Persian Gulf 2019: India’s Relations with the Region 9811514313, 9789811514319

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PERSIAN GULF

PERSIAN GULF 2019 India’s Relations with the Region

P. R. Kumaraswamy Md. Muddassir Quamar

Persian Gulf India’s Relations with the Region

Series Editor P. R. Kumaraswamy School of International Studies Jawaharlal Nehru University New Delhi, Delhi, India

Persian Gulf, the leading product of the Middle East Institute, New Delhi, India systematically looks at the growing relationship between India and the countries of the region. Due to rising economic interactions and political engagements, the region has assumed greater importance and hence requires a methodical study. About two-thirds of India’s oil and gas imports are met by the Persian Gulf countries and the Gulf Arab countries are home to over seven million Indian expatriate labour force. The Persian Gulf is also India’s largest sub-­ regional trading partner and a potential source of trade and investments. There is however knowledge gap regarding the region and its importance to India. Persian Gulf seeks to redress this challenge by offering a systematic understanding of the region, its problems and opportunities for India in the political, economic, social, energy and strategic arenas. Since the publication of the inaugural volume in 2011, the Persian Gulf Series covers India’s bilateral relations with nine countries, namely, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, UAE and Yemen as well as the Gulf Cooperation Council (GCC). It has also examined the relations of the major players such as the US, Russia, China and Pakistan and their impact upon Indo-Gulf relations. Backed by various primary materials the series seeks to be a platform for informed discussion on this vital region towards its nuanced understanding. It is a closed series. More information about this series at http://www.palgrave.com/gp/series/15919

P. R. Kumaraswamy  Md. Muddassir Quamar

Persian Gulf 2019 India’s Relations with the Region

P. R. Kumaraswamy School of International Studies Jawaharlal Nehru University New Delhi, Delhi, India

Md. Muddassir Quamar Institute for Defence Studies & Analyses New Delhi, Delhi, India

ISSN 2523-8302     ISSN 2523-8310 (electronic) Persian Gulf ISBN 978-981-15-1431-9    ISBN 978-981-15-1432-6 (eBook) https://doi.org/10.1007/978-981-15-1432-6 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Singapore Pte Ltd. 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-­01/04 Gateway East, Singapore 189721, Singapore

Persian Gulf Series

Persian Gulf 2012: India’s Relations with the Region, Kindle Persian Gulf 2013: India’s Relations with the Region, New Delhi, Sage Persian Gulf 2014: India’s Relations with the Region, New Delhi, Sage Persian Gulf 2015: India’s Relations with the Region, Smashwords Persian Gulf 2016–17: India’s Relations with the Region, New Delhi, IDSA and Pentagon Press Persian Gulf 2018: India’s Relations with the Region, New Delhi, Palgrave Macmillan Persian Gulf 2019: India’s Relations with the Region, New Delhi, Palgrave Macmillan

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In the Memory of Professor K. R. Singh With respect and gratitude

Contents

List of Figures  xiii List of Tables  xv 1 Introduction  1 2 Bahrain 39 3 Iran 59 4 Iraq 93 5 Kuwait117 6 Oman135 7 Qatar157 8 Saudi Arabia177

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CONTENTS

9 UAE211 10 Yemen235 11 GCC253 12 Policy Options267 Index271

About the Authors

P. R. Kumaraswamy  is a professor of contemporary Middle East studies in Jawaharlal Nehru University (JNU), New Delhi. From 1992 to 1999, he was a research fellow at the Harry S. Truman Research Institute for the Advancement of Peace, Jerusalem. Since joining JNU in September 1999, he has been researching, teaching and writing on various aspects of the contemporary Middle East. His works include Squaring the Circle: Mahatma Gandhi and the Jewish National Home (2018); India’s Israel Policy (2010) and Historical Dictionary of the Arab Israeli Conflict (2015, second edition). Kumaraswamy has edited a number of volumes and published research articles in refereed and non-refereed international journals and regularly contributes to Indian as well as international media outlets. In February 2010, he set up the virtual Middle East Institute, New Delhi, and serves as its honorary director. He is the editor of Contemporary Review of the Middle East and the series editor of Persian Gulf: India’s Relations with the Region. Md. Muddassir Quamar  is associate fellow in the Institute for Defence Studies and Analyses, New Delhi. He holds a PhD in Middle East studies from Jawaharlal Nehru University. His doctoral thesis examined social developments in Saudi Arabia between 1991 and 2010 within a conceptual framework of Islamic modernism. Quamar’s areas of interest include Politics and Societies in the Gulf, Middle East Strategic Affairs and Political Islam. His research papers have appeared in leading international journals such as Contemporary Arab Affairs, Digest of Middle East Studies, Journal of Arabian Studies and Journal of South Asian and Middle Eastern Studies. xi

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ABOUT THE AUTHORS

He has co-edited an anthology titled Contemporary Persian Gulf: Essays in Honour of Gulshan Dietl, Prakash C.  Jain and Girijesh Pant (2016), contributed chapters to edited volumes and regularly contributes opinion articles on strategic developments in the Middle East and India-Gulf relations. Quamar has been a visiting fellow in King Faisal Center for Research and Islamic Studies, Riyadh, and serves as associate editor of Contemporary Review of the Middle East.

List of Figures

Fig. 1.1 Fig. 1.2 Fig. 1.3 Fig. 1.4 Fig. 1.5 Fig. 1.6 Fig. 1.7 Fig. 2.1 Fig. 2.2 Fig. 2.3 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 4.1 Fig. 4.2 Fig. 4.3 Fig. 5.1 Fig. 5.2 Fig. 5.3 Fig. 6.1 Fig. 6.2 Fig. 6.3 Fig. 7.1 Fig. 7.2 Fig. 7.3 Fig. 8.1 Fig. 8.2

Persian Gulf share in global oil reserves Persian Gulf share of global natural gas reserves Fluctuations in international oil price Persian Gulf share in India’s total imports Persian Gulf share in India’s total exports Share of oil products in India’s exports Share of energy in India’s total foreign trade India-Bahrain bilateral trade Share of oil in India’s total imports from Bahrain Bahrain’s share in India’s energy imports India-Iran bilateral trade Share of oil in imports from Iran Iranian share in oil imports India-Iraq bilateral trade Share of oil in imports from Iraq Share of Iraq in India’s oil imports India-Kuwait bilateral trade Share of oil in imports from Kuwait Share of Kuwait in India’s oil imports India-Oman bilateral trade Share of oil in India’s imports from Oman Share of Oman in India’s oil imports India-Qatar bilateral trade Share of energy in India’s imports from Qatar Share of Qatar in India’s energy imports India-Saudi Arabia bilateral trade Share of oil in India’s imports from Saudi Arabia

14 14 15 24 25 26 29 52 53 54 84 87 88 110 112 113 129 130 131 150 152 153 170 171 173 202 205 xiii

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LIST OF FIGURES

Fig. 8.3 Fig. 9.1 Fig. 9.2 Fig. 9.3 Fig. 10.1 Fig. 10.2 Fig. 10.3 Fig. 11.1 Fig. 11.2

Share of Saudi Arabia in India’s oil imports India-UAE bilateral trade Share of oil in India’s imports from the UAE Share of the UAE in India’s oil imports India-Yemen bilateral relations Share of oil in India’s imports from Yemen Share of Yemen in India’s oil imports GCC’s share in India’s external trade Share of GCC in India’s energy imports

206 226 228 229 247 249 250 262 263

List of Tables

Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 1.6 Table 1.7 Table 1.8 Table 1.9 Table 1.10 Table 1.11 Table 1.12 Table 1.13 Table 1.14 Table 1.15 Table 1.16 Table 1.17 Table 1.18 Table 1.19 Table 1.20 Table 2.1 Table 2.2 Table 2.3

Oil reserves, 2017 Natural gas reserves, 2017 Crude oil prices (West Texas intermediate) GDP growth rate HDI and Ease of Doing Business indices 2017 Passport index Global gender gap index 2017 Internet penetration in Gulf countries, 2018 Freedom House aggregate score, 2018 Corruption perception index Persian Gulf in India’s total imports (in US$ million) Persian Gulf in India’s total exports (in US$ million) India’s energy imports from Persian Gulf (in US$ million) Top five energy suppliers Share of petroleum products in India’s exports (in US$ million) Share of petroleum in India’s foreign trade (in US$ million) India’s five largest trading partners in 2017–18 (US$ million) Place of Persian Gulf countries among the top 25 trading partners of India, 2017–18 List of countries requiring Emigration Check Required (ECR) for Indian migrant labour Population of overseas Indians, 2018 India-Bahrain bilateral trade (US$ million) Share of oil in India’s imports from Bahrain (US$ million) India’s energy imports from Bahrain (in US$ million)

12 13 13 17 17 18 18 19 19 20 24 25 26 27 28 29 30 30 30 31 51 53 54

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LIST OF TABLES

Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 6.1 Table 6.2 Table 6.3 Table 7.1 Table 7.2 Table 7.3 Table 8.1 Table 8.2 Table 8.3 Table 9.1 Table 9.2 Table 9.3 Table 10.1 Table 10.2 Table 10.3 Table 10.4 Table 11.1 Table 11.2 Table 11.3 Table 11.4

Iran crude oil export Iran crude oil production Women in key political institutions India-Iran bilateral trade (US$ million) Share of energy in India-Iran trade (US$ million) India’s energy imports from Iran (in US$ million) Elections for the Council of Representatives, 12 May 2018 India-Iraq bilateral trade (US$ million) Share of oil in India’s imports from Iraq (US$ million) India’s energy imports from Iraq (in US$ million) Terms of Kuwaiti National Assembly India-Kuwait bilateral trade (US$ million) Share of oil in India’s imports from Kuwait (US$ million) India’s energy imports from Kuwait (in US$ million) India-Oman bilateral trade (US$ million) Share of oil in India’s imports from Oman (US$ million) India’s energy imports from Oman (in US$ million) India-Qatar trade relations (US$ million) Share of oil in India’s imports from Qatar (US$ million) India’s energy imports from Qatar (in US$ million) India-Saudi Arabia bilateral trade (US$ million) Energy imports from Saudi Arabia (US$ million) India’s energy imports from Saudi Arabia (US$ million) India-UAE bilateral trade (US$ million) Share of oil in India’s imports from the UAE (US$ million) India’s energy imports from UAE (in US$ million) Parties to Yemen civil war India-Yemen bilateral trade (US$ million) Share of oil in India’s imports from Yemen (US$ million) India’s energy imports from Yemen (in US$ million) SWF, current account deficit and share of petroleum in the GDP and state revenues India-GCC bilateral trade (in US$ million) India’s energy imports from GCC (in US$ million) Population of overseas Indians in GCC countries (December 2018)

72 72 77 84 85 86 96 110 112 113 120 129 130 131 149 151 152 170 170 173 202 204 205 226 228 229 238 247 248 249 257 261 262 264

CHAPTER 1

Introduction

Regional Political Challenges The year 2018 faced several regional challenges such as continuing intraGulf Cooperation Council (GCC) tensions, domestic instability and growing social cleavages and unrest in some. However, Iran continues to dominate the regional scenario. Indeed, since the end of the Cold War, India has spent considerable effort in developing and sustaining a fruitful relationship with the Islamic Republic of Iran. Despite the ideological differences over the clergy-dominated political order, since the 1990s various Indian governments have reached out to Iran and sought to explore closer ties with it. Since the visit of President Hashemi Rafsanjani in May 1995, there were three state visits from India and two from the Iranian side. At the same, Iran’s troubled relations with the outside world, especially with the US, have been a stumbling block in both countries progressing to the fullest extent of their interest convergence. Iran and JCPOA The arrival of Donald Trump in the White House has made matters worse. In line with his campaign rhetoric, on 8 May 2018, President Trump announced the unilateral US withdrawal from the Joint Comprehensive

© The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_1

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Plan of Action (JCPOA) or the Iran nuclear deal concluded in July 2015.1 Though the move was not surprising as Trump had made his intentions clear since his inauguration in January 2017, his decision to walk away from a carefully and painfully crafted international agreement put the regional dynamics in the Persian Gulf out of gear. The move not only puts Iran on notice for its regional ambitions but also creates trouble for other parties to the JCPOA, namely, the UK, Germany, France, Russia and China who see the nuclear deal as the best way to deal with Iran and its regional ambitions.2 Besides the withdrawal, the US decided to reimpose unilateral economic sanctions against Iran and introduce new ones. These were directed at the Iranian oil industry, which forms a significant sector of the Iranian economy, to curtail its oil exports to any country. Initially, the Trump administration announced a conditional waiver for some countries for six months, which it said would not be renewed. However, on 5 November, eight countries including India3 were given a 180-day waiver for imports from Iran, beyond which they would have to stop their imports completely.4 Under this waiver, India had reportedly agreed to restrict its monthly oil import from Iran up to 1.25 million tons. The sanctions on the oil industry made trading with Iran and countries which depend upon Iranian oil such as China, Japan, South Korea and India in a precarious situation. In the light of the American withdrawal from the JCPOA and the reimposition of unilateral sanctions, one could visualize four possible scenarios. Firstly, despite the commitment of all other parties, including Iran, the nuclear deal is dead. While the US involvement and backing were crucial for its conclusion, Iran is unlikely to adhere to its commitments in the light of unilateral American sanctions. The European countries, Russia and China, have indicated their willingness to continue trading with Iran 1  The White House Briefings. 2018. ‘Remarks by President Trump on the Joint Comprehensive Plan of Action’, 8 May, https://www.whitehouse.gov/briefings-statements/remarks-president-trump-joint-comprehensive-plan-action/, last accessed on 25 June 2019. 2  Al-Jazeera. 2018. ‘World Leaders React to US Withdrawal from Iranian Nuclear Deal’, 9 May, https://www.aljazeera.com/news/2018/05/world-leaders-react-withdrawal-iraniannuclear-deal-180508184130931.html, last accessed on 25 June 2019. 3  The other countries were China, Greece, Italy, Japan, South Korea, Taiwan and Turkey. 4  Mohammed, Arshad, Wroughton, Lesley and Zengerle, Patricia. 2018. ‘U.S. Allows Eight Importers to Keep Buying Iran Oil for Now’, in Reuters, 2 November, https://www. reuters.com/article/us-usa-iran-sanctions/u-s-allows-eight-importers-to-keep-buying-iranoil-for-now-idUSKCN1N70OZ, last accessed on 25 June 2019.

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bypassing the US sanctions, and towards this end, in January 2019, the European Union (EU) has launched a special purpose vehicle (INSTEX).5 However, given the dependence of European companies upon the US market, doing business with Iran will not be easy. This, in turn, would mean growing pressures on the Iranian economy, and if the past record is any indication, Iran is likely to harden its position and Tehran is unlikely to adhere to the deal due to the American pull-out. The European support to continue the JCPOA is essential but insufficient for indefinite Iranian compliance. There are suggestions and attempts for Trump administration renegotiating the nuclear deal,6 but Iran is unlikely to accept as it is not in a position to rally domestic public opinion, which is already divided over the nuclear deal, to reach an agreement under American diktats. Hence, there is a lesser likelihood of both sides resuming a dialogue for a new deal. Secondly, the unfolding situation is likely to create serious internal churning in Iran. The current tension between the hardliners and reformists led by President Hassan Rouhani is expected to sharpen further as the former were opposed to the JCPOA and argued that the nuclear deal did not serve Iranian interests or strategic autonomy.7 The US move would only increase their position resulting in greater criticisms of the Rouhani government. Following President Trump’s decision, Supreme Leader Ali Khamenei remarked: When the nuclear issue started some persons told me why do you insist on keeping the nuclear program? We told them that America’s problem with Iran isn’t about the nuclear program. Now you see that that’s true. We accepted the JCPOA but they continued their enmity with the Islamic Republic.8 5  Geranmayeh, Ellie and Batmanghelidj, Esfandyar. 2019. ‘Trading with Iran via the Special Purpose Vehicle: How It Can Work’, in Iran Sanctions Mini-Series, European Council on Foreign Relations, 7 February, https://www.ecfr.eu/article/commentary_trading_with_ iran_special_purpose_vehicle_how_it_can_work, last accessed on 25 June 2019. 6  Holland, Steve. 2018. ‘Trump Urges Iran to Talk Over Nuclear Program, Cannot Rule Out Military Action’, in Reuters, 9 May, https://www.reuters.com/article/us-usa-irantrump/trump-urges-iran-to-talk-over-nuclear-program-cannot-rule-out-military-actionidUSKCN1SF26S, last accessed on 25 June 2019. 7  Milani, Abbas and McFaul, Michael. 2015. ‘What the Iran-Deal Debate Is Like in Iran’, in The Atlantic, 11 August, https://www.theatlantic.com/international/archive/2015/08/ iran-deal-politics-rouhani-khamenei/400985/, last accessed on 25 June 2019. 8  Serjoie, Kay Armin. 2018. ‘“The Americans Cannot Be Trusted.” How Iran Is Reacting to Trump’s Decision to Quit Nuclear Deal’, in Time, 9 May, https://time.com/5270821/ iran-nuclear-deal-trump-ayatollah-khameini-hassan-rouhani/, last accessed on 25 June 2019.

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The hardliners led by Khamenei, whose support was critical for the JCPOA, have been sulking over the twist and the crippling sanctions faced by Iran. The two-year respite did not transform the economy, and the county faced rising inflation, food prices and high unemployment. These led to serious protests and demonstrations in various parts of the country in early 2018. The social turbulence is likely to increase further in the light of targeted American sanctions against the Iranian oil industry and would undermine the Rouhani government. Given that new parliament and presidential elections are due in 2020 and 2021, respectively, the JCPOA controversy will play into the hands of the hardliners, and renewal of American sanctions would be a significant campaign issue in the coming months. Under such domestic political battle for popularity, one should not rule out further Iranian isolation from the international community as any compromise would be seen as a surrender to the US. This, in turn, would mean increased Iranian efforts in the region through hostile statements and actions. Thirdly, as a result of the US decision, there is growing tension and unease in the Persian Gulf. Three allies of the US—Saudi Arabia, the UAE and Bahrain—who were not enamoured by the nuclear deal have come out in support of the Trump administration’s decision and have called for serious action against Iran to curtail its growing regional aspiration and influence.9 This was in contrast to the position of Qatar, Kuwait and Oman who had settled for a more ambivalent position on this issue, despite their closer ties with Washington.10 Iran has taken a strong view of the attitude of its Gulf neighbours and would work to undermine its regional rivals, especially the Kingdom of Saudi Arabia. Over the years, the Islamic Republic has increased its military capability, and presently, it is the largest and most powerful military force in the Persian Gulf region. Despite some domestic criticisms,11 it has not abandoned its support for its regional

 Al-Jazeera. ‘World Leaders React to US Withdrawal from Iranian Nuclear Deal’.  Vakil, Sanam. 2018. ‘Iran and the GCC Hedging, Pragmatism and Opportunism’, in Chatham House, September, https://www.chathamhouse.org/sites/default/files/publications/research/2018-09-13-iran-gcc-vakil.pdf, last accessed on 25 June 2019. 11  Radio Farda. 2018. ‘Iran In 2018: A Year of Confusion, Chaos and Perceived Threat of Regime Change’, 29 December, https://en.radiofarda.com/a/iran-in-2018-a-year-markedby-confusion-chaos-and-perceived-threat-of-regime-change/29682694.html, last accessed on 25 June 2019. 9

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allies such as Hezbollah and Houthis.12 Its military presence in Iraq and Syria has been widely recognized.13 The civil war in Yemen has not abated, and there are growing incidents of border clashes between the Houthi rebels and the Saudi forces, and missile attacks on the Saudi cities indicate growing Iranian military support for the rebels.14 In other words, the US sanctions would only heighten the Saudi-Iranian rivalry and could escalate regional instability. Fourthly, the sanctions and Trump administration’s determination to completely halt the Iranian oil exports are severe threats to the stability of the international oil market. Iran is one of the significant oil exporters in the world, and until the November sanctions, it accounted for 8–9 per cent of the oil exported by the Organization of the Petroleum Exporting Countries (OPEC) members.15 Much of its oil goes to developing Asian markets, and countries like India, China, Japan and South Korea depend heavily upon the Iranian oil. In 2018, for example, India imported nearly 23 million tons or 10 per cent of its crude oil from Iran. The Islamic Republic was also India’s third largest supplier after Iraq and Saudi Arabia.16 During the year, China was the largest market for Iran and imported 29.3 million tons.17 In the immediate term, there are ample alternative supplies in the form of US shale gas, higher supply capacity of countries like Iraq, Saudi Arabia and the UAE

12  Parker, Claire. 2019. ‘Iran Has Invested in Allies and Proxies Across the Middle East. Here’s Why They Matter Now’, in The Washington Post, 18 June, https://www.washingtonpost.com/world/middle_east/iran-has-invested-in-allies-and-proxies-across-the-middleeast-heres-why-they-matter-now/2019/06/18/0549200e-9152-11e9-b72dd56510fa753e_story.html?utm_term=.7b9ca94374c1, last accessed on 25 June 2019. 13  Ibid. 14  DW. 2019. ‘Iran-Backed Yemeni Rebels Attack Saudi Civilian Airport’, 12 June, https:// www.dw.com/en/iran-backed-yemeni-rebels-attack-saudi-civilian-airport/a-49154184, last accessed on 25 June 2019. 15  Oil Trade, Organization of the Petroleum Exporting Countries, https://asb.opec.org/ index.php/interactive-charts/oil-trade, last accessed on 25 June 2019. 16  The Hindu. 2019. ‘Iraq Remains Top Oil Supplier to India’, 1 May, https://www.thehindu.com/business/iraq-remains-top-oil-supplier-to-india/article27005247.ece, last accessed on 25 June 2019. 17  Meredith, Sam. 2019. ‘Here’s Why China and India Will Remain Defiant Amid Threat of US Sanctions for Iranian Oil Imports’, in CNBC, 23 April, https://www.cnbc. com/2019/04/23/iran-oil-sanctions-china-and-india-will-remain-defiant-against-us.html, last accessed on 25 June 2019.

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and the likely return of Libya to the oil market.18 At the same time, the strategic importance of Strait of Hormuz, closer to Iran and Tehran’s defiance, would be a shadow over the smooth flow of oil, especially from non-Iranian sources. Some Iranian leaders, such as the chairman of Chiefs of Iranian armed forces Major General Mohammed Baqeri, have warned that if Iran were prevented from exporting oil, it would not allow others to continue their oil exports.19 The media have often discussed a likely Iranian or Iranbacked disruption or even closure of Strait of Hormuz.20 The possible uncertainties and risks are good news for the oil market and might lead to a price rise, which, in turn, will undermine the global economy. Iran, however, is not the only factor contributing to regional tension in the Persian Gulf. GCC Turmoil The internal crisis within the GCC which began in July 2017 when Saudi Arabia, the UAE and Bahrain (along with Egypt) decided to impose a political, diplomatic and economic boycott of Qatar over the latter’s policies vis-à-vis Muslim Brotherhood, Iran and coverage by Qatari or Qatar-­ backed media continued into 2018. Despite efforts by Kuwait and Oman and later on some feeble attempts by the US, the crisis could not be defused. Qatar has managed to weather the storm with the help of Iran and Turkey, and the tactful handling of its financial heft meant that Doha is no longer willing to compromise on any of the issues flagged by other members of the GCC. This led to a serious rift within the regional group, and the GCC summit held in Riyadh in December did not see the participation of Emir Tamim bin Hamad al-Thani even though Arab media reported that he had received a formal invitation from King Salman.21 18  International Energy Agency. 2019. ‘Oil Market Report’, 14 June, https://www.iea. org/oilmarketreport/, last accessed on 25 June 2019. 19  Press TV. 2019. ‘Iran Won’t Let US Threaten Persian Gulf Security: FM Zarif’, 3 May, https://www.presstv.com/Detail/2019/05/03/594990/Iran-US-security-Persian-Gulfhormuz-strait-tension, last accessed on 25 June 2019. 20  Hafezi, Parisa, Saul, Jonathan and Sharafedin, Bozorgmehr. 2018. ‘Explainer: How Could Iran Disrupt Gulf Oil Flows?’, in Reuters, 11 July, https://in.reuters.com/article/ oil-iran/explainer-how-could-iran-disrupt-gulf-oil-flows-idINKBN1K12M9, last accessed on 25 June 2019. 21  Wasmi, Naser Al. 2018. ‘Qatar Receives GCC Summit Invitation Letter from Saudi King Salman’, in The National, 5 December, https://www.thenational.ae/world/gcc/­qatar-

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Qatar forged closer ties with Turkey, which was supportive of various Muslim Brotherhood groups in the region, a position which was opposed by Saudi Arabia and triggered the crisis in 2017. Doha has also been suggesting that Iran has a rightful place in the regional geopolitics.22 These developments cast serious doubts over the long-term viability of the GCC and its ambitions to follow the EU model of the border-free market, free movement of people and services and a possible security umbrella for the Gulf Arab countries.23 Yemen Crisis The situation in civil war-ridden Yemen continues to worsen in 2018; the growing number of deaths, destruction and shortage of food and medicine have pushed the country towards one of the worst humanitarian crises in recent times. According to estimates, more than 90,000 people have lost their lives since 2014, and over 150,000 were wounded.24 Nearly two million people are internally displaced while a large portion of the population is faced with an acute shortage of food, water and medicine. Children are the worst victims of the civil war and have been suffering from malnutrition and widespread outbreak of cholera.25 According to the United Nations (UN) and other international agencies providing humanitarian assistance, the ongoing cholera epidemic, crumbling health infrastructure and ‘pocket-like conditions of famine’ have worsened the situation.26 Since receives-gcc-summit-invitation-letter-from-saudi-king-salman-1.799300, last accessed on 25 June 2019. 22  Al-Jazeera. 2019. ‘Iran: Rouhani Welcomes Developing Relations with Qatar’, 6 June, https://www.aljazeera.com/news/2019/06/iran-rouhani-welcomes-developing-relationsqatar-190605154738749.html, last accessed on 25 June 2019. 23  Al-Gannabi, Yasmina. 2017. ‘After the GCC Summit: Is the Bloc Dead?’ in DW Akademie, 10 December, http://akademie.dw.com/gulfgermany/after-the-gcc-summit-isthe-bloc-dead/, last accessed on 25 June 2019. 24  Magdy, Samy. 2019. ‘Database Says 91,600 Killed in Yemen Fighting since 2015’, in AP News, 20 June, https://www.apnews.com/b28a2bdb1b01413689e05a7204e6ea90, last accessed on 25 June 2019. 25  Save the Children. 2017. ‘Alarming Cholera Spike in Yemen Coastal Region’, 1 September, https://www.savethechildren.org.uk/news/media-centre/press-releases/alarming-choleraspike-yemen-coastal-region, last accessed on 3 June 2019. 26  United Nations Security Council Report. 2018. ‘The Situation in the Middle East’, 23 October, https://www.securitycouncilreport.org/atf/cf/%7b65BFCF9B-6D27-4E9C8CD3-CF6E4FF96FF9%7d/s_pv_8379.pdf, last accessed on 3 June 2019.

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April 2017, more than 1.1 million suspected cases of cholera and 2,310 associated deaths have been reported. Twenty-one out of 22 governorates or 305 out of 333 districts have been affected.27 The cumulative number of suspected cholera cases between 27 April 2017 and 23 September 2018 stood at 1,207,596 and associated deaths at 2510.28 Children under the age of five account for 30.5 per cent of the total suspected cases. Hopes of finding a political solution were revived with the Stockholm Agreement signed in December 2018 between the Houthi rebels and the government headed by Abdrabbuh Mansur Hadi mediated by the UN.29 As per the agreement, both sides agreed on a ceasefire in Hodeida, an essential port in southwest Yemen, and for UN-monitored prisoner exchange and medical supplies. Nonetheless, fighting continued in other parts of the country, and both sides refused to come down from their determination to take full control of the country. This led to further cracks within the coalition fighting the Houthis whereby the southern secessionist movement has voiced the division of the country into south and north Yemen. The Southern Transition Council (STC) has been emboldened by the support it receives from the UAE which has been trying to establish an independent military presence in the southern part of Yemen to be able to control the Sea Lines of Communication (SLoC) in the Arabian Sea. The unabated violence between the Houthi rebels and the government forces and Houthi rocket and drone attacks into Saudi Arabia threaten to escalate the situation further and make the Persian Gulf more unstable. Internal Tensions Domestic developments in some of the countries added to the growing regional volatility. A series of protests over economic hardships and terror attacks due to ethnic and sectarian fault lines in Iran were notable in 2018. Disturbances in the Eastern Province of Saudi Arabia and erratic foreign policy moves taken by Crown Prince Mohammed bin Salman (MbS) raised international concerns and doubts over the style of Saudi leadership.  United Nations Office for the Coordination of Humanitarian Affairs. 2016. ‘Yemen: Cholera Outbreak—Oct 2016’, 6 October, https://m.reliefweb.int/disaster/37281/ep2016-000107-yem, last accessed on 3 June 2019. 28  Ibid. 29  United Nations Security Council. 2018. ‘Stockholm Agreement’, 20 December, https:// undocs.org/S/2018/1134, last accessed on 3 June 2019. 27

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Issues of human rights violations in Bahrain, the UAE and Oman and patronization of Islamists by Qatar are some of the problems the Persian Gulf would have to tackle if it were to avoid significant internal turmoil. The Kingdom of Saudi Arabia, as the dominant Arab and Islamic power, faces several internal challenges. The foremost among them is the continuing dependence on oil for national growth and extremist ideology pervasive among sections of Saudi society. MbS has been trying to address both these problems through large-scale economic and social reforms such as the Saudi Vision 2030 and National Transformation Programme 2020 as well as initiatives such as allowing cinemas and other recreational activities and easing restrictions on women. Though important, these require a more extended gestation period to materialize.30 However, many, within and outside the country, have raised concerns over his style of leadership and functioning. One incident that created a major international uproar against the Kingdom and criticisms against MbS was the murder of Saudi journalist Jamal Khashoggi inside the Saudi consulate in Istanbul on 2 October 2018.31 The news of the murder and the gory details swayed the international public opinion against the Saudi Crown Prince. The initial Saudi denial led to Turkey releasing raw footage and recordings of the conversation between Khashoggi and members of the Saudi hit-team, and Riyadh was forced to admit to the involvement of its officials.32 Some of the 15-member team which murdered the journalist were closely ­associated with MbS,33 and fearing a western backlash against the Crown Prince, on 26 October, Riyadh ordered the arrest and dismissal of 18 officials.34 The ongoing Saudi-led fighting in Yemen and its contribution to the worsening humanitarian situation in that country has become an 30  Quamar, Md. Muddassir. 2017. ‘Challenges for the New Crown Prince of Saudi Arabia’, in IDSA Comment, 23 June, https://idsa.in/idsacomments/challenges-for-the-new-crownprince-of-saudi-arabia_mmquamar_230617, last accessed on 25 June 2019. 31  BBC News. 2019. ‘Jamal Khashoggi: All You Need to Know about Saudi Journalist’s Death’, 19 June, https://www.bbc.com/news/world-europe-45812399, last accessed on 25 June 2019. 32  Ibid. 33  The Hindu. 2018. ‘Saudi Arabia Admits Khashoggi Was Killed in Its Istanbul Consulate’, 20 October, https://www.thehindu.com/news/international/saudi-arabia-admits-khashoggikilled-in-istanbul-consulate/article25269054.ece, last accessed on 25 June 2019. 34  Ibid.

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i­nternational concern. Consequently, on 18 October, days after the Khashoggi affair, a bipartisan resolution in the US Congress called for stopping the supply of US weapons to Saudi Arabia and censored the Crown Prince over his role in the murder of Khashoggi, a columnist for The Washington Post and a permanent resident in the US.35 While the Central Intelligence Agency had accused the MbS of direct involvement,36 President Trump declared that relations between the US and Saudi Arabia are strategic and that the Crown Prince was not ‘involved’ in the affair. He also vetoed the Congressional resolution to stop the supply of weapons to the Kingdom, but the US did scale down its involvement and support in the Yemeni civil war and argued that it would only provide intelligence and advisory input to the coalition forces led by Riyadh.37 Interestingly, MbS, who was frequently seen in Washington circles, had not visited the US since the Khashoggi affair. Iran is another country which is in the midst of internal troubles. The domestic economic and political problems have been multiplying not only due to the failure of the Rouhani government to provide relief to the population which was facing financial hardships due to prolonged sanctions but also from the hardline political opposition which was critical of government’s foreign and economic policies. One of the key developments during 2018 was the widespread protests in the country which began as a dissent against economic hardships, higher inflation, ­unemployment, rising food prices and diminishing value of the national currency. These gradually took political overtones with many criticizing the government for spending on the military build-up in neighbouring countries instead of using the financial resources to ease the economic suffering of the Iranians.38 Though the 35  Gould, Joe. 2018. ‘US House Bill Would Close Door on Saudi Arms Sales’, in Defense News, 24 October, https://www.defensenews.com/congress/2018/10/24/us-house-billwould-close-door-on-saudi-arms-sales/, last accessed on 25 June 2019. 36  The Guardian. 2018. ‘CIA Finds Saudi Crown Prince Ordered Jamal Khashoggi Killing—Report’, 17 November, https://www.theguardian.com/world/2018/nov/16/ cia-determines-saudi-crown-prince-ordered-journalists-killing-washington-post, last accessed on 25 June 2019. 37  BBC News. 2019. ‘Yemen War: Trump Vetoes Bill to End US Support for Saudi-Led Coalition’, 17 April, https://www.bbc.com/news/world-us-canada-47958014, last accessed on 25 June 2019. 38  Majidyar, Ahmad. 2018. ‘Will Latest Anti-Regime Protests Change Iran’s Costly Regional Policies?’ in Middle East Institute, 10 January, https://www.mei.edu/publications/will-latest-anti-regime-protests-change-irans-costly-regional-policies, last accessed on 25 June 2019.

 INTRODUCTION 

11

protests were eventually controlled and repressed, the tense internal ­situation between different segments of the population, especially between the reformist government and hardliners supported by the Supreme Leader, has been a concern.39 The return of the US sanctions led to serious debates within Iran over the direction of the country’s foreign policy. Even before Tehran could reap the benefits of the JCPOA, the US unilaterally pulled out of the nuclear deal and imposed sanctions, primarily directed at the oil sector. Earlier, the internal debates in the country revolved around the economic benefits accruing out of its decision to give up nuclear enrichment.40 In the wake of the US decision, the domestic debate questioned the wisdom of Iran adhering to the nuclear deal and giving up its right to develop a nuclear capacity for peaceful civilian purposes.41 Therefore, the US decision is not only a foreign policy problem but also a domestic challenge for the Rouhani government. Moreover, domestic stability of some of the Gulf countries is threatened by terrorism, often perpetuated by internal elements, and this was most visible in Iran, Iraq, Saudi Arabia and Yemen. Iran has witnessed two major terrorist attacks, reportedly carried out by Ahvaz National Resistance and Baloch militant group Ansar al-Furqan. The Houthi rebels backed by Iran are accused of carrying out attacks on Saudi border posts as well as attacks inside the Kingdom. Despite the military defeat of the Islamic State of Iraq and Syria (ISIS) announced by Prime Minister Haider al-­Abadi on 9 December 2017, Iraq continues to be vulnerable to the revival of insurgency. The political process in Iraq has failed to take roots and was visible in the May 2018 parliamentary election which witnessed a lower turnout of 44.5 per cent.42 It took the country more than five months to form a government headed by Prime Minister Adel  Sofuoglu, Murat. 2019. ‘Are Iran’s Moderates Losing Power to Hardliners?’ in TRT World, 7 March, https://www.trtworld.com/magazine/are-iran-s-moderates-losing-powerto-hardliners-24747, last accessed on 25 June 2019. 40  Milani, Abbas and McFaul, Michael. The Atlantic. ‘What the Iran-Deal Debate Is Like in Iran’. 41  Serjoie, Kay Armin. Time. ‘“The Americans Cannot Be Trusted.” How Iran Is Reacting to Trump’s Decision to Quit Nuclear Deal’. 42  Al-Jazeera. 2018. ‘Iraq: Election Results within Two Days, Turnout at Record Low’, 13 May, https://www.aljazeera.com/news/2018/05/iraq-election-results-days-turnout-record180513061807758.html, last accessed on 25 June 2019. 39

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­ bdul-Mahdi in October. While the remnants of ISIS continued random A attacks on military and civilian targets in the south and central Iraq, protests were noticeable in several ­cities and towns over lack of amenities such as water and electricity.43 Despite reconciliation over the Kurdish referendum held in September 2017, the relations between the central authority in Baghdad and the Kurdish Regional Government based in Erbil continue to remain tense.

Economic Outlook The Persian Gulf presents a mixed picture on the economic front. The abundant reserves of crude oil (Table  1.1) and natural gas (Table  1.2) have enabled the GCC countries in successfully pursuing a rentier welfare model. At the same time, this also made these countries as well as the three non-GCC states, Iran, Iraq and Yemen, to be heavily dependent upon and Table 1.1  Oil reserves, 2017 Country Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen

Billion barrels 157.2 148.8 101.5 5.4 25.2 266.2 97.8 3.0

Share in total (per cent)

R/P ratioa (years)

9.3 8.8 6.0 0.3 1.5 15.7 5.8 0.2

86.5 90.2 91.9 15.2 36.1 61 68.1 156.6

Source: BP Statistical Review of World Energy 2018, https://www.bp.com/content/dam/bp/businesssites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf a Reserves-to-production (R/P) ratio—If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time that those remaining reserves would last if production were to continue at that rate.

43  Al-Jazeera. 2018. ‘Iraq Protests: What You Should Know’, 22 July, https://www. aljazeera.com/indepth/features/iraq-protests-180717074846746.html, last accessed on 25 June 2019.

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Table 1.2  Natural gas reserves, 2017 Country Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen

Trillion cubic metres 0.2 33.2 3.5 1.7 0.7 24.9 8.0 5.9 0.3

Trillion cubic feet 5.5 1,173.0 123.9 59.9 23.5 879.9 283.8 209.7 9.4

Share in total (per cent)

R/P ratioa (years)

0.1 17.2 1.8 0.9 0.3 12.9 4.2 3.1 0.1

10.3 148.4 337.7 97.6 20.6 141.8 72.1 98.2 410.6

Source: BP Statistical Review of World Energy 2018, https://www.bp.com/content/dam/bp/business-sites/ en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf a Reserves-to-production (R/P) ratio—If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time that those remaining reserves would last if production were to continue at that rate

Table 1.3  Crude oil prices (West Texas intermediate)

Year

Average closing price (US$)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

61.95 79.48 94.88 94.05 97.98 93.17 48.72 43.58 50.84 64.90

Source: Macro Trends, https://www.macrotrends.net/1369/crude-oilprice-history-chart

hence vulnerable to the oil market. Fluctuations in international oil prices (Table 1.3) expose the Persian Gulf markets and have compelled them to undertake economic reforms and measures to dilute their dependence upon the energy sectors (Figs. 1.1, 1.2, and 1.3).

