India and Germany to focus on Indo-Pacific and more | The Financial Express

India and Germany to focus on Indo-Pacific and more

The German Chancellor’s planned visit next month will be his first visit to India since he assumed office in December 2021. The aim is to significantly expand overall cooperation in areas of trade, defence, clean energy, and climate change.

India and Germany to focus on Indo-Pacific and more
The German Chancellor’s planned visit next month will be his first visit to India since he assumed office in December 2021. (File Shot/Courtesy: Twitter/PMO India)

(Mrs) Amb Narinder Chauhan

Leaders of the European Union’s two biggest economies, Germany, and Franceare expected to visit India this quarter: the German Chancellor Olaf Scholz in February and the French President Emmanuel Macron in March. Their bilateral visits will be in addition to their visits in September 2023 for the G20 summit in New Delhi. Preparations are underway to firm up the key outcomes from the visits, even as the focus has been to increase the economic ties, and engagement in the Indo-Pacific. Both France and Germany have declared India as their key partner in the Indo-Pacific.

The German Chancellor’s planned visit next month will be his first visit to India since he assumed office in December 2021. The aim is to significantly expand overall cooperation in areas of trade, defense, clean energy, and climate change.PM Modi and Scholz met earlier in Bali last November during the G20 Summit. Prior to that PM Modi had visited Berlin in May 2022 for the 6th India-Germany inter -governmental consultations (IGC) followed by the visit in June2022 for the G7 Summit where India was invited as a partner country.

During the IGC, a total of 14 agreements were signed in diverse fields such as green partnership, development cooperation, renewable energy, migration, and mobility etc. The two leaders also signed a joint declaration of Intent on Green and Sustainable Development Partnership (GSDP). A large part of the support will be in the form of credit lines from KfW Development Bank with interest ranging from 2.7% to 3.2%. For the forthcoming visit, about 22 projects are being readied covering transition to renewable energy, climate resilient urban development and sustainable use of natural resources totaling one billion euros under the green and sustainable partnership. During the May visit, Germany had announced support of at least 10b euros by 2030 under GSDP. These projects finalized with the Finance ministry are in Meghalaya, Tamil Nadu, Himachal Pradesh, Rajasthan, all these are expected to cut greenhouse gas emissions or help adapt to climate change.

As a leading economy of the EU, the trajectory of India EU talks on FTA will also figure high on the agenda. In a special address at the World Economic Forum Annual meeting 2023, the Chancellor said this week that he would do his utmost to ensure an FTA with India. The negotiations were relaunched last year, and separate negotiations were held for Investment Protection Agreement (IPA) and Agreement on Geographical Indications (GIs). The challenge persists in ironing out differences related to tariffs on certain goods and the movement of professionals. Besides tax reduction in wines, spirits and dairy products and a strong Intellectual property regime, the EU seeks significant duty cuts in automobiles where Germany has a direct interest.  The EU is India’s third largest trading partner, accounting for 88b euro worth of trade in goods, and trade in services at 30b euros in 2021. India wants to push taxation measures outside the scope of the treaty by making tax related regulatory measures non-justiciable. The EU has difficulty in accepting this given the recent history of India’s tax related investment disputes with Vodafone, Cairn Energy and Nissan. The EU’s investment proposal contains an MFN provision to ensure EU investors do not face discrimination; India fears this will enable investors to indulge in disruptive treaty shopping; a qualified MFN provision may be a way out.

German Foreign Minister Annalena Baerbock’s visit to India last December further set the tone of the forthcoming visit when she said, ‘India will have a decisive influence in shaping the international order in the 21st century, especially in the Indo-Pacific’. Both sides have been underlining the importance of an effective rules based international order and respect for the fundamental principles of international law enshrined in the UN Charter. The expansion of cooperation in the Indo-Pacific in the backdrop of China’s growing military muscle-flexing in the region will, therefore, be high on the agenda.

