Over time, Europe has emerged as the top trade and investment partner for most Indo-Pacific states and has been gradually trying to increase its presence in the region, developing bilateral partnerships with major players and increasing engagement in regional institutions and security arrangements. The EU political leadership has been actively engaging with East and Southeast Asia, and has been prioritizing negotiation of FTA treaties with Singapore, Vietnam, and Japan, while also spending a large amount of energy and resource in its relationship with China.
Although declared as a strategic partnership in 2004, the EU-India relations have long been kept outside the list of priorities of the EU leadership. Negotiations on an EU-India Free Trade Area has been virtually frozen since 2013. By the end of 2019, EU-India trade accounted for a mere 1.9 percent of EU’s total trade.
EU recently has given renewed effort to develop bilateral relations with India driven by by economic, political and strategic concerns. Given worldwide waves of economic nationalism, the EU is also stressing “European strategic autonomy” and economic sovereignty, emphasizing the necessity of mitigating external dependency, especially its dependency on China. India is increasingly viewed by Europeans as an alternative to external dependency for Europe to diversify its external supply chains and to extend European exports and business.
Strains in EU China’s Relations leading to enhanced EU India partnership
EU relations with China has been strained over many issues such as Questions of 5G networks; investment screening; the role of state-owned enterprises (SOEs) and subsidies; China’s attempts at disinformation in the wake of the COVID-19 pandemic; Chinese influence in European politics, media, and academia; and China’s increasing political, economic, and strategic influence in Europe and its neighborhood through the Belt and Road Initiative (BRI)
In 2013, Chinese President Xi Jinping announced a major undertaking, named initially as the One Belt and One Road Initiative and later referred to as Belt and Road Initiative (BRI), to support better connectivity of the Asian, European and African continents. Often referred to as the ‘New Silk Road’, the BRI revives the idea of the ancient Silk Road, which describes traditional trading routes spanning across China, the Asian continent, the Middle East and Europe (Zhou et al., 2019).
China plans to build a high-speed railway between China and the UK, which will connect Kazakhstan, Uzbekistan, Turkmenistan, Iran, Turkey, Bulgaria, Romania, Hungary, Austria, Germany, Belgium and France. The project, with an estimated cost of $150 billion, is scheduled for completion in 2020-2025.”
Some European countries are torn between traditional ties to the United States and the economic opportunities that the BRI presents. There has been no unified EU policy toward China’s One Belt, One Road initiative, writes Philippe Le Corre. Several EU countries and cities have been particularly receptive to Chinese investors. Others have been more cautious, seeking guarantees from China that it will follow international standards and not exclusively pursue its geostrategic interests.
Facing with recession, Greece and Italy badly need new investments and infrastructure to jump-start their recovery, reduce unemployment, and boost competitiveness and have given signals to join the Chinese scheme. Chinese state shipping giant COSCO has heavily invested in Piraeus port during the past decade, transforming it into the Mediterranean’s busiest trade port, along with Valencia, Spain.
Built by China National Machinery Import and Export Corporation (CMC), the Kaposvar 100MW Photovoltaic Power Plant is Hungary’s largest solar power station with a total venture of around 100 million euros (about 121 million U.S. dollars). The 180-km-long highway linking the Bar on Montenegro’s Adriatic coast to Serbia’s landlocked neighbor is another example.
At a critical EU-China summit on April 2019 in Brussels, European Union (EU) members and China agreed on a road map for specific bilateral trade arrangements aimed at drastically reducing unfair trade practices and subsidies. The prospective agreement is on one hand expected to satisfy Europeans demanding freer access to China’s protected market for exports and investments. For China it will also further advance China’s ambition to become the world’s 21st century superpower, mainly by acquiring full access to the huge European market.