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Fig. 1.1  Persian Gulf share in global oil reserves 18 15.7 16 14 12 9.3 10 8.8 8 6 5.8 6 4 1.5 2 0.3 0 Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE

0.2 Yemen

Share in Per cent Source: BP Statistical Review of World Energy, 2018

Fig. 1.2  Persian Gulf share of global natural gas reserves 20 17.2 18 16 12.9

14 12 10 8 6

4.2

4 2 0

1.8 0.1 Bahrain

Iran

Iraq

0.9

0.3

Kuwait Oman

0.1 Qatar

Share in Per cent Source: BP Statistical Review of World Energy, 2018

3.1

Saudi Arabia

UAE

Yemen

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Fig. 1.3  Fluctuations in international oil price 120 100 80 60 40 20 0

2009

2010

2011

2012

2013 2014 Oil Price (US$)

2016

2017

2018

Source: Macro Trends, https://www.macrotrends.net/1369/crude-oil-price-history-chart

Some of the important initiatives such as Saudi Vision 2030,44 Bahrain’s Economic Vision 2030,45 Oman’s Vision 2020 46 and Emirati Vision 202147 were national strategic plans aimed at economic diversification through non-oil infrastructure developments. Saudi Arabia has taken the lead in developing logistical hubs, improved transportation, promotion of tourism and reintroduction of recreational and entertainment activities to create a more dynamic and diversified economy. Through a host of mega projects, Saudi Arabia and other Gulf Arab countries hope to generate employment for their educated youth. These governments are trying to diversify domestic energy market and reduce the local consumption of hydrocarbon fuels. This would enhance the quantum of oil and gas a­ vailable for exports and  Vision 2030, Saudi Arabia, https://vision2030.gov.sa/en, last accessed on 25 June 2019.  ‘From Regional Pioneer to Global Contender: The Economic Vision 2030 for Bahrain’, https://www.bahrain.bh/wps/wcm/connect/38f53f2f-9ad6-423d-9c96-2dbf17810c94/Vis ion%2B2030%2BEnglish%2B%28low%2Bresolution%29.pdf?MOD=AJPERES, last accessed on 25 June 2019. 46  Strolla, Alfred and Peri, Phaninder. 2013. ‘Oman: Vision 2020’, in Deloitte: A Middle East Point of View, Fall, https://www2.deloitte.com/content/dam/Deloitte/xe/ Documents/About-Deloitte/mepovdocuments/mepov12/dtme_mepov12_ Oman2020vision.pdf, last accessed on 25 June 2019. 47  Vision 2021, United Arab Emirates, https://www.vision2021.ae/en, last accessed on 25 June 2019. 44 45

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generate additional revenue, and towards this end, Saudi Arabia and the UAE are investing heavily on solar and nuclear energy. One of the other measures taken by some of the countries to combat unemployment and lack of opportunities for their youth has been the nationalization of the job market and restrictions on foreign workforce. At one level, this has created a degree of anxiety among the private companies and the large expatriate community in the Gulf Arab countries. The private sector in GCC has faced problem in offering jobs to native youths at a higher salary and often at lesser levels of skills, and this had led many to rethink their business plans.48 At the same time, countries like Saudi Arabia and Kuwait are trying to dissuade the flow of new foreign workforce by imposing taxes and levies on the expatriates or their dependent families.49 This had forced return migration from the Gulf or expatriates sending their families back home to manage the additional burden. These measures have resulted in the many Persian Gulf countries bucking the global economic slowdown and register a positive economic growth projection for 2019 (Table 1.4). The GCC countries continue to dominate in terms of Human Development Index and Ease of Doing Business Index (Table  1.5). Only crisis-ridden Iran, Iraq and Yemen remain at the bottom of both the indices. Interestingly, in terms of visa-free travel, the Emirati passport is globally ranked eighth and highest in the entire Middle East as it ensures visa-free travel to 113 countries and territories (Table  1.6). Despite the popular perception of its political and diplomatic isolation, the Israeli passport ensures visa-free travel to 105 countries. At the same time, in terms of gender issues, the Persian Gulf falls way behind the international standards (Table 1.7). This is despite the progress made by countries such as Saudi Arabia, the UAE, Kuwait and Qatar in improving the conditions of their female population and increasing their work opportunities. Despite the anti-woman image of Saudi Arabia, the gender gap in Iran is equally significant as some of the premier institutions 48  Hodgson, Sasha and Hanson, Darren. 2014. ‘Enforcing Nationalization in the GCC: Private Sector Progress, Strategy and Policy for Sustainable Nationalization’, in Middle East Journal of Business, Volume 9 Issue 2, April, http://www.mejb.com/upgrade_flash/ April2014/Nationalisation.pdf, last accessed on 25 June 2019. 49  Government of India (GoI). Ministry of External Affairs (MEA). 2018. ‘Question No. 1932 Hike in Expatriate Dependent Fee Imposed by Saudi Arabia’, 4 January, https://www. mea.gov.in/rajya-sabha.htm?dtl/29324/QUESTION_No_1932_HIKE_IN_ EXPATRIATE_DEPENDENT_FEE_IMPOSED_BY_SAUDI_ARABIA, last accessed on 25 June 2019.

 INTRODUCTION 

Table 1.4 GDP growth rate

17

Country

GDP growth 2017 (per cent)a

Expected GDP growth 2019 (per cent)b

Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen

3.8 3.8 −2.1 −2.9 −0.9 1.6 −0.9

1.8 −6 2.8 2.5 1.1 2.6 1.8

0.8 −5.9

2.8 2.1

The World Bank, https://data.worldbank.org/indicator/ny.gdp. mktp.kd.zg a

International Monetary Fund, https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD b

Table 1.5  HDI and Ease of Doing Business indices 2017

HDI for 2017 Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen India

43 60 120 56 48 37 39 34 178 130

Ease of Doing Business, 2017 66 124 168 96 71 83 92 21 186 100

Source: United Nations Development Programme (UNDP) Human Development Reports, http://hdr.undp.org/en

of the country such as supreme leader, the presidency and members of the Guardian Council exclusively and explicitly exclude women.50 In a similar vein, the space for criticism is minimal in the Persian Gulf, despite the region having one of the highest internet penetration rates in 50  Sedgh, Hamideh. 2007. Women and Politics in Iran: Veiling, Unveiling, and Reveiling. Cambridge, UK: Cambridge University Press.

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Table 1.6  Passport index Country Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen India

Visa-free score

Visa-free global ranking

Visa-free

52 85 89 46 54 50 56 8 85 67

46 13 07 53 41 50 39 113 11 25

84 44 34 95 81 87 79 158 44 66

Source: Visa-free score: https://www.passportindex.org/

Table 1.7  Global gender gap index 2017 Country

Rank

Score

Granting of voting rights

Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen India

126 140 Not included 129 Not available 130 138 120 144 108

0.632 0.583 NA 0.628 NA 0.626 0.584 0.649 0.649 0.669

1973 1963 1980 2005 2003 2003 2011 2006 1967 1935

Note: The whole region figures very low Global Gender Gap Report, where 1 stands for parity and 0 stands for imparity; despite having a greater number of female cabinet members, the overall Emirati ranks at 120, the highest in the entire region Source: Global Gender Gap Report 2017, http://reports.weforum.org/global-gender-gap-report2017/?doing_wp_cron=1539160682.1163349151611328125000

the world (Table 1.8), and the entire region gets a lower score and rank in terms of Freedom House index on freedom (Table 1.9). The Khashoggi affair brought the widespread suppression of any form of dissent within the Kingdom to the fore, but the situation in other countries is not better either. Reports of large-scale economic and social reforms in the Kingdom were diluted by the news that many activists and religious scholars have

 INTRODUCTION 

Table 1.8 Internet penetration in Gulf countries, 2018

Country Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen India

19

Users as share of total population (per cent) 95.9 76.0 49.4 98.0 80.2 95.9 88.6 96.9 26.7 –

Source: Internet World Stats, https://www.internetworldstats.com/ stats5.htm

Table 1.9  Freedom House aggregate score, 2018

Country Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen India

Aggregate score 12 18 32 36 23 25 7 17 11 77

Source: Freedom in the World, 2019, https://freedomhouse.org/report/ countries-world-freedom-2019

been detained or are undergoing trial for various unspecified charges.51 One of the key components of MbS’ reform initiative was allowing women to drive which was allowed in June but was overshadowed by reports of detention of women activists demanding an end to that ban.52 Shia protests in the Eastern Province and the arrest of some Shia activists 51  Amnesty International. 2018. ‘Saudi Arabia: More Activists Arrested in Continuing Crackdown’, 23 May, https://www.amnesty.org/en/latest/news/2018/05/saudi-arabiamore-activists-arrested-in-continuing-crackdown/, last accessed on 25 June 2019. 52  BBC News. 2018. ‘Saudi Arabia’s Ban on Women Driving Officially Ends’, 24 June, https://www.bbc.com/news/world-middle-east-44576795, last accessed on 25 June 2019.

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Table 1.10  Corruption perception index

Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen India

2011

2012

2013

2014

2015

2016

2017

2018

46 120 175 54 50 22 57 28 154 95

53 133 169 66 61 27 66 27 156 94

57 144 171 69 61 28 63 26 167 94

55 136 170 67 64 26 55 25 161 85

50 130 161 55 60 22 48 23 154 76

70 131 166 75 64 31 62 24 170 79

103 130 169 85 68 29 57 21 175 81

99 138 168 78 53 33 58 23 176 78

Source: Transparency International, https://www.transparency.org/cpi2018

for disrespecting the King and revolting against the state came to the fore.53 In recent years, a large number of youth protesters were detained, and according to international human rights groups, over 60 of them were executed in the Kingdom over various charges.54 Corruption appears to be a significant concern in much of the Middle East, and countries like the UAE, Qatar and to a lesser extent Saudi Arabia are perceived to be less corrupt than Iran, Iraq and Yemen (Table 1.10). Official corruption has been one of the main causes for the popular protests in many Arab countries, and if one considers the assessment of Transparency International, Bahrain is more corrupt in 2018 (99th rank) than in 2011 (46th) when the protests began. Kuwait which did not witness any major protests also slipped during this period while the UAE has improved its position from 28th to 23rd rank. On the treatment of minorities, whether native or expatriates and of women, the Persian Gulf countries face a significant challenge. Countries like the UAE, Oman and Iraq fare better in the treatment of the minority population, while others like Bahrain, Saudi Arabia, Qatar, Kuwait and Iran have fallen behind in taking decisive measures to improve the condi53   Coogle, Adam. 2018. ‘Saudi Arabia’s “Reforms” Don’t Include Tolerance of  Shia  Community’, in Human Rights Watch, 21 September, https://www.hrw.org/ news/2018/09/21/saudi-arabias-reforms-dont-include-tolerance-shia-community, last accessed on 25 June 2019. 54  Human Rights Watch. 2019. ‘Saudi Arabia: Mass Execution of 37 Men’, 24 April, https:// www.hrw.org/news/2019/04/24/saudi-arabia-mass-execution-37-men, last accessed on 25 June 2019.

 INTRODUCTION 

21

tion of their minorities. In countries like Saudi Arabia and Kuwait, which are more orthodox, the problem emanates from deep social system and requires more than official measures and initiatives to overcome the situation. Saudi Arabia has taken a slew of measures to change the conditions of women in the public sphere, and the policy of gender segregation is gradually relaxed. The mixed-gender audience is being allowed in some of the public events in the Kingdom.55 The space for the religious minorities is also expanding in the UAE with the construction of a Hindu temple in Abu Dhabi. How did India navigate these changing and challenging political, economic and social milieus in the Persian Gulf in 2018?

Bilateral Relations There has been an exponential growth in the Indo-Gulf ties in the past five years. Indeed, one of the highlights of the foreign policy successes of the Narendra Modi government has been the Persian Gulf region. He has created an unprecedented opportunity whereby India has the prospect to enhance its political and economic ties with the Gulf countries and take it to the next stage of more extensive political understanding on regional and global issues, forge closer partnership in fighting terrorism and counter radicalism and mutually beneficial engagements in other areas, including military and security cooperation. The existing trade and business ties, which form the bedrock of the bilateral relations, should enable India to forge a strategic partnership with significant countries of the region, namely, Saudi Arabia, the UAE, Qatar and Iran, not necessarily in that order. Politico-Economic Relations In the political realm, 2018 was a fruitful year for the Indo-Middle East relations. The year began with the visit of Israeli Prime Minister Benjamin Netanyahu in January, and this was the second visit by an Israeli prime minister and reciprocal one after the visit of Prime Minister Modi in July

55  The Guardian. 2017. ‘Saudi Arabia Allows Women into Stadium as It Steps Up Reforms’, 24 September, https://www.theguardian.com/world/2017/sep/24/saudi-arabia-allowswomen-into-stadium-as-it-steps-up-reforms, last accessed on 25 June 2019.

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2017.56 This was followed by Prime Minister Modi’s visit to Palestine in February.57 While he could avoid visiting Israel, logistical compulsions made a stopover visit to Jordan inevitable, and from Amman, Prime Minister flew to Oman58 and the UAE.59 In the same month, he hosted Iranian President Hassan Rouhani60 as well as King Hussein of Jordan.61 During the year, India hosted the Foreign Ministers of Iran,62 the UAE63 as well as Egypt.64 Indian External Affairs Minister Sushma Swaraj visited

56  Kumaraswamy, P. R. 2018. ‘Reading Modi’s Visit to Israel’, in India Quarterly, 74(1), 1–16, https://journals.sagepub.com/doi/full/10.1177/0974928417749644, last accessed on 25 June 2019. 57  GoI. MEA. 2018. ‘English Translation of Press Statement by Prime Minister during His Visit to Palestine (February 10, 2018)’, 11 February, https://www.mea.gov.in/SpeechesStatements.htm?dtl/29474/english+translation+of+press+statement+by+prime+minister+d uring+his+visit+to+palestine+february+10+2018, last accessed on 25 June 2019. 58  GoI. MEA. 2018. ‘India Oman Joint Statement during Visit of Prime Minister to Oman’, 12 February, https://www.mea.gov.in/bilateral-documents.htm?dtl/29479/india +oman+joint+statement+during+visit+of+prime+minister+to+oman, last accessed on 25 June 2019. 59  GoI. MEA. 2018. ‘India-UAE Joint Statement during State Visit of the Prime Minister of India to UAE (February 10–11, 2018)’, 11 February, https://mea.gov.in/bilateral-documents. htm?dtl/29476/IndiaUAE_Joint_Statement_during_State_Visit_of_the_Prime_Minister_of_ India_to_UAE_February_1011_2018, last accessed on 25 June 2019. 60  GoI. MEA. 2018. ‘India-Iran Joint Statement during Visit of the President of Iran to India (February 17, 2018)’, 17 February, https://www.mea.gov.in/bilateral-documents. htm?dtl/29495/indiairan+joint+statement+during+visit+of+the+president+of+iran+to+ind ia+february+17+2018, last accessed on 25 June 2019. 61  GoI. MEA. 2018. ‘Visit of the King of Jordan to India (February 27–March 01, 2018)’, 26 February, https://mea.gov.in/press-releases.htm?dtl/29518/Visit_of_the_King_of_ Jordan_to_India_February_27–March_01_2018, last accessed on 25 June 2019. 62  GoI. MEA. 2018. ‘External Affairs Minister’s Meeting with Iranian Foreign Minister’, 28 May, https://www.mea.gov.in/press-releases.htm?dtl/29925/External_Affairs_ Ministers_meeting_with_Iranian_Foreign_Minister, last accessed on 25 June 2019. 63  GoI. MEA. 2018. ‘Official Visit of Foreign Minister of the UAE to India (June 24–30, 2018)’, 1 July, https://www.mea.gov.in/press-releases.htm?dtl/30031/Official+visit+of+F oreign+Minister+of+the+UAE+to+India+June+2430+2018, last accessed on 25 June 2019. 64  GoI. MEA. 2018. ‘Visit of Foreign Minister of the Arab Republic of Egypt to India (March 22–23, 2018)’, 23 March, https://www.mea.gov.in/press-releases.htm?dtl/29726/ Visit+of+Foreign+Minister+of+the+Arab+Republic+of+Egypt+to+India+March+2223+ 2018, last accessed on 25 June 2019.

 INTRODUCTION 

23

Saudi Arabia,65 the UAE66 and Kuwait.67 A critical development in March was the confirmation of the death of 39 Indian workers who were abducted by ISIS fighters in Iraq in 2014. Their mortal remains were identified and brought to India in April, and this closed a painful chapter of efforts to trace the missing Indians.68 However, the most crucial moment in the Indo-Gulf relations came in November during the G20 summit meeting in Buenos Aries. In line with his policy since the Brisbane summit in November 2014, Prime Minister Modi met Saudi Crown Prince Mohammed bin Salman and meeting came against the backdrop of the Khashoggi affair and the western criticisms of the Saudi Arabia and its leadership.69 In economic terms, the Persian Gulf continues to dominate India’s foreign trade. Though its overall trade improved in 2017–18 from the previous year, the share of the Persian Gulf has dipped. In 2017–18, India’s imports from the region stood at US$465.58 billion as against US$384.35 billion a year before, but in terms of share, the Persian Gulf dropped to 19.96 per cent from 20.13 per cent a year earlier (Table 1.11; Fig. 1.4). The same trend can be noticed in India’s exports to the region; it increased from US$275.85 billion in 2016–17 to US$303.52 billion in 2017–18, but the share dropped from 16.56 per cent to 14.51 per cent during the same period (Table 1.12; Figs. 1.5 and 1.6). The fluctuation is also reflected in the Indo-Gulf energy trade. Because of its diversification efforts and imports from the US, which commenced 65  GoI. MEA. 2018. ‘Official Visit of External Affairs Minister to Saudi Arabia (February 6–8, 2018)’, 5 February, https://mea.gov.in/press-releases.htm?dtl/29413/ Official+visit+of+External+Affairs+Minister+to+Saudi+Arabia+Februar y+68+2018, last accessed on 25 June 2019. 66  GoI. MEA. 2018. ‘Visit of External Affairs Minister to United Arab Emirates (December 3–4, 2018)’, 30 November, https://www.mea.gov.in/press-releases.htm?dtl/30663/ Visit+of+External+Affairs+Minister+to+United+Arab+Emirates+December+34+2018, last accessed on 25 June 2019. 67  GoI. MEA. 2018. ‘Visit of External Affairs Minister to Kuwait (October 30–31, 2018)’, 1 November, https://www.mea.gov.in/press-releases.htm?dtl/30557/Visit+of+External+ Affairs+Minister+to+Kuwait+October+3031+2018, last accessed on 25 June 2019. 68  Bhattacharjee, Kallol. 2018. ‘Mortal Remains of Indians Killed in Mosul Flown Back Home’, in The Hindu, 2 April, https://www.thehindu.com/news/national/indians-killedin-mosul-families-wait-to-receive-remains-in-amritsar-updates/article23413108.ece, last accessed on 25 June 2019. 69  The Hindu. 2018. ‘Saudi Crown Prince Meets India’s Modi in Argentina’, 30 November, https://www.thehindu.com/news/international/saudi-crown-prince-meets-indias-modiin-argentina/article25630805.ece, last accessed on 25 June 2019.

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Table 1.11  Persian Gulf in India’s total imports (in US$ million) Year

Total imports

1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18

39,132.41 41,484.49 42,388.71 49,738.06 50,536.45 51,413.28 61,412.14 78,149.11 111,517.43 149,165.73 185,735.24 251,654.01 303,696.31 288,372.88 369,769.13 489,319.49 490,736.65 450,199.78 448,033.40 381,006.62 384,357.02 465,580.98

Imports from Persian Gulf

Share (per cent)

5,225.60 5,182.19 6,252.67 7,708.73 1,914.12 2,018.62 2,189.82 3,549.26 7,505.67 8,519.55 46,131.24 64,328.98 80,292.24 73,640.76 96,595.68 133,825.28 139,892.75 131,409.63 108,176.01 72,913.69 77,391.17 92,959.57

Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 1.4  Persian Gulf share in India’s total imports 35 30 25 20 15 10 5 0

Share in Per cent Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

13.35 12.49 14.75 15.50 3.79 3.93 3.57 4.54 6.73 5.71 24.84 25.56 26.44 25.54 26.12 27.35 28.51 29.18 24.14 19.13 20.13 19.96

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25

Table 1.12  Persian Gulf in India’s total exports (in US$ million) Year

Total exports

Exports to Persian Gulf

Share (per cent)

1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18

33,469.95 34,784.98 33,218.72 36,822.49 44,560.29 43,826.72 52,719.43 63,842.55 83,535.94 103,090.53 126,414.05 163,132.18 185,295.36 178,751.43 251,136.19 305,963.92 300,400.68 314,405.29 310,338.48 262,290.13 275,852.43 303,526.16

2,720.03 2,952.81 3,280.56 3,539.78 4,376.42 4,405.61 5,946.79 8,277.87 11,423.92 13,398.41 19,209.10 25,997.08 35,104.98 33,537.55 50,076.90 48,882.30 57,160.12 55,417.58 55,292.31 45,864.41 45,705.53 44,068.71

8.13 8.49 9.88 9.61 9.82 10.05 11.28 12.97 13.68 13.00 15.20 15.94 18.95 18.76 19.94 15.98 19.03 17.62 17.81 17.48 16.56 14.51

Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 1.5  Persian Gulf share in India’s total exports 25 20 15 10 5 0

Share in Per cent Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

26 

P. R. KUMARASWAMY AND MD. MUDDASSIR QUAMAR

Fig. 1.6  Share of oil products in India’s exports 25 20 15 10 5 0

Share in Per cent Source: Adapted from Director-­General of Foreign Trade, New Delhi, www.dgft.gov.in

Table 1.13  India’s energy imports from Persian Gulf (in US$ million) Country

2013–14

Bahrain 359.23 Iran 8,556.95 Iraq 18,450.33 Kuwait 16,121.78 Oman 1,514.11 Qatar 14,590.81 Saudi Arabia 32,781.57 UAE 13,263.35 Yemen 762.62 Total energy imports 106,400.75 from Persian Gulf India’s total energy 181,382.56 imports Share of Persian 58.66 Gulf in total energy imports (per cent)

2014–15

2015–16

2016–17

2017–18

215.82 7,292.13 14,177.22 12,228.71 732.51 13,415.31 23,212.88 13,509.04 516.68 85,300.30

94.07 4,461.57 10,759.19 4,059.61 584.67 7,942.43 15,177.91 7,912.80 0.01 50,992.26

46.94 9,006.29 11,633.29 3,455.54 390.56 6,762.10 15,583.08 9,457.60 0.00 56,335.34

69.12 9,232.61 17,544.32 6,121.36 2,880.79 7,207.82 17,816.06 9,080.71 138.02 70,090.81

96,953.02 103,163.20

132,294.61

156,399.98 54.54

52.59

54.60

52.98

Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

in 2014, the share of Persian Gulf in India’s overall energy imports has been coming down in recent years. As highlighted in Table 1.13, it had dropped from 58.66 per cent of the total energy imports in 2013–14 to 52.98 per cent in 2017–18.

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27

Table 1.14  Top five energy suppliers Year

First

Second

Third

Fourth

Fifth

1996–97 1997–98 1998–99 1999–2000 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18

Nigeria Saudi Arabia Saudi Arabia Nigeria Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia

Saudi Arabia Nigeria Kuwait Saudi Arabia Nigeria Iran Iran Iran Nigeria Iraq Iraq Iraq Iraq Iraq Iraq Iraq

UAE Australia Nigeria UAE Iran UAE UAE Kuwait Kuwait Kuwait Kuwait Kuwait Nigeria Nigeria UAE Australia

Kuwait Kuwait UAE Kuwait Kuwait Nigeria Kuwait Nigeria UAE UAE UAE Qatar UAE Qatar Iran Nigeria

Australia UAE Australia Iran Iraq Kuwait Nigeria Iraq Iran Nigeria Qatar Nigeria Qatar UAE Nigeria Iran

Note: Non-Gulf suppliers are identified in Italics Source: Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

For the first time in a decade, two non-Gulf suppliers have entered the top five energy suppliers of India (Table 1.14). While Saudi Arabia continues to enjoy the top slot, the position of Iran would considerably change in the wake of the limited US waiver granted to India in November 2018. India’s energy imports partly cater to oil refineries and the export of energy products. The year witnessed a marginal growth from US$32.435 billion from the previous year, and it exported US$38.469 billion worth of petroleum products in 2017–18 which accounts for 12.67 per cent of its total exports (Table  1.15). This, however, is still far below the peak achieved in 2013–14 when India exported US$64.685 billion worth of petroleum products. As a result of the growing import of energy resources and export of petroleum products, energy accounts for over one-fifth of India’s total foreign trade (Table 1.16; Fig. 1.7). As a result of large bilateral trade and energy imports, the UAE and Saudi Arabia are among India’s five largest trading partners (Table 1.17), and besides them, Iraq and Iran are among the top 25 trade partners in 2017–18 (Table 1.18). The expatriate workforce forms an active component of the bilateral relations; because of labour requirements and skills, labourers migrating

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P. R. KUMARASWAMY AND MD. MUDDASSIR QUAMAR

Table 1.15  Share of petroleum products in India’s exports (in US$ million) Year 1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18

Total exports

Petroleum exports

33,469.95 34,784.98 33,218.72 36,822.49 44,560.29 43,826.72 52,719.43 63,842.55 83,535.94 103,090.53 126,414.05 163,132.18 185,295.36 178,751.43 251,136.19 305,963.92 300,400.68 314,405.30 310,338.48 262,290.13 275,852.43 303,526.16

516.43 394.52 141.08 90.87 1,930.99 2,182.94 2,707.24 3,734.32 7,140.39 11,866.60 18,859.48 29,085.48 28,437.14 29,036.29 42,610.74 57,391.93 62,105.50 64,685.27 57,619.99 31,231.49 32,435.65 38,469.36

Share (per cent) 1.54 1.13 0.42 0.25 4.33 4.98 5.13 5.85 8.55 11.51 14.92 17.83 15.35 16.24 16.97 18.76 20.67 20.57 18.56 11.9 11.75 12.67

Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

to Gulf Arab countries require emigration clearance (Table  1.19), and according to the Ministry of External Affairs, there are over 8.5 million Indians in the Gulf Arab countries at the end of 2018 (Table 1.20) with the UAE accounting for the largest number. During 2018, India received US$79 billion in the form of remittances, and out of this, at least US$35–40 billion came from the Gulf.70 Notwithstanding the strong state of the bilateral ties and the opportunities on offer, India faces several challenges vis-à-vis the Persian Gulf. These emanate from domestic, regional and international factors.

70  John, Issac. 2018. ‘India to Retain Top Rank with $80 Billion in Remittance in 2018’, in Khaleej Times, 9 December, https://www.khaleejtimes.com/business/economy/indiato-/retain-top-rank-with-80b-in-remittance-in-2018, last accessed on 25 June 2019.

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Table 1.16  Share of petroleum in India’s foreign trade (in US$ million) Year

Foreign trade

Petroleum exports

Petroleum imports

Total petroleum trade

Share (per cent)

1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18

72,602.36 76,269.47 75,607.43 86,560.55 95,096.74 95,240.00 114,131.57 141,991.66 195,053.37 252,256.26 312,149.29 414,786.19 488,991.67 467,124.31 620,905.32 795,283.41 791,137.33 764,594.22 758,301.08 642,094.55 660,209.45 769,107.14

516.43 394.52 141.08 90.87 1,930.99 2,182.94 2,707.24 3,734.32 7,140.39 11,866.60 18,859.48 29,085.48 28,437.14 29,036.29 42,610.74 57,391.93 62,105.50 64,685.27 57,619.99 31,231.49 32,435.65 38,469.36

11,464.60 10,067.75 8,043.19 14,350.19 17,545.14 15,771.75 19,680.60 22,700.20 34,818.66 50,310.06 61,778.90 86,384.07 103,933.81 96,321.16 115,929.02 172,753.97 181,344.67 181,382.56 156,399.98 96,953.02 103,163.20 132,294.61

11,981.03 10,462.27 8,184.27 14,441.06 19,476.13 17,954.69 22,387.84 26,434.52 41,959.05 62,176.66 80,638.38 115,469.55 132,370.95 125,357.45 158,419.95 230,145.90 243,450.17 246,067.83 214,019.97 128,184.51 135,598.85 170,763.97

6.06 13.74 10.85 16.70 20.50 18.87 19.63 18.63 22.00 26.71 25.83 27.84 27.07 26.84 25.51 28.94 30.77 32.18 28.22 19.96 20.53 22.20

Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 1.7  Share of energy in India’s total foreign trade 35 30 25 20 15 10 5 0

Share in Per Cent Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

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P. R. KUMARASWAMY AND MD. MUDDASSIR QUAMAR

Table 1.17  India’s five largest trading partners in 2017–18 (US$ million) Country China US UAE Saudi Arabia Hong Kong

Exports

Imports

Total trade

Trade balance

13,333.53 47,878.48 28,146.12 5,410.70 14,690.27

76,380.70 26,611.03 21,739.11 22,069.96 10,675.98

89,714.23 74,489.51 49,885.23 27,480.66 25,366.25

−63,047.16 21,267.44 6,407.01 −16,659.26 4,014.29

Source: Department of Commerce, Export Import Data Bank, DGFT, GoI, https://commerce-app.gov. in/eidb/iecnttopn.asp

Table 1.18  Place of Persian Gulf countries among the top 25 trading partners of India, 2017–18 Country UAE Saudi Arabia Iraq Iran

Ranking

Exports

Imports

Total trade

Share (per cent)

3 4 10 16

28,146.12 5,410.70 1,462.23 2,652.37

21,739.11 22,069.96 17,615.81 11,111.52

49,885.23 27,480.66 19,078.04 13,763.89

6.49 3.57 2.48 1.79

Source: Adapted from Director-General of Foreign Trade, New Delhi, www.dgft.gov.in

Table 1.19  List of countries requiring Emigration Check Required (ECR) for Indian migrant labour

Global

Middle East countries Persian Gulf countries

Afghanistan Indonesia Malaysia Thailand

Jordan Lebanon Libya Sudan Syria

Bahrain Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen

Source: AR, MOIA, 2014–15

Challenges The most formidable challenge before India is the growing tension in the Persian Gulf due to the rivalry between the Islamic Republic of Iran and the Kingdom of Saudi Arabia. Mutual suspicion and contest for leadership have fuelled various problems in the region and beyond, including sectarianism,

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Table 1.20  Population of overseas Indians, 2018 Country Bahrain Iran Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen Total Gulf Global total Gulf share (per cent)

Non-resident Indians (NRIs)

Persons of Indian origin (PIOs)

Overseas Indians

312,918 4,000 10,000 928,421 688,226 691,539 2,812,408 3,100,000 500 8,548,012 13,113,360 65.18

3,257 273 0 1,482 919 500 2,160 4,586 10,000 23,178 17,882,369 0.13

316,175 4,273 10,000 929,903 689,145 692,039 2,814,568 3,104,586 10,500 8,571,189 30,995,729 27.65

Source: Ministry of External Affairs, http://mea.gov.in/images/attach/NRIs-and-PIOs_1.pdf

the proxy war in Yemen and deep divisions within the GCC. Sectarianism has majorly contributed to the death and destruction witnessed in Iraq since the early 2000s, and the proxy war had destroyed Yemen in the last five years. The internal crisis within the GCC created a situation where the dream of unity leading to common market and security architecture seems a distant dream. Any restoration of status quo ante would require considerable foresight, compromise and accommodation on the part of all the members of the GCC. For India, the unity among the Gulf Arab countries is of paramount importance because of its stakes in all the GCC countries. Realistically, it has two options; it could wait for the situation to change or try and work towards a change. For the latter to happen, India would require the active involvement of Prime Minister Modi, a team of dedicated experts prepared to work under the radar and considerable patience and innovation. Second, the policies of the Trump administration have become a significant challenge for India in maintaining its relations with Iran. For decades, the US has been a de facto Gulf power, and under Trump, the problems over Iran have heightened, and this is a delicate situation for India. At one level, strong strategic tie with the US is of paramount importance for its economic growth and political ascendance, and since the end of the Cold War, India has been immensely benefitting from its close cooperation with Washington. At the same time, foreign policy

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P. R. KUMARASWAMY AND MD. MUDDASSIR QUAMAR

c­ ompulsions and priorities meant, on some issues, including Iran, New Delhi takes a variant view. Iran is a key power in the region, especially on issues such as stability in Afghanistan, access to Central Asia and energy security. These mean that India maintains a friendly approach towards Iran, which is not the approach of the Trump administration. Besides, Indo-Iranian relations have come under stress from two other regional players, Saudi Arabia and Israel, who adopt a belligerent position vis-à-vis Tehran. India, therefore, must continually evolve postures and strategies over Iran that maximize its interests and minimize the frictions with other stakeholders. Three, China is emerging as a major player in the region and has been forging strong economic, trade and business ties with the Persian Gulf. It has undertaken a slew of construction projects in countries such as Iran and Saudi Arabia, and its Belt and Road Initiative (BRI) has been welcomed by some of the key players in the region who seek to integrate their market with the world’s second-largest economy. Besides political influence, China has an advantage over India in terms of technology, economic clout, swift policy implementation and lesser bureaucratic bottlenecks. Hence, India’s long-term influence will have to reflect on some of its inbuilt handicaps and limitations. Four, there is a noticeable radicalization among the Gulf returnees. While some have merely become more religious and devoted due to the social and cultural conditions in the Gulf, a few have been radicalized after encountering radical preachers or individuals who seek to propagate their ideology to different parts of the world. The problem of radicalism has persisted in the Gulf despite numerous political and administrative measures, especially since the 11 September terror attacks in the US. According to estimates, Saudis and other native Gulf Arabs constitute a substantial portion of fighters with the ISIS.71 The large-scale social reforms, ­especially vis-à-vis empowering women, would attract resistance from the established ulema and conservative circles and might result in social upheavals if mishandled. For India, the task is even more difficult. Its domestic political situation and communal issues can provide an impetus for extremism, especially to 71  Al-Saud, Abdullah bin Khaled. 2019. ‘Saudi Foreign Fighters: Analysis of Leaked Islamic State Entry Documents’, in International Centre for the Study of Radicalisation, https:// icsr.info/wp-content/uploads/2019/02/ICSR-Report-Saudi-Foreign-Fighters-Analysisof-Leaked-Islamic-State-Entry-Documents.pdf, last accessed on 25 June 2019.

 INTRODUCTION 

33

those already exposed to radical ideas during their stay in the Gulf. There are signs in Kerala where a small number of individuals are active in promoting extremisms.72 In the past, some of them migrated either to join the ISIS as fighters or to reach countries like Yemen and Afghanistan to lead a ‘devout’ life.73 Attraction towards extremism is not just a security issue but a socio-political challenge for India. Five, the ongoing economic reforms in the Gulf Arab countries have created the phenomenon of Gulf returnees, and one of the vital Indian states to be affected is Kerala which accounts for nearly half the Indian expatriate population in the Gulf.74 As the Gulf countries try to resolve their domestic problems such as youth unemployment, women empowerment and nationalization of the labour force, the flow of Indian workers to the region is expected to be affected. The situation in Saudi Arabia could be critical due to local demography and the rapid transformation of its educational system. Steps such as allowing women to drive and the imposition of expatriate fees on the families of foreign workers have started affecting the Indian community. According to official Indian estimates, their number had come down from 3.2 million a year ago to 2.8 million in 2018.75 Six, in terms of energy security where the region plays a pivotal role, the Indian dependency on the Persian Gulf would continue, but its diversification efforts have yielded results. In 2018, the region supplied just over half of India’s total energy imports, and a decade ago, it was about two-thirds. At the same time, Persian Gulf would continue to be a significant player as India’s energy needs continue to grow. The emergence of the US as a shale oil supplier adds a new dimension to India’s energy security strategy 72  Siyech, Mohammed Sinan. 2019. ‘The Islamic State in India: Upgrading Capabilities?’ in Middle East Institute, 5 February, https://www.mei.edu/publications/islamic-stateindia-upgrading-capabilities, last accessed on 25 June 2019. 73  Times of India. 2018. ‘In a Shocker from Kerala, 10 People Confirmed to Have Joined ISIS’, 13 December, https://timesofindia.indiatimes.com/videos/city/kochi/in-a-shockerfrom-kerala-10-people-confirmed-to-have-joined-isis/videoshow/67073946. cms?from=mdr, last accessed on 25 June 2019. 74  Varma, Vishnu. 2018. ‘Back from the Gulf: The Exodus Is Real and Kerala Might Not Be Prepared’, in The Indian Express, 15 March, https://indianexpress.com/article/india/ kerala-gulf-business-exodus-kottakkal-gulf-cooperation-council-5626274/, last accessed on 25 June 2019. 75  GoI. MEA. Embassy of India, Riyadh. 2018. ‘India-Saudi Bilateral Relations’, December, https://mea.gov.in/Por tal/ForeignRelation/India-Saudi_Bilateral_Relations_ December_2018.pdf, last accessed on 25 June 2019.

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vis-à-vis the Persian Gulf. The desire of the Gulf countries to move away from their oil dependence and seek hydrocarbon joint ventures with Asian countries could be a new template for Indo-Gulf partnership. Seven, there are immense possibilities to enhance trade and investments between India and Gulf Arab countries. While the Indo-Gulf political engagements were on an upward swing since 2014, this has not been reflected by the importance given to the region by the Indian a­ cademia, strategic community, intelligentsia and the media. The lack of non-­ governmental and non-official contacts hampers a fuller realization of the potentials. The unusually excellent relations at the highest levels of the governments on both sides provide an opportunity for official and private entities, including educational and research institutions, to scale up their engagements with the counterparts in the Persian Gulf so as to realize the real potentials. The skewed priority of the neighbourhood can be fathomed by the importance given to the Middle East or the lack of it in institutions of higher learning. The Middle East as a distinct discipline is taught only in three central universities of the countries, including two located in the capital, namely, Jawaharlal Nehru University and Jamia Millia Islamia, and Aligarh Muslim University located about 200 kilometres southeast of New Delhi and Mysore University in the south. Educational institutions in Kerala, which accounts for more than half the Indian expatriate workers in the Gulf, do not have the Middle East as a separate area of study. Private universities are not better either and none of them offer a full-fledged degree programme on the region. The conditions of the think tanks are not very encouraging. The Middle East does not get the treatment of a separate course in most premier institutions of the country, and the region is often submerged into international politics, political science, energy studies or global studies. In some cases, the region is treated within the ambit of Arabic, Persian, Turkish or Hebrew studies programmes devoid of any understanding of the contemporary Middle East. Irrespective of their locations, national capital or different parts of the country, the Middle East is not their priority. With the sole exception of the Defence Ministry-funded Institute for Defence Studies and Analyses (IDSA), no think tanks have a separate Middle East or West Asian division, centre or cluster. The absence of job opportunity has, in turn, limited the scope of expertise on the region. The egg-and-the-chicken situation has left India with a handful of experts on the region. Unfortunately, the country of 1.3 billion has only a

 INTRODUCTION 

35

dozen or so experts for whom the Middle East is their bread and butter, and most are in the national capital. In independent India’s history, one could only identify two persons who had a nuanced, skilful and sustained interest and understanding of the Middle East: one was the late Professor M.  S. Agwani who had directly or indirectly trained all the experts and students of the Middle East in the country, and other is the former diplomat and Vice President M. H. Ansari. As a result of this lack of scholarship, discussion on the Middle East is dominated by former diplomats who have a nodding acquaintance with the region by serving in one or two countries. Barring a few, most lack sustained interest, and their knowledge of the domestic politics often confines the periods they were posted to those countries. Another crop of experts is the armed-chair journalists who could pontificate on anything under the sun. In short, the expertise in the country is inversely proportionate to the requirements, and this contributes to a limited understanding of the Middle East. Above all, centuries of religious contacts between the two have not been appropriately harnessed. For centuries there have been people-to-­ people contacts through hajj pilgrimage and trade in spices, horses, swords, pearls, dates and so on. Islam came to India shortly after the death of Prophet Mohammed, took roots in its lands, spread widely to different parts, witnessed powerful empires, developed a more inclusive approach towards other faiths and in the process became widely accepted and transformed its followers into one of the largest communities in the world. Islam as it is practised in the country is more inclusive, accommodative and less extremist than much of the Middle East. Despite these, Islam has come to be seen as a liability in Indo-Middle Eastern and Indo-Gulf relations. The Pakistan-centric approach of some of the Arab countries partly contributed to this phenomenon. In their short-sightedness, the Arab-Islamic world has alienated and marginalized the sizeable Muslim community of India. Frequent references to Kashmir by the Organisation of Islamic Cooperation have not helped in developing greater political understanding. At another level, the region has become the favourite area of interest for the Indian Muslims, and it is not accidental that Muslims constitute the bulk of those who study, specialize or immigrate to the region. In some ways, the region has become co-terminus to a person being a Muslim. India appointing only Muslim ambassadors to Saudi Arabia has an administrative rationale, namely, the ability to travel to Mecca, which is forbidden for non-Muslims. At the same time, such an approach also undermines India’s

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commitments to secularism and raises questions about sending non-Christians as ambassadors to Christian-majority countries. Indeed, over the years, only Muslims were entrusted with some of the sensitive positions involving the region, thereby creating an impression that in the eyes of the Indian government, only Muslims can understand, evaluate or represent the country.

MEI@ND Founded in October 2009 as a private and not-for-profit academic initiative, Middle East Institute, New Delhi (MEI@ND) is devoted to generating a serious, nuanced, scholarly and non-partisan understanding of the region of vital importance to India. During the decade of its existence, the MEI has undertaken several academic and outreach activities, including Contemporary Review of the Middle East, a refereed quarterly published by Sage (India) and edited volumes. The Persian Gulf dominates India’s political, strategic, economic, energy, cultural and social interests in the Middle East and hence MEI launched the Persian Gulf Series in 2012. The series closely follows, analyses and details the bilateral relations annually. The inaugural issue was published by Kindle.76 Sage (India) published the subsequent Persian Gulf 2013 77 and Persian Gulf 2014.78 The fourth in the series Persian Gulf 2015 was published by Smashwords.79 The 2016–17 volume covering developments during 2015 and 2016 was jointly published by Institute for Defence Studies and Analyses (IDSA) and [email protected] Our journey has been eventful and finally thanks to Sagarika Ghosh, in 201881 we found a home in Palgrave Macmillan which has taken over the Persian Gulf Series, and the present volume 2019 is the seventh in the series and the second under Palgrave Macmillan. 76  Persian Gulf 2012, https://www.amazon.in/Persian-Gulf-2012-Indias-Relationsebook/dp/B0099RZ6NG, last accessed on 31 March 2019. 77  Persian Gulf 2013, https://us.sagepub.com/en-us/nam/persian-gulf-2013/book 242306, last accessed on 31 March 2019. 78  Persian Gulf 2014, https://us.sagepub.com/en-us/nam/persian-gulf-2014/book 245036, last accessed on 31 March 2019. 79  Persian Gulf 2015, https://www.smashwords.com/books/view/549471, last accessed on 31 March 2019. 80  Persian Gulf 2016–17, https://idsa.in/book/book_persian-gulf-2017, last accessed on 31 March 2019. 81  Persian Gulf 2018, https://www.palgrave.com/gp/book/9789811319778, last accessed on 31 March 2019.

