ARMY Chief General MM Naravane’s recent visit to Israel underscored the importance of last month’s virtual meeting of the Foreign Ministers of India, Israel, the United Arab Emirates and the United States to form an “international forum for economic cooperation” to promote trade, infrastructure construction, vaccines and maritime transport. security in West Asia. Initiated by America after its withdrawal from Afghanistan, this grouping of culturally diverse countries sharing economic interests is hailed in India as the “Middle East Quad” (MEQ) or “Asian Quad”. West ”to distinguish it from the Quadrilateral Security Dialogue, which focuses on maintaining the balance of power in the American Indo-Pacific. The MEQ offers India an unprecedented opportunity to strengthen its economic profile in West Asia.
Essentially, the MEQ appears to be designed to foster greater business cooperation. But security cannot be absent. Given that 80% of the oil imported by China passes through the Indian Ocean, dominated by the United States, its recent decision to sell its iron friend, Pakistan, its most advanced warship to maintain the balance powers, may be a signal that it is launching a key to America’s strategic and economic work in the Gulf region.
It’s not surprising. US bases in Israel and the United Arab Emirates give it a strategic presence in a Middle East torn by conflict and holding two-thirds of the world’s oil reserves.
On another level, the pessimistic energy outlook, India’s need to modernize its defense infrastructure, and the U.S., United Arab Emirates, and Israel’s rivalries with Iran, imply that the common interests of New Delhi with them must not alienate Tehran, especially as India wishes to develop the strategically important port of Chabahar. India’s economic interests therefore go hand in hand with the security interests of its partners.
The mini-multilateral MEQ challenges India to build on its close bilateral economic ties with Israel and the United Arab Emirates. Especially since its refusal to join the Indo-Pacific Regional and Comprehensive Economic Partnership makes it appear economically isolated and gives the impression that it cannot face competition from China.
China is already India’s economic competitor to the United Arab Emirates and Israel, which have secured investments through its Belt and Road initiative. But India can still become their attractive economic partner through investment and trade.
In 2019, India’s cumulative investments in Israel amounted to $ 118.24 million. During the period April 2000 to March 2021, Israel’s FDI in India amounted to $ 224.76 million. India is the source of just 2.4 percent of Israel’s imports; China by 12 percent. Three percent of Israel’s exports go to India, 9.6 percent to China.
India buys 43% of Israeli arms exports to diversify defense supply sources; this represents 13 percent of India’s arms imports.
India is well positioned to compete with China in the United Arab Emirates, which is India’s third-largest source of oil imports. India buys 7 percent of UAE exports, China 5 percent. Sixteen percent of the UAE’s imports come from China and 11 percent from India. An India-UAE free trade agreement is on the agenda.
In the United Arab Emirates, India has some economic advantage over China. In 2019, India’s trade with the UAE was worth $ 59 billion, making the UAE India’s third-largest trading partner. Trade between China and the United Arab Emirates is around $ 48 billion.
Indian companies have invested around $ 85 billion in the UAE. The UAE’s investment in India – around $ 13 billion to $ 14 billion – makes it India’s 9th largest foreign investor.
In contrast, China’s overall direct investment in the United Arab Emirates reached $ 650 million in 2019.
However, China offers opportunities for the UAE to increase its global connectivity. The Emirates need China as a major energy market and as a transshipment hub for Chinese manufactured goods to the Middle East, Europe and Africa.
India therefore cannot be complacent: it faces competition from China in crucial areas such as infrastructure, high tech and health. China is speeding up delivery of the Covid-19 vaccine to the United Arab Emirates.
Economy and strategy are linked, so India has to fight “Chinese influence” in different ways. India will need to be cautious with Israel and the UAE when it comes to dealing with China. Having close economic ties with Beijing, the two countries have asserted that the MEQ is not anti-China and unlike India, neither has a border feud with China.
On another level, the United States has expressed concern over its Israeli ally’s cutting-edge economic and technological ties with Beijing. China has developed and operates three of Israel’s four strategically important ports, including Haifa, which is located on the Israeli Mediterranean between Europe, Africa and Asia. Israel does not want to alienate either its US security guarantor or its major Chinese investment partner, which can expand its connectivity by land and sea.
India will have to navigate its way through these complex partner issues with great caution.
An economic forum cannot avoid security, especially since America’s withdrawal from Afghanistan – and its previous withdrawal from Iraq – makes it appear weak in Southwest Asia and the Middle East, and as China tries to increase its economic influence in the oil-rich Gulf region. This, in turn, could help strengthen China’s strategic impact in West Asia.
The MEQ cannot therefore “save” India from China’s economic challenge, which will continue to be driven by its economic strength. Yet India has considerable scope to strengthen its presence in the Gulf region through trade and investment, if it can withstand the vagaries of Chinese competition and the involvement of its MEQ partners in the negotiations. conflicts in West Asia. India must rise to the occasion.