Beyond Mexico: Modi Must Connect With the Rest of Latin America

As far India is concerned, there is more to Latin American countries than just the Panama Papers, writes Vivek Katju.

Prime Minister Narendra Modi’s working visit to Mexico on 8 June, as part of his six-day-five-country tour came after three decades of the previous bilateral prime ministerial visit from India. Rajiv Gandhi visited this major Latin American country in August 1986. Coincidentally, and interestingly, both were in the context of nuclear issues but India’s purposes then and now were very different.

Rajiv went to take part in the six-nation-five-continent nuclear disarmament summit, an initiative of Sweden, Argentina, Mexico, India, Tanzania and Greece. As Prime Minister, AB Vajpayee recalled at the NAM summit in South Africa in 1998 after the Indian nuclear tests, the 1986 summit’s purpose was “focussed on the banning of all nuclear tests, a ban which would be a meaningful step towards disarmament”. Rajiv’s bilateral visit followed the summit.

Objective Achieved

Modi’s primary purpose was to urge Mexico to overlook its inhibitions and not stand in the way of India’s membership of the NSG. It is a measure of India’s changed international stature and present geopolitical realities that Mexican President Enrique Pena Nieto, with whom Modi has struck an obvious warm relationship, agreed to the Indian PM’s request and said that Mexico would give positive and constructive support to India’s membership of the NSG.

At the same time, for form’s sake, the bilateral joint statement asserted that the two countries “pledged to continue promoting the shared goals of disarmament and non-proliferation.”

Expanding Ties

At a joint press briefing after the two leaders met, Pena Nieto called India “one of the powers of the world.” There is, thus, a growing consciousness among Latin American leaders that India will now be a worthwhile partner. The joint statement indicates a clear desire on Mexico’s part to intensify bilateral ties in many areas, especially trade, investment, energy and research.

Diplomacy Beyond Mexico

• Modi’s main purpose was to urge Mexico to not stand in the way of India’s membership of the NSG.
  
• Mexican President Enrique Pena Nieto called India “one of the powers of the world.”
  
• India imports around 20 percent of its oil from Latin America, including 6 MMT from Mexico.
  
• There are vast economic opportunities for India all over Latin America, unlike a few years ago.
  
• India is more actively involved with the two most important South American countries, Brazil and Argentina.
  

Tapping Oil Reserves

A key area for investments is energy. The oil industry was a government monopoly linked to popular national Mexican sentiment. Pemex, the national oil company, provided government significant revenues. However, with oil production and reserves declining, Pena Nieto courageously undertook structural reforms of the oil sector in 2013-14 and has opened up the industry to private foreign and domestic capital. This has provided opportunities to private global players to participate in the area especially as promising new off shore fields are available.

India imports around 20 percent of its oil from Latin America, including 6 MMT from Mexico. To explore the possibilities opening up in Mexico, Petroleum Minister Dharmendra Pradhan visited the country to try to turn a “buyer-seller” relationship into an “energy partnership”. ONGC-Videsh decided to set up an office in Mexico to pursue these opportunities. This was a laudable initiative especially as there would be competition from major international oil companies.

Clarity Needed

The joint statement notes the “satisfaction” of both leaders to “the growing interest for investment of Indian companies in the energy sector.” This diplomatic formulation indicates nothing of what is actually transpiring on the ground and it is time that the petroleum ministry makes the actual position clear.

Many leading Indian IT, pharma and some engineering companies have set up joint ventures in Mexico to take advantage of its membership of the North American Free Trade Agreement (NAFTA). The core of NAFTA is the US and Mexico provides a good platform to enter the American market, besides the Mexican market itself.

There is need for a more active push from the government especially to overcome non-tariff barriers faced by the pharma industry in particular. This is not unique to Mexico but is seen in many countries where the major international players are seeking to keep Indian cost-effective pharma products out.

Connecting With Latin America

Historically, India and Latin America were remote and apathetic to each other. Lack of connectivity and misperceptions caused by ideological rigidities bred by the Cold War contributed to a lack of real interest. There were small pockets of opinion interested in each other’s culture but nothing really more. That time is gone. Now there are vast economic opportunities for India all across Latin America and there is growing realisation that on many global issues a congruence of interests as well.

India is more actively involved with the two most important South American countries, Brazil and Argentina. The former is a member of BRICS and G4. The latter group consists of Germany, Japan, India and Brazil to collectively push their strong cases for permanent membership of the Security Council. With Argentina, India has signed a civil nuclear cooperation agreement.

These relationships and with others such as Chile and Columbia need to be nurtured through regular high level contacts. These have been lacking till now. In addition, the consciousness of the openings available to India’s overall interests in Latin America has to be augmented within the Indian system, beginning with the external affairs ministry itself.

For India, there is more to Latin America than the Panama Papers.

(The writer is a former Secretary (West), Ministry of External Affairs.)