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The MEI@ND prefers ‘Persian Gulf’ to other expressions only because of its historical nature and is a UN-recognized nomenclature. When there are water bodies like the Arabian Sea, Indian Ocean or Bay of Bengal, why object to the Persian Gulf? However, like other geographical expressions, the term Persian Gulf does not denote Iranian ownership of the said waters. A few notes of caution. Trade figures put out by India’s Directorate General of Foreign Trade for a current year are often revised in the following year and hence there could be a slight discrepancy. For example, the trade figures for 2015–16 would be different in Persian Gulf 2018 and Persian Gulf 2019. Two, references to the internet websites (URLs) were accurate at the time of writing, and the authors or publisher are not responsible for URLs that may have expired or changed since the manuscript was finalized. The series began as an edited volume, and when we moved to Palgrave Macmillan, we settled for co-authorship for greater coherence and timely execution. Hence, Persian Gulf 2019 is a co-authored one, but the basic template of the Series remains the same, presenting India’s relations with the region in a comprehensive, holistic and systematic manner. We record sincere gratitude to all the previous contributors who made the series possible and flourishing. Our sincere thanks and gratitude are due to innumerable scholar friends, including Commodore C.  Uday Bhaskar, Professor Girijesh Pant, Professor Gulshan Dietl, Professor Rajesh Rajagopalan, Ambassador Sanjay Singh, Shri Vivek Mehra, Dr. Sreeradha Datta and Dr. Sameena Hameed. We would be failing in our duty if we do not acknowledge Honourable Shri M. Hamid Ansari for his wholehearted, valuable and unflinching support for the MEI. Special thanks are reserved for Parnika Praleya for her delicate skills in fine-tuning the references and for Amit for the index. We immensely value the support of Sagarika Ghosh and Sandeep Kaur in getting this volume out in such a short time. Above all, we acknowledge and appreciate the unconditional love, affection, inspiration and support of our family and friends in completing this volume. With great respect and gratitude, we are dedicating this volume to the memory of one of the doyens of Middle East studies in India Professor K. R. Singh. And all omissions and commissions are ours alone. P. R. Kumaraswamy and Md. Muddassir Quamar New Delhi

CHAPTER 2

Bahrain

Key Information Ruling family: Al-Khalifa; Ruler: King Hamad bin Isa al-Khalifa (since 6 March 1999); Crown Prince: Prince Salman bin Hamad bin Isa al-Khalifa (since 9 March 1999); National Day: 16 December; Parliament: 40-member Nominated Consultative Council and 40-member Elected Chamber of Deputies; Last Parliamentary Election: 24 November 2018; Major Group in Parliament: Independents (Shia Opposition boycotted); National Carrier: Gulf Air. Socio-Economic Indicators Area: 760 sq. km; Population: 1.49 million (World Bank 2017), 1.64 million (UN estimate); Native: 46 per cent; Expats: 54 per cent; Religious Groups: Citizens—Muslims: 98–99 per cent (Shia 60–65 per cent and Sunni 30–35 per cent), Others 1–2 per cent; Resident—Muslim 70 per cent; Christian 14.5 per cent; Hindu 10 per cent; Buddhist 2.5 per cent; Jewish 0.5 per cent and Others 2 per cent; Youth: 15.49 per cent (15–24 age group); Population growth rate: 2.19 per cent (2018 est.); Life expectancy at birth: 79.1 years (2018 est.); Major population groups: Bahraini 46 per cent; Asian 45.5 per cent; other Arabs 4.7 per cent; African 1.6 per cent; European 1 per cent; Others 1.2 per cent (2010 est.); Literacy rate: 95.7 per cent (2015 est.); National Currency: Bahraini Dinar (BHD); GDP (current US$): US$35.307 billion (2017 World Bank); © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_2

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Foreign Trade: Export US$12.89 billion, Import US$14.751 billion (2017); Defence budget: 4.124 per cent of GDP (2017); Sovereign Wealth Fund: US$15.4 billion; External Debt: US$52.15 billion (2017 est.); Per capita income: US$44,850 at PPP (2017) (HDI report GNI per capita PPP 2011 US$: 41,580); Oil reserves: 124.6 million bbl. (2018 est.); Gas reserves: 92.03 billion m3 (2018 est.); HDI rank: 43/189 (2017); Infant Mortality Rate: 7.3/1,000 live births (under-five mortality, UNICEF, 2017); UN Education Index: 0.757 (2017); Gender Inequality Index: 0.222 rank 47/160 (2017); Labour Force: 831,600 (2017 est.); Unemployment rate: 3.8 per cent (2018 IMF2); Total Urban Population: 89.3 per cent (2018); Rate of Urbanization: 4.38 per cent (2015–20 est.); Last National Census: 2010. India Related Indian Cultural Centre: None (32 registered and 68 non-registered socio-cultural organizations and clubs); Number of Indians: 290,000 (approximately); Number of places of worship for Indians: 1 Temple, 5 Churches and 6 Gurudwaras; Indian Schools: Seven; Indian Banks: State Bank of India (2), Bank of Baroda (1), Canara Bank (1), ICICI Bank (1) and HDFC Bank (1); Currency exchange rate: BHD 1 = INR 183.06 (March 2019); Last visit to India by the ruler: Hamad bin Isa al-Khalifa February 2014; Last Indian Prime Minister to visit: None since 1947. The tiny island of Kingdom of Bahrain holds a geostrategic significance in regional affairs far outweighing its size. For one, it is an important partner in the six-member Gulf Cooperation Council (GCC) that seeks greater political and economic integration of the regional bloc. Two, the uncertainty following the Qatar crisis of June 2017 has accentuated its domestic tension and growth, thereby forcing Bahrain to rely on Saudi Arabia for economic and political security increasingly. Three, it seeks to overcome the internal tension and regional pressures through rapid economic growth, especially in the construction sector. And four, as the host to the Fifth Fleet, one of the most important bases of the US Navy, Bahrain is key to the security of the Persian Gulf region. With expatriates constitut1  Bahrain Trade Statistics, in World Integrated Trade Solution, https://wits.worldbank. org/CountryProfile/en/BHR, last accessed on 5 May 2019. 2  Unemployment Rate, in IMF Data Mapper, https://www.imf.org/external/datamapper/LUR@WEO/OEMDC/ADVEC/WEOWORLD/BHR, last accessed on 5 May 2019.

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ing over 50 per cent of the resident population, Bahrain’s stability and prosperity will have a direct bearing on many countries including India. India has strong bilateral relations with the Kingdom, and it was among the first to respond to India’s outreach towards the region since the early 1990s. Though economic powerhouses like Dubai and Doha overshadow Manama, the island nation remains vital in India’s engagements with the region. This was indicated by growing political contacts between the two and the visit of Congress president Rahul Gandhi to Bahrain in January 2018.

Domestic Developments Bahrain’s journey towards liberalization was marred by controversies and deficiencies between the hopes and aspirations of the restive population and the reluctance of an influential section within the ruling Al-Khalifa family to grant political rights. Upon assuming office in March 1999, King Hamad bin Isa al-Khalifa sought to accommodate some of the popular demands and held a referendum on 14–15 February 2001, to approve the National Action Charter.3 Transforming Bahrain into a notionally constitutional monarchy with a bicameral National Assembly or al-Majlis al-­ Watani, he granted unrestricted voting rights to all citizens, including women.4 Though elections were periodically held for the 40-member Majlis al-Nuwwab (House of Deputies or Lower House) since 2002, the island state has remained politically unstable.5 A harmonious system that would balance the role of the monarchy, will of the citizens, universal civil rights and the rule of law remained elusive. While the monarchy does not wish to dilute let alone relinquish its stronghold, an important constituency of opposition comprising of clerics, intellectuals and community leaders have been voicing their demand for a genuine constitutional monarchy with checks and balances.6

3  Shafaei, Hasan. ‘National Action Charter and Human Rights’, Bahrain Monitor, n.d., http://www.bahrainmonitor.org/views/w-002-01.html, last accessed on 5 May 2019. 4  Kuwait, for example, had elected national assembly since 1963, but women were given voting rights only in 2005. 5  Parliament elections were held in November–December 2018. 6  The New  York Times. 2011. ‘Bahrain: Opposition Demands Switch to Constitutional Monarchy’, October 13, https://www.nytimes.com/2011/10/14/world/middleeast/bahrain-opposition-demands-switch-to-constitutional-monarchy.html, last accessed on 5 May 2019.

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These tensions came into the open in early 2011 when many Bahraini citizens joined their brethren in other Arab countries and demanded more significant economic and political rights. Financial hardships, demographic fault lines which favour the Shia population and political dissatisfaction created an aggressive mixture of the public outpouring of anger. The economic issues-centric protest was framed within a sectarian prism, and notwithstanding the differences within the royal family regarding the handling of the situation, the Al-Khalifa yielded to pressures from more prominent regional allies and neighbours and chose to confront the disenchanted youth with force.7 The resultant discontent and fears of an impending Shia takeover of the country resulted in the Peninsula Shield Force (PSF)—the military arm of the GCC—being sent to Bahrain in March 2011 to secure the state.8 While the order was restored, stability remained elusive due to periodic protests, arrests and accusations of human rights violations by the security establishment. The non-implementation of the critical but credible observations of Bahrain Independent Commission of Inquiry (BICI)9 which presented its report in November 2011 only made things worse. Meanwhile, the regime felt beleaguered by periodic suggestions of Iranian support—political and material—to the Shia citizens of Bahrain10 and its impact upon the Bahraini-Saudi relations. The fragile demographic balance in favour of the Shias—estimated to constitute about 60–65 per cent of the population—contributed to a security-­centric approach to widespread unrest, and this meant that progress towards political liberalization was not only frozen but also slipped since 2002. Thus, main political forces in the country, including Al-Wefaq (National Islamic Society), which secured 18 out of the 40 seats in 2010 elections, Wa’ad (National Democratic Action Society), an influential 7  For details, see: International Crisis Group, ‘Popular Protest in North African and the Middle East (III): The Bahrain Revolt’, ICG Report, No. 105, 6 April 2011, https://www. crisisgroup.org/middle-east-north-africa/gulf-and-arabian-peninsula/bahrain/popularprotests-north-africa-and-middle-east-iii-bahrain-revolt, last accessed on 31 March 2019. 8  Bronner, Ethan and Slackman, Michael. 2011. ‘Saudi Troops Enter Bahrain to Help Put Down Unrest’, in The New York Times, March 14, https://www.nytimes.com/2011/03/15/ world/middleeast/15bahrain.html, last accessed on 5 May 2019. 9  For details, see: Bahrain Independent Commission of Inquiry, ‘Report of the Bahrain Independent Commission of Inquiry’, Presented on 23 November 2011, http://www.bici. org.bh/BICIreportEN.pdf, last accessed on 5 May 2019. 10  Fulton, Will. 2010. ‘Bahrain-Iran Foreign Relations’, in Critical Threats, 8 April, https://www.criticalthreats.org/analysis/bahrain-iran-foreign-relations, last accessed on 5 May 2019.

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organization of left-wing intellectuals, and the radical Amal (Islamic Action Society), were gradually outlawed, and their leaders, members and sympathizers were imprisoned or came under increased surveillance.11 Most of these groups being dominated by Shias only increased the sectarian divide. Amidst the political uncertainty and clampdown on dissent, Bahrain held its fifth parliamentary election in November–December 2018. The first round was held on 24 November, but it elected a clear winner only in 9 out of 40 seats, leading to a second round on 1 December to choose the remaining 31. According to the Legislation and Legal Opinion Commission of Bahrain, which coordinates the administrative and logistical aspects of elections, the first round witnessed 67 per cent voting, a significant increase from the 53 per cent in 201412 and 37 per cent in the second round. However, these figures were contested by the opposition groups, especially Al-Wefaq which alleged that the authorities had inflated the number, and the actual participation was as low as 30 per cent.13 As happened in the earlier election held four years ago, most candidates participating in the 2018 elections were pro-monarchy independents since many political societies and groups have been outlawed. In May, the Majlis approved a bill that barred members of the dissolved/proscribed opposition groups from running in the elections.14 As a result, the new parliament was dominated by pro-government independents with limited previous legislative experience. Despite these lacunae, six women candidates emerged victorious, thus doubling the number of female members of the Majlis al-Nuwwab four years ago.15 Since Bahrain does not allocate quotas for women in parliament, this is a significant accomplishment. 11   Wickham, Daniel. 2018. ‘Bahrain’s Elections and the Exclusion of the Political Opposition’, in Middle East Centre Blog, London School of Economics and Political Science, 22 November, https://blogs.lse.ac.uk/mec/2018/11/22/bahrains-elections-and-the-exclusion-of-the-political-opposition/, last accessed 5 May 2019. 12  The National. 2018. ‘Bahrain Reports 67% Turnout in Parliamentary and Municipal Elections’, 24 November, https://www.thenational.ae/world/gcc/bahrain-reports-67-turnout-in-parliamentary-and-municipal-elections-1.795352, last accessed on 5 May 2019. 13  Middle East Monitor. 2018. ‘Bahrain Opposition: Voter Turnout Did Not Exceed 30%’, 26 November, https://www.middleeastmonitor.com/20181126-bahrain-opposition-voterturnout-did-not-exceed-30/, last accessed on 5 May 2019. 14  Global Security. 2018. ‘Bahrain-Politics-2018 Elections’, https://www.globalsecurity. org/military/world/gulf/bahrain-politics-2018.htm, last accessed on 5 May 2019. 15  Al-Jazeera. 2018. ‘Record Number of Bahraini Women Elected to Parliament’, 3 December, https://www.aljazeera.com/news/2018/12/record-number-bahraini-womenelected-parliament-181202165415224.html, last accessed on 5 May 2019.

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However, while regular elections since 2002 have lent a degree of l­egitimacy to the political system, differences over monarchical control over the executive and limited legislative space have been a bone of contention. The situation has gone downhill since 2011 with political opening backsliding and increasingly visible securitization. These, in turn, led to the worsening of the human rights situation. Human Rights Situation The international concerns over the human rights conditions in Bahrain remain unabated. Several activists have been prosecuted for their political or ideological views. Prominent human rights defenders such as Nabeel Rajab, president of the Bahrain Centre for Human Rights, have remained behind bars since his arrest in December 2016. One of the major criticisms against the Bahraini authorities has been the lack of any follow-up on the report of the BICI which was constituted by King Hamad in 2011. The report recommended concrete action against a host of security officials for the use of force and torture against unarmed protesters.16 More than seven years after BICI submitted its report, no action has been taken and only a handful of 50 Shia mosques that were destroyed have been rebuilt.17 At the same time, extreme measures have been taken against those critical of the government, and according to the Human Rights Watch, during the year as many as 258 Bahrainis have been stripped of their citizenship18 for their alleged involvement in crimes such as terrorist acts, disturbing public order or for ‘offending the country’.19 These are reflected in the Freedom Report which identified Bahrain as Not Free with a score of 12 out of 100 during the year.20 16  Bahrain Independent Commission of Inquiry, ‘Report of the Bahrain Independent Commission of Inquiry’, Presented on 23 November 2011, http://www.bici.org.bh/ BICIreportEN.pdf, last accessed on 5 May 2019. 17  International Religious Freedom Report. 2017. ‘Bahrain 2017 International Religious Freedom Report’, p.  14, https://www.state.gov/documents/organization/281222.pdf, last accessed on 5 May 2019 and Law, Bill. 2014. ‘Razed Mosque Symbol of Divided Bahrain’, in BBC News, 27 March, https://www.bbc.com/news/world-middleeast-26721084, last accessed on 5 May 2019. 18  Indeed, Article 17B of the 2002 constitution explicitly states: ‘It is prohibited from banishing a citizen from Bahrain or from preventing him from returning to it.’ 19  Human Rights Watch. 2019. ‘Bahrain: Events of 2018’ in ‘World Report 2019’, https:// www.hrw.org/world-report/2019/country-chapters/bahrain, last accessed on 5 May 2019. 20  Freedom House. 2018. ‘Freedom in the World 2018: Bahrain’, https://freedomhouse. org/report/freedom-world/2018/bahrain, last accessed 5 May 2019.

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Independent media outlets, newspapers, journalists and websites also must bear the brunt of the official crackdown.21 Several journalists, including female,22 have been put behind bars for reports critical of the government. Expression of discontent, including on social media, has been dealt with severely with authorities acting against anyone criticizing the monarchy or the government.23 Even those voicing opposition to the Saudi-UAE-led boycott of Qatar were warned against criticisms. The Bahraini government went to the extent of declaring that it would be illegal to sympathize with Doha,24 and actions were initiated against those who stepped out. On 25 March, a statement issued by the Interior Ministry warned Bahrainis and others residing in the Kingdom against criticizing the government on the internet and social media and declared that it was monitoring all accounts that ‘departed from national norms, customs and traditions’.25 Bahrain also came under criticism from the United Nations (UN). The Office of the UN High Commission for Human Rights (OHCHR) criticized the Kingdom especially over the detention of rights activist Nabeel Rajab. Responding to the rejection of Rajab’s appeal for his release by the Bahrain Cassation Court, a spokesperson of the OHCHR observed that the Kingdom should ‘ensure that all Bahrainis are able to exercise their rights to freedom of opinion and expression without fear of arbitrary detention’.26 This was rejected by the Bahraini g ­ overnment27 28 and Majlis al-Shura (the upper house) that described the statement by the UN official as an interference in the internal affairs of Bahrain. 21  Reporters Without Borders. 2018. ‘World Press Freedom Index’, https://rsf.org/en/ bahrain, last accessed on 5 May 2019. 22  Human Rights Watch. 2019. ‘Bahrain: Events of 2018’ in ‘World Report 2019’, https:// www.hrw.org/world-report/2019/country-chapters/bahrain, last accessed on 5 May 2019. 23  Freedom House. 2018. ‘Freedom on the Net 2018: Bahrain’, https://freedomhouse. org/report/freedom-net/2018/bahrain, last accessed on 5 May 2019. 24  The Peninsula. 2017. ‘Bahrain Detains Qatar Sympathiser’, https://www.thepeninsulaqatar. com/article/14/06/2017/Bahrain-detains-Qatar-sympathiser, last accessed on 5 May 2019. 25  Human Rights Watch. 2019. ‘Bahrain: Events of 2018’ in ‘World Report 2019’, https:// www.hrw.org/world-report/2019/country-chapters/bahrain, last accessed on 5 May 2019. 26  UN News. 2019. ‘Rights Defenders Jailed in Bahrain and UAE Should Be Released Unconditionally, UN Urges’, 4 January, https://news.un.org/en/story/2019/01/1029832, last accessed on 5 May 2019. 27  Toumi, Habib. 2019. ‘Bahrain Rejects UN Criticism over Rajeeb’, in Gulf News, 6 January, https://gulfnews.com/world/gulf/bahrain/bahrain-rejects-un-criticism-overrajeeb-1.61271270, last accessed on 5 May 2019. 28  Wasmi, Naser Al. 2019. ‘Bahrain Shura Council Denounces Interference by UN Rights Body’, in The National, 7 January, https://www.thenational.ae/world/gcc/bahrain-shuracouncil-denounces-interference-by-un-rights-body-1.810438, last accessed on 5 May 2019.

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Economy At the same time, the economy started to regain confidence after recent bouts of political instability and over-dependence upon the petroleum sector. Unlike its other neighbours, Bahrain suffers from low oil reserves and declining production. This compelled the Kingdom to diversify its economy leading to substantial financial, service and retail sectors. As a result, the petroleum sector contributes only to 12–14 per cent of the Bahraini gross domestic product (GDP).29 Nevertheless, the fiscal balance and budget continue to depend upon the oil industry as the latter comprises 87 per cent of the government revenues.30 As a result, the fiscal pressures on the government had significantly increased during 2014–16 when the oil prices fell, thereby putting pressures on government expenditure and public sector spending. With the recovery of oil prices (see Table 1.3), Bahrain has been able to reduce its fiscal deficit in 2018 to 5 per cent as against 18 per cent in 2015–16.31 The fiscal recovery has not significantly affected the market, with the World Bank estimating the continuing decline in GDP growth, and from 3.9 per cent in 2017, it would drop to 3.2 per cent in 2018 to 2.6 per cent in 2019.32 To tide over the situation, Bahrain has accelerated a host of construction projects, including New Economic City in Manama, Bapco– Sitra Refinery Expansion and Modernization in Sitra, Bahrain Integrated Transit Line to shore up the capitals transportation system, government housing projects and development of new artificial islands off the shore of Manama for commercial purposes.33 Besides, towards improving its economic challenges and market situation, Bahrain has been seeking the support of its wealthier neighbours. In 2011, it received a financial aid package of US$7.5 billion from Saudi Arabia, Kuwait and the UAE.  In June 2018, these countries reiterated 29  ‘Bahrain Economy’, Kingdom of Bahrain, E-Government Portal, https://www.bahrain. bh/wps/portal/!ut/p/a1/04_Sj9CPykssy0xPLMnMz0vMAfGjzOI9_A3MDI0sjLz8g90s DBwtwnzdnSzdjA3cjYEKIoEKDHAARwNC-oNT8_TD9aPAygyMfJ0NPU2Mv Ax8fYF6LZyCfELcnA0MLIwIKACaA1WA2x0FuREVnpmOigCTXevX/dl5/d5/ L2dBISEvZ0FBIS9nQSEh/, last accessed on 31 March 2019. 30  Ibid. 31  World Bank. 2018. http://pubdocs.worldbank.org/en/424351538076725253/mpoam18-bahrain-bhr-ks-9-13-fin.pdf, last accessed on 5 May 2019. 32  Ibid. 33  Building and Construction Network. 2019. https://www.bncnetwork.net/Access-BahrainConstruction-Projects-News-Analytic-Reports-and-Forecasts, last accessed on 5 May 2019.

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their pledge of a financial package for Bahrain to alleviate the market fears. Following a meeting of the finance ministers of the three countries in Manama in August, it was declared that a new financial package, unlike the earlier one, ‘will be tied to the achievement of fiscal target monitored by the Arab Monetary Fund’.34 The success of the diversification efforts is hampered by the private sector which largely depends upon the public funding. Non-oil sectors such as large-scale construction have seen some growth due to domestic demands, and these do not appear to be sustainable because of continued dependence on government spending and oil revenues. This compelled the government to introduce fiscal reform to reduce its expenses in the public sector and reduce subsidies. It has cut subsidies on domestic gasoline consumption leading to a rise in petroleum prices and imposed sales tax on products such as sugary drinks, tobacco and alcoholic drinks to meet some of the government budgetary deficit.35 At the same time, the government is planning to diversify the economy through capital infusion in sectors such as tourism and sports. According to the Bahrain Economic Development Board, in 2017–18 the total investment in Bahrain tourism infrastructure development reached US$13 billion.36 Additionally, Gulf Air, Bahrain’s national carrier, has invested US$7.2 billion to modernize its fleet to facilitate luxury tourism in the island nation.37 Partly to present a picture of normalcy and despite criticisms from human rights organizations, Bahrain held Formula One motor race in April. While these would depend on increasing government revenues, a promising development was the discovery of new oil and gas reserves in the offshore Khaleej al-Bahrain basin. This is seen as one of the largest such discoveries since the exploration of oil began in the island Kingdom in the 1930s. The new field is estimated to have nearly 80 billion barrels  World Bank. See footnote 31.  Yaakoubi, Aziz El. 2018. ‘Bahrain Puts Fresh Austerity on Hold as It Mulls Subsidy System’, in Reuters, 23 January, https://www.reuters.com/article/bahrain-economy-subsidies/bahrain-puts-fresh-austerity-on-hold-as-it-mulls-subsidy-system-idUSL8N1PI1YU, last accessed on 5 May 2019. 36  Arabian Business. 2017. ‘Bahrain’s Tourism Infrastructure Investments Reach $13 Billion’, 28 December, https://www.arabianbusiness.com/travel-hospitality/386612-bahrains-tourism-infrastructure-investments-reach-13-billion, last accessed on 5 May 2019. 37  Debusmann Jr., Bernd. 2018. ‘Tourism to Contribute “Double Digits” to Bahrain’s GDP in Coming Years’, in Arabian Business, 23 April, https://www.arabianbusiness.com/ travel-hospitality/394790-tourism-to-contribute-double-digits-to-bahrains-gdp-in-coming-years, last accessed on 5 May 2019. 34 35

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of oil and gas reserves. Once it comes online, this is expected to boost Bahrain’s oil production significantly and would ease some of its economic troubles in the near-to-medium term.38 Society For long, Bahrain has been following or at least seeking a policy of economic, social and political opening. Despite the ensuing political situation in the wake of the 2011 unrest, the island has remained committed to its inclusive social milieu and prides itself of its societal moderation. Adhering to the Khaleeji (Gulf Arab) cultural norms in terms of familial ties and tribal heritage, Bahraini social structure is inclusive and amenable to gender mixing and the participation of women in public life. This is true for Muslims and non-Muslims alike, and citizens and non-citizens are free to follow, adhere and display their cultural and religious symbols in public. Despite the overshadowing of political controversies, 2018 witnessed the election of more women to parliament. Two candidates—Fawzia Abdullah Yusuf Zainal (53.7 per cent) from the Southern district and Fatema Abbas Qasim Mohammed (51.8 per cent) from the Northern district—won in the first round, and four more who failed to secure 50 per cent of the valid voted were elected in the second round. Interestingly, except for Zainab Abdulameer Khalil Ebrahim, all of them defeated a male rival by a significant margin to enter the Majlis. At least three more women lost their bid in the run-off second round. Bahrain has a healthy female-to-male labour force participation compared to other Persian Gulf countries and in 2017, the female labour participation was 50 per cent, a jump of 10 per cent compared to the beginning of the twenty-first century.39 Women have been outperforming men in all indices related to education, including primary, secondary and tertiary enrolment and competition ratio. Their overall participation in decisionmaking remains limited as only a few women have reached the top echelons of public service. Likewise, the number of women business leaders, CEOs and senior management positions is also limited. Bahraini women 38  Sheppard, David. 2018. ‘Oilfield Discovery Lifts Bahrain’s Hopes of Energy Resurgence’, in Financial Times, 4 October, https://www.ft.com/content/d757dba2-9c8a-11e8-88de49c908b1f264, last accessed on 5 May 2019. 39  The World Bank. 2018. https://data.worldbank.org/indicator/SL.TLF.CACT.FM. ZS?locations=BH, last accessed on 5 May 2019.

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enjoy equal rights, but when it comes to civic issues, especially in areas such as inheritance, divorce, child custody and transferring of nationality to their husbands and children, they are at the receiving end as the legal practices are guided by the Maliki (Sunni) and Jafari (Shia) school of Islamic jurisprudence which favours men. Demography is Bahrain’s major social fault line, and according to most estimates, Shias constitute the majority population,40 and they have often complained of systematic discrimination in a host of areas, including education, employment and religious rights. This demographic situation along with the political dynamics has been a bone of contention for long and has deteriorated since the outburst of social unrest in February 2011. These protests have been more intense in Shia-dominated areas which were also underdeveloped and impoverished. A majority of those detained for protest actions or killed by the security forces reportedly belong to the Shia community.41 This has further created a feeling of disaffection among sections of the community and impeded a meaningful reconciliation. There is political disenchantment among the Shias who feel short charged by the Sunni monarchy at a time of trust deficit. For its part, the government attributes the unrest to external interference, especially from Iran. In September, a crackdown on Shia activists led to 169 arrests on the accusation of links with Iranian Pasdaran forces and for attempting to form a branch of Hezbollah in Bahrain.42 At the same time, the Shias enjoy formal equality in terms of social, political and economic status. The present 24-member government headed by Prime Minister Prince Khalifa bin Salman al-Khalifa has at least five Shia ministers including a deputy Prime Minister Jawad bin Salem al-Arrayed (first appointed in 2006), and 10 members of the cabinet are from the royal family. Bahrain is also one of the few countries in the region which has non-Muslims as citizens, including about 40–50 Jews and a few hundred Hindus. 40  There are no official figures available. Most unofficial or independent surveys estimate Shias to form 62 per cent of the citizenry which, according to the CIA World Factbook, is about 750,000. 41  Asia News. 2019. ‘Manama Condemns 167 People to Prison for the 2017 Shiite Uprisings’, 15 March, http://www.asianews.it/news-en/Manama-condemns-167-peopleto-prison-for-the-2017-Shiite-uprisings-46507.html, last accessed on 5 May 2019. 42  Al-Jazeera. 2018. ‘Bahrain Charges 169 for Forming Another “Hezbollah”’, 25 September, https://www.aljazeera.com/news/2018/09/bahrain-charges-169-forminghezbollah-180925140306696.html, last accessed on 5 May 2019.

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Bilateral Relations Political Ties India and Bahrain maintain strong bilateral ties, but with an increasing focus on Abu Dhabi, Riyadh and Tehran in the past five years, Manama has featured less in India’s diplomatic engagements in the Persian Gulf. Indeed, no Indian prime minister had ever visited Bahrain since the latter became independent in 1971. Growing Bahraini dependence upon Riyadh for political, economic and security support has also contributed to continued Indian neglect. Despite the tense situation over the Shias, Bahrain has been an inclusive state vis-à-vis the religious minorities. There are no high-profile engagements since the visit of King Hamad bin Isa al-Khalifa in February 2014, but several ministerial-level contacts have continued between the two. External Affairs Minister Sushma Swaraj had visited the Kingdom thrice since taking office in May 2014; she first visited in September that year to inaugurate a diaspora engagement meet organized by Confederation of Indian Industries and Overseas Indian Facilitation Centre. Her second visit was in January 2016 for the first ministerial meeting of Indo-Arab Cooperation Forum. Swaraj undertook her third visit to the Kingdom when she went to Manama in July 2018 to co-chair the Second High Joint Committee (HJC) bilateral meeting. The meeting discussed a host of issues covering bilateral political, economic and strategic cooperation. During her visit, Swaraj also met the Bahraini leadership including King Hamad, Crown Prince Salman and other senior officials to exchange views. During the visit, she inaugurated the new Indian embassy complex in the Kingdom and thanked the Bahraini leadership for welcoming Indians into the Kingdom and for stronger ties with India. After the HJC meeting, a joint statement was issued which underlined the significance India attaches to Bahrain and the need for ‘regular meetings of well-established bilateral mechanism and high-level bilateral visits’.43 Three agreements on diplomatic visas, renewable energy and cooperation in healthcare were signed, and both sides also expressed an interest to cooperate in space technology and counterterrorism. In a significant 43  Government of India (GoI), Ministry of External Affairs (MEA). 2018. ‘India-Bahrain Joint Statement during Visit of External Affairs Minister to Bahrain’, July 15, https://mea. gov.in/bilateral-documents.htm?dtl/30065/indiabahrain+joint+statement+during+visit+of +external+affairs+minister+to+bahrain+july+15+2018, last accessed on 5 May 2018.

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move, president of the Congress party Rahul Gandhi visited the Kingdom in January and addressed the Global Organization of People of Indian Origin held in Manama, and during the visit, he also met the Bahraini leadership, including Crown Prince Salman.44 Trade and Commerce Commercial relations form one of the pillars of the bilateral ties between India and Bahrain, and the latter is an important country in the broader Middle East with whom India maintains a favourable balance of trade. This is despite energy being India’s major imports from the Kingdom. India mostly exports cereals, food and agricultural products, meat and animal products, vegetables and vegetable oil, tea and coffee, fish, seeds, fruits and petroleum products to Bahrain. In 2017–18, India exported commodities worth US$556.82 million while importing US$431.12 million worth of goods from the Kingdom (Table  2.1). The total bilateral trade was US$987.94 million or 18 per cent more than the previous year when it stood at US$762 million. This pattern has continued mainly in recent years, and the trade peaked in 2011–12 when it reached US$1.3 billion mark. Due to a slowdown in the international market, falling oil prices, Bahrain’s diversification effect and political situation, the bilateral trade slumped to US$762 million in 2016–17 (Fig. 2.1), but the recovery of oil prices contributed to a spurt in the two-way trade. Table 2.1  India-Bahrain bilateral trade (US$ million)

India’s exports India’s imports Total bilateral trade Share in India’s total trade

2013–14

2014–15

2015–16

639.36 563.24 1,202.60 0.16

472.98 446.25 919.23 0.12

654.14 356.90 1,011.04 0.16

2016–17

2017–18

471.71 290.69 762.40 0.12

556.82 431.12 987.94 0.13

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

44  The Indian Express. 2018. ‘Rahul Gandhi in Bahrain Highlights: “Invite NRIs to Steer India Back to Its Original Strength”’, 9 January, https://indianexpress.com/article/ india/rahul-gandhi-in-bahrain-live-updates-congress-president-to-address-nris-tonight/, last accessed on 5 May 2019.

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Fig. 2.1  India-Bahrain bilateral trade 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

2011-12

2012-13 2013-14 2014-15 Imports Exports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

A few trade-related visits have taken place between the two countries, but reflecting the political apathy, there was little progress. The Bahrain-India Forum had not met since May 2016. Indian business has not taken note of the diversification efforts of Bahrain, especially in the construction industry and its business-friendly investment climate. The discovery of the new oil and gas field might enhance energy imports from Bahrain in the coming years and could increase India’s oil imports and positively impact on the bilateral relations. This figured during the visit of External Affairs Minister in July.45 India is one of the major trading partners of Bahrain and is among the top ten countries in terms of volumes of trade. The converse, however, is not true, and Bahrain does not figure in India’s top 50 trading partner and constitutes only about 0.13 per cent of India’s total foreign trade. Energy Ties Energy continues to be the critical component of the bilateral trade. During 2017–18, India imported US$69.12 million worth of petroleum from Bahrain. This constitutes only 0.05 per cent of India’s total energy 45  GoI, MEA. 2018. ‘India-Bahrain Joint Statement during Visit of External Affairs Minister to Bahrain’, July 15, https://mea.gov.in/bilateral-documents.htm?dtl/30065/ind iabahrain+joint+statement+during+visit+of+external+affairs+minister+to+bahrain+j uly+15+2018, last accessed on 5 May 2019.

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Table 2.2  Share of oil in India’s imports from Bahrain (US$ million) Year

2013–14 2014–15 2015–16 2016–17 2017–18

Oil imports from Bahrain

Total oil imports

Bahraini share in total oil imports

Imports from Bahrain

Per cent of oil in imports from Bahrain

359.23 215.82 94.07 46.94 69.12

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

0.20 0.14 0.10 0.05 0.05

563.24 446.25 356.90 290.69 431.12

63.78 48.36 26.36 16.15 16.03

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 2.2  Share of oil in India’s total imports from Bahrain 80 70 60 50 40 30 20 10 0

2011-12

2012-13

2013-14

2014-15 2015-16 Share of Oil

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

imports but about 16 per cent of total imports from the Kingdom (Table 2.2). Indeed, as highlighted in Fig. 2.2, there has been a sharp drop in the share of energy in India’s imports from Bahrain. Between 2011–12 and 2017–18, the portion has declined from 63 per cent to 16 per cent. Correspondingly, Bahrain’s share in India’s energy imports from the Persian Gulf region has also witnessed a sharp decline from 0.5 per cent in 2011–12 to 0.1 per cent in 2016–17 (Table 2.3 and Fig. 2.3). In other words, Bahrain is not a significant energy supplier even in the Persian Gulf

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Table 2.3  India’s energy imports from Bahrain (in US$ million) 2013–14 Energy imports from Bahrain Total energy imports Energy imports from Persian Gulf Bahrain’s share in total energy imports Bahrain’s share in energy imports from Persian Gulf

359.23

2014–15 215.82

2015–16 94.07

2016–17 46.94

2017–18 69.12

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75 85,300.30 50,992.26 56,335.34 70,090.81 0.20

0.14

0.10

0.05

0.05

0.34

0.25

0.18

0.08

0.10

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 2.3  Bahrain’s share in India’s energy imports 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

2011-12

2012-13 2013-14 Total Imports

2014-15 2015-16 2016-17 Imports from Persian Gulf

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

region. The drop in the energy trade is reflective of the lower oil prices as well as the declining oil production in Bahrain due to depleting reserves. This also compelled Bahrain to diversify its economy into service, finances, sports and tourism sectors. Seen within this context, the discovery of new oil and gas field in the offshore Khaleej al-Bahrain basin in early 2018 is a major development. The Basin is estimated to contain 80 billion barrels of oil and 280–560 billion

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cubic metres of natural gas reserves.46 Initial assessments suggest that commercial production from the new field could start within five years, and analysts suggest that this would transform the dynamics of the international energy market and catapult Bahrain as a primary energy player.47 For energy import-dependent countries such as India, China, Japan and South Korea, the new discovery is welcome news as it provides them with an opportunity to diversify their energy imports and offers them with an alternative in case of an emergency. For the Indian oil companies looking to expand their presence and operations worldwide, the new discovery in Bahrain offers a strategic opportunity. Given the strong bilateral ties and India’s emergence as an important energy market, both public and private oil companies could work actively in participating in the Bahraini petroleum industry. The early bird catches the worm would be more appropriate if India were to adopt a long-term vision vis-à-vis Bahrain. Investments Despite being smaller than other countries, Bahrain is one of the top sources of foreign direct investment (FDI) inflows to India from the Gulf region. Though it stands at 44th position in terms of total FDI inflow into the country, among the Gulf countries, it is 4th after the UAE, Oman and Saudi Arabia.48 In 2017–18, India received US$19.68 million worth of FDI from Bahrain, including US$4.69 between April and October 2018. In terms of cumulative FDI since April 2000, the Kingdom has been the source of US$169.5 million investments in India.49 On the other hand, in recent years the Indian companies have significantly expanded their businesses and investments in the island. According to the External Affairs Ministry, 3,181 Indian joint companies are registered for doing business in Bahrain. Moreover, between January 2003 and March 2018, Indian

46  BBC News. 2018. ‘Bahrain Discovers Offshore Oilfield “Containing 80 bn Barrels”’, 4 April, https://www.bbc.com/news/world-middle-east-43644629, last accessed on 5 May 2019. 47  Gnana, Jennifer. 2018. ‘Bahrain’s Largest Oil Discovery Since 1932 “Can Be Game Changer”, Economists Say’, in The National, 2 April, https://www.thenational.ae/business/energy/bahrain-s-largest-oil-discovery-since-1932-can-be-game-changer-economistssay-1.718145, last accessed on 5 May 2019. 48  GoI, Department for Promotion of Industry and Internal Trade. 2018. ‘FDI Statistics’, https://dipp.gov.in/publications/fdi-statistics, last accessed on 5 May 2019. 49  Ibid.

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ventures have invested nearly US$1.69 billion in the Bahrain market, mostly in the financial, real estate and hospitality sector.50 Expatriates A significant and often most visible aspect of the Indo-Bahrain relations is the presence of the vast Indian expatriate community in the Kingdom, estimated at around 350,000. This is also the largest expatriate community in the Kingdom and constitutes nearly about a fourth of the total resident population in Bahrain. The Indian community is involved in a relatively diversified set of professions and industries. Many of them are engaged in the unskilled and unorganized sectors, but a relatively significant number are involved in highly skilled professions such as medicine, engineering, software development, management and so on, in diversified fields such as financial and IT services, construction, retail, shipping and manufacturing. One of the primary concerns of the Indian government has been the welfare of the Indian workers and to ensure that the unskilled workers are not exploited or abused. A case of unpaid salaries of 350 Indian workers in three companies was witnessed and sorted out through official ­intervention.51 At the same time, the Indian community has enjoyed the trust and respect of the Bahraini population, and this is underlined by the continuing flow of Indian workers to the Kingdom despite political uncertainty and economic difficulties facing Bahrain. Besides economic opportunities, the prevalence of respect for religious rights and social norms of non-Muslims in the Kingdom has been an added attraction.

