and Palestine, the real news story lies in PM Modi’s upcoming visit to the UAE on 11-12 February 2018.

Modi’s main agenda in the UAE will be to remind Abu Dhabi about their promised investment of $75 billion in India; not a cent has come from the UAE since this promise was made by their authorities two-and-a-half years ago, when PM Modi last visited the UAE.

Make no mistake. PM Modi’s single biggest agenda in the UAE will be to nudge them to deliver on their two-and-a-half year-old pledge of investing $75 billion in India.

Nothing concrete has been achieved on this front, so far. India has wasted a lot of time in setting up the required architecture for receiving the mega investment from the UAE. But even now sticking points remain, mostly of political hues.

The Modi government needs this investment as soon as possible for its own political reasons – it will be a major boost for Modi and the BJP as they prepare for the 2019 general elections. The 2019 polls may well be preponed by a few months as the Modi government feels there is no strong, credible or popular Opposition as of now.

Hurdles in UAE Investment in India

The UAE mega investment can boost the BJP and PM Modi’s domestic constituency, which the latter can use to their political advantage. This investment, coming from a predominantly Muslim nation, would allow the BJP (which is seen as an ultra-right wing party) to prove to the electorate its credibility in the international community.

If this investment comes through, it would also allow the Modi government to score brownie points over arch rival Pakistan, which has traditionally had very close relations with UAE.

However, indications are not very positive. Chances are that PM Modi is going to return virtually empty-handed. At best, he may end up with a few MoUs and a few hundred million dollars worth of investment. But his main objective – of seeking $75 billion directly from the UAE government, is unlikely to be fulfilled.

The reason for this is that the UAE wants counter-guarantees from the Indian government, something Modi can’t do. India has given counter-guarantees only once in the past – in the Enron case, which had caused India to burn its fingers.

The UAE wants a guarantee from the Indian government to safeguard its investment in our country, and to return the investment to the former, in case business doesn’t pan out as planned.

This is a clear deal breaker. The Indian government cannot agree to a business proposition such as this, which is likely to come under the scanner of the Opposition and Parliament.
  • India to counterbalance its ties with Israel by engaging Arab world, as PM Modi is all set to embark on three-nation Middle East tour from February second week
  • Modi’s main agenda in UAE will be to remind Abu Dhabi about their promised investment of $75 billion in India
  • This foreign mega investment will boost ruling party’s credibility among electorate
  • But first, Modi govt needs to improve Ease of Doing Business index and its ratings
  • Oman, a second home for many Indians, has strong defence ties with India, despite insubstantial bilateral trade
  • India’s support to Palestine has been crux of our foreign policy, and stayed the same irrespective of govt in power

New Ease of Doing Business Strategy Needed

The cash-rich Arab states go strictly by the advice of international rating agencies, which also manage almost 30 percent of global investments. First, India needs to ensure that its ratings by international rating agencies are pegged higher, before seeking foreign investment.

If its ratings go up, then the Arab world, and for that matter everyone else, will follow blindly and park its funds in India. But that hasn’t happened yet because India continues to be ranked poorly in the rating agencies’ scheme of things and their Ease of Doing Business index.

Despite the fact that the $2.4 trillion worth Indian economy might be picking pace, international investors are skeptical on account of its working conditions and myriad issues concerning Ease of Doing Business.

PM Modi needs to focus attention on this aspect first.


A Second Home for Many Indians

For a large number of Indians, Oman is second home. The number of Indian expatriates in Oman is 8,00,749 (as of April 2017) and the number of Indian workers including professionals in Oman is about 6,90,163 (as of October 2017). No wonder then that four Indian Prime Ministers have previously visited the Sultanate – Rajiv Gandhi (1985), PV Narasimha Rao (1993), Atal Bihari Vajpayee (1998) and Manmohan Singh (2008).

Though India-Oman bilateral trade is not substantial (just about four billion dollars), the defence cooperation between the two countries has emerged as the key pillar of their strategic partnership.

The Ministries of Defence of both countries review their relations annually under the aegis of the Joint Military Cooperation Committee meeting. Both the Air Force and the Navy conduct staff talks on a regular basis, which has been the catalyst for new areas of cooperation. India and Oman conduct biennial bilateral exercises between all three services.

The second Army exercise ‘Al Najah’, concluded in March 2017 in Himachal Pradesh. The Air Force exercise ‘Eastern Bridge’ culminated in January 2017 at Jamnagar and the last round of India-Oman Naval Exercise concluded in December 2017 in Oman.

India’s Support to Palestine

India's support to the Palestinian cause has been the cornerstone of our foreign policy, and irrespective of which political party is in power, this policy hasn’t changed. Modi will become the first Indian Prime Minister to embark on an official visit to Palestine.

The highest level of visit to Palestine from India has been by the then President Pranab Mukherjee in October 2015, although the then Palestinian President Yasser Arafat had visited India several times, and current Palestinian President Mahmoud Abbas visited India in the years between 2005 and 2012, and most recently in May 2017.

Modi’s maiden visit to Palestine comes close on the heels of a shocking decision by United States President Donald Trump to recognise Jerusalem as the Israeli capital and shift the US embassy in Tel Aviv to the new capital.

In December 2017, India was among the 128 countries that voted in favour of a UN General Assembly resolution rejecting US recognition of Jerusalem as the capital of Israel.

Modi’s visit to Palestine, less than a month after he hosted PM Benjamin Netanyahu in New Delhi, is demonstrative of India’s fiercely independent and truly non-aligned foreign policy.

(Rajeev Sharma is a strategic analyst and columnist who tweets @Kishkindha. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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