The year 2019 was momentous for EU-China relations, marked by a tougher EU approach toward China. A new, more assertive European line toward China surfaced in a January 2019 policy paper on EU-China economic relations from the influential Federation of German Industries (BDI). The paper referred to China as a “systemic competitor” and called on the EU to strengthen its commitments to compete with China. The paper expressed growing frustrations among German businesses about China’s ability to reform its market-distorting practices. It also urged German politicians to support tougher measures against China.
On April 10, 2019, the EU finalized an investment screening mechanism that marked a major step forward in forging a more coherent, common EU approach toward detecting and raising awareness around foreign direct investment (FDI) from China in critical assets, technologies, and infrastructure. Under the new rules, foreign investments in several critical sectors—such as energy, ports and airports, communications, data, space, and financial industries—will be scrutinized.
Energy geopolitics: Chinese supply of critical raw materials could pose long-term risks
Europe is heavily dependent on imports of rare earths from China. China has very big and good quality resources of rare earth elements. An earlier study analysed risks to European renewable industries from the Chinese supply of critical raw materials. The offshore wind sector was found to be the most vulnerable of the renewable industries to supply risks. EU and industry strategies should be able to deal with these supply risks in the short term, but there are potential long-term risks to solar and wind sectors.
In a bid to become less dependent on certain resource-rich countries the EU recently unveiled a critical raw materials action plan. That seeks to diversify supply while also significantly strengthening domestic sourcing, processing and recycling inside Europe. India is increasingly viewed by Europeans as an alternative to China for Europe to diversify its external supply chains and to extend European exports and business.
India being considered as counterbalance to China
As more EU-China competition and conflicts appear in technology, industry, trade, and investment, India is being considered a counterbalance to China. Furthermore, as US-China tensions continue in the South China Sea, the neighboring Indian Ocean appears to be more and more strategically significant and the EU is hoping to exert its own strategic influence in this region. Finally, there is an EU-India commonality in their support for a continued process of global climate governance, so EU elites perceive potential cooperation on Europe’s green deal.
India comes as the best candidate with its population, technology prowess, and manpower skill including multilingual capabilities, its Space and Nuclear leadership with its long-standing good relationship on the country to country and people to people basis. India is one of the world’s largest economies, in terms of purchasing power parity human resources, technological competence, Global acceptance as a preferred partner. The country is the fastest-growing large economy, with annual GDP growth rates of around 7%, and on its way to reaching the US$US 7.8 trillion economy mark by 2030. It is an important player in global economic governance.
In 2017, the EU was India’s first trading partner, while India was the EU’s 10th largest trading partner. The potential economic benefits of a free-trade deal are obvious. The EU is one of India’s largest trading partners, on par with the U.S. and ahead of China. Increased trade with the EU via a free-trade deal could lead to gains of around €8 billion, according to a recent study by the European Parliament. For India & Europe countries, there will be even greater opportunities if all 27 countries join in India free trade to contribute to sustainable development.
There is, however, a wide gulf in what the two partners want and what they can give. India is seeking improved market access for its IT professionals in the Eurozone, removal of non-tariff barriers for goods and for EU to recognise India as a data secure country for easy flow of sensitive data. EU wants India to lower tariff on wines and spirits, dairy products and automobiles, further liberalize FDI in multi brand retail and insurance and open up accountancy and legal services for foreign players. Indian industry has been opposed to any such tariff reduction fearing a flood of cheaper imports from Europe that will be detrimental to domestic firms.
However, the EU officials said two sides are “quite far apart” on the issue of a Bilateral Trade and Investment Agreement (BTIA), negotiations for which were suspended in 2017. They were also critical of what they described as “protectionist” measures adopted by India and the termination of bilateral investment treaties with 25 EU member states.
Europe’s foreign policy community began to refocus its attention on India during the COVID-19 pandemic in March-April. The impact of the pandemic might lead to destabilisation of states that were already weak and fragile, to begin with, and thereby require more peacekeeping deployments; the India-EU partnership can play an important role in the current pandemic; At the recent India-EU summit, Indian Prime Minister Narendra Modi reminded the two actors that their partnership is “vital for global peace and stability”, and stressed that the India-EU partnership can play an important role in the current pandemic
To gain an advantageous position in current international strategic competitions for cutting-edge technologies and emerging industries, the von der Leyen Commission is now carrying forward a new industrial strategy and working to build Europe’s own digital platforms. It regards India as a potential partner for Europe’s digital transformation, considering the highly developed Indian software industry.