Challenges As Bahrain is inching towards political stability, economic diversification and growth, it requires the understanding and support of India and other friendly powers. Capitalizing on the opportunities, especially with the discovery of new oil fields, would require India abandoning its prolonged neglect and indifference towards the island Kingdom. Besides the two50  GoI, MEA. 2018. ‘India-Bahrain Bilateral Relations,’ 10 May, https://mea.gov. in/Portal/ForeignRelation/Bilateral_Relations_May_10_2018.pdf, last accessed on 5 May 2019. 51  GoI, MEA. 2018. ‘Unpaid Workers in Bahrain, Unstarred Question No. 3566,’ 8 August, https://mea.gov.in/lok-sabha.htm?dtl/30265/QUESTION_NO3566_UNPAID_ WORKDERS_IN_BAHRAIN, last accessed on 5 May 2019.

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way investment flows, Bahrain provides an opportunity for India to enhance security and counterterrorism cooperation. However, given the sectarian discord both within the Kingdom and in the region, India will have to find ways to politically engage with a smaller Gulf state without compromising its regional priorities. This is easier said than done, and Bahrain is a prime example. Its size and regional influence resulted in India’s political indifference of Bahrain. Prime Minister Narendra Modi, for instance, could not find time to accept and honour the invitation of King Hamad to visit Bahrain and become the first Indian prime minister to visit the island. Though a friendly country which has been engaging with India at the ministerial level, a higher political exchange, especially by a state visit from India, is necessary if both the countries were to benefit from their mutual potential and opportunities.

CHAPTER 3

Iran

Key Information Ruling Party: Combatant Clergy Association; Supreme Leader (Wilayat-­ e-­Faqih): Ali Khamenei (since 4 June 1989); President: Hassan Rouhani (since 15 June 2013, re-elected in May 2017); National Day: 1 April; Parliament: 290-member Majlis; Last Parliamentary Election: 26 February 2016; Major Group in Parliament: Reformists (coalition led by Mohammed Khatami); National Carrier: Iran Air. Socio-Economic Indicators Area: 1,648,195 sq. km; Population: 83.02 million (July 2018 est.); Native: 100 per cent; Expats: NA; Religious Groups: Muslim 99.4 per cent (Shia 90–95 per cent; Sunni 5–10 per cent); Zoroastrian, Jewish and Christian 0.3 per cent (2011 est.); Youth: 14.05 per cent (15–24 age group); Population growth rate: 1.19 per cent (2018 est.); Life expectancy at birth: 74.2  years (2018 est. HDI); Major population groups: Persians 61 per cent; Azeri 16 per cent; Kurds 10 per cent; Lurs 6 per cent; Baloch 2 per cent; Arabs 2 per cent; Turkmen and Turkic tribes 2 per cent; other 1 per cent; Literacy rate: 85.54 per cent (2016 World Bank); National Currency: Iranian Riyal (IRR); GDP: US$439.5 billion (2017); Foreign Trade: Export US$101.4 billion, Import US$76.39 billion (2017 est.); Defence budget: 3.1 per cent (SIPRI/ World Bank 2017) 5 per cent of GDP (CIA 2017); Sovereign Wealth © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_3

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Fund: US$91 billion; External Debt: US$7.995 billion (2017 est.); Per capita income: US$20,880 PPP (2017) (HDI report GNI per capita 2011 PPP); Oil reserves: 157.2 billion bbl. (1 January 2018 est.); Gas reserves: 33.72 trillion m3 (1 January 2018 est.); HDI rank: 60/189 (2017); Infant Mortality Rate: 15.5/1,000 live births (2018 est.); UN Education Index: 0.74; Gender Inequality Index: 0.461 (2017); Labour Force: 30.5 million (2017 est.); Unemployment rate: 12.1 per cent (April–June 2018, World Bank); Urban Population: 74.9 per cent (2018); Rate of Urbanization: 1.71 per cent annual rate of change (2015–20 est.); Last National Census: 2016. India Related Indian Cultural Centre: Tehran (inaugurated in 2013); Number of Indians: 700–4,000 (approximately 2017 est.); Number of places of worship for Indians: 2 Temples and 3 Gurudwaras; Indian Schools: one; Indian Banks: State Bank of India; Currency exchange rate: IRR 1 = INR 0.0016 (March 2019); Last visit to India by ruler: President Dr Hassan Rouhani, February 2018; Last Indian Prime Minister to visit Iran: Prime Minister Narendra Modi, May 2016. * * * The US factor in the Indo-Iranian relations has re-emerged as a serious foreign policy challenge to New Delhi after President Donald Trump announced the American withdrawal from the Joint Comprehensive Plan of Action (JCPOA) on 8 May 2018. India seeks and maintains friendly ties with Iran both for its energy security interests and as a partner country to develop connectivity links with Afghanistan and Central Asia. The return and intensification of unilateral US economic sanctions has an adverse impact on the development of the Chabahar Port in southern Iran and associated infrastructure developments and limits India’s oil import options. Before the signing of the JCPOA and the removal of restrictions on oil exports by Iran, New Delhi managed to get period waivers from Washington. This face-saving mechanism enabled India to balance its ties with Iran and the US. While India managed to get a limited waiver in November 2018, the insistence of the Trump administration to bring the Iranian oil exports to ‘zero’ is shrinking India’s diplomatic options vis-à-vis Iran. New Delhi

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seeks to maintain friendly ties with Iran by continuing crude oil imports without undermining its growing strategic cooperation with Washington. Indeed, managing the US-Iran axis will continue to be its most testing foreign policy challenge since the end of the Cold War.

Domestic Developments Politics The domestic situation in Iran has been uneasy for some time due to slowing economic growth and growing Iranian regional ambitions. External hostility and tension, especially since the inauguration of the Donald Trump presidency, have partly contributed to the domestic challenges. Despite the public bravado, the sanctions have been undermining the Iranian economy and its oil industry.1 This was one of the reasons for the Iranian desire to negotiate with the US and other great powers regarding its controversial nuclear programme. At the same time, the signing of the nuclear deal in July 2015 had not resulted in Iran reaping massing windfalls and economic benefit accruing from the JCPOA fell short of popular expectation, thereby contributing to internal discord against President Hassan Rouhani.2 The regime faced criticisms and disapprovals from the hardliners, including Supreme Leader Ali Khamenei, for ‘compromising’ Iranian interests at the altar of its adversaries.3 The lack of tangible economic benefits of the nuclear deal paved the way for unrest and restlessness among common people.4 Towards the end of 2017, small demonstrations were held in various towns and cities against the government’s inability to revive the economy, 1  Rahn, Wesley and Ansary, Maryam. 2018. ‘Iranians Feel Pressure of New US Sanctions’, in Deutsche Welle, 5 November, https://www.dw.com/en/iranians-feel-the-pressure-ofnew-us-sanctions/a-46162550, last accessed on 3 June 2019. 2  Barzegar, Jamshid. 2018. ‘Iran Protests Signal Simmering Anti-Government Anger’, in Deutsche Welle, 17 May, https://www.dw.com/en/iran-protests-signal-simmering-antigovernment-anger/a-43826965, last accessed on 3 June 2019. 3  Khalaji, Mehdi. 2018. ‘Khamenei Attacks Moderates as Source of Iran’s Problems’, Policy Watch, No. 3002, The Washington Institute for Near East Policy, 15 August, https://www. washingtoninstitute.org/policy-analysis/view/khamenei-attacks-moderates-as-source-ofirans-problems, last accessed on 3 June 2019. 4  Najjar, Farah. 2018. ‘What’s Driving the Protests in Iran?’ in Al-Jazeera, 3 January, https://www.aljazeera.com/news/2018/01/factors-iran-protests-180103090723709. html, last accessed on 3 June 2019.

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rising food and fuel prices and lack of jobs. The protests soon escalated in a larger expression of opposition including social, political and foreign policy issues.5 In January 2018, the situation became serious with reports of several deaths and injuries due to the use of force by police and security personnel.6 These protests were eventually brought under control, but the enraged public opinion provided an opportunity to the hardliners to attack the government and President Rouhani.7 Initially, both Supreme Leader Ayatollah Ali Khamenei and President Rouhani dismissed these protests as externally instigated and a conspiracy,8 but eventually the Iranian leadership had to admit the socio-economic problems facing the country and promised to address the grievances.9 These protests, however, were smaller than the Green Movement of 200910 but underlined the internal churning and increased the challenge for the regime to put the house in order. Media reports within Iran suggested that over two dozen protesters were killed in different part of the country during January–February in the security crackdown to curb the unrest.11 In addition, thousands of protesters, mostly students and traders, were arrested and sentenced. Some of the women were protesting the restriction upon them, especially the clergy-­ imposed dress code, and were arrested and given prison terms.12 Many of the protesters not only flagged economic grievances but also took up some of the pet projects of the Iranian foreign policy. Iranian intervention in Syria, Iraq and Yemen and support for militant groups in Lebanon and Palestine came under criticisms.13 In one incident, the protesters shouted slogans such as ‘Death to Rouhani’ and ‘Death to the  Ibid.  Al-Jazeera. 2018. ‘Iran Death Toll Rises as Protests Continue’, 2 January, https://www. aljazeera.com/news/2018/01/deaths-repor ted-iran-anti-government-protests-180102072448238.html, last accessed on 3 June 2019. 7  Sofuoglu, Murat. 2019. ‘Are Iran’s Moderates Losing Power to Hardliners?’ in TRT World, 7 March, https://www.trtworld.com/magazine/are-iran-s-moderates-losing-powerto-hardliners-24747, last accessed on 3 June 2019. 8  Barzegar, Jamshid. 2018. ‘Iran Protests Signal Simmering Anti-Government Anger’. 9  Najjar, Farah. 2018. ‘What’s Driving the Protests in Iran?’ 10  Ibid. 11  Al-Jazeera. 2018. ‘Iran Death Toll Rises as Protests Continue’. 12  BBC News. 2018. ‘Iran’s Hijab Protests: The Girls of Revolution Street’, 5 February, https://www.bbc.com/news/av/world-middle-east-42954970/iran-s-hijab-protests-thegirls-of-revolution-street, last accessed on 3 June 2019. 13  Najjar, Farah. 2018. ‘What’s Driving the Protests in Iran?’ 5 6

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dictator’.14 Iran spending its limited national resources on developing the military capacity and for supporting militant groups across the region became a major rallying point for the protesters.15 Big business corruption and profiteering was another point raised by the protesters.16 Wary of growing frustration and anger over corruption and accumulation of wealth by a few, the regime established special courts to deal with financial crimes which have handed out at least seven death sentences since they were set up in August.17 Though the regime and its security apparatus were able to contain the wider protests, small demonstrations over local issues and the government handling of the economy continued throughout the year. In the meantime, on 8 May the Trump administration announced its decision to withdraw from the JCPOA and reimpose a host of unilateral economic sanctions over what it considered Iranian ‘non-compliance’ and ‘violations’.18 Though President Donald Trump was critical of the nuclear deal even during his campaign days,19 not many expected he would go the extent of annulling it.20 The JCPOA is an international agreement between Iran and six major powers, namely, the US, Russia, China, Britain, France and Germany, concluded after years of negotiations and compromise. By unilaterally pulling out of an international agreement, the US put President Rouhani in a quandary; the return of the American economic sanctions hardened the erstwhile domestic critics. The Trump administration appeared to have yielded to Iran’s regional critics and adversaries who feared that the nuclear deal had emboldened Iran and would fuel its 14  Reuters. 2017. ‘Price Protests Turn Political in Iran as Rallies Spread’, 30 December, https://in.reuters.com/article/iran-economy-protests/price-protests-turn-political-iniran-as-rallies-spread-idINKBN1EO02X, last accessed on 3 June 2019. 15  Najjar, Farah. 2018. ‘What’s Driving the Protests in Iran?’ 16  Ibid. 17  Reuters. 2018. ‘Iranians Increasingly Angry at Country’s Wealth in Wake of New Sanctions’, in Haaretz, 7 November, https://www.haaretz.com/middle-east-news/iran/ iranians-increasingly-angry-at-country-s-wealthy-in-wake-of-new-sanctions-1.6632637, last accessed on 3 June 2019. 18  The White House. 2018. ‘Remarks by President Trump on the Joint Comprehensive Plan of Action’, 8 May, https://www.whitehouse.gov/briefings-statements/remarks-president-trump-joint-comprehensive-plan-action/, last accessed on 3 June 2019. 19  Begley, Sarah. 2016. ‘Read Donald Trump’s Speech at AIPAC’, in TIME, 21 March, http://time.com/4267058/donald-trump-aipac-speech-transcript/, last accessed on 3 June 2019. 20  Dubowitz, Mark and Albright, David. 2017. ‘How Trump Can Improve the Iran Deal’, in Wall Street Journal, 25 September, https://www.wsj.com/articles/how-trump-canimprove-the-iran-deal-1506381353, last accessed on 3 June 2019.

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regional hegemony and expansion.21 Thus, the hardliner elements felt that Iran was punished twice: first by the nuclear deal which imposed limits to Iranian sovereignty and autonomy vis-à-vis its nuclear programme and second by its abandonment by the US.22 Even the Supreme Leader also lent his voice in the growing domestic debate against President Rouhani and his handling of the issue.23 Notably, despite the US withdrawal, Iran has expressed its commitment to continue with the deal along with the other signatories. Tehran has said that it would continue to comply its part of the commitment in the deal until other signatories also decide to walk away. Iran, at the same time, filed a suit in the International Court of Justice in July alleging that Washington’s decision to impose sanctions after withdrawing from the JCPOA violates the 1955 treaty between Iran and the US.24 Foreign Policy As the Trump administration announced its decision to pull out of the JCPOA, the Iranian leaders reacted angrily and threatened to walk out of the deal, if other parties to the agreement yield to the US pressures.25 Iranian official warned that Tehran would begin increasing its uranium enrichment capacity if the deal collapses as result of the American move.26 The hardliners in the regime saw this situation as an opportunity to sharpen their attack on the Rouhani government. Foreign Minister Javad Zarif, the chief architect of the nuclear deal from the Iranian side and a close confidant of the President, came under intense criticisms for putting Iranian sovereignty on

21  Kalin, Stephen and Dadouch, Sarah. 2018. ‘Gulf Arab Allies Hail Triumph after U.S.  Quits Iran Deal’, in Reuters, 9 May, https://www.reuters.com/article/us-iran-nucleargulf-reaction/gulf-arab-allies-hail-triumph-after-u-s-quits-iran-deal-idUSKBN1I93CU, last accessed on 3 June 2019. 22  Khalaji, Mehdi. 2018. ‘Khamenei Attacks Moderates as Source of Iran’s Problems’. 23  Ibid. 24  Sterling, Toby. 2018. ‘Iran Files Suit in International Court against U.S. over Sanctions’, in Reuters, 17 July, https://in.reuters.com/article/iran-nuclear-usa-sanctions/iran-filessuit-in-international-court-against-u-s-over-sanctions-idINKBN1K71WN, last accessed on 3 June 2019. 25  Official Website of the President of the Islamic Republic of Iran. 2019. ‘Statement by the Supreme National Security Council of the Islamic Republic of Iran’, 8 May, http://www. president.ir/en/109588, last accessed 3 June 2019. 26  Ibid.

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the line by accepting curbs on the nuclear programme.27 To salvage the situation with the help of the European powers, Tehran intensified its efforts to garner international public opinion by capitalizing upon the growing wedges between the European Union (EU) and the Trump administration. Soon after the unilateral American pull-out, Foreign Minister Zarif visited several western capitals28 and to a large extent Iran elicited a sympathetic response from China, Russia and even from Europe. The EU strongly supported the status quo and urged Iran to continue with its commitments to the JCPOA.29 To operationalize its commitments, the EU began developing a special purpose vehicle called Instrument in Support of Trade Exchanges (INSTEX) to quarantine European countries trading with Iran from the purview of the American sanctions. This move became essential as many European or Europe-based companies were sanctioned by the Trump administration. After months of internal consultations and legal review, INSTEX was announced in early 2019. At the same time, Iran had to endure severe criticisms from Israel and Saudi Arabia which enthusiastically endorsed the Trump administration’s decision and rejoiced that the US withdrawal and sanctions would isolate Iran globally and contain its military expansionism in the Middle East.30 Iran was not completely alone and isolated but received support from unexpected quarters. Turkey, which has been working with Moscow and Tehran to stabilize the situation in Syria  and is one of Iran’s major oil consumers, was quick to criticize the US decision to pull out of the JCPOA and the imposition of unilateral sanctions against Iran. The Turkish position must be contextualized within the growing rift and tension between Washington and Ankara over a host of bilateral and regional issues. However, Turkey openly coming out in support of Iran has been surprising since both the powers have been at loggerheads for regional

27  Kamali Dehghan, Saeed. 2018. ‘Iran’s Leader Lambasts Trump over US Exit from Nuclear Deal’, in The Guardian, 9 May, https://www.theguardian.com/world/2018/ may/09/iranian-hardliners-rejoice-over-us-nuclear-deal-exit, last accessed on 3 June 2019. 28  Among others, Zarif visited China (May and July), Russia (May), Belgium (May) and India (May). 29  International Crisis Group. 2018. ‘How Europe Can Save the Iran Nuclear Deal’, Middle East Report, No. 185, 2 May, https://d2071andvip0wj.cloudfront.net/185-howeurope-can-save-the-iran-nuclear-deal.pdf, last accessed on 3 June 2019. 30  Kalin, Stephen and Dadouch, Sarah. 2018. ‘Gulf Arab Allies Hail Triumph after U.S. Quits Iran Deal’.

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influence.31 For some analysts, this is an emerging new geopolitical realignment in the Middle East comprising of Iran, Qatar and Turkey as a bloc with critical support from Russia and China.32 Turkey’s immediate concern was the continued flow of crude oil from Iran as the former entirely depends upon imports to meet its growing energy needs. Until May 2018, for example, its crude oil imports stood at 912,000 tons monthly from Iran comprising 47 per cent of its total imports.33 Hence, ending all its imports from Iran as demanded by the Trump administration was a major problem, and the November waiver set the limits of Turkish procurement. Speaking at a news conference in Azerbaijan a few weeks after the US pull-out, Turkish Foreign Minister Mevlut Cavusoglu observed: ‘Turkey gets oil and gas from Azerbaijan, Iran, Russia and Iraq. If I don’t buy from Iran now, where am I supposed to meet that need from?’34 For its part, Iran has been exploring all diplomatic options and legal avenues to salvage the situation. In July, it filed a suit in the International Court of Justice (ICJ) against the US, asking the ICJ to provisionally order Washington to lift the unilateral sanctions as the US was in violation of a 1955 bilateral agreement.35 A State Department official felt that the complaint was ‘without merit’ and that the US would fight the case in court.36 On the diplomatic front, Iran has focused its attention on Russia, China and the EU who strongly differ with the US over the JCPOA and sanctions. Foreign Minister Zarif toured these countries several times during the year in salvaging the situation as the annulment of the nuclear deal would not only intensify domestic opposition but also undermine the economic recovery of Iran. Since May, he has been urging his interlocutors to continue doing business with Tehran and find ways to develop mechanism 31  G. Stafford, Edward. 2018. ‘U.S. Withdrawal from Iran Deal to Heighten Tension with Turkey’, in Ahval, 11 May, https://ahvalnews.com/us-turkey/us-withdrawal-iran-dealheighten-tension-turkey, last accessed on 3 June 2019. 32  Shahtahmasebi, Darius. 2019. ‘New Turkey-Iran-Qatar Axis is Rising in Middle East, and It Has Saudi Arabia Furious’, in RT, 22 March, https://www.rt.com/op-ed/454512alliance-iran-qatar-turkey-saudi/, last accessed on 3 June 2019. 33  Sezer, Can. 2019. ‘Despite Rhetoric, Turkey Complies with U.S. Oil Sanctions on Iran’, in Reuters, 21 May, https://www.reuters.com/article/iran-oil-turkey/despite-rhetoric-turkey-complies-with-us-oil-sanctions-on-iran-idUSL5N22W3GK, last accessed on 3 June 2019. 34  Reuters. 2018. ‘Turkey Told U.S. It Opposes Sanctions on Iran: Foreign Minister’, 24 July, https://www.reuters.com/article/us-oil-iran-turkey/turkey-told-us-it-opposes-sanctions-on-iran-foreign-minister-idUSKBN1KE27J, last accessed on 3 June 2019. 35  Sterling, Toby. 2018. ‘Iran Files Suit in International Court against U.S. over Sanctions’. 36  Ibid.

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to circumvent or avoid the US sanctions.37 As a result, on 25 September, Germany, France and the UK—the original EU3 of the nuclear negotiation—supported by Russia and China, announced the creation of a ‘special purpose vehicle’ to facilitate doing business with Iran without falling into the US sanctions net.38 The Instrument, INSTEX, would enable EU companies to conduct financial transactions with Iran, especially for necessary items such as food supplies and medicines, and could eventually be used for the transaction of goods and commodities of EU and non-EU countries.39 Iran also faced serious challenges in Syria in the wake of the Israeli attacks on several positions held by Iran or militia backed by it closer to the Israel-Syrian border. The Israeli airstrikes reportedly destroyed several bases and caused deaths of several Iranian military personnel.40 To counter the Israel attacks, Iranian forces in Syria have been retaliating periodically through small operations; for example, on 10 May, the Iranian forces in Syria launched 20 rockets against Israeli army positions in the Western Golan Region. The Syrian Observatory for Human Rights reported that the attacks occurred after Baath, a town on the Syrian side of Golan, was bombed by the Israeli forces. This led to Israel launching an extensive airstrike against the Iranian targets in Syria codenamed Operation House of Cards in May 2018, resulting in more Iranian casualties. The escalation of the Israeli-Iranian confrontation in Syria was prevented by the active Russian intervention as Moscow tried to alleviate the Israeli concerns and persuaded Iran to move its military presence away from the Golan Heights.41 As a result, the situation remained calm for the rest of 2018 as Iran has been restrained in its responses to Israeli military actions. The Iranian involvement in the Iraqi politics also came up for criticisms. After the 12 May parliamentary elections, the government formation in 37  Westcott, Ben, Mazloumsaki, Sara and Beech, Samantha. 2018. ‘Iranian Foreign Minister Visits Russia and China to Try to Save Nuclear Deal’, in CNN, 14 May, https:// edition.cnn.com/2018/05/14/middleeast/zarif-russia-china-iran-deal-intl/index.html, last accessed on 3 June 2019. 38  Pietromarchi, Virginia. 2019. ‘EU Launches Mechanism to Bypass US Sanctions on Iran’, in Al-Jazeera, 31 January, https://www.aljazeera.com/news/2019/01/eu-launchesmechanism-bypass-sanctions-iran-190128084529234.html, last accessed on 3 June 2019. 39  Ibid. 40  BBC News. 2018. ‘Israel Strikes Iranian Targets in Syria in Response to Rocket Fire’, 10 May, https://www.bbc.com/news/world-middle-east-44063022, last accessed on 3 June 2019. 41  Hilterman, Joost. 2018. ‘Russia Can Keep the Peace between Israel and Iran’, in The Atlantic, 13 February, https://www.theatlantic.com/international/archive/2018/02/ israel-syria-iran-hezbollah-putin-assad/553217/, last accessed on 3 June 2019.

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Baghdad was delayed for weeks and was primarily attributed to the active involvement of external players, including Iran, on behalf of various Iraqi political parties and groups.42 The emergence of Saairun Alliance led by Muqtada al-Sadr as the leading group in parliament was seen by some as a counter to Iranian interests as he was highly critical of the Iranian influence in Iraqi politics and was seen hedging his moves with Saudi Arabia.43 The Iranian shadow continued to loom large on Iraqi politics, and the eventual candidate who surged ahead in the race and became prime minister, namely, Adel Abdul-Mahdi, is seen to be closer to Iran.44 During the year, Iran’s troubles with its Kurdish dissent continued, and concerns over Kurdish movement for statehood like the one in northern Iraq became a source to challenge the central authorities in Tehran. As a warning to the Kurdish dissidents within the country in September, the Islamic Revolutionary Guard Corps (IRGC) fired seven missiles on the Iraq-based Iranian Kurdish dissidents in which at least 11 people were killed.45 In addition to Syria and Iraq, the Islamic Republic has continued its strategic expansionism in Lebanon, Palestinian territories and Yemen. These have caused concerns in many Arab capitals, especially in the Arab monarchies in the Persian Gulf, Egypt and Jordan. Qatar which faced the Arab boycott, however, has been veering towards Iran in regional politics. More importantly, Oman which remained neutral in most regional disputes has continued to maintain the business-as-usual approach towards Iran thereby underlying the raptures within the Gulf Cooperation Council. Defence and Security Issues As Iran has been expanding its regional influence through military involvement and has been reasonably successful in its ambitions for a political say and military presence in various countries in the Middle East, the domestic security situation was breached many times during the year. The two major 42  Mansour, Renad. 2019. ‘Iraq’s 2018 Government Formation: Unpacking the Friction between Reform and the Status Quo’, LSE Middle East Centre Report, February, http:// eprints.lse.ac.uk/100099/1/Mansour_Iraq_s_2018_government_formation_2019.pdf, last accessed on 3 June 2019. 43  Ibid. 44  Ibid. 45  Reuters. 2018. ‘Iranian Guards Claims Missile Attack on Iraq-based Kurd Dissidents’, 9 September, https://www.reuters.com/article/us-mideast-crisis-iraq-iran/iranian-guardsclaims-missile-attack-on-iraq-based-kurd-dissidents-idUSKCN1LP08Q, last accessed on 3 June 2019.

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attacks in late 2018 underlined the growing fault lines within Iran. In September, terrorists targeted a military parade commemorating the Iran-­ Iraq War in the southwestern city of Ahvaz. The attack was carried out by four men in military uniform who mixed with soldiers and spectators and opened fire. According to media reports, at least 29 persons including soldiers and children were killed, while another 53 were injured.46 The Islamic State of Iraq and Syria (ISIS) as well as Iranian Arab separatist group Ahvaz National Resistance claimed responsibility for the attack.47 The Iranian authorities blamed the US and Gulf monarchies for fermenting attacks to destabilize the regime. In response, the IRGC carried out military strike on the Syrian town of Abu Kamal and killed several Syrian opposition militants whom Iran said were held responsible for the Ahvaz attack.48 The second attack took place in December when a suicide bomber blew up outside the police headquarters in the port city of Chabahar. At least 4 persons were killed, and another 42 were injured.49 This time a Baloch militant group Ansar al-Furqan (Guardian of the Criterion) claimed responsibility for the attack. The Sunni Islamist group calls for the toppling of the regime to lift the people out of injustice.50 For its part, Iran blamed foreign groups for the attack and vowed to punish all terrorist groups working to destabilize the Islamic Republic.51 In a tweet on the day of the attack, Foreign Minister Zarif warned: ‘Foreign-backed terrorists kill & wound innocents in Chabahar. As we’ve made clear in the past, such crimes won’t go unpunished: In 2010, our 46  Press TV. 2018. ‘25 Killed, 60 Injured in Terror Attack on Military Parade in Ahvaz’, 22 September, https://www.presstv.com/Detail/2018/09/22/574848/Iran-Ahvaz-terroristattack, last accessed on 3 June 2019. 47  Regencia, Ted. 2018. ‘Iran: Who Was Responsible for the Deadly Attack in Ahvaz?’ in Al-Jazeera, 23 September, https://www.aljazeera.com/news/2018/09/iran-responsibledeadly-attack-ahvaz-180922134648290.html, last accessed on 3 June 2019. 48  Barnes, Tom. 2018. ‘Iran Fires Missiles at Syria Targeting Militants in Retaliation over Parade Shooting’, in The Independent, 1 October, https://www.independent.co.uk/news/ world/middle-east/iran-syria-bombing-missiles-air-strike-abu-kamal-attack-latest-ahvazparade-shooting-a8562776.html, last accessed on 3 June 2019. 49  Press TV. 2018. ‘Deadly Car Bomb Attack Hits Iran’s SE Port City of Chabahar’, 6 December, https://www.presstv.com/Detail/2018/12/06/582124/Iran-shooting-Chabahar, last accessed on 3 June 2019. 50  Ibid. 51  Basravi, Zein. 2018. ‘After Ahvaz: Iran’s National Security Worries and Challenges’, in Al-Jazeera, 29 September, https://www.aljazeera.com/news/2018/09/ahvaz-iran-nationalsecurity-worries-challenges-180929150734325.html, last accessed on 3 June 2019.

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security services intercepted & captured extremists en route from UAE.  Mark my words: Iran WILL bring terrorists & their masters to justice.’52 Several suspects were detained, and Iran subsequently claimed that more terrorist cells have been identified and neutralized in security crackdown across the country. The ethnic and sectarian fault lines in Iran are a major security threat. Though the regime claims to be inclusive and non-discriminatory, several ethnic and religious minorities including Arabs, Kurds, Balochs, Sunnis, Baha’is and Zoroastrians have been persecuted for their religious beliefs and ethnic differences.53 In the past, this has caused internal security challenges as many extremist groups representing or championing the minorities have been active in the Islamic Republic. On several occasions, the regime has accused that these militants have been receiving support and funding from the neighbouring countries including Saudi Arabia, Pakistan, the UAE and Iraq.54 Though the involvement of foreign agencies cannot be ruled out completely, deflecting the problem of ethnic and religious discrimination merely to foreign sources would not solve the problem facing Iran. Economy The Iranian economy has been facing difficulties for many years due to international economic sanctions and low oil prices between 2014 and 2016. The expected benefits of the nuclear deal and the lifting of sanctions did not materialize, and on the contrary, the Trump administration changed the course and reimposed sanctions against Tehran. This was not an entirely unexpected move as the US President made his intensions clear soon after taking office in January 2017. Indeed, the speculations over the US presidential elections and impending uncertainty following Trump’s

52  Zarif, Javad. 2018. @JZarif Official Twitter Handled of Foreign Minister of Iran, 6 December, https://twitter.com/JZarif/status/1070666069575122944?ref_src=twsrc%5E tfw%7Ctwcamp%5Etweetembed%7Ctwter m%5E1070666069575122944&ref_ url=https%3A%2F%2Firanprimer.usip.org%2Fblog%2F2018%2Fnov%2F07%2Fpart-1-history-terrorism-against-iran, last accessed on 3 June 2019. 53  Freedom House. 2019. Freedom in the World Report 2019, https://freedomhouse.org/ report/freedom-world/2019/iran, last accessed on 3 June 2019. 54  BBC News. 2019. ‘Iran Warns Neighbours after Bombing Kills Revolutionary Guards’, 14 February, https://www.bbc.com/news/world-middle-east-47238711, last accessed on 3 June 2019.

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surprise victory had kept many European and Asian investors and businesses from signing new contracts with their Iranian counterparts.55 This uncertainty has harmed the Iranian economy. The overall situation is not healthy, and significant negative impacts can be noticed in the fiscal and microeconomic health and among small traders, farmers and local industries. People faced hardships due to inflation and rising prices of food and essential commodities and the depreciation of the Iranian currency. The lack of foreign investment and business opportunities has affected some of the vital industries in the country, including pharmaceuticals, automobile and manufacturing. The farm sector has also been affected badly. The oil sector which is the largest contributor to the gross domestic product (GDP) and government revenues suffered due to sanctions. Lack of modernization has hampered the production and hence exports. After the sanctions were lifted in the wake of the JCPOA, Iran significantly enhanced its oil production and exports to the Asian and European markets, but the reimposition of the US sanctions in May 2018 revived the problems for the oil industry. During 2016–18, the oil and gas sector witnessed a small growth of 0.9 per cent despite the production limits imposed by the OPEC.56 During much of 2018, Iranian oil production declined from 3.8 million barrels per day (mb/d) in early 2018 to 2.7 mb/d in December 2018, while exports declined from 2.2 mb/d to 1.2 mb/d during the same period (Tables 3.1 and 3.2). After two years of relative stability, the economy is expected to face serious challenges in the wake of the US actions. According to the World Bank, the growth rate in 2017–18 moderated to 3.8 per cent due to increased revenues, mainly from oil exports. As a result, the fiscal deficit was reduced to 1.8 per cent during the year.57 In the medium term, the economy experienced downward trajectory as oil exports are expected to fall to half of their 2017–18 following the US move. With depreciating exchange rates, rising inflation and looming further sanctions, Iran’s current account surplus fell from 3.9 per cent of the GDP in 2016–17 to 3.5 per cent in 2017–18. Real export growth of goods and services recorded a 1.8 per cent fall from 41.3  Juneau, Thomas. 2019. ‘The Enduring Constraints on Iran’s Power after the Nuclear Deal’, in Political Science Quarterly, Spring 2019, vol. 134, no. 1, pp. 39–61. 56  The World Bank. 2019. ‘Iran’s Economic Update—April 2019’, 28 March, http:// pubdocs.worldbank.org/en/930061553672411223/Iran-MEU-April-2019-Eng.pdf, last accessed on 3 June 2019. 57  The World Bank. 2019. ‘Iran’s Economic Update—April 2019’. 55

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Table 3.1  Iran crude oil export

Year

Iran crude oil export, barrel/day

2013 2014 2015 2016 2017

1,215.41 1,109.175 1,081.145 1,921.730 2,125

Source: CEIC. n. d. ‘Iran Crude Oil: Exports’, https://www.ceicdata. com/en/indicator/iran/crude-oil-exports, last accessed on 3 June 2019

Table 3.2  Iran crude oil production

Year

Iran crude oil export, million barrels/day

2013 2014 2015 2016 2017 2018

2.7 2.8 2.8 3.6 3.8 3.5

Source: U.S.  Energy Information Administration. n.d. ‘Open Data’, https://www.eia.gov/opendata/qb.php?category=1039874&sdid=S TEO.COPR_IR.A, last accessed on 3 June 2019

per cent a year earlier, and real import growth stood at 13.4 per cent. In recent years, Iran’s non-oil exports have risen from 6 per cent of the GDP in 2012–13 to 10 per cent in 2017–18.58 These forced Iran to take some measures to deal with the situation. In April, the government announced the unification of the official and parallel exchange rates but failed to achieve the goals of calming the market which has experienced months of turmoil. The parallel market rate soared in anticipation of further dollar shortage in the wake of the US withdrawal from the JCPOA. By August, the Rial had devalued by 172 per cent over the past 12 months, crossing 48,000 Rials to a dollar in August 2018, and the end of the year, it was 42,000 Rials to a dollar.59  Ibid.  Radio Farda. 2019. ‘Iran’s Currency Continued Downward Trend, Impacted by Nuclear Decision’, 9 May, https://en.radiofarda.com/a/iran-s-currency-continues-downward-trendimpacted-by-nuclear-decision/29930597.html, last accessed on 3 June 2019. 58 59

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The massive depreciation of the currency contributed to rising inflation which returned to 24 per cent in August and touching 40 per cent by December.60 The higher import prices from the depreciation of Rial are expected to push the inflation further beyond 30 per cent in the coming years. As inflationary expectations spiral, consumer sentiments would fall thereby leading to the return of the stagflation that Iran witnessed during the decade-long nuclear controversy. The rate of unemployment remained high and during April–June it stood at 12.1. The male and female unemployment rates stood at 10.2 and 19.7 per cent, respectively, thereby suggesting continued gender gap in the labour market.61 In June, the youth (15–24 years) unemployment stood at 28.3 per cent, and this high rate partly contributed to protests and disturbances in various regions during the year. The labour force participation rate edged to 41.1 per cent in the second quarter of the year, and this was the highest level in more than a decade.62 Female labour force participation rate continued to improve to reach 19.8 per cent in 2017–18.63 This made Iran among the countries that had improved the participation of female workforce, although considerable difference and disparity exist between male and female labour force indicators.64 A plethora of projects inked between Iran and other countries in the first half of 2018 became uncertain in the wake of the US move. Major deals such as the Iran-Iraq joint development of shared oil fields in the Khuzestan Province and the Tehran-Mashhad rail electrification project worth US$227 million for which the Export-Import Bank of China had agreed to provide the major funding could be affected due to the US sanctions.65 Deals signed by European countries and Iran in pharmaceutical, energy and automobile sectors could also be in limbo. 60  Radio Free Europe Radio Liberty. 2018. ‘Iran’s Inflation Rate Will Soar to Over 40 Percent by Year-End, IMF Says’, 14 November, https://www.rferl.org/a/irans-inflation-ratewill-soar-over-40-percent-year-end-imf-says/29599407.html, last accessed on 3 June 2019. 61  Basravi, Zein. 2018. ‘Iran Unemployment Crisis, Rising Living Costs Bite amid Sanctions’, in Al-Jazeera, 21 August, https://www.aljazeera.com/news/2018/08/iran-unemploymentcrisis-rising-living-costs-bite-sanctions-180821104357766.html, last accessed on 3 June 2019. 62  The World Bank. 2018. ‘Iran: Overview’, https://www.worldbank.org/en/country/ iran/overview, last accessed on 3 June 2019. 63  Ibid. 64  Ibid. 65  Herber Smith Freehills. 2018. ‘Key Developments in Iran, January 2018’, https:// www.herbertsmithfreehills.com/latest-thinking/key-developments-in-iran-january-2018, last accessed on 3 June 2019.

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A significant positive development for the oil sector was the signing of the Convention on the Legal Status of the Caspian Sea on 12 August. According to the convention, issues regarding the sharing of the Caspian Sea and its resources among the five littorals—Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan—were agreed upon.66 Before the dissolution of the USSR in December 1991, the Caspian Sea only had two littoral, the Soviet Union and Iran, which treated the waterbody as a lake and defined its legal status through a host of bilateral agreements. The new convention determined the sui generis regime for the Caspian Sea including the legal status of the waters, seabed and subsoil, thereby regulating the use of its natural resources and airspace. It also establishes the sovereign and ­exclusive rights of all the littoral states and defines their respective ‘territorial waters’, seabed and subsoil ‘sectors’. It also recognizes far-reaching liberties for the common use of the Sea by the coastal states.67 Society Demographically, Iran is the largest country in the Persian Gulf and the second largest in the broader Middle East after Egypt. It has inherited one of the oldest civilizations of the world and is home to a diverse group of people in terms of their ethnicities, culture, religious beliefs and practices. At the same time, this diverse group has been subsumed by the dominant Shia-Persian socio-political milieu. Persian is the language of poetry and science, and historically, it was the source of influence of the Persian culture and trade links with vast parts of the world, including Asia, Europe and China, and the Persian culture was enriched due to its interactions with the world. The language also left its influence in different parts of the world due to the people-to-people contacts. Notwithstanding the past, modern Iran faced serious social, political and economic churning and instabilities. While the Soviet power ambitions and constitutional movement (1905–11) deeply affected the Iranian society in the beginning of the twentieth century, and the Pahlavi regime (1925–79) gravitated towards the US in the aftermath of World War II. This resulted 66  BBC News. 2018. ‘Caspian Sea: Five Countries Sign Deal to End Dispute’, 12 August, https://www.bbc.com/news/world-45162282, last accessed on 3 June 2019. 67  Freshfields Bruckhaus Deringer. 2018. ‘The New Convention on the Legal Status of the Caspian Sea: New Opportunities and New Challenges’, 1 November 2018, http://knowledge.freshfields.com/en/Global/r/3848/the_new_convention_on_the_legal_status_of_ the_caspian_sea, last accessed on 3 June 2019.

