The Saudi visit of Prime Minister Modi –Another milestone in the Act West Policy

October 30, 2019 6:47 PM

PM Modi‘s “Make in India” pitch was dovetailed with MBS’s Vision 2030 during this visit when he addressed the “ Third Future Investment Initiative or the Davos in the Desert” conference as Saudis seek to attract foreign technology and investment to diversify their socio-economic structures for the 21st century.

narendra modi saudi visit, Act West Policy, Riyadh Declaration, Jammu and Kashmir, Article 370, Reliance Industries, AramcoIndia and Saudi Arabia are the top two importers of defence products.

By Ambassador Anil Trigunayat

Prime Minister Narendra Modi‘s visit to the Kingdom of Saudi Arabia from October 28-29 is highly significant. This was his second visit in less than three years and within eight months of the visit of MBS when significant announcements for deepening strategic and economic partnership were made. His previous visit was a grand success when the Saudis had conferred their highest award on him and taking the bilateral relationship to a new level of strategic partnership pursuant to Delhi Declaration of 2006 and Riyadh Declaration of 2010. Until then the relationship has merely been driven by oil and diaspora. Only Prime Minister Nehru and Indira Gandhi had visited Riyadh in 1955 and 1983 respectively. It was in 2010 that the then PM Man Mohan Singh visited Riyadh in 2010 and the jinx was broken. This has further been cemented, in a real strategic partnership, with the visits of PM Modi, where mutual concerns are respected and addressed in a manner that exponential growth in the mutual trust is witnessed in the bilateral and international discourse. The two are also part of the G20 apart from several others. India did not comment on the Khashoggi affair and welcomed Crown Prince Mohammad Bin Salman to India apart from meeting him on the sidelines of G20. Saudis considered Article 370 abrogation as an internal matter. The Saudis showed immense appreciation, understanding and reasonable support during the Pulwama and Balakot episode as well as during the Article 370 abrogation in Jammu and Kashmir. Reportedly they have been dissuading the Pakistani leadership not to push Kashmir issue too much at the Human Rights Council in Geneva apart from advising them to keep the conflict under the threshold. Of course in keeping with their Islamic credentials and the long-standing relationship they bailed out Pakistan from its economic conundrum and do not want the Indo-Pak simmering conflict to become a conflagration. While we may wish to think anyways Saudis today do not wish to be in a spot where they have to choose between India and Pakistan as that will adversely impact their own strategic calculus.

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PM Modi‘s “Make in India” pitch was dovetailed with MBS’s Vision 2030 during this visit when he addressed the “ Third Future Investment Initiative or the Davos in the Desert” conference as Saudis seek to attract foreign technology and investment to diversify their socio-economic structures for the 21st century. The last one was marred by the Khashoggi controversy when several important delegates had dropped out. Saudis have weathered that storm even though low oil prices, draining Yemen war and impending conflict in the region pursuant to US-Iran heightened tension continue to dog the Saudi economy. At the same time, they consider India as an attractive and secure destination for their investments and oil supplies and bothe sides are moving on from the buyer-seller matrix to strategic engagement. As such Saudi Arabia is a major anchor of India’s energy security accounting for over 17 per cent of oil supplies and 32 per cent of LPG requirements. They are looking at the possibility of not only bridging the supply gap caused due to US-Iran rift and sanctions but also to create and fulfil India’s second strategic reserves project of about 6.5 million tones of petroleum. Meeting of PM with the Saudi Environment and energy ministers apart from his “ friend and brother MBS “ and King Salman was significant in the sense that Saudis are focusing a great deal on renewable energies and India could emerge as a reliable partner. In any case during the February visit of MBS to India, an announcement of intention was made to invest US$ 100 bn in Indian infrastructure, energy, refining and mining etc. Moreover for ensuring their Food Security India and Saudi could join hands with African countries to develop agriculture and food processing for a trilateral win-win matrix which could open vistas for newer areas of cooperation. Hitherto the Gulf countries have mainly looked at even the lucrative sectors in India rather conservatively limiting their scope to real estate, assured return investments in the financial markets, instruments and institutions.

