?There has been a feeling among the EU for a long time, and especially among its diplomats in Delhi, that EU relations with India are stuck in a rather unproductive institutionalised rut and that the best way of energising the relationship is by opening a broader debate in civil society in both Europe and India. With the Treaty of Lisbon in force, the EU ambassadors here believe that there is an opportunity to put the relations on a new plane on which Europe and India will work much more closely together
being beneficial to both sides.?
?India Europe Forum, April 12-13, 2010, Instituto Cervantes, New Delhi In 2004, India and the European Union became strategic partners. In view of India?s rapidly growing relationship with the United States, and its avowed ?Look East? policy, questions are nevertheless asked whether, despite a strong economic relationship and shared values and beliefs, the relationship between the EU and India is adrift. To some extent this is simply a question of perception and adjustment to changes taking place within Europe, as India has strong ties and regular dialogue with several European countries at the bilateral level. In view of the colonial connection, in many ways, the dialogue between India and the English speaking world is ahead of the rest of the EU, and certainly in its understanding of India. Indeed, Indian culture has become more Americanised than Europeanised, and the Europeanisation of India is more recognisable as a type of Americanisation. Since Britain?s transatlantic links are arguably stronger than its links with continental Europe, it is unsurprising that to most Indians Europe stopped at Britain and then extended to America.
India and non-English speaking Europe have still to largely discover each other. French and German have long been the most popular non-English European languages in India, but their reach has always been very limited. The relentless forces of market globalisation may well be changing that, as English takes stronger root in Europe as the global lingua franca, and the
logic of market integration constrains countries to look outwards. A good example of the latter is the recent spurt in the demand for Spanish in Indian schools, in response to the vast global Latin speaking market. The recently set up Instituto Cervantes in New Delhi is perhaps symbolic of this new engagement in the globalisation era.
Unfortunately, the current dialogue between Europe and India is still hostage to the ?aid paradigm?, even as it is becoming abundantly clear that such flows are negligible compared to the magnitude of the problems to be addressed, that there is little appetite in civil society to substantially enhance such flows, unless tied to exports, and their outcomes are debatable. In any case, the time for the aid paradigm is past, as it is the tail end of the colonial paradigm.
It is not as though there is no room for untied aid in the new relationship. India is a poor country and the capacity of government is limited. Such aid as is available can help enhance the capacity of resource constrained public institutions, and in topping up outlays on resource constrained flagship schemes, rather than duplicating the efforts of government through a multiplicity of standalone projects. Civil society
and non-governmental organisations could also stand to gain through such assistance. However, given Europe?s fiscal strains, going forward, aid flows are likely to be minimal, and the real vibrancy in the economic relationship between Europe and India will come from private trade and investment. The rapid rise of Asia has, in any case, made aid largely marginal and irrelevant. The dialogue between Asia, and particularly India, and Europe needs to move away from aid and be elevated to a more meaningful and strategic level in keeping with contemporary realities if they are to discover each other. Let me elaborate upon what I mean.
The largely peaceful exit notwithstanding, the colonial experience severely mauled the psyche of Asia at both governmental and civil society levels. Trust, therefore, needs to be re-established at both planes. Where do we stand in the matter of trust? As the work of the great European economic historian, Angus Maddison, has clearly brought out, the Indian economy, along with that of China, was amongst the biggest globally right up to the Industrial Revolution even if Western Europe is considered as a single entity. Indeed, Asia and Europe were equals in every sense of the term: robust economies, strong states and grand civilisations.
The relative rise of Europe following the Industrial Revolution was accommodated through conquest and colonisation, since there were no other institutions of global governance. Indeed, the first hesitant steps towards multilateral governance were made in Europe in the aftermath of the Napoleonic wars through the Concert of Europe. There are object lessons to be learnt from the inability of the Concert to accommodate a unified
Germany that eventually resulted in two World Wars. The question now is how the rise of Asia is to be accommodated in institutions of global governance spawned in the post war and post colonial period. Such accommodation is, first and foremost, simply the counterpart of global responsibilities that rising powers are expected to bear. Secondly, in the absence of such accommodation, alternative institutions are likely to sprout, leading over the long run to adjustments through conflict and use of force as has been the practice right through history.