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in serious American footprints on the socio-economic conditions of Iran, but increasing economic hardships and cultural and religious consciousness in the last two decades of the Cold War caused widespread anti-Shah and anti-American sentiments in the society. The eventual overthrow of the Shah in 1979 not only changed the political destiny of the country but also had deeper socio-cultural impact in the form of the Islamic Republic. Contemporary Iranian society grapples with some serious problems. Increasing influence of globalization and technology has impacted the way the Iranian youth think about the political and social systems in the country. They have been aspiring for a more open and freer society. The regime and the powerful clergy have a different view and wish to maintain the revolutionary zeal of Islamization and cultural homogenization. The determination to maintain the status quo had become a major problem and impediment not only for the aspirational youth but also for the ethnic and religious minorities and women of the country. Restrictions on the expression of political opinion, grievances and cultural and religious expressions other than those approved and patronized by the regime,68 together with dress code and public code of conduct imposed on women, have caused a sense of anger among sections of population. Freedom of expression is one of the major victims of policies of the current regime. According to media reports, during the disturbances in late 2017 and early 2018, nearly 4,900 protesters were arrested throughout the country for expressing their dissatisfaction on the official policies, especially on the economic front. In addition, at least 21 persons lost their lives during the clashes and crackdown. The government banned popular messaging platform Telegram to stem the flow of protests, and it even stopped English classes in schools to prevent people from accessing and understanding the international public opinion on the events inside Iran.69 Several attorneys appearing for the protesters were rounded up; in June, a prominent women lawyer Nasrin Sotoudeh was detained on charges of incitement, collusion and propaganda, and her trial started in December.70  Freedom House. 2019. Freedom in the World Report 2019.  Reuters. 2018. ‘Iran Bans English in Primary Schools after Leaders’ Warning’, 7 January, https://www.reuters.com/article/iran-english/update-1-iran-bans-english-in-primaryschools-after-leaders-warning-idUSL8N1P20DS, last accessed on 3 June 2019. 70  Amnesty International. 2019. ‘Iran: Shocking 33-Year Prison Term and 148 Lashes for Women’s Rights Defender Nasrin Sotoudeh’, 11 March, https://www.amnesty.org/en/latest/news/2019/03/iran-shocking-33-year-prison-term-and-148-lashes-for-womens-rights-defender-nasrin-sotoudeh/, last accessed on 3 June 2019. 68 69

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According to Freedom House, Iran fares poorly on all accounts and is considered as a ‘Not Free’ country.71 There are hardly any independent media in Iran, and both online and offline contents are tightly monitored and censored by the state agencies. Both broadcast and print media are heavily regulated and are dominated by the hardline clergy and security apparatus.72 Independent journalists face persecution, and many were imprisoned for their reporting. According to Reporters without Borders, the Islamic Republic ranks 170 among 180 countries and is one of the worst performers in terms of abuse of j­ ournalists.73 Reports highlighted that in July and August, at least six journalists belonging to Majzooban-e-Noor, an online newspaper, were convicted and given prison terms ranging from 7 to 26  years ‘for their coverage of February protests by members of the Sufi Muslim order Nematollahi Gonabadi’.74 Religious minorities face discrimination and even persecution. According to Religious Freedom Report published by the US State Department, ‘non-Shia Muslims and those affiliated with a religion other than Islam, especially members of the Baha’i community, continued to face societal discrimination and harassment, and employers experienced social pressure not to hire Baha’is or to dismiss them from their private sector jobs. Baha’is reported there were continued incidents of destruction and vandalism of their cemeteries.’75 The condition of women has come under criticisms from within the country. Several women professionals and activists have faced persecution due to their involvement in generating awareness about gender equality and for demanding greater freedom for women. Iran has a Gender Development Index (GDI) value of 0.871 and Gender Inequality Index (GII) value of 0.461. In terms of Gender Inequality, it ranks 109th in the world.76 Discrimination against women was one of the major issues of protests during December 2017 and January–February 2018. In the four  Freedom House. 2019. Freedom in the World Report 2019.  Ibid. 73  Reporters without Borders. 2019. ‘World Press Freedom Index’, https://rsf.org/en/ ranking_table, last accessed on 3 June 2019. 74  Freedom House. 2019. Freedom in the World Report 2019. 75  United States Institute of Peace. 2018. ‘US Report: Religious Freedom in Iran’, 29 May, https://iranprimer.usip.org/blog/2018/may/29/us-report-religious-freedom-iran, last accessed on 3 June 2019. 76  United Nations Development Program (UNDP). 2018. ‘Human Development Indices and Indicators: 2018 Statistical Update’, http://hdr.undp.org/sites/all/themes/hdr_ theme/country-notes/IRN.pdf, last accessed on 3 June 2019. 71 72

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Table 3.3  Women in key political institutions

77

Position

Number of women

Majlis/parliament Guardian Council Cabinet minister Vice presidents

5.9 per cent (17) None None 2 (Family & Women’s Affairs + Legal Affairs) 1 presidential advisor on civil rights 8

Presidential advisor Mayor/head of city council

Source: Raz Zimmt. 2017. ‘The Growing Power of Women in Iran’, 5 September, https://www.regthink.org/en/articles/the-growingpower-of-women-in-iran, last accessed on 3 June 2019

decades since the Islamic Revolution, the participation of women in education and labour force has witnessed an upward trend, but their political participation remains abysmal and continued to be excluded from the top institutions of the state, including the Council of Ministers, the Majlis or parliament, Guardian Council and so on (Table 3.3).

Bilateral Relations India’s strong bilateral ties with Iran are based on historical and cultural linkages, energy imports, partnership in the development of Chabahar Port and cooperation in counterterrorism. At the same time, several external factors and calculations have affected their trajectory and restricted them to be transactional. International concerns, the US pressures and the need to balance ties with Israel and Saudi Arabia have hampered India’s ability to pursue a more vigorous approach towards Tehran. There are also a few bilateral issues which impeded the relations. From the Iranian viewpoint, New Delhi did not show enough enthusiasm during 2016 and May 2018 to partake in the economic development programmes in Iran when international and US sanctions were lifted following the nuclear deal. India, however, views that Tehran has backtracked on its promise to allocate some of the gas production contracts for the Farzad B field to Oil and Natural Gas Corporation (ONGC) which was one of the international companies involved in the exploration of that field. There is a degree of continued misunderstanding and misreading of each other’s policies and approach. Nonetheless, both countries continue to maintain strong bilateral ties encompassing political engagements, economic cooperation and energy and investment ties.

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Political Ties Reflecting the importance of each other, there were several political contacts during 2018. The most important moment came when President Hasan Rouhani visited India during 15–17 February. This was his first visit to India since his inauguration in August 2013 even though he came to New Delhi in June 2002 as National Security Adviser.77 During his three-­ day visit, President Rouhani called on his Indian counterpart Ramnath Kovind and held a summit meeting with Prime Minister Narendra Modi. Vice President M. Venkaiah Naidu and External Affairs Minister Sushma Swaraj called on the Iranian leader. During his meeting with Prime Minister Modi, several bilateral and regional issues were discussed, and both sides signed nine memorandums of understanding (MoUs) including a lease contract for Phase I of the Chabahar Port. The joint statement issued at the end of summit noted the significance of Chabahar in proving new connectivity to and from Afghanistan and Central Asia for both the countries and welcomed the inauguration of Phase I of the port in December 2017. Both sides ‘reiterated their commitment for early and full operationalization of Shahid Beheshti Port at Chabahar’.78 During the Modi-Rouhani discussions, regional connectivity and bilateral investments emerged as the most important bilateral concern. Marking the inauguration of Phase I of the Chabahar Port, both the leaders released ‘a joint postage stamp depicting Deendayal Port, Kandla and Shahid Beheshti Port Terminal, Chabahar’ reflecting the ‘enhanced prosperity through greater connectivity’.79 It was noted by them that the trilateral agreement among India, Iran and Afghanistan should be put into operation immediately and the Coordination Council should hold regular meetings to discuss any emerging issues. To fully utilize the potential of 77  Ministry of External Affairs, Government of India (MEA, GoI). 2002. ‘India-Iran, Joint Press Statement’, 28 June, http://mea.gov.in/bilateral-documents.htm?dtl/7573/India__ Iran_Joint_Press_Statement, last accessed on 3 June 2019. 78  MEA, GoI. 2018. ‘India-Iran Joint Statement during Visit of the President of Iran to India’, 17 February, https://www.mea.gov.in/bilateral-documents.htm?dtl/29495/indiair an+joint+statement+during+visit+of+the+president+of+iran+to+india+february+17+2018, last accessed on 3 June 2019. 79  ANI. 2018. ‘India, Iran Welcome Lease Contract for Chabahar Port Operations’, 17 February, https://www.aninews.in/news/world/asia/india-iran-welcome-lease-contractfor-chabahar-port-operations201802171916130002/, last accessed on 3 June 2019.

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the port and the connectivity, ‘India conveyed its readiness to support the development of Chabahar-Zahedan Rail line’.80 The state-owned Indian Railway Construction Company Limited (IRCON) and Construction and Development of Transportation Infrastructure Company (CDTIC) of Iran were tasked with finalizing the technical details for the project, and it was decided that both sides would enhance ‘cooperation in railway sector including supply of steel, rails, turnouts and locomotives’.81 Furthermore, both the leaders ‘reiterated their commitment to (the) International North-South Transport Corridor (INSTC) and stressed on the need for inclusion of Chabahar within its framework’.82 The joint statement also ‘noted that Iran will hold an early meeting of the INSTC Coordination Meeting in Tehran’. The Iranian side welcomed ‘India’s accession to the TIR Convention and Ashgabat Agreement … as additional steps at enhancing regional connectivity and linking regional centres of economic growth’.83 Iran has invited Indian companies to invest in various sectors of its economy including the energy sector and agreed to work towards finalizing the deal on Farzad B gas field that would strengthen bilateral energy cooperation.84 The issue of creating better banking network for facilitating bilateral trade was discussed, and New Delhi expressed its readiness to allow the opening of a branch of the Pasargad Bank in India.85 The issue of trading in Indian currency to circumvent international sanctions on Iran was also discussed.86 Defence and security issues were also discussed, and both sides agreed to enhance institutional mechanism for periodic consultations on important security issues including terrorism, organized crimes, drug trafficking

80  MEA, GoI. 2018. ‘India-Iran Joint Statement during Visit of the President of Iran to India’. 81  Ibid. 82  Ibid. 83  Ibid. 84  MEA, GoI. 2018. ‘Question No. 4327 Iranian President’s Visit to India’, 21 March, https://mea.gov.in/lok-sabha.htm?dtl/29681/QUESTION_NO4327_IRANIAN_ PRESIDENTS_VISIT_TO_INDIA, last accessed on 3 June 2019. 85  Business Standard. 2019. ‘Iran’s Pasargad Bank to Open Branch in Mumbai in 3 Months: Nitin Gadkari’, 8 January, https://www.business-standard.com/article/economy-policy/ iran-s-pasargad-bank-to-open-branch-in-mumbai-in-3-months-nitin-gadkari-119010800380_1.html, last accessed on 3 June 2019. 86  Ibid.

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and cybercrimes.87 Prime Minister Modi in his press statement during Rouhani’s visit noted that both the ‘people are associated with the shared ideology of Sufi message of peace and tolerance. Looking at our common interests, we are committed to stopping the expansion of such forces that promote terrorism, extremism, illegal drug trafficking, cyber-crime and international organized crimes of various forms’.88 During his India visit, President Rouhani travelled to Hyderabad and interacted with local communities and attended the Friday prayers in the historic Mecca Mosque. The choice of Hyderabad for public interaction was significant as the city had closer ties with Iran before India’s independence and has a significant Shia population. The erstwhile rulers of Deccan province had close ties with the Safavid rulers of Iran, and it was during this period that Hyderabad adopted Persian cultural, linguistic, architectural lifestyle and the visit of Rouhani underlined the historical linkages. During his interaction with the local community, the President appreciated India’s cultural diversity and pluralism and observed that ‘India is a living museum of different ethnicities and religions peacefully coexisting. This process is going on for centuries. Shias, Sunnis, Sufis, Hindus, Sikhs and others are living together. They together built their country and built their civilizations.’89 Weeks after Rouhani’s visit, a four-member delegation of lawmakers from Iran visited New Delhi as part of the India-Iran Parliamentary Friendship Group to promote bilateral exchanges. The delegation called on EAM Swaraj and held discussion with the Parliamentary Standing Committee on Energy. On 16 July, both the countries held Foreign Office consultations in New Delhi. The Indian side was led by Foreign Secretary Vijay Gokhale and the Iranians were led by Deputy Foreign Minister Seyyed Abbas Araghchi. The latter also called on Ministry of State for External Affairs M.  J. Akbar. During the consultation meeting, it was ‘agreed to maintain the momentum of mutually beneficial multifaceted bilateral cooperation and exchanges between the two sides and to hold the next round of Joint Commission Meeting at the level of External Affairs 87  MEA, GoI. 2018. ‘India-Iran Joint Statement during Visit of the President of Iran to India’. 88  Ibid. 89  The News Minute. 2018. ‘India is a Living Example of Peaceful Co-existence: Iranian President Rouhani in Hyderabad’, 16 February, https://www.thenewsminute.com/article/ india-living-example-peaceful-co-existence-iranian-president-rouhani-hyderabad-76541, last accessed on 3 June 2019.

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Minister in November 2018 in Iran’.90 The meeting however did not take place by the end of 2018. On his tour of important global capitals to shore up diplomatic support for Iran and the JCPOA after US withdrawal, Iranian Foreign Minister Javad Zarif visited New Delhi on 28 May. During the visit, he had a meeting with External Affairs Minister Sushma Swaraj, and the two leaders discussed important bilateral, regional and global issues. According to the Ministry of External Affairs (MEA), Zarif briefed his counterpart ‘about the discussions that Iran has undertaken with parties to the Joint Comprehensive Plan of Action following the US decision to withdraw from the Agreement’. Swaraj, on the other hand, ‘conveyed that all parties to the Agreement should engage constructively for peaceful resolution of the issues that have arisen with respect to the Agreement’.91 Meanwhile, in September, India’s National Security Advisor (NSA) Ajit Doval travelled to Iran to take part in the meeting of NSAs of Iran, Russia, Afghanistan and India to discuss ‘the issue of threat posed by terrorism, including Daesh/ISIS, to regional and global peace, security and stability’.92 The meeting was an opportunity for India to understand the views of the participants on terrorism and to convey India’s points of view. Doval ‘articulated India’s abiding commitment to partner in bilateral, regional and global forums for tackling the scourge of terrorism which poses a huge threat to the entire humanity’. He further highlighted the need for not distinguishing ‘between good and bad terrorism’ and the need for ‘greater cooperation, including information sharing for disrupting support mechanism such as training, financing and supply of weapons; need for disruption cross-border movement of terrorism; and isolating those who support and sponsor terrorism’.93 In addition to other engagements, between September and December, the officials of India, Iran and Afghanistan held three trilateral meetings to 90  MEA, GoI. 2018. ‘India and Iran Hold Foreign Office Consultations’, 16 July, https:// mea.gov.in/press-releases.htm?dtl/30066/India_and_Iran_hold_Foreign_Office_ Consultations, last accessed on 3 June 2019. 91  MEA, GoI. 2018. ‘External Affairs Minister Meeting with Iranian Foreign Minister’, 28 May, https://www.mea.gov.in/press-releases.htm?dtl/29925/External_Affairs_Ministers_ meeting_with_Iranian_Foreign_Minister, last accessed on 3 June 2019. 92  MEA, GoI. 2018. ‘Press Release on Visit of National Security Advisor to Iran’, 26 September, https://mea.gov.in/press-releases.htm?dtl/30431/press+release+on+visit+of+ national+security+advisor+to+iran, last accessed on 3 June 2019. 93  Ibid.

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discuss the Chabahar Port development. The first meeting was held in Kabul on 11 September to discuss the consolidation of the economic cooperation among the three countries, and India was represented by its Foreign Secretary.94 On 21 October, Tehran hosted the first meeting of the Coordination Council of the Chabahar Agreement, and the Indian side was led by Secretary (Economic Relations) in the Ministry of External Affairs, T.  S. Tirumurti, and it discussed the operationalization of the trilateral agreement. It was decided to form a follow-up Committee to finalize the protocols and technical details of the Chabahar agreement,95 and a follow-up meeting was held in Chabahar on 24 December.96 India took a strong position regarding terrorist attacks in Iran. A statement issued by the Ministry of External Affairs expressed solidarity with the victims and people of Iran for the September attack in Ahvaz where more than two dozen people lost their lives when four gunmen opened fire on the spectators of a military parade.97 Again on 6 December when a suicide bomber targeted the police headquarters in Chabahar, India strongly condemned the despicable terrorist attack. A  statement by the Ministry of External Affairs said: ‘We express our condolences to the Government and people of Iran and the families of the victims of this attack. We wish speedy recovery of those injured. The perpetrators behind this dastardly attack should be brought to justice expeditiously. There can be no justification for any act of terror.’98 The Islamic Republic reciprocated these  The Hindu Business Line. 2018. ‘For First Time, India, Iran, Afghanistan Hold Trilateral’, 11 September, https://www.thehindubusinessline.com/news/world/for-first-time-indiairan-afghanistan-hold-trilateral/article24926487.ece, last accessed on 3 June 2019. 95  MEA, GoI. 2018. ‘First Trilateral Meeting between India, Afghanistan and Iran of the Coordination Council of the Chabahar Agreement’, 23 October, https://www.mea.gov.in/ press-releases.htm?dtl/30531/First+Trilateral+Meeting+between+India+Afghanistan+and+ Iran+of+the+Coordination+Council+of+the+Chabahar+Agreement, last accessed on 3 June 2019. 96   MEA, GoI. 2018. ‘First Meeting of the Follow-up Committee between India, Afghanistan and Iran for Operationalization of the Chabahar Agreement’, 24 December, https://mea.gov.in/press-releases.htm?dtl/30813/First_meeting_of_the_Followup_ Committee_between_India_Afghanistan_and_Iran_for_operationalization_of_the_ Chabahar_Agreement, last accessed on 3 June 2019. 97  MEA, GoI. 2018. ‘Press Release on India’s Condemnation to Terrorist Attack in Ahwaz, Iran’, 23 September, https://mea.gov.in/press-releases.htm?dtl/30423/Press_release_on_ Indias_condemnation_to_terrorist_attack_in_Ahwaz_Iran, last accessed on 3 June 2019. 98  MEA, GoI. 2018. ‘India Strongly Condemns Terrorist Attack in Chabahar, Iran’, 6 December, https://mea.gov.in/press-releases.htm?dtl/30686/india+strongly+condemns+t errorist+attack+in+chabahar+iran, last accessed on 3 June 2019. 94

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sentiments when a Pakistan-backed vehicle-borne suicide bomber attacked a convoy of Indian paramilitary forces in Pulwama on 14 February 2019.99 Trade and Commerce Economic relations form an important aspect of the bilateral relations. Iran is the 16th largest trading partner of India. With a share of 1.79 per cent of its global trade, the Islamic Republic is its 11th largest partner in terms of imports and 29th in terms of exports.100 For Iran, India is the 11th largest source of imports and 6th largest exports destination.101 In other words, both the countries are important to one another with India being more important to Iran than vice versa. The most important and critical commodity of trade is oil which dominates India’s imports and petroleum products that Iran requires. In addition, commodities like fertilizers, organic and inorganic chemicals, dry fruits and nuts, plastic and plastic products dominate India’s imports from Iran. On the other hand, major Indian exports to Iran include cereals, tea, coffee, spices, iron and steel, machinery and industrial equipment, pharmaceutical products, automobiles and vehicles.102 As reflected in Table  3.4, the bilateral trade witnessed a marginal increase from US$12.83 billion in 2016–17 to US$13.76 billion a year later. However, during the same period, Iran’s share in the total Indian foreign trade dipped marginally from 1.95 per cent to 1.79 per cent (Table 3.4 and Fig. 3.1). Since the bilateral trade is heavily dominated by the crude oil imports from Iran, the balance of trade is skewed in favour of the Islamic Republic. In 2017–18, India imported goods and commodities worth US$11.11 billion from Iran, while its exports to Iran stood only at US$2.65 billion. In other words, India’s imports from Iran are six times higher than its exports to Iran and hence during the year the 99  Chaudhary, Dipanjan Roy. 2019. ‘Iran Echoes Indian Position on Role of Pak-Supported Suicide Bombers’, in The Economic Times, 16 February, https://economictimes.indiatimes. com/news/international/world-news/iran-echoes-indian-position-on-role-of-pak-supported-suicide-bombers/articleshow/68026992.cms, last accessed on 3 June 2019. 100  Ministry of Commence, GoI, Export Import Data Bank, https://commerce-app.gov. in/eidb/Default.asp, last accessed on 3 June 2019. 101  The World Bank. 2018. World Integrated Trade Solution, https://wits.worldbank.org/ CountryProfile/en/Country/IRN/Year/2011/TradeFlow/Export/Partner/by-country, last accessed on 3 June 2019. 102  Ministry of Commence, GoI, Export Import Data Bank, https://commerce-app.gov. in/eidb/Default.asp, last accessed on 3 June 2019.

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Table 3.4  India-Iran bilateral trade (US$ million)

India’s exports to Iran India’s imports from Iran Total bilateral trade Share in India’s total Trade

2013–14

2014–15

4,971.35 10,307.16 15,278.51 2.00

4,175.06 8,955.02 13,130.08 1.73

2015–16

2016–17

2017–18

2,718.51 2,379.61 6,278.75 10,506.51 9,060.26 12,886.12 1.41 1.95

2,652.37 11,111.52 13,763.89 1.79

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 3.1  India-Iran bilateral trade 18 16 14 12 10 8 6 4 2 0

2011-12

2012-13 2013-14 Exports

2014-15 Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

trade deficit stood at US$8.46 billion in favour of the latter. This is due to the oil imports which accounts for nearly 85 per cent of India’s imports from Iran. For example, in 2017–18, India imported crude oil worth US$9.23 billion from Iran, and this was higher than its trade deficit with the Islamic Republic (Table 3.5). The trade deficit has been complicated by India’s payment problems when it was unable to find a smooth payment mechanism. As the US-backed sanctions intensify, it has become difficult for New Delhi to use dollars and euros as the payment mechanism. Hence, India and Iran were trying to find a way out when fresher sanctions were imposed by the

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Table 3.5  Share of energy in India-Iran trade (US$ million) Year

2013–14 2014–15 2015–16 2016–17 2017–18

Oil imports from Iran

Total oil imports

Iranian share in total oil imports

Imports from Iran

Per cent of oil in imports from Iran

8,556.95 7,292.13 4,461.57 9,006.29 9,232.61

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

4.72 4.66 4.60 8.73 6.98

10,307.16 8,955.02 6,278.75 10,506.51 11,111.52

83.02 81.43 71.06 85.72 83.09

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Trump administration in May. The warning by the US to impose secondary sanctions on countries and companies trading with Iran had further undermined the climate. Efforts to continue and enhance the bilateral trade amidst this situation were partly responsible for the increased political engagements between the countries in 2018. Both the countries are working to develop a payment mechanism in the Indian currency to circumvent or minimize secondary sanctions from the US. The Indian willingness to allow Pasargad Bank to open a branch was one such response. The Iranian request has been pending for some time, but the US sanctions perhaps hastened the process. Given the lopsided nature of the bilateral trade, both countries are trying to expand the scope of Rupee payment mechanism whereby a larger portion of the oil bill can be settled through the Indian currency which Iran could use to pay for its imports from India.103 Domestic political fallout of the anti-Iranian rhetoric of the US is also a concern for New Delhi as Indian lawmakers have been flagging the fallout of the American withdrawal from the JCPOA. Energy Ties The bilateral trade between India and the Persian Gulf countries is dominated by energy and Iran is not an exception. It is one of the major suppliers of energy resources to India. India’s dependence upon crude oil imports to meet its growing domestic energy demands and future projections 103  Business Standard. 2019. ‘Iran’s Pasargad Bank to Open Branch in Mumbai in 3 Months: Nitin Gadkari’.

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means that this dependency on imports from the Persian Gulf as well as Iran will continue. India was among the eight countries104 who were given a special waiver by the US in November to import lesser quantities of crude oil from Iran. The Trump administration, however, is not inclined to renew the waiver as it insists these exempted countries to reduce their oil imports from Iran to zero. This will put India in a tight corner as it seeks closer ties with the US as well as Iran. Though India could find alternative suppliers, bringing imports from Iran to a halt under the US warnings can be detrimental to India’s international standing and will raise questions over its foreign policy decision-making (Table 3.5). In terms of quantity and oil bill, Iran was the third largest supplier of crude oil to India in 2017–18 after Iraq and Saudi Arabia. For Iran, India was the second largest export destination after China. India imported 23.9 million tons of crude from Iran during the year. The Indian imports were a marginal increase from 22.59 million tons imported the previous year (Table 3.6).105 In terms of the energy bill in 2017–18, the situation looked stable. India’s imports from Iran worth US$9.23 billion and this was a marginal increase from the previous year when its imports stood at US$9 billion. Table 3.6  India’s energy imports from Iran (in US$ million) 2013–14 Energy imports from Iran Total energy imports Total energy imports from Persian Gulf Share in total energy imports (in per cent) Share in energy imports from Persian Gulf (in per cent)

8,556.95

2014–15

2015–16

7,292.13

4,461.57

2016–17 9,006.29

2017–18 9,232.61

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75 85,300.30 50,992.26 56,335.34 70,090.81 4.72

4.66

4.60

8.73

6.98

8.04

8.55

8.75

15.99

13.17

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

 The others are China, Turkey, Taiwan, South Korea, Greece, Japan and Italy.  The Indian Express. 2019. ‘Iraq Remains India’s Top Oil Supplier, Imports from US Rises Four-Folds’, 2 May, http://epaper.indianexpress.com/2136380/Delhi/May-022019#page/18/1, last accessed on 3 June 2019. 104 105

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Fig. 3.2  Share of oil in imports from Iran 100 90 80 70 60 50 40 30 20 10 0

2011-12

2012-13

2013-14

2014-15 2015-16 share of oil

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

At the same time, in terms of quantity, this was a marginal decline of 2 percentage points. In 2017–18, India’s total energy imports stood at US$132 billion which was a significant increase from US$103 billion registered a year earlier. This was partly because of the increase in the quantity of imports as well as rise in oil prices. Correspondingly, this meant that the Iranian share in India’s energy imports has dropped to 6.98 per cent from 8.73 per cent a year earlier. Likewise, the share of energy in Iran’s exports to India also dropped from 85.72 per cent to 83.09 per cent in 2017–18 (Table 3.5 and Fig. 3.2). The same decline can be noticed in Iranian share in India’s imports from the Persian Gulf which dropped from 15.99 per cent to 13.17 per cent during the same period (Table 3.6 and Fig. 3.3). Investments Iran has been an attractive market for the Indian investments. The prospects were enhanced briefly by the JCPOA and the lifting of international sanctions against Iran. At the same time, the market confidence in the Iranian economy remained low due to several factors, and the primary among them was the election of Trump in the US and his anti-Iranian

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Fig. 3.3  Iranian share in oil imports 18 16 14 12 10 8 6 4 2 0

2011-12 2012-13 2103-14 share in Total Imports

2104-15 2015-16 2016-17 2017-18 Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

rhetoric. Both during the election campaign and since assuming office, he has been giving statements critical of Iran and the JCPOA. Lingering doubts were settled in May when President Trump announced the US withdrawal from the nuclear deal and the imposition of more stringent and unilateral sanctions on Iran. The Indian companies who showed some interest in the post-nuclear deal Iran such as Indian Oil Corporation Limited (IOCL) and ONGC became reluctant. Hence, no progress can be noticed during the year. However, both the sides discussed the possibilities of enhancing mutual investments during the visit of Prime Minister Modi to Iran in May 2016106 and President Rouhani to India in February 2018. Between 2016 and 2018, India committed to invest US$20 billion in oil, gas, petrochemical and fertilizer sectors in Chabahar area.107 Both sides also signed a deal worth US$2 billion for Indian investments in the railway sector in Iran. India plans ‘to equip and operate two berths in the [Chabahar] port with 106  MEA, GoI. 2016. ‘India—Iran Joint Statement—“Civilizational Connect, Contemporary Context” during the Visit of Prime Minister to Iran’, 23 May, https://www.mea.gov.in/ bilateral-documents.htm?dtl/26843/India__Iran_Joint_Statement_quot_ Civilisational_Connect_Contemporar y_Contextquot_during_the_visit_of_Prime_ Minister_to_Iran, last accessed on 3 June 2019. 107  Firstpost. 2016. ‘India Links $20 bn Oil and Gas Investment in Iran to Favourable Terms’, 11 April, https://www.firstpost.com/business/india-links-20-bn-oil-and-gasinvestment-in-iran-to-favourable-terms-2722026.html, last accessed on 3 June 2019.

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a capital investment of [US]$ 85.21 million on a 10-year lease’.108 An agreement to this effect was signed during the visit of President Rouhani. Both the countries also signed an MoU worth US$600 which would enable Iran to purchase cars from India. A statement from the Iranian embassy in New Delhi observed that Iran would do its best to ensure the security of oil supplies to India by offering ‘flexible measure’. Iran wants India to expedite its investments and accelerate the engagement for development of the Chabahar Port.109 Moreover, both countries agreed to allow Indian companies to invest in Rupees in the Chabahar area, and if materializes, this would mitigate the impact of the US sanctions over Iran.

Challenges Iran continues to be the most challenging dimension of India’s foreign policy in general and towards the Persian Gulf in particular. The official position has been that ‘India’s bilateral relations with Iran stand on their own and are not influenced by India’s relations with any third party’,110 but New Delhi has become a prisoner of the US-Iranian disagreement and confrontation. The bilateral relations are entering a new phase of challenging times once the US waiver on the Indian import of Iranian crude comes to an end. While New Delhi is hard-pressed to accede to the demands of the US, it would also require a face-saving formula for not entirely disregarding Iran, which has been a traditional friend of India. This will not be easy in the light of the growing friendship between India and the US and the strengthening and interest convergence of the Indo-US relations. Washington has been forthcoming towards India on a host of issues at the global level and has been instrumental in India becoming part of the highly restricted groups such as Wassenaar Arrangement.111 Though the Indo-US relations have not been free from disagreements and 108  Roche, Elizabeth. 2018. ‘In a Major Shift, India Lets Businesses Invest in Iran in Rupees’, in Live Mint, 16 February, https://www.livemint.com/Politics/IRGHKh8oKj0xbxhTevDHNL/ In-a-major-shift-India-lets-businesses-invest-in-Iran-in-ru.html, last accessed on 3 June 2019. 109  Herber Smith Freehills. 2018. ‘Key Developments in Iran, January 2018’. 110  MEA, GoI. 2018. ‘Question No. 137 Indo-Iranian Relationship’, 18 July, https:// m e a . g o v. i n / l o k - s a b h a . h t m ? d t l / 3 0 0 9 4 / Q U E S T I O N _ N O 1 3 7 _ I N D O I R A N _ RELATIONSHIP, last accessed on 3 June 2019. 111  The Hindu. 2017. ‘In an Elite Club: On India’s Wassenaar Entry’, 12 December, https://www.thehindu.com/opinion/editorial/in-an-elite-club/article21419773.ece, last accessed on 3 June 2019.

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troubles, especially over President Trump’s decision to impose tariffs on Indian exports to his country, the US has been helping India in putting pressure on Pakistan over terrorism. Moreover, the Indo-US relations transformed over the past decade, and it will not be possible for New Delhi to ignore let alone defy the US pressure tactics. With growing cooperation and collaboration with their counterparts, Indian industries and private companies would not like to lose their business interests with the US over Iran. An open defiance, as advocated by a section of the Indian elite, would be detrimental and hence is not a viable option. At the same time, India is likely to continue working with Iran on the Chabahar Port which was given an exemption. While the November waiver had set a six-month timeframe for oil imports, the waiver for the port had no time limit. India and Iran have sought to consolidate the situation by exploring investments in Rupees as a safety mechanism. Towards this end, Iran has been seeking the Indian nod for expanding banking activities in India. Presently, one Iranian bank with a branch in Mumbai is operating in the country, and Iran wishes to expand this network partly to circumvent the US sanctions. The Pasargad Bank which was given the licence by the Reserve Bank of India is expected to start its operations in 2019. Both the countries are also shoring up the Rupee payment mechanism that came into force in 2015 to address the question of payment dues for the Indian imports of Iranian oil. The JCPOA enabled India to settle its oil dues to the tune of US$750 million of the US$6.4 billion dues in May 2016. To ward off future difficulties, both have been working to expand the portion of the dues that can be settled through the Indian currency and its possible use by Iran. In addition to bilateral issues and the US factor, India’s Gulf policy has been significantly reshaped in the past few years, especially since 2014 when Narendra Modi became prime minister. Far from being defused and somewhat sympathetic towards Iran, it has become more focused on the UAE and Saudi Arabia, the arch-rivals of the Islamic Republic. This poses an interesting challenge to India as it is not ready to ignore Iran and wholeheartedly embrace the Gulf monarchies. Israel is also another important player in India’s Iran policy. As Indo-­ Israeli relations are getting stronger, the Middle East has witnessed growing Israeli-Iranian animosity and tension. During 2018, this burst into a full-fledged conflict in Syria when Israel attacked Iranian interests in the war-ravaged Syria. But for the Russian intervention and calming effect on

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both the parties, Israeli-Iranian confrontation in Syria would have gone for the worst. Seeking closer ties with both the parties, India will not be able to be indifferent towards the Israeli-Iranian tensions and animosity. The other important player for India in the Iranian theatre is China. Beijing has been increasing its economic footprints in the Gulf for some time, and there are indications that China is taking more interests in the political and security affairs of the region to safeguard its interests. The Gulf countries including Iran have enthusiastically embraced President Xi Jinping’s flagship Belt and Road Initiative (BRI), an ambitious plan to enhance China’s global connectivity and trade. India remains more vocal in its opposition primarily because of the inclusion of China-Pakistan Economic Corridor (CPEC) that passes through the Gilgit-Baltistan region of the Pakistan-occupied Kashmir. Nonetheless, India’s concerns vis-à-vis BRI are also attributed to New Delhi feeling lesser room for its own economic ambitions vis-à-vis the Persian Gulf countries. Thus, Iran continues to be a major challenge to India’s foreign policy. New Delhi’s desire for closer ties with Tehran must be accommodated if not squared with India’s interests vis-à-vis the US, Saudi Arabia, the UAE and Israel and their disagreements with Iran over a host of issues. If the events of 2018 are an indication, India’s Iran policy will come under greater international attention and scrutiny and may even expand the scope for external influence in its policies and positions vis-à-vis Iran in the coming years.

CHAPTER 4

Iraq

Key Information Ruling Party: Coalition of six blocs dominated by Saairun and Wataniya; President: Barham Salih (since 2 October 2018); Prime Minister: Adel  Abdul-Mahdi (since 24 October 2018); National Day: 14 July; Parliament: 329-member Council of Representatives; Last Parliamentary Election: 12 May 2018; Major Group in Parliament: Saairun Alliance; National Carrier: Iraqi Airways. Socio-Economic Indicators Area: 438,317 sq. km; Population: 40.194 million (July 2018 est.); Native: NA; Expats: NA; Religious Groups: Muslim 95–98 per cent (Shia 64–69 per cent; Sunni 29–34 per cent); Christian 1 per cent; other 1–4 per cent (2015 est.); Youth: 19.42 per cent; Population growth rate: 2.5 per cent (2018 est.); Life expectancy at birth: 74.9  years (2017  est. HDI); Major population groups: Arabs 75–80 per cent; Kurdish 15–20 per cent; Turkoman, Assyrian or Other 5 per cent; Literacy rate: 79.7 per cent (2015 est.); National Currency: Iraqi Dinar (IQD); GDP: US$197.7 billion (2017 World Bank); Foreign Trade: Export US$61.4 billion (2017 est.), Import US$39.47 billion (2017 est.); Defence budget: 3.63 per cent of GDP (2016 est.), 3.9 per cent of GDP (2017, SIPRI/World Bank); Sovereign Wealth Fund: US$0.9 billion; External Debt: $73.02 billion (31 December 2017 est.); Per capita © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_4

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income: US$17,010 (2017); Oil reserves: 148.8 billion bbl. (1 January 2018 est.); Gas reserves: 3.82 trillion cu m (1 January 2018 est.); HDI rank: 120/189 (2018); Infant Mortality Rate: 37.5 deaths/1,000 live birth; UN Education Index: 0.53; Gender Inequality Index: 0.506 (2017); Labour Force: 8.9 million (2010 est.); Unemployment rate: 16 per cent (2012 est.); Urban Population: 70.5 per cent (201); Rate of Urbanization: 3.06 per cent annual rate of change (2015–20 est.); Last National Census: 1997. India Related Indian Cultural Centre: NA; Number of Indians: 15,000–17,000 (2019); Number of places of worship for Indians: NA; Indian Schools: NA; Indian Banks: NA; Currency exchange rate: IQD 1 = INR 0.058 (March 2019); Last visit to India by the ruler: Prime Minister Nouri al-Maliki, August 2013; Last Indian Prime Minister to visit: Indira Gandhi, January 1975. * * * The Iraqi celebrations of a military victory over the Islamic State of Iraq and Syria (ISIS) announced by Prime Minister Haider al-Abadi in December 2017 proved to be premature. The hope that insurgency and civil war would end and give way to national rebuilding and reconstruction did not materialize; 2018 saw the continued presence of the ISIS, and the group mounted several attacks on the military and civilian targets with impunity across the country. While the quasi-state established by the ISIS has been dismantled, its ability to function as an insurgent organization remained intact. Some of the principal ISIS figures have taken refuge in the vast desserts in Al-Anbar and Saladin provinces in western Iraq. This has raised the question not only over the effectiveness of the Iraqi military but also over the policies adopted by external actors who were focusing on the military defeat of the ISIS. As a result of the loyalty and allegiance of various groups to their foreign patrons, the Iraqi polity continued to be fragmented and caused political instability. A clear manifestation of this was a five-month delay in the formation of a new government after the 12 May election to the 329-member Majlis al-Nuwwab (Council of Representatives). At the

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same time, the relatively successful election with free and fair voting highlighted the Iraqi desire to work towards normalization. Despite the continued political turmol, Iraq’s foreign trade, especially its energy sector, has shown signs of revival and contributed to growth in exports. India has emerged as one of the primary destinations for the Iraqi oil and during the year Iraq became one of the top suppliers of crude oil to India. These are encouraging signs, but the political situation is far from stable as the country must find solutions to a myriad of problems and the foremost among them is the accommodation of the marginalized Sunni and the restive Kurdish population. It will also have to deal with challenges posed by the remnants of the ISIS and evolve a robust politico-­ military response.

Domestic Developments Politics After a delay of six months, Iraq held its parliamentary election (Table 4.1) on 12 May 2018, and this was the fifth national elections (one for the Transitional National Council [January 2005] and four for the Council of Representatives [December 2005, March 2010, April 2014 and May 2018]) since the US-led invasion of the country in March 2003.1 According to the Independent High Electoral Commission (IHEC)—the body responsible for the conduct of elections—the turnout was 44.52 per cent,2 and this was a significant drop from near 60 per cent recorded in 2010 and 2014 elections.3 According to official statistics, 27 coalitions comprising of 88 recognized political parties and 6,904 candidates were vying for the 329 seats in the unicameral Majlis al-Nuwwab (Council of Representatives). The electoral process was considered a success4 mainly 1  Inter-Parliamentary Union, ‘Iraq’, http://archive.ipu.org/parline-e/reports/2151_A.htm, last accessed on 31 May 2018. 2  CNN. 2018. ‘Iraq: The Participation Rate in the Elections Reached 44.5%’, 12 May, https://arabic.cnn.com/middle-east/2018/05/12/iraq-elections-closing-centers, last accessed on 25 May 2019. 3  Daily Sabah. 2014. ‘60% Voter Turnout in Iraq Elections’, 1 May, https://www.dailysabah.com/mideast/2014/05/01/60-voter-turnout-in-iraq-elections, last accessed on 25 May 2019. 4  The Peninsula. 2018. ‘Approx 7000 Candidates Compete in Iraqi Elections’, 20 February, https://thepeninsulaqatar.com/article/20/02/2018/Approx-7,000-candidates-competein-Iraqi-elections, last accessed on 25 May 2019.

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Table 4.1  Elections for the Council of Representatives, 12 May 2018 General details Registered voters Voter turnout Number of candidates Female candidates Coalitions in the fray Election results Name of coalition Saairun al-Islah (March Towards Reform) al-Fatah (Conquest) al-Nasr (Victory) Dawlat al-Qanun (State of Law) Kurdistan Democratic Party (KDP) al-Wataniya (National) Tayar al-Hikma al-Watani Patriotic Union of Kurdistan (PUK) Muttahidun Lil Islah (Unity for Reforms) Others (27 coalition and parties) Independents Total Men Women

18.2 million 44.52 per cent 6,904 NA 27 Leader Muqtada al-Sadr Hadi al-Amiri Haider al-Abadi Nouri al-Maliki Masoud Barzani Ayad Allawi Ammar al-Hakim Kosrat Rasul Ali Usama al-Nujaifi – –

Number of seats 54 48 42 25 25 20 19 19 14 49 14 329 246 83

Source: Inter-Parliamentary Union (IPU), http://archive.ipu.org/parline/reports/2151_E.htm

because despite fears of ISIS attacks and political violence, the process was completed without any major terror attack. Nonetheless, incidents of protests and clashes among supporters of various parties and leaders were reported during the build-up to the election.5 The results were announced on 19 May which threw some surprises, with Muqtada al-Sadr’s Saairun Alliance emerging as the largest block with 54 seats (Table 4.1). The Fatah Alliance led by Hadi al-Amiri gained 48 seats, while Nasr Alliance headed by incumbent Prime Minister Abadi came third with 42 seats.6 State of Law coalition headed by former Prime 5  Al-Khafaji, Isam. ‘Iraq 2018 Elections: Between Sectarianism and the Nation’, Arab Reform Initiative, Policy Alternatives, 12 July 2018, https://archives.arab-reform.net/en/ node/1328, last accessed on 25 May 2019. 6  Al-Jazeera. 2018. ‘Iraq Elections Final Results: Sadr’s Block Wins Parliamentary Poll’, 20 May, https://www.aljazeera.com/news/2018/05/iraq-election-final-results-sadr-blocwins-parliamentary-polls-180519071930804.html, last accessed on 25 May 2019.