However, the recent acquisition by Aramco of 20 per cent of Reliance Industries and $ 44 bn West Coast refinery and Petrochemicals project in Maharashtra with Reliance, ADNOC of UAE and Aramco indicate the shift towards strategic long term investments. Likewise, the Indian companies are looking at downstream and upstream sectors apart from the IT, Pharma and health care sectors. Major Indian conglomerates might be looking to pick up the equity in Aramco as and when the Saudi giant gets to divest 5 per cent or so of its equity. Agreements signed during the visit in the field of renewable energy, cooperation in the field of medical products and regulations, and in the SME and Aviation sectors as well as between Indian Strategic Petroleum Reserves Limited and Aramco clearly attest to the emphasis on specified areas of cooperation. Even in the defence sector to further strengthen collaboration in the military acquisition, industries, R&D and technology an MoU was signed that should pave the way to cooperation in this strategic sector. India has been supplying lethal and non-lethal equipment to the Gulf countries and joint ventures in this area could obviate the excessive expenditures on defence procurements.

India and Saudi Arabia are the top two importers of defence products. The two sides will conduct Naval Exercises later in the year. China has also recently got into the manufacturing of defence equipment in Saudi Arabia while Russia has been scouting for opportunities there. Of course for the US, Kingdom is always a green field. In 2017 they had signed a deal worth $110 billion along with several other smaller ones. However the recent drone attacks, attributed to the Iranians even though Houthis claimed responsibility, on Saudi oil facilities called into question the efficacy of the highly expensive deterrence in place.

Of course in keeping with the Indian Government’s emphasis on digital payment and to help its 2.6 million Diaspora and over 200000 Haj pilgrims and to accord credibility to Indian credit card payment mechanism the MoU on Ru Pay card is relevant. In the Joint Statement, the two sides urged the business community to utilize the investment and business opportunities in both countries in diverse sectors. It was also reported that some B2B agreements worth $ 15 billion were signed on the sidelines of the FII. Saudi Arabia is also expected to contribute $1bn for India’ National Infrastructure Investment Fund to enable quick take-off of joint projects.

As expected the two sides discussed the bilateral, regional and international issues of mutual concern that would have included the recent developments in India, the role of Pakistan in harbouring terrorist groups and terror financing in the context of FATF and the larger context of fighting terrorism globally, the situation in Syria, Yemen, security of waterways in the Gulf and the Indian Ocean and need to cooperate further in the context of prevailing uncertain situation due to USA-Iran and between Iran and Saudi Arabia would have been discussed in greater detail even though the immediate point of focus and reference of either country could have had a different target. Both have troubling neighbours. Likewise with the recent spats with Turkey India and Saudi Arabia may have found certain common ground. These were reflected in the Joint Statement in a standard format since Statements have to overtly address the key concerns and be sweeteners to the palate as well. However, hopefully, the friendly countries in the OIC especially the host Riyadh and other GCC countries will prevent Pakistan from raising the Kashmir issue and passing the rabid unanimous resolutions there to put any suspicion to rest. Be that as it may, the two countries have begun to appreciate and understand each other’s core concerns better and react to it positively where ever needed.

In order to follow up on the outcomes and recommendations a Strategic Partnership Council led by PM Modi and MBS has been established that will ensure timely implementation of agreed and prospective projects and removal of bottlenecks if any. Under it, the two mechanisms will be chaired by the respective Foreign and Trade Ministers who will report the progress to their Principals which reflects the seriousness the two sides attach to the deepening of strategic ties. As such PM Modi will visit Riyadh again in 2020 for the next G20 Summit if they don’t meet in the interim.

(The author is Distinguished Fellow Vivekananda Foundation. Views expressed are personal.)

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