Chancellor Olaf made a controversial visit to China in November 2022, amid evolving German policy over China’s economic dependencies, increasingly aggressive postures in its neighborhood, and expanding relations with Russia in the aftermath of the Ukraine crisis. The visit was the first by a Western leader and the first in the aftermath of the outbreak of Covid 19.  Another key issue driving German reassessment of China is the dynamics of US-China relations; the hardening of American position on China and adoption of ‘democracy vs authoritarian’ narrative, however, is not shared by Germany. Germany is also increasing its diplomatic outreach to Asia, particularly in the IndoPacific region, as part of its increasing engagement with the countries there. According to Scholz, ‘as China changes, the way to deal with China should change too’. Economic relations with China as the cornerstone, Germany is balancing a fine line between continuing economic ties on one hand and taking a critical stand on issues such as China’s assertive diplomacy, its aggressive moves over Taiwan etc. In brief, China is seen by Scholz as ‘a partner, a competitor, and a systemic rival’. The visit did serve some purpose from western point of view in extracting from China concerns about the Ukraine war and assurance (doubtful) to lobby with Russia to turn off the heat on nuclear threats.

India has noted how the Russia Ukraine conflict is changing Germany. Russia’s invasion of Ukraine has overturned Germany’s foreign and domestic policy pillars. At the global level, Germany’s foreign policy has been challenged. Germany has had for decades a policy of dialogue with Russia and China, now Russia and China are seen as the main adversaries of the western liberal order, and Germany must rethink its entire model of its economic and foreign relations.

Ukraine has forced a complete turnaround in Germany’s energy policy, security policy and its Russia policy, a huge shift. France and Germany have in the past consistently supported Russia’s involvement in European security. Though the Crimean developments weakened the belief in constructive cooperation with Russia, they still worked towards freezing Russia-Ukraine conflict under the Minsk agreement, went ahead with Nord Stream projects and sought easing of sanctions on Russia. The Ukraine War has prompted Germany to reevaluate its role in the EU, now focusing on European security and defense, since cooperation with Russia in the Eurasian architecture is no longer possible.  Ukraine has forced a change in Germany’s role in the EU from a majorly economic power to a net provider of defense; EU members such as Poland and Baltic states want Germany to invest heavily in their defense capabilities. At the European level, there is a lot of pressure on Germany while being criticized by the US and EU members for not doing enough to help Ukraine.

Germany has stopped buying gas from Russia, but it has hesitated in supplying heavier equipment and weapons to Ukraine. Ukraine hopes that German made Leopard battle tanks, a workhorse of armies across Europe, could turn the course of the war against Russia, which Germany has not so far agreed to supply.  There have been loud calls for Germany to supply the tanks, especially after the UK pledged to give Ukraine 12 of its challenger tanks. Germany has been reluctant to cave into Ukraine’s demands, fearing an escalation of conflict with Russia. Germany lifting its objections could be one of the most consequential shifts in western aid so far.Ukraine does not want to become another buffer zone separating Russia and West but that is a scenario Germany will give serious consideration fearing another war or Russian nuclear threats. The German defense minister has resigned amid scrutiny over the response to the war; there was international outcry whenGermany offered to supply 5000 helmets when Ukraine was calling for heavy weapons.

Germany has had to battle a huge energy crisis because of a self-inflicted dependence on Russian oil.  The EU banned seaborne Russian crude imports in December and will ban Russian oil products this February, which will likely have a greater impact than the restrictions on crude oil due to lack of storage capacity.The surplus will likely leave more crude oil to sell, which again Russia currently does not have the capacity to store. Germany has tried to meet its demand from the Middle East with a consequential hike in the oil price, a subject which has repeatedly figured in the public statements of the Indian foreign minister.

India and Germany have collaborated internationally, and their views converge on many global issues, not the least on UNSC expansion where India and Germany support each other within the framework of G4; the last meeting of the G4 was held at the level of Foreign Ministers at the 77th UNGA in September 2022. Apart from reform of international financial institutions, Sustainable Development Goals, pandemics, global recession, food and energy crises, and climate change, dealing with Russia will be one of the most difficult issues. Germany is of the view India has good relations with all sides which can be helpful in the Ukraine conflict. India will have to navigate a delicate balance to bridge the east west conflict while keeping its own strategic self-interests as well as those of the global community in giving priority to a developmental agenda. In developing a blueprint for global economic recovery as the G20 Presidency, what India heard recently from 126 developing nations at the first Global South Summit that it chaired will provide added food for discussion during the forthcoming visit. The message that India is emerging as the voice of the global south will not be lost on Germany.

Author is former Indian Ambassador. 

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First published on: 20-01-2023 at 22:08 IST