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Minister Nouri al-Maliki and the Kurdish Democratic Party obtained 25 seats each. The other Kurdish party, Patriotic Union of Kurdish (PUK)— headed by Iraqi President Jalal Talabani until his death in October 2017— got 19 seats. Amidst accusations of fraud and mishandling, the parliament ordered a recount of all ballots and resolved that votes cast by the internally displaced voters should be cancelled. This mostly pertained to Iraqis who were displaced due to the ISIS violence in the north and central Iraq and nullified about 285,000 votes. The IHEC challenged this move in the Supreme Court, and the latter in its ruling in June upheld the manual count but dismissed the cancellation of votes by the internally displaced persons. After the recount of votes, the final results were announced on 9 August more than eight weeks after the votes were cast with five seats changing hands.7 The fragmentation of the verdict and wide ideological differences of the political blocs and their policy priorities proved a challenge for government formation. After protracted negotiations and deal-making, a broad-­based coalition comprising of Saairun, Fatah, Nasr, PUK and Wataniya consisting of 183 members of parliament announced its intention to form a government based on a ‘cross-sectarian’ and non-partisan agenda.8 Meanwhile, Abdul-Mahdi, an independent Shia lawmaker and former finance minister under Prime Minister Ayad Allawi, was nominated by rival leaders comprising of Sadr, Abadi and Amiri to lead the next government. On 15 September, the parliament elected Sunni lawmaker Mohammed al-Halbousi as a speaker. Barham Salih backed by PUK was elected president on 2 October and assumed office with immediate effect. Within hours after assuming office, Salih invited Abdul-Mahdi to form the government. On 24 October, more than five months after the Majlis elections, Abdul-Mahdi along with 14 ministers took the oath to head the next Iraqi government.9 He pledged to 7  Aboulenein, Ahmed. 2018. ‘Recount Shows Iraq’s Sadr Retains Election Victory, No Major Changes’, in Reuters, 10 August, https://in.reuters.com/article/iraq-election/ recount-shows-iraqs-sadr-retains-election-victory-no-major-changes-idINKBN1KV04V, last accessed on 25 May 2019. 8  MacDonald, Alex. 2018. ‘Iraqi Parties Announce Alliance to Form Government’, in Middle East Eye, 20 August, https://www.middleeasteye.net/news/iraqi-parties-announcealliance-form-government, last accessed on 25 May 2019. 9  Aldroubi, Mina. 2018. ‘Iraq Forms New Government, Five Months after Elections’, in The National, 25 October, https://www.thenational.ae/world/mena/iraq-forms-new-government-five-months-after-elections-1.784304, last accessed on 25 May 2019.

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administer a non-partisan ­government that would focus on fighting corruption and improving the economic and social hardships faced by the ordinary Iraqis. The delay in the government formation was the result of the trust deficit among the electorate which reflected in the lower voter turnout. The lack of essential amenities, especially electricity and water, and rampant corruption contributed to a degree of contempt for the ‘Green-zone’ elites10 who have been running the country, with the patronage of the US and Iran.11 The widespread apathy and anger were the principal reason for the protests in the port city of Basra which began in July and soon spread to other parts of the country. It acquired violent manifestation in some parts, especially Najaf and Basra, and led to mild use of force against the protesters in Basra and other locations. After the elections, protests against ‘corruption, poor services, and unemployment’ acquired higher intensity and Shia elite became their ­target.12 As the government formation was dragging on, scores of persons were killed by the security forces by the end of September. The political stalemate and external interference on behalf of rival factions only added to popular anger. In mid-September, such protests also targeted American and Iranian consulates in Basra.13 The situation calmed down only after the political breakthrough and initiation of the government formation, and Abdul-Mahdi’s government promised to address the issues that angered the ordinary Iraqis. The tension between Baghdad and Erbil—headquarters of the Kurdistan Regional Government (KRG)—has been brewing since the

10  This refers to the political leaders and members of political parties who live in the safe and secure area of the Green-Zone in Baghdad that houses the government offices, parliament and courts. 11  Mansour, Renad and Toorn, Christine van den. 2018. ‘The 2018 Iraqi Federal Elections: A Population in Transition’, in LSE Middle East Centre Report, July, http://eprints.lse. ac.uk/89698/7/MEC_Iraqi-elections_Report_2018.pdf, last accessed on 25 May 2019. 12  Winter, Chase. 2018. ‘Iraq’s Protests: What You Need to Know’, in DW, 22 July, https:// www.dw.com/en/iraqs-protests-what-you-need-to-know/a-44779555, last accessed on 25 May 2019. 13  Twaij, Ahmed. 2018. ‘Northern Iraq May Be Free, but the South Is Seething’, in Foreign Policy, 9 November, https://foreignpolicy.com/2018/11/09/northern-iraq-maybe-free-but-the-south-is-seething-basra-isis-sistani-pmf-shiites-oil-poverty/, last accessed on 25 May 2019.

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September 2017 Kurdish referendum.14 Despite strong objection and opposition from the federal government, 72 per cent of the registered electorate took part in the referendum with an overwhelming majority of 93 per cent voting in favour of independence. This sent shockwaves in Baghdad and other capitals in the region. The government headed by Prime Minister Abadi seized the initiative from the KDP-led KRG and, with the help of the Iraqi military and the Iran-backed Popular Mobilization Unit (PMU), took control of the borders of KRG with neighbouring countries, namely, Turkey, Iran and Syria as well as oil fields in Kirkuk. It also closed all international air traffic to Erbil airport and virtually imposed a siege. Though tensions escalated, the overwhelming nature of Baghdad’s measures forced KRG to back down on its demands and an open military confrontation was avoided. At the same time, differences between the two continued and budget allocation for KRG caused friction as Baghdad sought to leverage its position. Tensions began to ease around March–April when the federal government agreed to temporarily resume fund transfers to meet the immediate needs of the KRG, especially salaries and pension to its employees. Towards the end of the year, in November, both sides agreed for the resumption of oil exports from Kirkuk, indicating that the issue of Kurdish independence has been put on the backburner for now as Baghdad and Erbil work towards reconciliation.15 Security The security situation in Iraq continued to deteriorate during the year, partly due to ISIS-linked violence. On 9 December 2017, Prime Minister Haider al-Abadi declared the military defeat of ISIS and soon Iraq was proclaimed to be free from ISIS.  However, during 2018, ISIS claimed responsibility for several dozen attacks in the Anbar and Saladin provinces that caused over 500 casualties. The web-based Iraq Body Count (IBC) recorded 3,319 civilian deaths in the country during the year, a signifi-

14  BBC. 2017. ‘Iraqi Kurds Decisively Back Independence in Referendum’, 27 September, https://www.bbc.com/news/world-middle-east-41419633, last accessed on 25 May 2019. 15  Al-Jazeera. 2018. ‘Iraq: Baghdad and Kurds Strike Deal to Resume Kirkuk Oil Exports’, 17 November, https://www.aljazeera.com/news/2018/11/iraq-baghdad-kurds-strikedeal-resume-kirkuk-oil-exports-181116170010040.html, last accessed on 25 May 2019.

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cantly lower number since the rise of the ISIS in 2014.16 Moreover, the IBC data indicates that this was also the lowest number of civilian casualties in Iraq since the US-led invasion of that country in 2003.17 A gradual return to normalcy can be noticed with media reports suggesting that nearly two million internally displaced Iraqis have returned to their homes in 2017 and 2018.18 At the same time, nearly 8.7 million Iraqis are affected by the violence that plagued the country since the US invasion; out of them, 1.5 million are internally displaced, 2.5 million are refugees in neighbouring countries and about 3.8 million live under the extremely vulnerable situation.19 Nonetheless, the continued violence in the western provinces and the escalation of protests in the southern part of the country have been causes for concern. The international coalition against the ISIS along with the Kurdish Peshmerga has been able to push the ISIS out of the northern areas and brought the region under control. On the other hand, the Iraqi military has been less effective and had to rely on the Shia militia which makes up the PMU, and the latter was accused of carrying out several mass killings in Sunni villages in Anbar province, thereby contributing to further alienation of the Sunni population. The ISIS appears to enjoy a degree of local support in some of the areas, especially in the western provinces.20 According to some media reports, several hundred ISIS fighters have entered Iraq from Syria and Turkish borders during the latter half of 2018.21 The return of the insur It was 20,218 in 2014; 17,578 in 2015; 16,393 in 2016; and 13,427 in 2017.  Database of Iraq Body Count, https://www.iraqbodycount.org/database/, last accessed on 25 May 2019. 18  International Organization for Migration. 2018. ‘Iraq Displacement Figures Drop Below 2 Million for First Time Since 2014; Nearly Four Million Have Returned Home’, 4 September, https://www.iom.int/news/iraq-displacement-figures-drop-below-two-million-first-time-2014-nearly-four-million-have, last accessed on 25 May 2019. 19  Humanitarian Country Team. 2018. ‘2018 Iraq Humanitarian Response Plan’, February, https://www.humanitarianresponse.info/sites/www.humanitarianresponse.info/ files/documents/files/iraq_2018_hrp.pdf, last accessed on 25 May 2019. 20  Chughtai, Alia. 2018. ‘Iraq War Map: Who Controls What’, in Al-Jazeera, 31 October, https://www.aljazeera.com/indepth/interactive/2016/08/iraq-war-map-controls-160830115440480.html, last accessed on 25 May 2019. 21  Saadoun, Mustafa. 2019. ‘Has Islamic State Returned to Iraq?’ in Al-Monitor, 5 March, https://www.al-monitor.com/pulse/originals/2019/03/iraq-isis-anbar-mosul-terrorisms e c u r i t y. h t m l ? u t m _ c a m p a i g n = 2 0 1 9 0 3 0 6 & u t m _ s o u r c e = s a i l t h r u & u t m _ medium=email&utm_term=Daily%20Newsletter, last accessed on 25 May 2019. 16 17

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gency and the continued support for ISIS among the sections of the ­disgruntled Sunni population are concerns for the Iraqi government and would require a long-term solution. Besides the security situation in the north, the outbreak of social protests in the south adds to the security dilemma. According to columnist Ahmed Twaij, the current crisis was the outcome of years of neglect and inattention from the government which resulted in the abysmal lack of basic amenities despite the region being the primary source of oil in the country.22 In his words: Increased civil unrest in the region has been exacerbated by the government’s focus on defeating the Islamic State in northern Iraq and unequal distribution of resources, making the current situation both expected and preventable. Basra’s once grand canals, winding through a city previously known as the Venice of the Middle East, are now open-air sewers.23

According to media reports, between April and September—the peak of the protests—at least 23 persons were killed in the clashes.24 As the year ended, the situation calmed down and the new government which came into office in October announced US$2.5 billion additional spending on electricity and water projects. Steps were initiated for the creation of 10,000 new jobs, and the government also announced the formation of a new commission to investigate corruption allegations, but no one was named to head the body as the year ended. Foreign Policy Iraq’s relation with its neighbours during the year has been one of discomfort primarily over the fate of ISIS. As its security forces proved to be ineffective, neighbouring countries—Iran and Turkey—intervened militarily to maintain the Iraqi security. The US continues to play an essential role in ensuring security. Iran has been instrumental in arming and training several Shia militias who were eventually brought under the  Twaij. Foreign Policy. ‘Northern Iraq May Be Free, but the South Is Seething’.  Ibid. 24  Ibrahim, Arwa. 2018. ‘Iraq: Deadly Basra Clashes as Protesters Torch Government Office’, Al-Jazeera, 5 September, https://www.aljazeera.com/news/2018/09/iraq-deadlybasra-clashes-protesters-torch-government-office-180904184844773.html, last accessed on 25 May 2019. 22 23

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umbrella of PMU, and at its height, the force had a strength of at least 150,000 ­fighters. This was the prime force in the fight against the ISIS besides the Kurdish Peshmerga fighters who were trained and armed by the US.  The Iraqi armed forces were also given support and training by the US. Through their security assistance and military presence, both the US and Iran have entrenched their presence in Iraq resulting in them patronizing different local groups in support of their respective interests. This partly contributed to widespread resentment which manifested in the American and Iranian consulates in Basra coming under attack by protesters in September. President Donald Trump’s decision to renew and intensify sanctions against Iran contributed to external rivalries being played out inside Iraq. As the US and Iran prop up proxies, Baghdad has been doing a tightrope balance while maintaining its dependency to maintain security and political stability. Turkey was the third country that intervened in Iraq to act against the Kurdish Workers’ Party (PKK)—banned in Turkey since 1984—which maintains its presence in the Qandil Mountains in northern Iraq. Ankara increased its military operation in northern Iraq between March and June 2018, and the Turkish army extended its presence at least 30 km inside northern Iraq, closer to the town of Qanimasi.25 Since then Turkish forces reportedly established multiple posts inside Iraq, including in the rural areas of Dohuk and Erbil governorates of the KRG territory in its fight against  PKK.26 This anomalous situation of a Turkish military presence inside Iraq was also a result of the newly found bonhomie among Ankara, Baghdad and Tehran in the aftermath of the September 2017 Kurdish referendum as the three powers sought to prevent the emergence of independent Kurdistan in Iraq.27 With changing the geopolitical situation, Baghdad has played its role rather carefully and reached out to Gulf Arab monarchies, especially Saudi Arabia. During the run-up to the parliament election, Riyadh tried to 25  Ahval News. 2018. ‘Turkey Intensifies Military Operations in Northern Iraq’, 4 June, https://ahvalnews.com/turkey-iraq/turkey-intensifies-military-operations-northern-iraq, last accessed on 25 May 2019. 26  Ibid. 27  Sharafedin, Bozorgmehr. 2017. ‘Iran Vows to Stand with Baghdad, Ankara Against Iraqi Kurds’ Independence Push’, in Reuters. 26 September, https://www.reuters.com/article/ us-mideast-crisis-kurds-referendum-iran/iran-vows-to-stand-with-baghdad-ankara-againstiraqi-kurds-independence-push-idUSKCN1C11G7, last accessed on 25 May 2019.

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c­ ultivate the faction led by Muqtada al-Sadr who had visited the Kingdom in July 2017. Due to the latter’s emergence as the most powerful Iraqi leader after the May elections, the Iraqi government is expected to maintain or at least seek cordial relations with all the regional powers. Economy The Iraqi economy is slowly crawling back to normalcy after decades of devastations due to civil wars, sectarian violence, political turmoil and terrorism. Prolonged conflict, political isolation, policy paralysis and economic sanctions had ruined the economy. Indeed, since 1980 Iraq has been in a perpetual state of war and hardship. It was only after the revival of the energy sector during the last few years that the economic situation started to improve. During 2018, the Iraqi gross domestic product (GDP) was estimated at US$230 billion, a significant improvement from US$192 billion registered a year earlier. The economy also shows signs of steady growth and from about 1.5 per cent to it rose to 2.0 per cent during the year. The World Bank estimates that in 2019, the economy would accelerate and register 6.2 per cent growth.28 National rebuilding and job creation are the two main challenges facing the country. According to the World Bank, the cost of post-ISIS Iraqi reconstruction would be as high as US$88 billion, and the country would have to rely on international aid and loans for reconstruction. During the meeting of the International Conference for the Reconstruction of Iraq held in Kuwait in February, Iraq received pledges worth US$30 billion ‘most in the form of loans and guarantees’.29 The rising oil prices and increasing exports have contributed to a fiscal improvement and are expected to post a surplus of 1.2 per cent of the GDP, and this could reduce the public debt-to-GDP ratio to 55 per cent from 63.7 per cent in 2016. The oil prices also contributed to a current account surplus expected to be at 2.1 per cent of the GDP with an estimated foreign exchange reserve of US$60 billion by the end of 2018. As a result of increased liquidity in the market, inflation slightly rose to 1.7 per cent during the year. Similarly, due to the spurt in oil prices, growth was visible in construction, agriculture and goods and services sectors, and 28  The World Bank. 2019. ‘Country Overview: Iraq’, last updated 1 April, https://www. worldbank.org/en/country/iraq/overview, last accessed on 25 May 2019. 29  Ibid.

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they are also gaining strength from growing government expenditure. The external trade has increased to US$101 billion with foreign debt reaching US$73 billion. While the economic indicators and GDP show signs of improvement, the real problems facing the country are poverty and deprivation. Protracted conflict and instability had destroyed the local economy with organized and unorganized sectors faring poorly. This contributed to a high rate of unemployment, hunger and lack of amenities. The recorded unemployment stands at 14.08 per cent, and with a median age of 20 years, this is a precarious situation. Almost a quarter of the working-age population is underutilized, that is, either unemployed or underemployed. Fewer internally displaced adults have jobs, so much so that one employed adult in a household supports more than six non-employed family members.30 The situation is acute in the rural areas, villages and towns retaken from the ISIS control. Internal displacement and lack of economic opportunities have forced millions of Iraqis to depend upon international aid for survival. Directly or indirectly during 2018, Iraq received food aids worth US$1.2 billion. The internal poverty rate has climbed from 18.9 per cent in 2012 to an estimated 22.5 per cent in 2014 and is believed to have gone up further between 2014 and 2018 amidst the ongoing fight against the ISIS. Society After decades of suffering from violence and conflicts, the Iraqi society continues to remain vulnerable to religious, sectarian and ethnic fault lines. While the problem is pervasive, women, children and minorities have been the worst affected due to the civil war, insurgency and terrorism. Thousands have been killed and millions forced out of their homes in search of safety and livelihood. The ISIS which took control of vast areas filled with extreme hatred and violence against Yazidis and Shias perpetuated mass killings and displacement of these communities. On the other hand, in response to the ISIS-initiated violence, Shia militias and armed Kurdish groups also carried out devastating revenge killings in Sunni villages. 30  The World Bank Group. 2018. ‘Iraq Economic Monitor: Toward Reconstruction, Economic Recovery and Fostering Social Cohesion’, Fall 2018, http://documents.worldbank.org/curated/en/980021539372476570/pdf/130798-WP-P164676-Iraq-EcoMonitor-Fall-2018-10-12-18-web.pdf, last accessed on 25 May 2019.

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Women are the worst victims of the socio-political malaise facing Iraq. Their quality of life has deteriorated with economic, political and social marginalization. In addition to being victims of violent crimes, including rape and sexual abuse, women have been suffering from lack of educational and healthcare opportunities, restriction in access to livelihood in addition to cultural and social biases. The structural and legal obstacles further led to their marginalization, and during 2017–18, Iraq stood at the bottom of the global ranking of Women; in Peace and Security Index it was placed 147th out of 153 countries considered for the measures aimed at the overall wellbeing of women in a country based on ‘inclusion, justice, and security’.31 In terms of the Gender Development Index (GDI) and Gender Inequality Index (GII), Iraq is one of the worst performers in the world with rates 0.823 and 0.506, respectively.32 Female representation in politics and economics is dismal, and Iraq is among the worst performing country in the Middle East in terms of share of women in the labour market. At 12 per cent, the female share in the Iraqi labour market is similar to Syria (12 per cent) and only better than Yemen (6 per cent).33 Political participation is also negligible. Nonetheless, 25 per cent of the seats in the Council of Representatives are reserved for women, and accordingly, 82–83 women have been elected in the parliamentary elections held since 2010. At the grassroots level, the number of women in public life is limited and only a few have taken up roles outside the household. Cultural and tribal customs also inhibit women from participating in public life, especially during turbulent times. Those living in rural areas or who were internally displaced perform even worse and are more vulnerable to violence and intimidation. Indeed, 80 per cent of the total internally displaced persons are women and children. Minority women are also more susceptible to violence and crime, but at the same time, the condition of women in the Kurdish areas is comparatively better. According to UNDP, the Gender Inequality Index in Kurdistan region 0.48 is lower than Iraqi 31  Georgetown Institute for Women, Peace and Security. 2018. Women, Peace and Security Index, https://giwps.georgetown.edu/the-index/, last accessed on 25 May 2019. 32  United Nations Development Program (UNDP). 2018. ‘Briefing Note for Countries on the 2018 Statistical Update: Iraq’, http://hdr.undp.org/sites/all/themes/hdr_theme/ country-notes/IRQ.pdf, last accessed on 25 May 2019. 33  The World Bank. 2018. Female Labour Force Participation Data, https://data.worldbank.org/indicator/sl.tlf.cact.fe.zs, last accessed on 25 May 2019.

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a­ verage of 0.56. Similarly, the underage marriage in the Kurdish region of Iraq is around 10 per cent, while in Iraq it is 19 per cent.34 Minorities continue to be vulnerable. While the new constitution adopted in 2005 pledges legal protection of religious freedom and guarantees equal rights, the sectarian and religious fault lines have created a severe wedge between people. A country of minorities, ethnic and religious, Iraq is going through one of the toughest moments of its history; Yazidis and Christians have been the worst affected communities due to the rise of ISIS which has perpetuated hatred, extremism and violence against the non-Islamic faiths. According to one report, the ‘humanitarian crisis has disproportionately affected Iraq’s most vulnerable people, subjecting minorities, such as Assyrians, Iraqi Turkmen, and Yazidis to gross human rights violations and abuse.’35 Reports also suggest minorities make up a considerable portion of internally displaced persons and refugees.36

Bilateral Relations As it embarks upon national reconstruction, external understanding, assistance and help are essential for Iraq. While its economy is in tatters, the society continues to be disintegrated, and polity fragmented. Though geographically distant, Iraq is vital for India for issues such as energy security and fighting terrorism and religious extremism. Besides the historical ties between the countries, India’s growing global stature and raising economy have attracted considerable attention in the Persian Gulf, especially in Iraq. Following the end of the civil war and military defeat of the ISIS, India has enhanced its efforts to engage with the Iraqi leadership with the object of increasing trade and commercial ties and towards helping the rebuilding and reconstruction of the war-torn country. Iraq offers immense opportunities for Indian companies in  redevelopment and reconstruction projects  and in the process expand their business opportunities. 34  Kaya, Zenep. ‘Gender Equality in Iraq and Iraqi Kurdistan’, in LSE Middle East Centre Blog, 1 May, https://blogs.lse.ac.uk/mec/2018/01/05/gender-equality-in-iraq-and-iraqikurdistan/, last accessed on 25 May 2019. 35  Unrepresented Nations and Peoples Organization. 2018. ‘The Situation of Minorities in Iraq after ISIS’, 7 June, https://unpo.org/article/20889, last accessed on 25 May 2019. 36  Ibid.

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Political Ties The suspense over the fate of the 39 Indian workers37 who were abducted by ISIS fighters in June 2014 came to an end in March 2018 when the DNA identification of the remains was found after the liberation of Mosul in July 2017.38 This closed a long and painful chapter regarding the missing Indians which was a charged political issue within the country. Following the liberation of Mosul, Minister of State (MoS) for External Affair Gen. V. K. Singh was sent to Iraq in October 2017 to discuss locating the missing Indians or their mortal remains. For domestic political reasons, the government was not prepared to confirm their deaths based on media reports39 and in the process kept the hopes of the family members alive.40 In March, the government informed the parliament that upon the liberation of Mosul and Badush, ‘Iraqi authorities informed … India about the mass graves found in and around these areas … asked for DNA samples of the close relatives of the missing Indians for matching with the mortal remains being discovered in the graves’.41 Once the DNA identification confirmed the fate of the missing Indians, External Affairs Minister Sushma Swaraj informed the parliament on 20 March42 and held a press conference later that day. Clarifying that 37  Government of India (GoI), Ministry of External Affairs (MEA). 2018. ‘List of Indian Nationals Killed in Iraq around Mosul’, 20 March, https://mea.gov.in/press-releases. htm?dtl/29671/list+of+indian+nationals+killed+in+iraq+around+mosul, last accessed on 25 May 2019. 38  GoI, MEA. 2018. ‘Transcript of Press Conference by Embassy of India, Baghdad on Issue of 39 Indians in Iraq’, 20 March, https://mea.gov.in/media-briefings. htm?dtl/29672/transcript+of+press+conference+by+embassy+of+india+baghdad+on +issue+of+39+indians+in+iraq, last accessed on 25 May 2019; and GoI, MEA. 2018. ‘Translation of Press Conference by External Affairs Minister on Issue of 3 Indians in Iraq (March 20, 2018)’, 20 March, https://mea.gov.in/media-briefings.htm?dtl/29676/ Translation_of_Press_Conference_by_External_Affairs_Minister_on_issue_of_39_Indians_ in_Iraq_March_20_2018, last accessed on 25 May 2019. 39  Ibid. 40  NDTV. 2018. ‘39 Indians, Kidnapped 4 Years Ago by ISIS in Iraq, Killed: A 10-Point Timeline’, 20 March, https://www.ndtv.com/india-news/39-indians-kidnapped-4-yearsago-by-isis-in-iraq-killed-a-10-point-timeline-1826251, last accessed on 25 May 2019. 41  GoI, MEA. 2018. ‘Question No. 1884 Indians Missing in Iraq’, 7 March, https://mea. gov.in/lok-sabha.htm?dtl/29549/QUESTION_NO1884_INDIANS_MISSING_IN_ IRAQ, last accessed on 25 May 2019. 42  GoI, MEA. 2018. ‘English Translation of the EAM’s Address in the Rajya Sabha on the Issue of 39 Indians in Iraq’, 22 March, https://mea.gov.in/Speeches-Statements.htm?dtl/29704/eng

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the government was waiting for conclusive proofs before pronouncing judgement, Swaraj remarked that it was only after the confirmation of the Martyr’s Foundation of Iraq43 that the government could confirm their deaths.44 Eventually, the remains were brought home in early April. Gen Singh who was coordinating the efforts since 2014 visited Baghdad in April to bring home the mortal remains. He took this opportunity to thank Najiha al-Shimmari, president of the Martyr’s Foundation, for extending cooperation ‘in locating the mass grave and in facilitating the repatriation of the same’.45 Surprisingly, the visit was not used to renew political contacts with Iraq. The other significant political development during the year was the Indian participation in the International Conference for Reconstruction of Iraq held in Kuwait in February. India was represented by the then MoS for External Affairs M. J. Akbar46 who informed the gathering that New Delhi had contributed US$30 million in assistance to Iraq since 2014.47 Out of this, US$20 million comprised food supplies through the World Food Programme and for ‘training of Iraqi Foreign Service Officers in diplomacy, and other Iraqi officials in Information Technology’. Another US$10 million went ‘towards International Reconstruction Fund Facility for Iraq (IRFFI) for investments, reconstruction, and development in Iraq’.48

lish+translation+of+eams+address+in+the+rajya+sabha+on+the+issue+of+39+indians+in+iraq+ma rch+20+2018, last accessed on 25 May 2019. 43  India has been cooperating with the Foundation for some time and in December 2018 the government informed the Lok Sabha that equipment and vehicles worth Rupees 38.2 million were given to the Foundation. GoI, MEA. ‘List of Main Ongoing Projects Undertaken in the Last Five Years’, https://mea.gov.in/Images/amb1/lu1565.pdf, last accessed on 25 May 2019. 44  GoI, MEA. ‘Translation of Press Conference by External Affairs Minister on Issue of 3 Indians in Iraq (March 20, 2018)’. 45  Embassy of India, Baghdad, Iraq. 2019. ‘India-Iraq Relations’, http://www.eoibaghdad.gov.in/page/india-iraq-relations/, last accessed on 25 May 2019. 46  He resigned on 17 October 2018 following accusations of sexual misconduct when he was a journalist before joining BJP in March 2014. 47  GoI, MEA. 2018. ‘Statement by Shri M J Akbar, Minister of State for External Affairs at the International Conference for Reconstruction of Iraq in Kuwait (February 14, 2018)’, 14 February, https://mea.gov.in/Speeches-Statements.htm?dtl/29485/statement+by+shri+m j+akbar+minister+of+state+for+external+affairs+at+the+international+conference+for+recon struction+of+iraq+in+kuwait+february+14+2018, last accessed on 25 May 2019. 48  Ibid.

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India has been forthcoming in offering help to Iraqi officials and students through training programmes and scholarships in addition to opening its healthcare infrastructure for Iraqis seeking medical attention. During the past few years, several thousand Iraqis have successfully sought medical care in cities across India. In a statement in Rajya Sabha (Upper House of Parliament) in March 2018, MoS Akbar observed that ‘India welcomed the plans of Iraq and offered to participate in specific projects’. He further added that ‘Indian companies have long experience in implementing projects in Iraq and can plan a substantive role in major projects, including in petrochemicals, health, education, infrastructure, and other sectors.’49 As Iraq seeks to recover from the devastations of war, one of the critical areas where it requires outside help is education. India with its vast and diverse educational infrastructure and skilled human resources can collaborate with Iraq. To further cooperation in this field, Iraqi Minister for Higher Education and Scientific Research Abdul Razzaq al-Assa visited India and participated in the DIDAC India-Asian Summit on Education and Skills and Exhibition held in New Delhi in October.50 Later that month, Iraqi Deputy Minister of Education and Scientific Research Fouad Qassim Mohamed visited India for the 14th Higher Education Summit and underlined the importance the two countries attach for cooperation in higher education. The minister and his delegation also attended a business-­ to-­business meeting organized by the Federation of Indian Chambers of Commerce and Industries (FICCI) to facilitate the engagement of Indian companies and explore opportunities for potential cooperation.51 Trade and Commerce As political visits remain sparse, commercial ties have emerged as the prime area of bilateral relations. As Iraq re-emerged as one of the leading suppliers of crude oil in recent years, Indian companies are increasingly looking to the Iraqi market. Though risks associated with political instability and conflict continue to be a dampener, many Indian companies have set up 49  GoI, MEA. 2018. ‘Question No. 3051 Support for Reconstruction of Iraq’, 22 March, https://mea.gov.in/rajya-sabha.htm?dtl/29714/question+no3051+support+for+reconstr uction+of+iraq, last accessed on 25 May 2019. 50  Embassy of India, Baghdad, Iraq. ‘India-Iraq Relations’. 51  Ibid.

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businesses and established joint ventures with Iraqi partners in relatively safer cities including Baghdad and Erbil. Moreover, since the opening of its consulate in Erbil in August 2016, India’s trade with the Kurdish Autonomous Region has been flourishing, and this has enabled many Indian companies to set up business activities in the Kurdish region. These resulted in Iraq emerging as the tenth largest trading partner of India in 2017–18. After years of slowdown, the Indo-­Iraqi trade crossed the US$19 billion mark in 2017–18 (Table 4.2). It was a 48 per cent jump from the previous financial year and was almost closer to the 2013–14 mark before the onset of ISIS (Table 4.2 and Fig. 4.1). Table 4.2  India-Iraq bilateral trade (US$ million) 2013–14

2014–15

2015–16

2016–17

2017–18

India’s exports to Iraq 918.03 892.32 1,004.39 1,111.45 1,462.23 India’s imports from Iraq 18,520.86 14,247.66 10,837.58 11,707.94 17,615.81 Total bilateral trade 19,438.89 15,139.98 11,841.98 12,819.39 19,078.04 Share in India’s total trade 2.54 1.99 1.84 1.94 2.48 Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 4.1  India-Iraq bilateral trade 25 20 15 10 5 0

2011-12

2012-13

2013-14 Exports

2014-15 Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

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Even though the bilateral trade is dominated by energy, other imports of India include dry fruits and dates and animal hide and skin for the leather industry. For its part, India exports cereals and agricultural products, petroleum products, meat, chemicals, pharmaceutical products, iron and steel, stone and building materials, clothes and apparels, vehicles and so on to Iraq. As part of the export promotion activities, a 28-member delegation from Confederation of Indian Industries (CII) visited Bagdad and Erbil, met ministers, officials and businesspersons, and explored possible cooperation in IT, pharmaceutical and construction industries. Another business delegation from Trade and Promotion Council of India visited Iraq in November.52 At the same time, the tension between the federal government and KRG over the Kurdish referendum and the subsequent sanctions imposed by Baghdad has considerably dented India’s fortunes. The closure of the Erbil airport and temporary stoppage of the oil production in Kirkuk signalled the fragility of India’s inroads in the Kurdish economy. In December, government informed the Lok Sabha that during the past few years, India had spent Rupees 5.5 million towards establishing Jaipur Foot Camp in Karbala for the benefit of those who lost their limbs in the civil war and sectarian violence.53 Energy Ties Energy has been the most essential commodity of the Indo-Iraqi trade relations and catapulted Iraq as India’s primary trade partner in the Persian Gulf. During 2017–18, Iraq emerged as one of the leading suppliers of crude oil to India accounting for 47.2 million metric tons (MMT) crude worth US$17.54 billion (Table 4.3). This is nearly 13 per cent of the total hydrocarbon resources imported by India during the year. Furthermore, energy accounted for 99.5 per cent of the total imports from Iraq (Fig. 4.2), signifying the complete domination of crude in India’s imports from the country. There has been significant growth in bilateral trade primarily due to rise in global oil price as well as increased production and export capacity of the Iraqi oil industry. The same trajectory is visible in the Iraqi share in India’s energy imports as reflected in Table  4.4 and Fig. 4.3. Continuing growth in the oil imports from Iraq will be crucial as India is

 Ibid.  GoI, MEA. ‘List of Main Ongoing Projects Undertaken in the Last Five Years’, https:// mea.gov.in/Images/amb1/lu1565.pdf, last accessed on 25 May 2019. 52 53

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Table 4.3  Share of oil in India’s imports from Iraq (US$ million) Year

Oil imports from Iraq

Total oil imports

Iraqi share in oil total imports

2013–14 2014–15 2015–16 2016–17 2017–18

18,450.33 14,177.22 10,759.19 11,633.29 17,544.32

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

10.17 9.06 11.10 11.28 13.26

Imports from Per cent of oil Iraq in imports from Iraq 18,520.86 14,247.66 10,837.58 11,707.94 17,615.81

99.62 99.51 99.28 99.36 99.59

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 4.2  Share of oil in imports from Iraq 99.7 99.6 99.5 99.4 99.3 99.2 99.1

2011-12

2012-13

2013-14

2014-15 2015-16 share in per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

forced to reduce its energy relations with Iran due to the intensification of sanctions by the Trump administration. The return of Iraq to international energy trade and its emergence as a viable option bode well for India’s energy security. This has also enabled India’s diversification options, and as a result, besides the US and Australia, Iraq has become a significant supplier of energy resources. According to the Indian embassy in Baghdad, ‘India’s public sector energy companies, including HPCL and BPCL, are the major importers of oil from Iraq.’54  Embassy of India, Baghdad, Iraq. ‘India-Iraq Relations’.

54

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Table 4.4  India’s energy imports from Iraq (in US$ million)

India’s energy imports from Iraq India’s total energy imports India’s total energy imports from Persian Gulf Share of Iraq in total energy imports (in per cent) Share of Iraq in imports from Persian Gulf (in per cent)

2013–14

2014–15

2015–16

18,450.33

14,177.22 10,759.19

2016–17

2017–18

11,633.29

17,544.32

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75

85,300.30 50,992.26

56,335.34

70,090.81

10.17

9.06

11.10

11.28

13.26

17.34

16.62

21.10

20.65

25.03

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 4.3  Share of Iraq in India’s oil imports 30 25 20 15 10 5 0

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Share in Total Oil Imports Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

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With the growing overseas acquisition, ONGC Videsh Limited (OVL), the overseas arm of India’s premier energy company, sent a delegation to Iraq which visited oil fields in Basra and held discussions with Iraqi energy sector officials to explore investment opportunities.55 Moreover, Iraq is also importing oil products from India and though the quantities are not substantial, they offer a potential avenue for enhancing India’s exports to Iraq. Expatriates The presence of the expatriate workers dominates much of India’s relations with the Gulf Arab countries. During the 1970s and 1980s, Iraq had a vibrant Indian community, and the onset of the Iran-Iraq War and the Kuwait crisis resulted in most of them leaving Iraq. However, a small number of Indians have continued to live in Iraq or have sought to go to that country, often illegally, to find work. The risk involved in such attempts was exposed in the abduction and subsequent killing of 39 Indian workers by the ISIS. Hence, at regular intervals, the Indian government has issued advisory to its citizens either to avoid visiting Iraq or to take precautionary measures if the visits were necessary. At the same time, Iraq continues to attract a sizeable Muslim pilgrim, and during the year, about 30,000–40,000 Indians visited Baghdad, Karbala, Najaf and Samarrah.56 In December, Air India announced the launching of a twice a week direct flight between Lucknow and Najaf, the two Shia centres of learning, to promote pilgrimage travel.57 Estimates suggest that there are about 10,000 Indians in Iraq involved in various business activities, including healthcare, mostly in the Kurdish Autonomous Region.58

 Ibid.  Ibid. 57  Financial Express. 2018. ‘Air India Plans to Start Lucknow-Najaf Flights from January Second Week’, 24 December, https://www.financialexpress.com/industry/air-india-plansto-start-lucknow-najaf-flights-from-january-second-week/1423975/, last accessed on 25 May 2019. 58  GoI, MEA. 2018. ‘Population of Overseas Indians’, December, http://mea.gov.in/ images/attach/NRIs-and-PIOs_1.pdf, last accessed on 25 May 2019. 55 56

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Challenges One of the impediments for realizing the full potentials of the Indo-Iraqi relations has been the internal situation in that country and continued uncertainty over the defeat if not the elimination of ISIS.  Though the political conditions are improving, Indian companies are somewhat cautious because of the continued political uncertainties. While many companies are becoming involved in reconstruction and capacity-building activities, threats of violence and the resurfacing of the insurgency are limiting the opportunities only to ‘safe’ zones and cities. The Kurdish referendum of September 2017 and the ensuing tension between Baghdad and Erbil are a negative development for India as the latter was seeking to exploit the economic opportunities of the oil-rich Kirkuk region. The return of stability to KRG following gradual reconciliation, therefore, is good news for India to sustain the momentum following the establishment of a consulate in 2016. India’s growing international profile would require it to partake in the economic rebuilding of Iraq through reconstruction activities and explore the avenues of cooperation with countries like the US, Russia and European Union who have a similar interest in Iraq. Only through active participation in the rebuilding of the country, India could enhance Indo-­ Iraqi relations in the coming years.

CHAPTER 5

Kuwait

Key Information Ruling family: Al-Sabah; Ruler: Emir Sabah al-Ahmad al-Jaber al-Sabah (since 29 January 2006); Crown Prince: Prince Nawaf al-Ahmad al-Jaber al-Sabah (since 7 February 2006); National Day: 25 February; Parliament: 65-member (50 elected, 15 ex-officio cabinet) National Assembly; Last Parliamentary Election: 26 November 2016; Major Group in Parliament: Conservative (Salafi and Muslim Brotherhood); National Carrier: Kuwait Airways. Socio-Economic Indicators Area: 17,818 sq. km; Population: 2.92 million (July 2018 est.); Native: 31 per cent; Expats: 69 per cent; Religious Groups: Citizen (Muslim 100 per cent); Resident population (Muslim 76.7 per cent; Christian 17.3 per cent; other 5.9 per cent); Youth: 15.04 per cent; Population growth rate: 1.38 per cent (2018 est.); Life expectancy at birth: 78.3  years (2018 est.); Major population groups: Kuwaiti 30.4 per cent; Other Arabs 27.4 per cent; Asian 40.3 per cent; African 1 per cent; Others 0.9 per cent; Literacy rate: 96 per cent (2017 est.); National Currency: Kuwaiti Dinar (KD); GDP: US$120.126 billion (2017 World Bank); Foreign Trade: Export US$55.17 billion (2017 est.), Import US$29.53 billion (2017 est.); Defence budget: 4.83 per cent (2015); Sovereign Wealth Fund: US$592 billion; External Debt: $47.24 billion (31 © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_5

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December 2017 est.); Per capita income: US$83,310 (2017 World Bank GNI PPP) (HDI report: US$70,524 GNI per capita 2011 PPP$); Oil reserves: 101.5 billion bbl. (2018 est.); Gas reserves: 1.784 trillion m3 (2018 est.); HDI rank: 56/189; Infant Mortality Rate: 6.8 deaths/1,000 live births (2018 est.); UN Education Index: 0.62; Gender Inequality Index: 0.270 (2017); Labour Force: 2.695 (2017 est.) million; Unemployment rate: 1.1 per cent (2017 est.); Urban Population: 100 per cent (2018); Rate of Urbanization: 1.78 per cent annual rate of change (2015–20 est.); Last National Census: 2005. India Related Indian Cultural Centre: India Study Centre (Faculty of Social Sciences, Kuwait University); Number of Indians: 919,354 (approx. 2017 est.); Number of places of worship for Indians: 7 recognized Churches and a few non-recognized Christian worship facilities; Indian Schools: 20; Indian Banks: State Bank of India, Indian Overseas Bank and HDFC Bank; Currency exchange rate: KD 1 = INR 227.24 (March 2018); Last visit to India by the ruler: Emir Sabah al-Ahmad al-Jaber al-Sabah, June 2006; Kuwaiti Prime Minister in 2013; Last Indian Prime Minister to visit: Indira Gandhi, May 1981. *** With the notable exception of war-torn Yemen, the Emirate of Kuwait received the least attention in New Delhi during the past five years. Kuwait remains on the sidelines despite the significant Indian focus on the Gulf region since 2014. Countries such as the UAE and Saudi Arabia and to a lesser extent Oman and Qatar received more attention in the Indian foreign policy establishment than Kuwait. It was only after four years since Narendra Modi became prime minister that a senior cabinet minister visited the Emirate towards the end of 2018. The visit of External Affairs Minister Sushma Swaraj in October was only the second high level political exchange between the two countries since the November 2013 visit of Kuwaiti Prime Minister Jaber alMubarak al-Sabah. Though commercial transactions have continued, the lack of political engagements, especially since 2014, underlines the lower priority accorded to Kuwait. At the same time, it also reflects the lack of

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initiatives from the Kuwaiti side to woo India at a time when other Gulf monarchies are courting New Delhi through political meetings and economic opportunities.