Partly enlightened by the US proposed “Indo-Pacific Strategy,” which appeared to intensify in the second half of 2019, and partly pressed by the huge geopolitical reshuffling resulting from the tense China-US strategic rivalry that accelerated in early 2020, and partly impacted by the ongoing pandemic, European politicians and think tankers are now attaching more importance to India in their strategic planning.
There is a clear imperative for greater understanding between the EU and India on a range of security concerns. The European Union and India have been engaged in a strategic partnership since 2004. There is significant scope for better cooperation on the issue of maritime security.
Earlier iterations of the EU-India Summit have largely focused on trade and investment issues. The 15th EU-India Summit, held virtually on 15 July 2020, gave greater attention to security issues. The 15th EU-India Summit culminated with the release of two crucial documents: the EU-India Joint Declaration of 2020, and the EU-India Strategic Partnership: A Roadmap to 2025. Both documents made salient references to issues of foreign policy, security and strategic technologies, arguably reflecting the ongoing transformation in EU-India security cooperation. The introductory article of the Roadmap committed to “further strengthen and expand EU-India dialogue mechanisms on foreign policy and security issues of common interest.”
The Leaders endorsed this “EU-India Strategic Partnership: A Roadmap to 2025” as a common roadmap to guide joint action and further strengthen the EU-India Strategic Partnership over the next five years. “In a complex international environment, the European Union and the Republic of India, both “unions of diversity”, sharing values of democracy, rule of law and human rights, are equally convinced of the necessity to preserve the rules-based international order and effective multilateralism. The EU and India have a common interest in each other’s security, prosperity and sustainable development. They can contribute jointly to a safer, cleaner and more stable world. They therefore endeavour to develop further their Strategic Partnership, based on this Roadmap.
EU and India have agreed to strengthen cooperation and work towards tangibles outcomes on shared objectives such as counter-piracy, counter-terrorism – including counter-radicalisation, cybersecurity, and maritime security,
- Strengthen cooperation and work towards tangible outcomes on shared objectives of non-proliferation and disarmament, maritime
security, counter-terrorism (including counter-radicalisation, anti-money-laundering and countering terrorism financing) and cyber
- Establish regular security consultations between the EU and India, focusing on exchange on strategic priorities, security issues, crisis
management and peacekeeping.
- Strengthen military-to-military relations and exchanges.
- Further enhance mutual understanding through seminars, visits and training courses hosted by defence institutions on both sides.
- Establish a maritime security dialogue replacing the counter-piracy dialogue and explore opportunities for further maritime cooperation.
- Deepen cooperation between the European Union Naval Force (EUNAVFOR) ATALANTA and the Indian Navy.
- Continue regular exchange of views on disarmament, non proliferation and export controls through the annual India-EU
Dialogue on Disarmament and Non-Proliferation.
- Conclude and implement a working arrangement between Europol and the Central Bureau of Investigation (CBI).
- Continue our joint efforts to promote an open, free, stable and secure cyberspace and increase cooperation on cyber security, as well as
combat and prevent cybercrime through the promotion of existing international standards and norms in their respective areas.
- Enhancing consultations on UN peacekeeping including the agenda on Women, Peace and Security. India and EU nations are strongly committed to the Women, Peace and Security (WPS) agenda initiated by the UN in 2000; both have been actively involved in the training of third countries;
In a major move, India and the UK in May 2021 vowed to expand bilateral defence cooperation, including through technology collaboration in developing combat aircraft and complex weapons, during a virtual summit between Prime Minister Narendra Modi and his British counterpart Boris Johnson.