Accommodation can be seen at three levels, namely economic, political and civil society. There is a need to consider the nature and measurement of Asia?s rise more closely to bring more clarity to what kind of accommodation is required. Following the economic rise of Asia from the late sixties, the gap between Asian economies and those of the OECD countries started converging quite rapidly, measured in terms of both market exchange rates and purchasing power parity. Following exchange rate distortions and volatilities consequent on the sharp increase in cross border capital flows since the East Asian crisis, the long-term trend of increase in the relative size of major emerging markets is now mostly manifest when measured in terms of purchasing power parity. In terms of PPP, the Indian economy is already bigger than any European economy, and most projections indicate that by the mid twenty-first century, and possibly earlier, the size of the Indian economy, like that of China, would be comparable to that of the US and EU in terms of PPP. The recent global crisis may well have advanced the process of convergence. In per capita terms, however, both China and India would still be poorer by any measure. The question of equity, the right to equality, an enduring message of the European enlightenment, therefore remains. And we are not talking of equality of outcomes?a proposition that appears to be close to Europe?s heart?but simply of equality of opportunity.
A substantial degree of economic accommodation has already been achieved. India is an equal partner of Europe in the G20, which has recently been designated as the premier multilateral economic forum, taking over the mantle of the G7. Under the stewardship of the G20, India has become an equal partner in a whole range of international financial regulatory and code-setting institutions such as FSB, BCBS, IOSCO, FATF etc. However, modest attempts of the G20 apart, fundamental governance reform of international financial institutions, such as the IMF and the World Bank, essential to make surveillance of economic and financial systems effective and address developmental imbalances, is still to be done.
Europe seems reluctant to cede commensurate space to major fast growing emerging markets in these organisations. India is a member of the WTO, but its developmental concerns, especially in agriculture, climate change and intellectual property rights, have still to be accommodated. Agriculture supports the poorest in large developing countries like India. Consequently, trade openness in agriculture would do much more for poverty in developing countries than aid can ever hope to do. Similarly, the IPR regime queers the pitch for the transfer of the very technology to developing countries that lies at the heart of rapid productivity gains, including the rise of Europe in the wake of the Industrial Revolution.
Likewise, at the United Nations Framework Convention for Climate Change, while there is a dialogue amongst equals, as in the case of the WTO, there appears to be a reluctance to accommodate the developmental concerns of emerging economies in an equitable manner. There is much that Europe has to gain through economic accommodation in trade and IPRs. The economic case for trade on the principle of comparative advantage is self-manifest, and removing barriers would only optimise welfare through lower taxes as agricultural subsidies are phased out. An open IPR regime would give developing countries access to cutting edge clean technologies that would make for a greener bridging of the developmental divide, vastly
alleviating the threat of catastrophic climate change.
At the political plane there has been very little accommodation. The Security Council is mostly unreformed, the nuclear regime is very inequitable, and the G7/8 remains the premier forum for multilateral political and military dialogue. To a great extent this reflects continuing technological asymmetries. Given shifting demographic profiles and vastly asymmetric growth rates, it would, over the long run, be difficult to exclude the populous countries of China and India from critical international policing, peacekeeping and strategic roles.
The relationship between Europe and India at the level of civil society is complex. Europe was traditionally seen as a land of opportunity, both for acquiring state-of-the-art knowledge as well as for more productive employment. Used to democratic freedoms at home, Indians were comfortable going to Europe, the undercurrent of racism notwithstanding. Faced with problems related to ageing, shortage of workers, especially low-skilled, Europe was mostly open to selective labour mobility. Over time, international terror has become a legitimate concern, and there are fears within civil society of the cultural implications of large-scale immigration. These concerns perhaps relate less to India, with which Europe shares similar cultural values, than to other conflict-ridden parts of Asia and Africa. With European growth rates declining, and those in India picking
up substantially on the back of the IT revolution to which India has taken as a duck takes to water, Europe is likely to be seen more as a place for acquiring human resource skills rather than as a land of employment opportunities.
Europe perhaps needs to reflect how it will cope with its ageing, and where new workers will come from. There is great scope for partnership between Europe and India in this regard,
especially since India becomes younger even as Europe ages.
This is the first of a two-part series.
The author is a civil servant.
Views are personal