Domestic Developments Politics The Emirate of Kuwait is a monarchy ruled by the Al-Sabah family for over two centuries, but it has a vibrant yet ineffective National Assembly since the first parliament elections in 1963. For a long time, the polity has been marred over differences between the ruling family and the elected members of the National Assembly. In recent years, the major bone of contention has been the issue of corruption and mishandling of the state finances by the royal-led governments. The other prominent question has been the lack of effective powers to the National Assembly, thereby limiting the scope of its legislative authority. Due to differences between the ruling family and the lawmakers, the elected Majlis has been suspended or dissolved several times, and indeed, since the first one in 1963, the Kuwaiti Majlis has on several occasions not completed its four-year term (Table 5.1). The last such occasion came in October 2016 when Emir Sabah al-Ahmad al-Sabah dissolved the house due to continued protests and disruption of the parliamentary proceedings over fuel price rise introduced by the government. The lawmakers were demanding the continuation of subsidies to domestic consumers despite the rapid drop in international oil prices. At the same time, the government has been under pressure to find newer revenues to maintain its social welfare measures amidst falling oil prices. It sought to balance the budget by shifting the burden of lower oil revenues on domestic consumers. This stalemate resulted in the dissolution of the Majlis, and fresh elections were held in November 2016. The Islamist and liberal opposition group (in the absence of legalization of political parties), which boycotted the 2013 election over the one-person-one-vote arrangement,1 took part in this election. The opposition groups gained 24 seats in the 50-member assembly, and Jaber al-Mubarak al-Sabah, a nephew of the Emir, was renamed prime minister. 1  The opposition was due to the impression that this favours the pro-government candidates with tribal affiliation.

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Table 5.1  Terms of Kuwaiti National Assembly Year of election

End of Whether dissolved mid-term? term

1963 1967 1971 1975

1967 1971 1975 1979

1981 1985

1985 1989

1990 1992 1996 1999 2003 2006

1994 1996 2000 2003 2007 2010

2008

2012

2009

2013

February 2012

2016

December 2016 2012 2013 2017 2016

2020

Completed Completed Completed The assembly was dissolved in 1976 over differences between members of the assembly and government and remained shut down until 1981 Completed Suspended in 1986 as the assembly members insisted on questioning the ministers who were also members of the Al-Sabah family. Kuwait remained without any parliament until 1990 when a New National Council was promulgated and elections were just before the Iraqi invasion. Suspended due to Iraqi invasion Completed Dissolved prematurely in May 1999 Completed Dissolved prematurely in May 2006 Suspended in 2008 due to standoff between the assembly and government Dissolved within a year in March 2009 by the Emir over financial appropriation by the members of the ruling family Dissolved in December 2011 over lack of investigation into alleged corruption by members of the government Constitutional Court overruled the December 2011 dissolution, thus reinstating the assembly elected in May 2009. However, due to lack of quorum, the assembly could not be convened and eventually dissolved by the Emir in October. Dissolved by the Constitutional Court due to procedural discrepancies in the December 2012 elections Emir announced the dissolution of parliament and early elections on 26 November 2016 were declared. Continuing

Sources: Inter-Parliamentary Union, http://archive.ipu.org/parline-e/reports/2171_arc.htm and Michael Herb, ‘The Origins of Kuwait National Assembly’, LSE Kuwait Programme Paper Series, No. 39, http://eprints.lse.ac.uk/65693/1/39_MichaelHerb.pdf

This, however, did not mitigate the situation, and the political contest between the government and elected members persists. One of the principal demands of the opposition has been the right to question the prime minister on the alleged mishandling of the relief work in the wake of the torrential rains in the Emirate in November 2018. Reports of flooding, deaths and

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destruction2 led to the opposition alleging inadequate preparation, neglect of early warning and lack of amenities and preparations in dealing with such unexpected weather.3 The opposition brought a motion in the Majlis for their right to question the prime minister, but this was referred to the Legal and Legislative Committee of the Assembly for its constitutional validity.4 While the political contest between the ruling Al-Sabah family and the opposition comprising of the Islamists, liberals and Salafists continues, the authorities have to grapple with a twin problem following the Arab Spring protests in the broader Middle East. At one level, there is a higher demand for freedom of speech, and on the other, the Emirate faces issues of youth unemployment, rising prices and ageing urban infrastructure. Caught between the two, the government is unable to meet the demands of the population. The protests were dispelled initially through a financial package, as a comprehensive programme for reform was launched in January 2017  in the form of Vision 2035.5 Among others, it sought to address issues such as education, employment generation, economic diversification and involvement of the private sector in creating infrastructure and for economic development.6 While reforms continue to be the focus of the political debate in the country, the issue of granting citizenship to the Bidoons (stateless tribal community) has become a significant concern in recent years. The Bidoons have remained stateless since independence and the present estimates put their population at 100,000.7 The community has pursued a nomadic life in areas covering Kuwait, Iraq and Saudi Arabia, and after the establishment of post-colonial borders, many were stranded within these places. 2  Toumi, Habib. 2018. ‘Death and Destruction as Torrential Rains Lash Kuwait’, in Gulf News, 15 November, https://gulfnews.com/world/gulf/saudi/death-and-destruction-astorrential-rains-lash-kuwait-1.60384487, last accessed on 31 May 2018. 3  Izzak, B. 2018. ‘Assembly Refers PM’s Grilling to Legal and Legislative Committee’, in Kuwait Times, 27 November, https://news.kuwaittimes.net/website/assembly-refers-pmsgrilling-to-legal-and-legislative-committee/, last accessed on 31 May 2018. 4  Ibid. 5  Arabian Business. 2017. ‘Kuwait Launches New Plan to Transform Economy by 2035’, 31 January, https://www.arabianbusiness.com/kuwait-launches-new-plan-transform-economyby-2035-661652.html, last accessed on 31 May 2018. 6  Olver-Ellis, Sophie. 2019. ‘A New Vision for Kuwait’, LSE Middle East Centre Blog, 8 January, https://blogs.lse.ac.uk/mec/2019/01/08/a-new-vision-for-kuwait/, last accessed on 31 May 2018. 7  The population has been reduced from 250,000 in 1990 to 100,000 due to migration and deportation. Human Rights Watch. 2019. ‘Kuwait: Events of 2018’, World Report 2019, https://www.hrw.org/world-report/2019/country-chapters/kuwait, last accessed on 31 May 2018.

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Initially, the nomadic communities did not wish to change their lifestyle but over time started to lead a settled life. In Iraq and Saudi Arabia, they became part of the urban lifestyle and were granted citizenship eventually. In Kuwait, however, a large group of Bidoons came to be regarded as stateless people due to insufficient documentation regarding their birth and lineage. After years of criticisms from the international community and human rights groups, Kuwaiti state reluctantly began to address the problems faced by the Bidoons. In March 2018, the Majlis approved a draft law to grant the social and political rights to the community. Once it is passed by the Assembly and approved by the Emir, one could witness Bidoons being given equal rights in the Emirate. Foreign Policy As a member of the Gulf Cooperation Council (GCC), Kuwait has been actively involved in the Qatari crisis following the imposition of boycott and blockade by Saudi Arabia, the UAE, Egypt and Bahrain. As both sides refused to yield, Kuwaiti Emir took the lead in trying to resolve the standoff. His efforts proved unsuccessful as the younger GCC leaders—Crown Prince Mohammed bin Zayed of Abu Dhabi, Mohammed bin Salman of Saudi Arabia and Emir Tamim bin Hamad of Qatar—have refused to take a conciliatory position to resolve the crisis. Their refusal to be accommodative of each other’s concerns has been the primary threat to Gulf unity since the formation of the GCC in 1981. The failure of Emir al-Sabah also highlights the limitations of the Kuwaiti foreign policy and its marginal clout among the warring parties.8 In many ways, the initial Kuwaiti efforts were hampered by the position adopted by the Trump administration with the President initially calling the action against Qatar as an important development in curbing terrorism and extremism in the Middle East.9 Before the State Department and Pentagon could brief the President of the damaging impact of his tweets, the message had gone that the Saudi-led action against Qatar had the blessing if not connivance of the White House. The annual GCC summit 8  Schanzer, Jonathan and Koduvayur, Varsha. 2018. ‘Kuwait and Oman Are Stuck in Arab No Man’s Land’, in Foreign Policy, 14 June, https://foreignpolicy.com/2018/06/14/ kuwait-and-oman-are-stuck-in-the-arab-no-mans-land/, last accessed on 31 May 2018. 9  Wintour, Patrick. 2017. ‘Donald Trump Tweets Support for Blockade Imposed on Qatar’, in The Guardian, 6 June, https://www.theguardian.com/world/2017/jun/06/qatar-panicbuying-as-shoppers-stockpile-food-due-to-saudi-blockade, last accessed on 31 May 2018.

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hosted by the Emir in December 2017 ended without any final communiqué. As the Qatari crisis continued, in September 2018 Emir al-Sabah visited Washington and met President Trump. Their main agenda was the US proposal to establish a regional strategic alliance to counter the growing Iranian military presence and political influence in the Middle East. For several months, the US has been encouraging the Gulf States to take the lead in forming a military bloc of pro-US Arab countries to counter Iran.10 A military alliance comprising of the Gulf Arab states, Egypt and Jordan, often termed as Arab NATO, under the American patronage, however, has not materialized primarily due to internal differences among the US allies.11 Another influential agenda of al-Sabah was the resolution of the GCC crisis and bolstering the group and preventing its demise.12 This was their third bilateral meeting since Donald Trump took office in January 2017. President Trump and Emir al-Sabah first met on sidelines of the historic summit with the Islamic countries held in Riyadh in May 2017, and the maiden foreign visit of President Trump was often seen as the trigger for the Qatar crisis.13 Trump and Emir subsequently met in September 2017 and again in September 2018. During the year a major diplomatic row broke out between Kuwait and Manila over the treatment of Filipino workers in Kuwait. President Rodrigo Duterte took a strong exception to the spate of deaths of workers, especially female domestic workers, in Kuwait. Diplomatic tension between the two countries spiked in February 2018 when the body of a murdered Filipina worker, Joanna Demafelis, was discovered in a freezer in Kuwait. Her employers, a Lebanese and a Syrian, were subsequently sentenced to death in absentia and are currently held in Lebanon and 10  Farouk, Yasmine. 2019. ‘The Middle East Strategic Alliance Has a Long Way to Go’, in Carnegie Endowment for International Peace, 8 February, https://carnegieendowment. org/2019/02/08/middle-east-strategic-alliance-has-long-way-to-go-pub-78317, last accessed on 31 May 2018. 11  Ibid. 12  Al-Jaber, Khalid. 2018. ‘A Look at the Kuwait-US Alliance’, in The Peninsula, 23 September, https://www.thepeninsulaqatar.com/opinion/23/09/2018/A-look-at-theKuwait-US-alliance, last accessed on 31 May 2018. 13  Landler, Mark. 2017. ‘Trump Takes Credit for Saudi Move Against Qatar, a U.S. Military Partner’, in The New York Times, 6 June, https://www.nytimes.com/2017/06/06/world/ middleeast/trump-qatar-saudi-arabia.html, last accessed on 31 May 2018.

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Syria, respectively.14 The incident brought into open a lingering anger over the treatment of Filipino workers in the Emirate. During 2016–17, as many as 185 Filipino workers died in Kuwait, some under suspicious circumstances. In the aftermath of the Demafelis incident, the Duterte government scrambled to assuage the Filipino public and temporarily banned Filipinos from migrating to Kuwait for work, pending an investigation into the deaths of seven domestic workers. The Kuwaiti authorities responded by accusing the Filipino embassy personnel of ‘smuggling Filipino maids in flagrant violation of Kuwait’s laws and international diplomatic rules’.15 They immediately detained several non-diplomatic staff from the embassy of the Philippines in Kuwait and issued arrest warrants against three Filipino diplomats. The war of words between the two sides escalated into a diplomatic crisis, and in April, Kuwait expelled Filipino ambassador Renato Villa and recalled its envoy in Manila.16 Subsequently, President Duterte called on the Filipino workers in the Emirate to return home. After decades of cordial relations, both countries were drifting dangerously close to severing diplomatic relations.17 Until the end of the year, the diplomatic stalemate continued. Economy Like its neighbours, the Kuwaiti economy showed signs of recovery after suffering for three years due to low oil prices and extra government spending in the wake of Arab Spring-related protests. According to the World Bank, the Kuwaiti ‘economy contracted by 3.5 percent in 2017, weighed

14  Wasmi, Naser Al. 2018. ‘Couple to Hang for Murder of Filipina Maid in Kuwait’, in The National, 1 April, https://www.thenational.ae/world/couple-to-hang-for-murderof-filipina-maid-in-kuwait-1.717879, last accessed on 31 May 2018. 15  Dwyer, Colin. 2018. ‘Viral “Rescue” Videos Ignite Dispute between Philippines and Kuwait’, in NPR, 26 April, https://www.npr.org/sections/thetwo-way/2018/04/26/606170975/ viral-rescue-videos-ignite-dispute-between-philippines-and-kuwait, last accessed on 31 May 2018. 16  Toumi, Habib. 2018. ‘Kuwait Asks Philippine Ambassador to Leave’, in Gulf News, 25 April, https://gulfnews.com/world/gulf/kuwait/kuwait-asks-philippineambassador-to-leave-1.2211835, last accessed on 31 May 2018. 17  Heydarian, Richard Javad. 2018. ‘Why Duterte Banned Workers from Going to Kuwait’, in Al-Jazeera, 3 May, https://www.aljazeera.com/indepth/opinion/duterte-kuwait-philippines-diplomatic-crisis-180503065733569.html, last accessed on 31 May 2018.

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down by OPEC-related oil production cuts’.18 Furthermore, the oil sector which accounts for nearly half the GDP ‘contracted by 7.2 percent’. At the same time, growth in the non-oil sector was 2.2 per cent and was ‘supported by a steady growth in household spending and higher government consumption spending’.19 In terms of investments in the market, the government spending slowed down in 2017, following a surge a year earlier when the government stepped up the implementation of the Five-Year Development Plan (2015–19), mainly as part of the Vision 2035 that aims to increase privatization and diversification.20 In October the IMF lowered its economic growth forecast for the year to 2.33 per cent but estimated the growth rate for 2019 to be at 4.06 per cent based on the growing commercial activities and government spending due to stability in the international oil market.21 According to the Central Statistical Bureau of Kuwait, the market ‘gains were driven by non-oil GDP, which increased by 2.9 per cent year-on-year (y-o-y) over the first three quarters of 2018’.22 In 2018, the economy also showed recovery with a 2.9 per cent growth in the non-financial sector, 2.3 per cent in the education sector and 0.8 per cent growth in the wholesale and retail trade sector.23 The infrastructural and financial sectors also have shown signs of recovery and are expected to gain momentum as the oil sector recovery gain stabilizes further in 2019. Society Comparing to countries like the UAE, Oman, Bahrain or even Qatar, Kuwait is more conservative when it comes to social opening and the treatment of women, minorities and expatriate workers. Reports of mistreatment of women workers, sexual abuse and exploitation have been  The World Bank. 2018. ‘Kuwait’s Economic Outlook—October 2018’, https://www. worldbank.org/en/country/gcc/publication/kuwait-economic-outlook-october-2018, last accessed on 31 May 2018. 19  Ibid. 20  New Kuwait Summit. 2019. ‘The Kuwait National Development Plan’, http://newkuwaitsummit.com/new-kuwait, last accessed on 31 May 2018. 21  Arab Times. 2018. Kuwait Economy Growth at 2.33% in 2018 … 4.06% in 2019’, 9 October, http://www.arabtimesonline.com/news/kuwait-economy-growth-at-2-33-in-20184-06-in-2019/, last accessed on 31 May 2018. 22  Oxford Business Group. 2019. ‘Kuwait: Year in Review 2018’, 15 January, https:// oxfordbusinessgroup.com/news/kuwait-year-review-2018, last accessed on 31 May 2018. 23  Ibid. 18

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rampant.24 This led to a major diplomatic spat between Kuwait and the Philippines during the year. Though some positive measures were witnessed regarding the social and political rights of the Bidoons, their equality with full citizenship rights remains a problem. In December, the National Assembly rejected a draft law proposed by the government to grant citizenship rights to non-­ Muslim residents who were living in the Emirate for a long time. This was rejected on the notion that under the constitution, Kuwait is an Islamic state and hence cannot bestow citizenship to non-Muslims.25 Thanks to oil wealth, Kuwait made significant progress in terms of healthcare and education and is ranked 56 in the world in terms of the Human Development Index.26 At the same time, when it comes to social and political rights, Kuwait fares poorly. It ranks 57th in the Gender Inequality Index with a score of 0.270 and has a value of 0.990 in Gender Development Index.27 In terms of personal law, Kuwaiti women face discriminatory legal and customary provisions. They are subjected to the guardianship system, and even though these are not part of the legal system, social customs make it imperative for Kuwaiti women to obtain the consent of their male guardians to marry, pursue education or undertake employment. Many families have abandoned these practices based on customary laws, but a large majority comply with them thereby limiting the progress. Indeed, Kuwait was one of the last Gulf countries to grant rights to women to vote and contest elections (Table 1.7). On crucial issues such as marriage and divorce, Kuwait women have almost no say. Their husbands can u ­ nilaterally divorce women. Men are even allowed to have up to four wives at a time without any consent or knowledge of their wives. The laws are unfavourable to women in terms of child custody, and there are no legal provisions against domestic violence.

 Human Rights Watch. 2019. ‘Kuwait: Events of 2018’, World Report 2019.  Izzak, B. 2018. ‘Assembly Panel Rejects Citizenship for Non-Muslims—Panel Nods to Social, Civil Rights for Bedoons’, in Kuwait Times, 27 December, http://news.kuwaittimes. net/website/assembly-panel-rejects-citizenship-for-non-muslims-panel-nods-to-social-civilrights-for-bedoons/, last accessed on 31 May 2018. 26  United Nations Development Programme (UNDP). 2019. ‘Kuwait: Human Development Indicators’, http://hdr.undp.org/en/countries/profiles/KWT, last accessed on 31 May 2018. 27  Ibid. 24 25

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Bilateral Relations Political Ties A lack of political interactions has marked the Indo-Kuwaiti relations for quite some time. The last prime-ministerial visit from India took place in 1981 when Prime Minister Indira Gandhi visited the Emirate. This became more prominent within the context of extensive political interactions between India and the Gulf region since 2014. In February 2018, Minister of State (MoS) for External Affairs M. J. Akbar attended the International Conference for the Reconstruction of Iraq hosted by Kuwait and pledged India’s support for Iraq’s ‘capacity building through training of Iraqi officials under our technical and economic cooperation programme (ITEC)’.28 The continued marginalization of Kuwait by India ended with the visit of External Affairs Minister Sushma Swaraj to the Emirate towards the end of the year. Her two-day visit on 30–31 October was the first visit by External Affairs Minister since Narendra Modi became prime minister and only the second high-level bilateral interaction since the state visit of Prime Minister Jaber al-Mubarak al-Hamad al-Sabah of Kuwait to India in November 2013.29 During her visit, Swaraj called on Emir al-Sabah and held discussions with her Kuwaiti counterpart Sabah al-Khalid al-Sabah. As part of the diaspora diplomacy, she also interacted with the Indian community in Kuwait. The bilateral discussions encompassed a wide range of issues including trade and commerce, defence, labour issues and problems of climate change. The Emirate accepted New Delhi’s invitation to join the International Solar Alliance launched by India in January 2016.30 Both sides agreed on the need to diversify the bilateral trade, go beyond oil

28  Ministry of External Affairs, Government of India (MEA, GoI). 2018. ‘Statement by Shri MJ Akbar, Minister of State for External Affairs at the International Conference for Reconstruction of Iraq in Kuwait (February 14, 2018)’, 14 February, https://mea.gov.in/ Speeches-Statements.htm?dtl/29485/Statement_by_Shri_MJ_Akbar_Minister_of_State_ for_External_Affairs_at_the_International_Conference_for_Reconstruction_of_Iraq_in_ Kuwait_February_14_201, last accessed on 31 May 2018. 29  The Kuwaiti Emir came on a private visit to Kerala in June 2017. His planned weeklong medical and rejuvenation visit, however, was cut short due to the Qatar crisis. 30  MEA, GoI. 2018. ‘Visit of External Affairs Minister to Kuwait (October 30–31, 2018)’, 1 November, https://mea.gov.in/press-releases.htm?dtl/30557/visit+of+external+affairs+ minister+to+kuwait+october+3031+2018, last accessed on 31 May 2018.

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trade and explore avenues for trade and investments.31 During the visit, only one agreement on the diplomatic passport was signed by both countries, thereby signalling limited interest convergence.32 Swaraj also raised the issue of 80 Indian nurses who were stranded in Kuwait without salary for over two and a half years after being hired by the Kuwaiti Ministry of Health.33 The Kuwaiti Foreign Minister promised to look into the matter and ‘expeditious resolution’ of the issue.34 During Swaraj’s visit, both sides signed an agreement regarding the employment of domestic workers from India. Days before her visit, Kuwaiti Minister for Social Welfare and Labour visited New Delhi and MoS for External Affairs Gen. V. K. Singh and held discussions on cooperation in the field of labour and human resources.35 Trade and Commerce The near absence of political contact has not affected the Indo-Kuwaiti commercial ties which have remained steady. The value of bilateral trade in 2017–18 is a significant increase of over 20 per cent from the previous year due to increased energy imports and oil price rise. The two-way trade during the financial year 2017–18 stood at US$8.5 billion (Table 5.2 and Fig. 5.1). The increase was mainly due to growth in India’s imports which rose from US$4.46 billion a year earlier to US$7.16 billion in 2017–18. During the same period, India’s exports to Kuwait marginally dipped from US$1.5 billion to US$1.36 billion. India’s imports are dominated by crude oil, and its exports to Kuwait primarily comprised of cereals, food and agricultural products, fruits, vegetables and meat products, textile, garments and electrical products. India’s exports also included construction materials and machinery used in industry and construction sites.  Ibid.  MEA, GoI. 2018. ‘Agreement/MoU Exchanged between India and Kuwait during Visit of External Affairs Minister to Kuwait’, 31 October, https://mea.gov.in/bilateral-documents.htm?dtl/30553/AgreementMoU_Exchanged_between_India_and_Kuwait_during_visit_of_External_Affairs_Minister_to_Kuwait, last accessed on 31 May 2018. 33  Arab Times. 2018. ‘Problem of 80 “Stranded” Nurses from India … Remains Unsolved’, 31 August, http://www.arabtimesonline.com/news/problem-of-80-stranded-nursesfrom-india-remains-unsolved/, last accessed on 31 May 2018. 34  MEA, GoI. 2018. ‘Visit of External Affairs Minister to Kuwait (October 30–31, 2018)’. 35  Embassy of India, Kuwait. 2019. ‘India-Kuwait Bilateral Relations’, http://www. indembkwt.gov.in/Pages/Bilateral.aspx, last accessed on 31 May 2018. 31 32

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Table 5.2  India-Kuwait bilateral trade (US$ million) 2013–14 India’s exports to Kuwait India’s imports from Kuwait Total bilateral trade Share in India’s total trade

2014–15

1,061.14 17,153.55 18,214.69 2.38

2015–16

2016–17

2017–18

1,198.89 1,247.51 1,497.99 1,365.66 13,381.97 4,969.69 4,462.28 7,165.69 14,580.85 6,217.20 5,960.27 8,531.34 1.92 0.97 0.9 1.11

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Fig. 5.1  India-Kuwait bilateral trade 20 18 16 14 12 10 8 6 4 2 0

2011-12

2012-13 2013-14 Exports

2014-15 Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Energy Ties Crude oil forms the bulk of the bilateral trade. The value of oil imports almost doubled from US$3.5 billion in 2016–17 to US$6.12 billion in 2017–18. This could be partly attributed to the increase in oil price, but the volume of crude imports from Kuwait also witnessed a rise. In terms of total imports from Kuwait, the share of energy increased from 77 to 85 per cent and correspondingly the Kuwaiti share in India’s total energy imports increased from 3.5 per cent a year earlier to 4.6  in 2017–18 (Table  5.3 and Fig.  5.2). The Kuwaiti share in energy imports of India from the Persian Gulf too witnessed an increase from 6.13 per cent in

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Table 5.3  Share of oil in India’s imports from Kuwait (US$ million) Year

2013–14 2014–15 2015–16 2016–17 2017–18

Oil imports from Kuwait

Total oil imports

Kuwaiti share Imports from Per cent of oil in total oil Kuwait in imports imports from Kuwait

16,121.78 12,228.71 4,059.61 3,455.54 6,121.36

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

8.89 7.82 4.19 3.35 4.63

17,153.55 13,381.97 4,969.69 4,462.28 7,165.69

93.99 91.38 81.69 77.44 85.43

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 5.2  Share of oil in imports from Kuwait 120 100 80 60 40 20 0

2011-12

2012-13

2013-14

2014-15 2015-16 Share in per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, GoI

2016–17 to 8.73 per cent a year later. At the same time, the energy trade had reached a peak of 2013–14 when Kuwait contributed nearly 15 per cent of India’s total imports (Table 5.4 and Fig. 5.3). Kuwait is keen on developing a partnership with India in the hydrocarbon sector, and both sides have established a Joint Working Group to discuss matters related to this sector. Presently, India imports nearly 60 per cent of its energy needs from the Persian Gulf and is seeking to diversify

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Table 5.4  India’s energy imports from Kuwait (in US$ million)

Energy imports from Kuwait Total energy imports Total imports from Persian Gulf Share in total energy imports Share in energy imports from Persian Gulf

2013–14

2014–15

2015–16

16,121.78

12,228.71

4,056.61

2016–17 3,455.54

2017–18 6,121.36

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75 85,300.30 50,992.26 56,335.34 70,090.81 8.89

7.82

4.19

3.35

4.63

15.15

14.34

7.96

6.13

8.73

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 5.3  Share of Kuwait in India’s oil imports 16 14 12 10 8 6 4 2 0

2011-12 2012-13 2013-14 Share in Total Oil Imports

2014-15 2015-16 2016-17 2017-18 Share in Oil Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, GoI

the suppliers. This might work against Kuwait. This can be mitigated if Kuwait offers attractive and competitive pricing and long-term deals to help India shore up its strategic petroleum reserves. The return of the US sanctions against the Iranian oil industry and imports can be an added incentive for Kuwait to increase its energy trade with India. Media reports

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suggested the interest of Kuwait Petroleum Corporation in buying stakes in an Indian ‘refinery-cum-petrochemical project’, but no progress was noticeable until the year-end.36 Investments According to the Indian Ministry of Commerce and Industry, Kuwait ranks 53rd in terms of foreign direct investment (FDI) into the country. This is an abysmal reality since Kuwait has been at the forefront of foreign investment since April 2000. There is a marginal improvement in recent years; its FDI into India in 2013 was US$4.16 million, and it increased to US$16.69 million in 2017 and US$10.17 a year later. According to the Ministry of External Affairs, most of the Kuwaiti investments come indirectly through portfolio managers and through ‘international investment companies or through Mauritius, Singapore or other countries providing tax breaks’.37 As of 2017, Kuwait has invested over US$3.5 billion in India, and out of this, over US$3 billion came from the Kuwait Investment Authority (KIA). In recent years, the KIA has invested US$300 million in the GMR Infrastructure, a New Delhi-based company building and managing airports, and another US$300 million in Indigo, a low-cost airliner. The KIA has also invested US$37 million in Power Grid Corporation of India, and many Kuwaiti corporations such as Alghanim Group, KAPICO, KIPCO and others have a presence in the Indian market. At the same time, several Indian companies, especially in the IT services, financial and retail sectors, have invested in the Kuwaiti market. Indian construction companies like Larsen & Toubro, Shapoorji Pallonji, Punj Lloyd, Esser and so on have expanded their presence in the Emirate and reportedly bagged contracts worth US$6 billion.38 Some of the Indian IT and energy companies have strengthened their presence through consultancy services.

36  Jacob, Shine. 2018. ‘Kuwait Petroleum Corporation to Soon Buy Stake in an India Refinery’, in Business Standard, 11 April, http://www.business-standard.com/article/ economy-policy/kuwait-petroleum-corporation-to-buy-stake-in-indian-s-west-coastrefinery-118041100345_1.html, last accessed on 31 May 2018. 37  MEA, GoI. 2017. ‘India-Kuwait Relations’, August, https://www.mea.gov.in/Portal/ ForeignRelation/Kuwait_India_Aug_2017.pdf, last accessed on 31 May 2018. 38  Ibid.

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Expatriates An estimated 900,000 Indian expatriate population lives and works in Kuwait. Some of them, especially in the domestic and blue-collar work, have often faced problems due to the kafala (sponsorship) system. Most recently a group of 80 nurses hired by the Kuwaiti Ministry of Health found themselves stranded without salary for over two and half years upon them reaching the Emirate in 2016. Initially, they were housed in a hostel for nurses and were told that they would be posted in hospitals in various parts of the Emirate upon the completion of administrative formalities of their posting, and this would take only a few days. After lengthy delays and postponement, it was clear that there was a problem of budgeting, and the allocation for the hiring the nurses was reversed due to some administrative reasons. This resulted in the Indian nurses finding themselves stranded in Kuwait without any work or salary.39 The nurses’ issue was raised by External Affairs Minister Swaraj during her visit to the Emirate in October 2018, and the Kuwaiti authorities assured that the matter would be expeditiously resolved. No progress was made until the end of the year. In April, the government informed the parliament that the conviction of 134 persons had been reduced through an intervention by the Emir, and this included 15 persons whose death sentences have been commuted to life sentences.40 Another major issue was the problem faced by those who were unable to return to India after the expiry of their work visa due to financial reasons. In 2017–18, the Kuwaiti authorities initiated an amnesty programme for such workers to either return to their home countries without paying the hefty fines for visa violations or correct their status by finding another job and paying the nominal charge for visa renewal or regularization. According to the answer given by MoS Singh, the Indian embassy in Kuwait had issued 9,605 Emergency Certificates to Indian nationals who were wanting to return to their homes but did not have valid passports. They were given monetary assistance by the Indian Community Welfare Fund to return home.41  Arab Times. 2018. ‘Problem of 80 “Stranded” Nurses from India … Remains Unsolved’.  MEA, GoI. 2018. ‘Question No. 6147 Reduction of Sentences’, 4 April, https:// mea.gov.in/lok-sabha.htm?dtl/29757/QUESTION_NO6147_REDUCTION_OF_ SENTENCES, last accessed on 31 May 2018. 41  MEA, GoI. 2018. ‘Question No. 2262 Indians Stranded in Kuwait’, 15 March, https:// mea.gov.in/rajya-sabha.htm?dtl/29662/question+no2262+indians+stranded+in+kuwait, last accessed on 31 May 2018. 39 40

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Challenges The Indo-Kuwaiti relations face several challenges, and the most prominent is the Kuwaiti position and influence within the Gulf geopolitics. The Emirate is a small country with abundant oil reserves but has less ­geostrategic influence. One of the primary examples of this was the Kuwaiti mediatory role in the intra-Gulf dispute over Qatar. Its failure underlined not only the gravity of the problem but its limited influence within the GCC. Secondly, despite historical ties and investment opportunities, Kuwait has been overtaken by others, especially the UAE, Saudi Arabia and Qatar in building a strategic partnership with India during the past five years. This has created the perception that India is not a priority area for Kuwait and vice versa. Overcoming this is a precondition if Indo-Kuwaiti relations were to flourish in the future. Thirdly, there are concerns in India about the treatment of minorities and non-Muslim in Kuwait. While other Gulf Arab countries, especially Bahrain, Oman and the UAE, have allowed temples for the Indian community, Kuwait has not been very keen. This, in turn, has resulted in New Delhi looking at the UAE and Oman in a friendlier manner than Kuwait. If the Indo-Kuwaiti relations were to overcome these challenges, both sides would have to abandon the current indifference and push for greater understanding and engagements.

CHAPTER 6

Oman

Key Information Ruling family: Al-Said; Ruler: Sultan Qaboos bin Said al-Said (since 23 July 1970); Crown Prince: Not nominated; National Day: 18 November; Parliament: Bicameral including 85-member (including Chairman) nominated Majlis al-Dawla, 85-member elected Majlis al-Shura; Last Parliamentary Election: 25 October 2015; Major Group in Parliament: NA; National Carrier: Oman Air. Socio-Economic Indicators Area: 309,500 sq. km; Population: 4.61 million (2017 est.); Native: 55 per cent; Expats: 45 per cent; Religious Groups: Muslim 85.9 per cent (75 per cent Ibadi Muslim; 25 per cent Shia and Sunni); Christian 6.5 per cent; Hindu 5.5 per cent; Buddhist 0.8 per cent; Other 1.3 per cent; Youth: 18.26 per cent (2018 est.); Population growth rate: 2 per cent (2018  est.); Life expectancy at birth: 75.9  years (2018  est.); Major population groups: Arab, Balochi, South Asian and African (distribution not available); Literacy rate: 96.1 per cent (2017  est.); National Currency: Omani Riyal (OMR); GDP: US$72.64  billion (2017); Foreign Trade: Export US$103.3 billion (2017 est.), Import US$24.12 billion (2017  est.); Defence budget: 13.73 per cent of GDP (2016);

© The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_6

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Sovereign Wealth Fund: US$6 billion; External Debt: US$46.27 billion (31 December 2017 est.); Per capita income: US$45,500 (2017 est. CIA), 40,240 (GNI, PPP World Bank) (HDI 36,290 for 2017); Oil reserves: 5.3  billion bbl.; Gas reserves: 651.3  billion m3 (2018  est.); HDI rank: 48/189; Infant Mortality Rate: 12.4 deaths/1,000 live birth (2018  est.); UN Education Index: 0.886; Gender Inequality Index: 0.264; Labour Force: 2.255 million (2016 est.); Unemployment rate: 15 per cent (2004 est.); Urban Population: 84.5 per cent; Rate of Urbanization: 5.25 per cent; Last National Census: 2010. India Related Indian Cultural Centre: NA; Number of Indians: 664,227 (October 2018, National Centre for Statistics and Information); Number of places of worship for Indians: 3 Temples, 5 Gurudwaras and 7 Churches; Indian Schools: 19; Indian Banks: State Bank of India (1), Indian Overseas Bank, Bank of Baroda (4) and HDFC Bank; Currency exchange rate: OMR 1 = INR 179.73 (March 2019); Last visit to India by the ruler: Sultan Qaboos al-Said, April 1997; Last Indian Prime Minister to visit: Narendra Modi February 2018. * * * The Sultanate of Oman has been a traditional friend of India and the strong bilateral relations encompass trade, commerce and energy ties and defence cooperation. Historical ties due to maritime trade and cultural links have formed the basis of the interest convergence. Despite being a smaller economy in the Persian Gulf region, New Delhi recognizes Muscat as an important actor whose role and influence is critical for minimizing tensions and for maintaining regional stability. The Omani ability to effectively reform its economy and continue to maintain autonomy in foreign policy choices would determine and shape the contours of the Indo-­ Omani relations. The renewal of political engagement in the form of the prime minister’s visit in early 2018 was a recognition of the Sultanate’s regional primacy.

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Domestic Developments Politics The ability of the Omani ruling family, especially the ailing Sultan Qaboos, in dealing with the continuing uncertainties about the question of succession has been remarkable and added to the confidence in the stability and sagaciousness of the Omani leadership. Indeed, since early 2014, when the Sultan largely withdrew from the public, there have been speculations and uncertainties over the future of the country due to the health conditions of the Sultan and the absence of a clearly designated successor. Signalling that succession would be settled in favour of one of two powerful cousins, the Sultan has named both as deputy prime ministers, namely Assad bin Tariq al-Said and Fahd bin Mahmoud al-Said. The former is responsible for international cooperation, while the latter looks after cabinet affairs.1 The Sultan reportedly identified and named his successor in case of a lack of consensus on the new leader among the ruling family. Having worked out the modalities, the Sultanate has been able to focus on the revitalization of the economy, which was facing a downward trend due to falling oil prices between 2014 and 2017. Sultan Qaboos has been the only political authority in the Gulf Cooperation Council (GCC) countries, who, in the early 1990s, adopted a policy of incremental opening of public space for consultations through the bicameral council that comprises a nominated Majlis al-Dawla (State Council) and an elected Majlis al-Shura (Consultative Council). Though neither of the bodies have any legislative powers, and political parties or associations do not exist in the Sultanate, some degree of political functioning have been incorporated and gradually, the Majlis al-Shura and Municipal Council elections are conducted based on universal adult franchise. The last election to the 85-member Consultative Council elections took place in October 2015, in which nearly 600 independents c­ ontested.2 Out of the 20

 Neubauer, Sigurd. 2017. ‘Succession in Oman: Clues but No Clarity’, in The Arab Gulf States Institute in Washington, 17 March, https://agsiw.org/succession-in-oman-clues-butno-clarity/, last accessed on 30 May 2019. 2  Kumar, Jatin. 2016. ‘Majlis al-Shura Elections in Oman, 2015’, in Contemporary Review of the Middle East, Volume 3, issue 4, page(s): 455–462, 21 December, https://journals. sagepub.com/doi/full/10.1177/2347798916664628, last accessed on 30 May 2019. 1

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women who contested, only one was successful. The next elections to the four-year term Shura council are expected to take place in October 2019. Despite incremental political reforms in the form of elections, Oman could not escape from the cascading effects of the Arab Spring and witnessed small protests, mainly over economic issues. The Sultan responded with a dual approach; some financial largesse to mitigate the economic burden was accompanied by a strong message that political activism or criticisms of the government would not be tolerated. The former was accomplished through a US$20 billion aid provided by the richer members of the GCC, namely, Kuwait, Saudi Arabia and the UAE. Towards pacifying the protesting public, the palace announced some concessions in the form of Majlis al-Shura being able to question the government’s economic policies, but any suggestions of a partially independent government functioning under the nominal authority of the Sultan was rejected completely. Even minor public criticisms of the government were not tolerated and invited severe rebuke from the authorities. Early 2018 witnessed some protests over falling jobs for Omani citizens and led to government reiterating its post-2011 policy on the nationalization of the job market and it tweaked the labour policy. Under the new guidelines, visa would not be issued to expatriate workers in 87 types of jobs in the private sector, thereby creating more job opportunities for the citizens.3 Among the jobs which would not be available to foreign workers include the IT, banking and finance, marketing and sales, HR, et cetera sectors.4 Questions of human rights violations, freedom of expression and functioning of media and women empowerment continue to attract internal attention and international criticisms. The Omani position in all these issues continued to be less satisfactory during 2018. On the issue of religious freedom and spread of radicalism, the Omani record has been better than its neighbours; its performance on media and political freedom are less inspiring. Reports of several arrests of bloggers for ‘insulting the state’, lack of transparent trails and reported torture of prisoners have been highlighted by the international media.5 The local media is highly regulated and any ‘derogatory’ content or ‘harming the prestige’ of the state6 are 3  Times of Oman. 2018. ‘Oman to Temporarily Stop Issuing Expat Visas for 87 Jobs’, 28 January, https://timesofoman.com/article/127000, last accessed on 30 May 2019. 4  Ibid. 5  Freedom House. 2018. Freedom in the World Report 2018: Oman, https://freedomhouse.org/report/freedom-world/2018/oman, last accessed on 30 May 2019. 6  Ibid.