A 10-year roadmap unveiled at the summit for boosting overall India-UK ties mentioned that the two countries will strengthen cooperation to take “decisive and concerted actions” against globally proscribed terrorists and terror entities. In the talks, the two sides also agreed to increase maritime co-operation while India invited the UK’s liaison officer to the Indian Navy’s information fusion centre, a key facility that keeps a hawk-eyed vigil on developments and movement of ships in the Indian Ocean region.
A 10-year roadmap unveiled at the summit for boosting overall India-UK ties mentioned broadening dialogue on “combat air collaboration to determine how the UK can support India’s ambitions for their light combat air MK2 programme”. “Both prime ministers agreed to deepen their defence and security cooperation through the India-UK defence and international security partnership framework and welcomed the finalisation of the new logistics MoU,” said a joint statement on Modi-Johnson talks.
It said the two leaders agreed that there is a promising new era ahead for India-UK collaboration on key military technologies including combat aircraft, maritime propulsion system and complex weapons, harnessing the strengths of Indian and British industries, government laboratories and academia.
India and France have signed a Joint Vision for Space Cooperation, in which both parties have agreed to cooperate on all areas of space technology. This latest document, which reaffirms the long-standing relationship between the two countries’ space agencies, was signed on 10 March during the visit of French President Emmanuel Macron to India, where he met with India’s Prime Minister Narendra Modi. The Joint Vision mentions the success of ongoing cooperation between India’s space agency ISRO and France’s space agency CNES, and is a wide-ranging document covering all aspects of space, including high-resolution earth imaging, satellite navigation, deep space exploration, and space law.
Within it is the mention of cooperation in space transportation systems, namely, technologies for a Liquid Oxygen-methane propulsion engine, India’s reusable launch vehicle (RLV), and the research and development of special materials. The Joint Vision also lists the development autonomous navigation of rovers in Moon, Mars and other planets, the modeling of Mars and Venus atmospheres, and inflatable systems for Venus exploration. Also mentioned is the design of man-in-loop simulators for human space flight as well as Bioastronautics.
In a separate Joint Statement issued, the two nations acknowledged the ongoing cooperation between their space agencies to realize the third joint satellite mission – TRISHNA, meant for eco-system stress and water use monitoring, of which very little has been revealed. ISRO might also carry a French instrument aboard OCEANSAT-3, the third of ISRO’s global marine observation satellites.
The global engagement on nuclear issues typically pivots around two primary themes, viz. research and development, and nuclear diplomacy. The 15th EU-India Summit has been noteworthy on both counts, as the Joint Statement and the Roadmap have highlighted key developments in the context of nuclear cooperation. The salient takeaways are in the form of nuclear energy and nuclear diplomacy and have a bearing on energy security (and ipso facto climate change) and disarmament and non-proliferation initiatives.
Although similar collaborations have occurred intermittently (and among India and individual European states), the scale and scope of these mechanisms combined with the context of international politics mark a watershed. Although France (and to a lesser extent Germany) has been an active partner in the Indian nuclear programme, the establishment of nuclear cooperation agreement with India under the aegis of the EU is novel. This is also the latest addition to the 14 existing bilateral, civilian nuclear agreements among India and other countries.
The EURATOM-India Agreement “on research and development cooperation in the peaceful uses of nuclear energy” inked during the Summit, figured prominently in official statements and media coverage. The Agreement opens up a plethora of possibilities since EU is the largest producer of nuclear energy while India is rapidly augmenting its domestic nuclear power generation capacity, and both of them are heavily dependent on energy imports. This, combined with the imperative of reducing dependency on non-renewable sources, creates a unique convergence for mutual research, development and collaboration in nuclear power.
The agreement between the European Atomic Energy Community or Euratom and Indian authorities will focus on cooperation between EU’s research programmes on new ways of using nuclear energy and similar activities on the Indian side, EU officials said during a briefing for journalists. India is on the cusp of becoming the first country to commission a fast-breeder reactor using thorium with its Prototype Fast Breeder Reactor, and it can work with EU in the pursuit of R&D in the emerging Generation IV nuclear reactors. Incidentally, the US, EU and UK are lagging behind Russia in R&D in the area of Generation IV reactors; an India-EU joint venture could be a game-changer with immeasurable commercial and economic benefits for both sides. India’s three-stage nuclear programme envisions harnessing the vast reserves of domestic thorium but faces impediments in commercial exploitation of same – recent advances in thorium reactor technology in Europe suggests exciting opportunities. Essentially, both the EU and India are heavily invested in energy security and ipso facto climate change, and they can draw on the strengths of their respective nuclear sectors for mutual cooperation.
EU and India are part of the seven-member consortium managing the global the International Thermonuclear Experimental Reactor (ITER) project that involves 35 countries. Aiming to generate power through nuclear fusion, the ITER represents the most complex technological endeavour attempted by humanity, and this unique enterprise goes beyond mere experiment to construct a Demonstration Power Plant (DEMO), slated to be operational in the early 2030s. The success of ITER would result in energy generation “with an inexhaustible, environmentally benign and universally available resource.” ITER then illustrates a successful EU-India research venture acting as a springboard for broader collaboration.
Considering nuclear diplomacy, both sides have agreed to regular exchanges on disarmament and non-proliferation issues. While the Joint Statement framed it within the broader rubric of “global peace and security”, the Roadmap substantiated the process by identifying platforms like the Annual India-EU Dialogue on Disarmament and Non-proliferation. Of particular interest was the emphasis to “strengthen cooperation and work towards tangible outcomes on shared objectives of non-proliferation and disarmament.” This becomes more interesting given how the Joint Statement declared, “India and the EU will continue to cooperate on international and regional issues of common interest including Iran and Afghanistan” – an implicit reference to Iran’s nuclearisation. Such diplomatic alignments come in tandem with growing collaborations in R&D in the nuclear sector; as such, linkages among specialised sub-state organisations can provide ballast to the overall relationship. Yet, greater significance lies in Indian nuclear diplomacy pertaining to the Nuclear Suppliers Group (NSG).
Security & Counter-Terrorism
Counter-terrorism has been a subject for EU-India discussion since the strategic partnership was forged. The joint declaration highlighted the determination of the EU and India to work together to tackle terrorism. Cooperation is extant in areas such as financing terrorism, designating groups as a terrorist and working together in the UNsystem.
The European Union Agency for Law Enforcement Cooperation or Europol and CBI are negotiating a working arrangement that will support law enforcement authorities of EU member states and India to prevent and combat organised crime and terror, they said.
Training cooperation thus necessarily would have to involve military-to-military interaction between India and the EU; India’s cooperation in Permanent Structured Cooperation (PESCO) projects would undoubtedly bolster the EU-India strategic partnership.
By EU joining hands with India, it can lead to further strengthening and maintaining economic stability as well as security throughout Europe, as well as enabling the EU to expand its industries and technologies into greater global markets, which places the EU on a stronger platform and less reliant upon it’s more aggressive non-EU trade partners it currently trades with.
Long term security and economic stability of the EU can only be truly achieved when it is allied economically and in its security with nations that hold the same ethos, and India does hold that same ethos, far greater than any other non-EU nations, and this must be recognized by the EU and India, and acted upon.
Equally importantly, India is recognizing that while relations with national European governments are valuable, the EU also has much to offer. This with Smart Secured Governance would ensure the creation of one of the largest single markets – US$1 trillion in spending and investment – offering great opportunities for both trading partners.
India is considered as Superpower in Software and services sectors which would complement the manufacturing sectors which could start with simple Security systems to complex Warships, submarines and take a joint leadership position for the world. This could boost some of the sagging economies and consolidate others that are in their prime position. With this going forward there would-be long-term stability in the region with the EU economy reincarnating to growth and India with its huge young educated manpower getting much-required employment and both the countries getting stability and Techno-Economic growth.
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