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prohibited, and hence Freedom House identifies Oman to be Not Free with a score of 23 out of 100 (where 100 stands for most free).7 In terms of religious freedom, the Ibadi Islam practised in the Sultanate has been accommodative of the other, including different sects within Islam. Non-­ Muslims, who form a significant portion of the expatriate population, could practise their faiths and customs without undue restrictions or state intervention, and this is manifested in the presence of many Hindu temples, Sikh gurudwaras and Christian churches. Foreign Policy Its location in the southeast of the Arabian Peninsula, overlooking the Arabian Sea and the Strait of Hormuz, bestows a strategic advantage to Oman. The Sultanate’s ability to maintain a strongly neutral foreign policy amidst sharpening regional geopolitical competition and rivalry has been a notable feature. It has traditionally played a behind-the-scene mediatory role in many regional disputes, the latest one being its contribution to the Joint Comprehensive Plan of Action (JCPOA) when it was a conduit between the US and the Islamic Republic of Iran.8 Earlier, it was also instrumental in the de-escalation of tension between Saudi Arabia and Qatar in 2014. The Sultanate also eschewed from taking sides in the ongoing tension between Riyadh and Tehran on a host of regional issues and has maintained political, economic and diplomatic ties with both sides, despite its reservations over the growing Iranian military expansion and influence in Yemen.9 Since the outbreak of the Qatari crisis in June 2017, Muscat has adhered to its neutrality and balancing. While not endorsing the boycott imposed by Saudi Arabia (along with the UAE, Bahrain and Egypt), Oman has not supported Qatar as Iran did. This resulted in Oman continuing its economic ties with Doha and the expansion of its business activities, especially  Ibid.  Ignatius, David. 2016. ‘The Omani “Back Channel” to Iran and the Secrecy Surrounding the Nuclear Deal’, in The Washington Post, 7 June, https://www.washingtonpost.com/ opinions/the-omani-back-channel-to-iran-and-the-secrecy-surrounding-the-nucleardeal/2016/06/07/0b9e27d4-2ce1-11e6-b5db-e9bc84a2c8e4_stor y.html?utm_ term=.7cb595d20468, last accessed on 30 May 2019. 9  Lons, Camille. 2018. ‘Oman: Neutrality under Pressure’, in The New Arab, 29 May, https://www.alaraby.co.uk/english/comment/2018/5/29/oman-neutrality-under-pressure, last accessed on 30 May 2019. 7 8

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in aviation and port facilities, and by offering alternative routes for the transportation of goods, services and passenger traffic, Oman has enhanced bilateral trade with Doha. At the same time, unlike Kuwait, Oman avoided projecting itself as a mediator in the Saudi-Qatari dispute. When the Trump administration showed signs of involvement, Muscat was briefly active in seeking a resolution of the intra-GCC dispute but without taking sides.10 At the same time, due to his health conditions, Sultan Qaboos has not been able to actively engage with the quarrelsome young Gulf Arab leaders. The coming years would be a testing time for Omani leadership in maintaining Muscat’s position as a neutral but stabilizing force in the region. Oman has been playing the role of a mediator in the Yemeni crisis and has been hosting meetings between various groups involved in the conflict. In March 2018, it hosted secret talks between the Saudis and the Houthi rebels towards resolving the conflict.11 On a few other regional issues, Muscat continued to chart a path that differed with the rest of the countries. In October, Israeli Prime Minister Benjamin Netanyahu visited Oman and met Sultan Qaboos,12 which was preceded by the visit of Palestinian President Mahmoud Abbas earlier in the month.13 Due to ongoing tension in recent years, no Arab country had hosted Israeli and Palestinian leaders in quick succession.14 Though there are media reports that other Gulf Arab countries, including Saudi Arabia and the UAE, are adopting a softer approach towards Israel due to their shared concerns vis-­à-­vis Iran, they have not hosted the Israeli premier. Some analyst suggested that Netanyahu’s Muscat visit was a tacit support for Oman over the succession issue and endorsement of its neutrality over regional conflicts.15  Ibid.  Ghobari, Mohammed and Browning, Noah. 2018. ‘Yemen’s Houthis and Saudi Arabia in Secret Talks to End War—Sources’, in Reuters, 15 March, https://uk.reuters.com/article/uk-yemen-security-saudi-talks/yemens-houthis-and-saudi-arabia-in-secret-talks-to-endwar-sources-idUKKCN1GR281, last accessed on 30 May 2019. 12  France 24. 2018. ‘After Netanyahu and Abbas Visits, Oman Offers Help in IsraeliPalestinian Peace Efforts’, 27 October, https://www.france24.com/en/20181027-omannetanyahu-abbas-visits-offers-help-israeli-palestinian-peace-efforts-conflict-bahrain, last accessed on 30 May 2019. 13  Ibid. 14  In the past, Egypt and Jordan hosted the Israeli and Palestinian leaders towards minimizing regional tension and bridging their differences. 15  Cook, Steven A. 2018. ‘Oman Just Bought Israeli Insurance’, in Foreign Policy, 7 November, https://foreignpolicy.com/2018/11/07/oman-just-bought-israeli-insurance/, last accessed on 30 May 2019. 10 11

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Economy Like other economies in the region, Oman has been struggling with stagnation in growth, falling oil prices and resultant decline in oil revenues, increasing national population and growing demands for Arabization of the labour force. In addition to these region-wise problems, Omani oil reserves are not substantial and are depleting; for example, at the end of 2017, Oman had a reserve of 700 million tonnes (MT) of oil reserves that is expected to last for another 15.2 years at the current rate of production (Table 1.1). Hence, Oman was compelled to actively pursue diversification, privatization and Omanization. Despite best efforts, the problems are far from over. While diversification efforts in terms of banking, tourism and retail sectors yielded some result, the government continues to be the prime driver for investments in all sectors of the economy. Private companies, though interested in expanding their activities, do not venture out of their comfort zones and their interest and involvements are concentrated in lucrative areas such as services, retail and finance sectors and they shy away from mega diversification public projects, such as manufacturing and infrastructure development.16 Likewise, the naturalization of the job market has hit roadblocks due to shortage in skilled human resources among the citizens17 and the Omani preference for well-paying jobs and distaste for menial works, such as construction, household activities, shopkeeping and accounting.18 These drawbacks resulted in the government focusing on its advantages and the stability in global oil prices since 2017 has enabled the ­management of budgetary constraints. It has used government bonds, international borrowing19 and reduced subsidies to generate additional resources.20 For 16  CIA World Factbook. 2018. Oman, https://www.cia.gov/library/publications/theworld-factbook/geos/mu.html, last accessed on 30 May 2019. 17  Ennis, Crystal A. and al-Jamali, Ra’id Z. 2014. ‘Elusive Employment Development Planning and Labour Market Trends in Oman’, in Chatham House Royal Institute of International Affairs, September, https://www.researchgate.net/publication/275830095_ Elusive_Employment_Development_Planning_and_Labour_Market_Trends_in_Oman, last accessed on 30 May 2019. 18  Ibid. 19  Fattah, Zainab. 2019. ‘Oil Keeps Oman on Debt Binge with $6.2 Billion Plan for 2019’, in Bloomberg, 2 January, https://www.bloomberg.com/news/articles/2019-01-02/oilkeeps-oman-on-borrowing-spree-with-6-2-billion-plan-in-2019, last accessed on 30 May 2019. 20  Times of Oman. 2017. ‘Oman Slashes Subsidies by More Than OMR500 Million in a Single Year’, 25 September, https://timesofoman.com/article/117984, last accessed on 30 May 2019.

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example, in 2017, subsidy on oil products, electricity and food products was reduced up to 20 per cent, leading to US$1.2 in reduced subsidies.21 Oil export continues to form the major source of revenue, and in 2018, it accounted for 80 per cent of the government revenues,22 66 per cent of exports and 39 per cent of the gross domestic product (GDP). Hence, oil-price stability enabled Oman to tide over its earlier current account deficit. In 2018, the GDP grew by 1.9 per cent and, according to International Monetary Fund estimates, this is expected to grow in 2019. The slower growth was reflected in the higher rate of unemployment, which soared to 49 per cent during the year.23 Indeed, joblessness among the educated youth has been one of the prime factors for the Arab uprising. Towards diversification, Oman has been courting international investments for developing its infrastructure and ports and attracted inflow of capitals from China, Iran and the UK, as well as from India.24 Oman is developing the Duqm Port in the Arabian Sea as a transportation and military hub, with an investment of US$60 billion, and the project is expected to be completed by the end of 2019.25 There are plans to develop a refinery, dry dock and container port at the site and has signed a host of agreements with Chinese, British and Gulf-based companies for the development of various projects associated with the Duqm port.26 China sees the port as a pivotal component of its Belt and Road Initiative (BRI) towards enhancing trade with Europe and Africa.27 Moreover, Oman is also trying to develop road and rail network with the Gulf Arab countries to allow them an alternative access to the SLoC in the Indian Ocean, thereby reducing their dependency upon the crowded and occasionally tense Persian Gulf and the Strait of Hormuz.28  Ibid.  CIA World Factbook. Oman. 23  Lons, Camille. 2018. ‘Oman: Between Iran and a Hard Place’, in European Council on Foreign Relations, 3 May, https://www.ecfr.eu/article/commentary_oman_between_iran_ and_a_hard_place1, last accessed on 30 May 2019. 24  Diwakar, Amar. 2019. ‘Vision 2040: Oman’s Ambitious Strategy Towards a PostOil Economy’, in The New Arab, 16 April, https://www.alaraby.co.uk/english/ indepth/2019/4/16/vision-2040-omans-ambitious-strategy-towards-a-post-oil-economy, last accessed on 30 May 2019. 25  Ibid. 26  Ibid. 27  Ibid. 28  Yousef, Deena Kamel. 2014. ‘Oman’s $3 Billion Railroad Plan to Blunt Iran Oil Risk: Freight’, in Bloomberg, 6 February, https://www.bloomberg.com/news/arti21 22

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During the year, the Omani economy has marginally stabilized, largely due to increasing oil prices. Fiscal deficit remains a major concern due to largescale state-funded infrastructure projects. Sectors such as services, retail, finance and construction have witnessed a renewed growth29 and diversification efforts in trading, tourism and recreation are poised to generate additional growth in the coming years.30 The World Bank expects the real GDP growth to ‘recover to 2.8 percent over the medium term in line with higher hydrocarbon production from the Khazzan gas field’.31 The government also plans to introduce indirect taxes and reduce subsidy to augment additional resources.32 Society Under Sultan Qaboos, who has ruled the country since 1970, Oman has made significant progress and emerged as the most prosperous, stable and peaceful society in the broader Middle East. The scares of the Darfur rebellion (1963–76) were overcome through a host of socio-economic measures and the Omani leadership was able to stay away from regional tensions and conflicts and remained focused on the economic development. This made Oman one of the leading Arab economies in the Persian Gulf despite stiff competition from its more resourceful neighbours. It provided the Omani society a sense of stability and prosperity and resulted in it staying away from radicalism and extremism witnessed in some of the other countries. Oman has maintained a demographic balance that can be the envy of other Gulf Arab countries. Out of its 4.6  million resident population during 2018, the expatriates make up 2.1 million or less than half. This is in contrast to countries like the UAE and Qatar, where the expatriates cles/2014-02-06/oman-s-3-billion-railroad-plan-to-blunt-iran-oil-risk-freight, last accessed on 30 May 2019. 29  Diwakar, Amar. The New Arab. ‘Vision 2040: Oman’s Ambitious Strategy Towards a Postoil Economy’. 30  Ibid. 31  The World Bank. 2018. Economic Outlook: Oman, https://www.worldbank.org/en/ country/gcc/publication/oman-economic-outlook-october-2018, last accessed on 30 May 2019. 32  Khan, Gulam Ali. 2019. ‘Economic Reforms to Strengthen Oman’s Fiscal Position, Says IMF’, in Muscat Daily, 14 April, https://muscatdaily.com/Archive/Business/ Economic-reforms-to-strengthen-Oman-s-fiscal-position-says-IMF-5due, last accessed on 30 May 2019.

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make up 80–85 per cent of their total resident population.33 The Omani population is also more diverse; about 60 per cent of them are Ibadi Muslims, 20–25 per cent Sunni Muslims and about 15 per cent of the population comprises Christians, Buddhists, Sikhs and Hindus. Even in terms of ethnicity, while the majority are Arabs, Oman also has a large population of Balochis, Africans, Afro-Arabs, Yemenis and South Asians.34 In terms of recognizable social indicators, Oman has done better than some of its neighbours. It has a Human Development Index of 0.821 and is ranked 48 in the world. The Omanis enjoy access to good healthcare and education without much distinction based on gender, nationality or religion. The conditions of women in terms of access to healthcare and education are significantly higher. Women constitute about 47 per cent of the Omani workforce, one of the highest in the region.35 At the same time, their participation in public life is often restricted due to local customs; the 85-member, elected Majlis al-Shura, for example, does not have a single woman lawmaker. Oman is a highly urbanized society and nearly 80 per cent of the population lives in urban areas and, at the median age of 29, Oman is one of the youngest countries in the region.36 It has a Gender Development Index (GDI) score of 0.942 and a Gender Inequality Index (GII) score of 0.264. Though both depict less favourable picture of the Sultanate, even this is higher than Oman’s neighbours. Despite these advantages, growing youth unemployment is a major concern for Muscat and would require a sustained long-term strategy.

Bilateral Relations The Indo-Omani relations received a significant boost during the year with the visit of Prime Minister Narendra Modi to Muscat in February. This was the first high-level meeting between the two leaderships since the Bharatiya Janata party (BJP)-led National Democratic Alliance (NDA) government came to power in May 2014. Indeed, Omani Minister Responsible for Foreign Affairs Yusuf bin Alawi was the first foreign dignitary to meet Prime Minister Modi in June 2014 and had visited India  CIA World Factbook.  Ibid. 35  The World Bank. 2018. Female Labour Force Participation Data, https://data.worldbank.org/indicator/sl.tlf.cact.fe.zs, last accessed on 30 May 2019. 36  CIA World Factbook. 33 34

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twice during June 2014 and April 2017. Though there were political contacts, the prime-ministerial visit had to wait until February 2018. Political Ties India and Oman have maintained strong ties since the establishment of diplomatic relations in 1955. Though centuries of trade and maritime ties were an advantage, the first political visit from India had to wait until 1985 when Prime Minister Rajiv Gandhi visited Oman, and since then, there were four visits from India undertaken by P.  V. Narasimha Rao (June 1993), Atal Behari Vajpayee (October 1998), Manmohan Singh (December 2008) and Modi (February 2018). From Oman, Sultan Qaboos visited India in April 1997 and in 2007 he was conferred with Jawaharlal Nehru Award for International Understanding for 2004. Due to inept handling by both sides, the Sultan was unable to visit India and receive the award. Diplomatic gaffe on the part of India appeared to have resulted in him not visiting India as the chief guest of the Republic Day celebrations in 2012 and, subsequently, health conditions prevented the Sultan from undertaking foreign visits.37 With a renewed vigour and recalibrated focus on the Gulf, Prime Minister Modi has been cultivating Gulf monarchies since assuming office and Oman has been on the radar since 2014. The prime minister preferred to visit the UAE, Saudi Arabia, Iran and Qatar in the Gulf before going to Oman in 2018. At the same time, Oman was not fallen off New Delhi’s Gulf policy and there were several ministerial visits and contacts since the NDA came to power. If External Affairs Minister Sushma Swaraj visited Muscat in February 2015, Minister of State for External Affairs M.  J. Akbar visited in December 2016. The first visit by an Indian Defence Minister took place in May 2016, when Manohar Parrikar went to Muscat. The 8th Indo-Oman Joint Committee Meeting took place in Oman in July 2018 along with 9th India-Oman Joint Business Council co-chaired by Commerce and Industry Minister Suresh Prabhu.38 37  Interestingly, Sultan Qaboos briefly studied in Pune. Financial Express. 2018. ‘PM Narendra Modi in UAE: Who Is Qaboos bin Said, the Oman Sultan Who Once Studied in India’, 11 February, http://www.financialexpress.com/india-news/pm-narendra-modi-inuae-who-is-qaboos-bin-said-the-oman-sultan-who-once-studied-in-india/1061565/, last accessed on 30 May 2019. 38  GoI, Press Information Bureau (PIB), Ministry of Commerce and Industry (MoCI). 2018. ‘8th India-Oman Joint Commission Meeting Begins in Muscat’, 16 July, http:// www.pib.nic.in/Pressreleaseshare.aspx?PRID=1538758, last accessed on 30 May 2019.

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The highpoint of the year, however, was Prime Minister Modi’s visit in February, during which he met with Sultan Qaboos and ‘exchanged views on bilateral, regional and global issues of common interests’.39 Both leaders emphasized on the historical nature of the relations between the two people and underlined their shared maritime heritage and ‘noted that the historically close bilateral ties, involving vibrant maritime trade and cultural exchange, have expanded into strategic partnership based on trust and mutual respect’.40 Both leaders issued a 41-point joint statement and pledged to improve security and defence cooperation and to find ways to enhance trade and commercial ties. During the visit the following eight memorandums of understanding (MoUs)/agreements were signed: 1. Agreement on legal and Judicial Cooperation in Civil and Commercial matters 2. Agreement on mutual visa exemption for holders of diplomatic, Special, service and official passports 3. MoU on Cooperation in the field of health 4. MoU on Cooperation in the peaceful uses of outer space 5. MoU on Cooperation between Foreign Service Institute, Ministry of External Affairs, India and Oman Diplomatic Institute 6. MoU on Academic and Scholarly cooperation sectors between National Defence College, Sultanate of Oman and the Institute for Defence Studies and Analyses 7. MoU in the field of Tourism cooperation between India and Oman and 8. Annexure to the MoU on Military Cooperation.41 According to the new additions to the MoU on military cooperation, Oman would provide access to Indian warships in the strategically located Duqm Port for docking and maintenance work. According to the government, this addition would enable the ‘use of certain facilities at the Special Economic Zone at Duqm (Sea Port, Dry Dock and Air Port) by Indian 39  GoI, MEA. 2018. ‘India Oman Joint Statement during Visit of Prime Minister to Oman’, 12 February, https://mea.gov.in/bilateral-documents.htm?dtl/29479/india+oma n+joint+statement+during+visit+of+prime+minister+to+oman, last accessed on 30 May 2019. 40  Ibid. 41  Ibid.

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armed forces’.42 This is a significant shift from the traditional Indian reluctance for defence cooperation with Gulf countries and would offer greater flexibility to Indian warships operating in the Indian Ocean region and as the government informed the parliament ‘Oman facilitates Indian naval ships conducting anti-piracy operations in Gulf of Aden’.43 Given the strategic location of the Duqm Port and increasing Chinese economic involvement in the Gulf region, the agreement is seen by some as an important Indian move to boost its strategic foothold in the Indian Ocean region. According to some, the access to Duqm Port would enable India to counter Chinese presence in the region through the Gwadar Port in Pakistan.44 In February, Oman facilitated India’s full membership in the Ashgabat Agreement of 2011 which envisages the ‘facilitation of transit and transportation of goods between Central Asia and the Persian Gulf’.45 This would be critical for India’s participation in the international transport and transit corridor to Central Asia.46 Security and Defence Both countries have maintained a strong cooperation in the field of defence and security. They sought defence cooperation since the early 2000s and signed an MoU on defence cooperation in 2005 and this was renewed for another ten years in 2016.47 Since the signing of the MoU, 42  GoI, MEA. 2018. ‘Question No. 1885 Agreements with Middle East Countries’, 7 March, https://mea.gov.in/lok-sabha.htm?dtl/29550/QUESTION_NO1885_AGREEMENTS_ WITH_MIDDLE_EAST_COUNTRIES, last accessed on 30 May 2019. 43  GoI, MEA. 2018. ‘Question No. 6148 Cooperation with Oman’, 4 April, https://mea. gov.in/lok-sabha.htm?dtl/29760/QUESTION_NO6148_COOPERATION_WITH_ OMAN, last accessed on 30 May 2019. 44  Bagchi, Indrani. 2018. ‘Access to Omani Port to Help India Check China at Gwadar’, in The Economic Times, 14 February, https://economictimes.indiatimes.com/news/ defence/access-to-omani-por t-to-help-india-check-china-at-gwadar/ar ticleshow/62911695.cms, last accessed on 30 May 2019. 45  GoI, MEA. 2018. ‘India Joins the Ashgabat Agreement’, 1 February, http://www.mea. gov.in/press-releases.htm?dtl/29406/India_Joins_the_Ashgabat_Agreement, last accessed on 30 May 2019. 46  Besides Oman, Iran, Turkmenistan and Uzbekistan are the founding members of this forum. 47  GoI, MEA. ‘India Oman Joint Statement during Visit of Prime Minister to Oman’.

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Omani officers and cadets have been coming to India to take part in various courses offered by premier Indian institutions such as National Defence Academy (Pune), National Defence College (New Delhi) and Defence Services Staff College (Wellington). The tri-services of India regularly conduct exercises with their Omani counterparts. Three such exercises were conducted in 2017; a five-day joint air force exercise Eastern Bridge in Jamnagar in Gujarat in January48; a second edition of Al-Najah army exercise in Bakloh in Himachal Pradesh in March; and a naval exercise Naseem al-Bahr in the Gulf of Oman near Muscat in December.49 The joint statement issued during Prime Minister Modi’s visit noted strong defence and security ties between the two countries and noted that ‘the MoU on Military Cooperation … has provided the general framework to strengthen bilateral defence ties’.50 The leaders also ‘expressed satisfaction at the signing of an annexure to the existing MoU’ and felt that it would ‘provide further impetus to the robust defence relations, including through regular holding of joint exercises by the three defence forces’.51 Both sides underlined the ‘progress achieved in the ninth round of bilateral Joint Military Cooperation Committee talks’ and agreed to enhance bilateral security and defence cooperation by exploring possibilities for cooperation in space technology, joint defence production and coastal security. Salalah, the provincial capital of Dhofar in the south, ‘is the very important port which provides that facility to us and also our planes which are travelling further up in the West, they get refuelling facility in Oman on a regular basis’.52 The Indian Prime Minister also thanked the Sultan for the 48  The Times of India. 2017. ‘Indian Air Force and Royal Air Force of Oman to Hold Joint Exercise’, 17 January, https://timesofindia.indiatimes.com/city/ahmedabad/iaf-and-royalair-force-of-oman-to-hold-joint-exercise/articleshow/56606005.cms, last accessed on 30 May 2019. 49  GoI, PIB, Ministry of Defence. 2017. ‘Indian Navy Conducts Exercise Naseem-AlBahr with Oman Navy’, 20 December, http://pib.nic.in/newsite/PrintRelease. aspx?relid=174638, last accessed on 30 May 2019. 50  GoI, MEA. ‘India Oman Joint Statement during Visit of Prime Minister to Oman’. 51  Ibid. 52  GoI, MEA. 2018. ‘Media Briefing on Upcoming Visits of Prime Minister to Palestine, UAE and Oman’, 6 February, http://mea.gov.in/media-briefings.htm?dtl/29414/ Media_Briefing_on_upcoming_visits_of_Prime_Minister_to_Palestine_UAE_and_Oman, last accessed on 30 May 2019.

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‘Omani assistance during Operation Rahat conducted by India to evacuate Indian and foreign nationals from Yemen in March-April 2015’.53 Oman also played a crucial rule in the September 2017 release of the Vatican priest Father Tom Uzhunnalil, who was kidnapped in Yemen in March 2016.54 Trade and Commerce The bilateral trade ties had shown an upward swing during the past two years which witnessed a drop due to declining oil prices during 2014–16. In 2017–18, the bilateral trade reached US$6.7 billion with India importing goods worth US$4.26  billion while exporting commodities to the tune of US$2.44  billion (Table  6.1 and Fig.  6.1). The major Indian imports include oil, gas, fertilizers, petroleum products, chemicals, minerals, aluminium ore, salt, sulphur, stones, lime and so on. On the other hand, the major Indian exports to Oman include petroleum products, heavy machinery, construction materials, iron and steel, electrical equipment, textile and garments, chemicals, tea, coffee, spices, cereals, meat products and seafood. The upward trajectory of the bilateral trade is mainly due to rise in oil and gas imports from Oman and increase in international oil prices in 2017–18. In comparison to other Gulf countries, the trade is smaller; Oman continues to be an important trading partner of India and, during Table 6.1  India-Oman bilateral trade (US$ million)

India’s exports to Oman India’s imports from Oman Total bilateral trade Share in India’s total trade

2013–14

2014–15

2015–16

2016–17

2017–18

2,812.27 2,951.18 5,763.45 0.75

2,379.44 1,752.24 4,131.69 0.54

2,190.79 1,674.71 3,865.50 0.60

2,728.30 1,290.50 4,018.79 0.61

2,439.46 4,264.29 6,703.76 0.87

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

 GoI, MEA. ‘India Oman Joint Statement during Visit of Prime Minister to Oman’.  Roy, Shubhajit. 2018. ‘Today, PM Modi Meets Oman’s Sultan Who Once Studied in India’, in The Indian Express, 11 February, http://indianexpress.com/article/india/todaypm-modi-meets-omans-sultan-who-once-studied-in-india-5059079/, last accessed on 30 May 2019. 53 54

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Fig. 6.1  India-Oman bilateral trade 8 7 6 5 4 3 2 1 0

2011-12

2012-13 2013-14 Exports

2014-15 Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

2017–18, ranked 35th largest trading partner of India. Prime Minister Modi flagged this aspect during his interactions with the Omani leadership and underlined the immense potential for trade growth. Modi’s visit was followed by the visit of Commerce Minister Suresh Prabhu in July to ­co-­chair India-Oman JCM and JBC, which identified potential areas of cooperation, including energy, food security, IT, healthcare and tourism.55 Energy Energy which makes up the bulk of the Omani economy is also an important component of the Indo-Omani ties. Oman is not a member of the 14-member Organization of the Petroleum Exporting Countries (OPEC),56 and its estimated 5.5 billion barrels of oil reserves would last for 15  years at the current rate of production (Table  1.1). Despite this limitation, Oman has been a major supplier of oil to India; as part of its diversification plans, Oman has also started exporting liquefied natural gas (LNG) and India is one of its major markets. The Sultanate has an  GoI, PIB, MoCI. ‘8th India-Oman Joint Commission Meeting Begins in Muscat’.  Citing its limited oil exports, Qatar left OPEC on 1 January 2019.

55 56

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e­ stimated natural gas reserve of 30 trillion cubic feet and produces 875 billion cubic feet per day; out of this, 407 billion cubic feet, or about 45 per cent, is exported.57 During 2018, India imported nearly 1.29 million metric tons of LNG. Though Qatar, the US and Australia are the major suppliers to India, during the past five years, Oman has also emerged as an important gas supplier to India.58 The total value of hydrocarbon imports from Oman during 2017–18 stood at US$2.88 billion, which constituted 2.18 per cent of India’s total energy imports during the year. As a result, energy constituted 67.56 per cent of India’s imports from Oman (Table 6.2 and Fig. 6.2). This was a significant increase from the previous year when the Omani share in India’s total energy imports stood at 0.38 per cent and energy comprised only 30.26 per cent of total Indian imports from the Sultanate. Correspondingly, the Omani share in India’s energy imports from the Persian Gulf region also witnessed an upward swing; from about 0.69 per cent in 2016–17, it rose to 4.11 per cent in 2017–18 (Table 6.3 and Fig. 6.3). Investments Investment is another major area of bilateral cooperation. As of 2018, Oman is the second largest investor in India from the Persian Gulf region, second only to the UAE. Its overall ranking in terms of total foreign direct Table 6.2  Share of oil in India’s imports from Oman (US$ million) Year

2013–14 2014–15 2015–16 2016–17 2017–18

Oil imports from Oman

Total oil imports

Omani share in total oil imports

1,514.11 732.51 584.67 390.56 2,880.79

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

0.83 0.47 0.60 0.38 2.18

Imports from Per cent of Oman oil in imports from Oman 2,951.18 1,752.24 1,674.71 1,290.50 4,264.29

51.31 41.80 34.91 30.26 67.56

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

 CIA World Factbook.  GoI, PIB, Ministry of Petroleum & Natural Gas. 2018. ‘Import of Natural Gas’, 23 July, http://pib.nic.in/newsite/PrintRelease.aspx?relid=180889, last accessed on 30 May 2019. 57 58

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Fig. 6.2  Share of oil in India’s imports from Oman 80 70 60 50 40 30 20 10 0

2011-12

2012-13

2013-14

2014-15 2015-16 Share in Per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Table 6.3  India’s energy imports from Oman (in US$ million) 2013–14 India’s energy imports from Oman India’s total energy imports Total energy imports from the Persian Gulf Share in total energy imports (per cent) Share in energy imports from Persian Gulf (per cent)

1,514.11

2014–15 732.51

2015–16 584.67

2016–17 390.56

2017–18 2,880.79

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75

85,300.30 50,992.26

56,335.34

70,090.81

0.83

0.47

0.60

0.38

2.18

1.42

0.86

1.15

0.69

4.11

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

investment (FDI) inflows into India is 31, and between April 2000 and December 2018, India has received US$491.92 million FDI from Oman. During 2018 alone, it received US$34.67 million from the Sultanate.59 In 59  GoI. 2019. ‘FDI Factsheet’, 12 March, https://dipp.gov.in/sites/default/files/FDI_ Factsheet_12March2019.pdf, last accessed on 30 May 2019.

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Fig. 6.3  Share of Oman in India’s oil imports 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

2011-12 2012-13 2013-14 Share in Total Oil Imports

2014-15 2015-16 2016-17 2017-18 Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

2010, the public sector State Bank of India and State General Reserve Fund of Oman established a 50–50 Oman-India Joint Investment Fund (OIJIF) as a special-purpose vehicle to promote Omani investments in India. Since then, the OIJIF has invested US$100 million in various sectors in India60 and, in addition, the joint fund has raised US$200 million for investments in sectors such as IT, healthcare and tourism. On the other hand, Indian companies have also been investing in Oman. According to the Omani Ministry of Commerce and Industries, over 3,200 Indian companies are functioning in the Sultanate.61 As per the Indian Ministry of External Affairs, sectors such as iron and steel, cement, fertilizers, textile, cables, chemicals and automotive are the ‘areas where Indian companies have preferred to invest’.62 In the Sohar special economic zone, for example, investments from Indian companies have reached over US$2 billion. Similarly, in the Salalah region, Indian companies have invested in ‘manufacturing of automotive parts, textile, cables, guargum’ sectors. In the Duqm special economic zone, ‘an Indo-Oman 60   GoI, MEA. 2018. ‘India-Oman Bilateral Relations’, https://mea.gov.in/Portal/ ForeignRelation/India-Oman_Bilateral_Realtions_for_MEA_Website.pdf, last accessed on 30 May 2019. 61  Ibid. 62  Ibid.

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JV Sebacic Oman is undertaking a US$1.2 billion project for setting up the largest Sebacic acid plant in the Middle East’. Furthermore, Indian companies are investing in an ‘integrated tourism complex project in Duqm, worth US$748 million’.63 Expatriates As of December 2018, the number of Indian expatriates in Oman is estimated at 690,00064 and this is also the largest expatriate community in the Sultanate.65 The Indian community is vibrant and peaceful and has earned its name with its work ethics, discipline and business acumen. The Indian expatriate workers are engaged in diverse professions in almost all sectors of the Omani economy. While most are employed as unskilled domestic workers and in menial jobs, a significant number can be found in white-­ collar professions such as doctors, engineers, IT professionals, business executives, educators and consultants. Some Indian workers have faced problems due to the kafala system (sponsorship) and misleading information about working conditions provided by Indian human resource agencies, the number of such cases have come down due to streamlining of the recruitment process. During his visit Prime Minister Modi visited the Shiva temple in Muscat known as Motishwar Mandir, which was built by the merchant community from Gujarat and has been functioning for over a century.66 The Indian prime minister also visited the Sultan Qaboos Grand Mosque, the main mosque of the Sultanate located in the capital that was ‘built from 300,000 tons of Indian sandstones sculpted by 200 craftsmen from India’.67 His engagements also included an address to the Indian community in the sport stadium in Muscat.68  Ibid.  Ibid. 65  Times of Oman. 2018. ‘Indians Again Become Largest Expatriate Community in Oman’, 10 December, https://timesofoman.com/article/574738/Oman/Indians-again-becomelargest-expatriate-community-in-Oman, last accessed on 30 May 2019. 66  The Economic Times. 2018. ‘PM Narendra Modi Visits Shiva Temple in Oman’, 12 February, https://economictimes.indiatimes.com/news/politics-and-nation/pm-narendra-modi-visits-shiva-temple-in-oman/articleshow/62884919.cms, last accessed on 30 May 2019. 67  Ibid. 68  Financial Express. 2018. ‘Modi in Oman Highlights: PM Modi Says India Will Get to See Bullet Train by 2022’, 11 February, http://www.financialexpress.com/india-news/pmnarendra-modi-in-uae-india-state-of-palestine-oman-abu-dhabi-hindu-temple-mahmoudabbas/1061540/, last accessed on 30 May 2019. 63 64

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Challenges While the Indo-Omani bilateral relations have been strong, the major challenge lies in converting them into a more comprehensive strategic partnership. Though the long-awaited visit by the Indian prime minister created much-needed impetus, the problem lies in converting the positive vibes into tangible political gains. The Omani importance lies in its strategic location and proximity to the Strait of Hormuz and the Indian Ocean. The additions to the defence MoU signed during Modi’s visit grants docking and maintenance facilities to Indian warships operating in the region and this should enhance India’s anti-piracy campaign in the Arabian Sea and Gulf of Aden. With the succession issue looming large in the Sultanate, India could play a constructive role in its smooth transition that is vital for Omani stability and progress. The traditional independent foreign policy pursued by Muscat would require a greater Indian engagement with Oman and New Delhi should benefit from the latter’s diverse contacts and engagements with various players in the Gulf and beyond.

CHAPTER 7

Qatar

Key Information Ruling family: al-Thani; Ruler: Tamim bin Hamad bin Khalifa al-Thani (since 25 June 2013); Crown Prince: Abdullah bin Hamad bin Khalifa al-Thani (since 11 November 2014); National Day: 18 December; Parliament: 45-member Majlis al-Shura, 30 members directly elected by popular vote for 4-year re-electable terms and 15 appointed by the monarch to serve until resignation or until relieved; Last Parliamentary Election: NA; Major Group in Parliament: NA; National Carrier: Qatar Airways. Socio-Economic Indicators Area: 11,586 sq. km; Population: 2.6 million (July 2018 est.); Natives: 11.6 per cent; Expats: 88.4 per cent (2015  est.); Religious Groups: Citizen (Sunni 90–95 per cent; Shia 5–10 per cent); Residents (Muslim 67.7 per cent; Hindu 13.8 per cent; Christian 13.8 per cent; Buddhist 3.1, other religion less than 1 per cent) (2010  est.); Youth: 12.12 per cent (2018  est.); Population growth rate: 1.95 per cent (2018  est.); Life expectancy at birth: 79  years (2018  est.); Major population groups: Arab 40 per cent; Indian 18 per cent; Pakistani 18 per cent; Iranian 10 per cent; Other 14 per cent; Literacy Rate: 97.3 per cent (2015  est.); National Currency: Qatari Riyal (QAR); GDP: US$167.6 billion (2017 World Bank); Foreign Trade: Export US$67.5 billion (2017 est.), Import © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_7

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$30.77  billion (2017  est.); Defence budget: NA; Sovereign Wealth Fund: US$320  billion; External Debt: $167.8  billion (31 December 2017  est.); Per capita income: $124,500 (2017  est. CIA), (HDI: 116,818) (World Bank GNI PPP: 128,000); Oil reserves: 25.24 billion bbl.; Gas reserves: 24.07  trillion m3; HDI rank: 37/189; Infant Mortality Rate: 6 deaths/1,000 live birth (2018 est.); UN Education Index: 0.6988; Gender Inequality Index: 0.206; Labour Force: 1.953 million (2017 est.); Unemployment rate: 8.9 per cent (2017 est.); Urban Population: 99.1 per cent (2018); Rate of Urbanization: 2.41 per cent (2015–20 est.); Last National Census: 2010. India Related Indian Cultural Centre: Doha (inaugurated in 2000); Number of Indians: 691,000 (April 2018); Number of places of worship for Indians: Catholic Church (opened in 2008); Indian Schools: 14; Indian Banks: State bank of India (1); ICICI Bank (1); HDFC Bank; Indian Overseas Bank; Currency exchange rate: QAR 1 = INR 18.99 (March 2019); Last visit to India by the ruler: Emir Tamim bin Hamad alThani, March 2015; Last Indian Prime Minister to visit: Narendra Modi, June 2016. * * * Qatar has emerged as one of the critical players in the fast-changing geopolitical situation in the Persian Gulf and the broader Middle East. The Emirate is seen by many as a country that punches above its weight in regional developments. A financial powerhouse due to its gas reserves, the Qatari foreign policy activism has competed with other regional heavyweights for influence. In recent years, Doha stepped on the weaker nerves of its regional rivals and allies, including the ambitious and larger neighbours, such as Saudi Arabia and the UAE. In the past, these intra-Arab tensions were resolved amicably, but the emergence of a new generation of leaders who are less experienced and more ambitious has resulted in the intra-Arab tension in the form of a Saudi-led boycott and blockade of Qatar since June 2017. This was escalated by the inept handling of the situation by President Donald Trump. Qatar has been able to handle the situation with the help of financial prowess, political network and diplomatic overtures to countries like Iran

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and Turkey, but the crisis had damaged the Arab Gulf unity as it was visualized when the six-member Gulf Cooperation Council (GCC) was formed in 1981. Except for an immediate shock and uncertainty, the crisis did not affect India significantly as it managed to weather the storm, but it poses a challenge to the core of its Gulf policy. Until the resolution of the crisis, it was trying to balance the Iran-Saudi divide and the GCC crisis.

Domestic Developments Politics Qatar is a monarchy ruled by the Al-Thani family since 1867, when the British enabled the family to take over a peninsular region from the Al-­Khalifa, the ruling family of Bahrain. The Al-Thani belong to the Nejd region of the Arabian Peninsula (incidentally, the heartland and core of the Al-Saud who rule Saudi Arabia) and emigrated to the eastern part in the pursuit of economic opportunities. The ruling family subscribes to the teachings of Muhammad bin Abdul Wahhab (1703–91) and hence shares the religio-ideological roots of the Kingdom of Saudi Arabia. However, as the GCC crisis highlights, these proved insufficient to prevent misunderstanding, tension and rivalry between Qatar and Saudi Arabia. The tiny peninsular state has a resident population of 2.6  million (2018), out of whom only 300,000 or just 11.5 per cent are citizens. It is governed by a hereditary emir belonging to the Al-Thani family. The present Emir—Tamim bin Hamad al-Thani—took over in June 2013 after his father abdicated in his favour.1 The Emir is also the defence minister and takes all decisions on the advice of his cabinet. Qatar has a Consultative Council (Majlis al-Shura) that was established in 1972. The new constitution adopted in 2003 provides for a partly elected 45-member Majlis alShura, but the first election scheduled for 2007 never took place and was postponed on some pretext or other. The term of the nominated Majlis al-Shura was extended again in 2016 for three more years. Hence, either the first elections will be held in 2019 or the duration of the nominated Majlis will be extended again.

1  Black, Ian. 2013. ‘Qatar’s Emir Sheikh Hamad to Hand Power to Son, Crown Prince Tamim’, in The Guardian, 24 June, https://www.theguardian.com/world/2013/jun/24/ qatar-emir-steps-down-son-tamim, last accessed on 26 May 2019.

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Like much of the region, political parties and associations are illegal and no political activity can be noticed in the Emirate. Even at the height of the Arab Spring protests, when neighbouring monarchies like Saudi Arabia, Bahrain, Oman and Kuwait witnessed some protests, Qatar remained quiet and tranquil. The ruler draws legitimacy through tribal and family alliances and issues and problems are raised only through the consultative mechanism and that too in private conversations. Any dissent against the ruler is not permissible and can invite serious repercussions. Moreover, political activism has been under check primarily because of the hydrocarbon wealth of the country, and its tiny citizen population has been rich. With a gross domestic product (GDP) per capita of US$124,500 (2017), Qatar is the wealthiest country in the world.2 A welfare mechanism and distribution of hydrocarbon wealth through patronization and alliance system have kept the country away from any form of political dissent. Qatar faced its toughest challenge in June 2017, when Saudi Arabia, the UAE, Bahrain and Egypt imposed a boycott and blockade of the peninsular state due to foreign policy differences.3 This resulted in Qatar facing political isolation, economic sanctions, travel restrictions, flight embargos, accusations of extremism and subversions.4 The initial difficulties, especially food shortages, faced by the Emirate were gradually overcome with the help of regional players—mainly Iran and Turkey—and due to the decision of GCC countries, like Oman and Kuwait, not to join the Saudi-led blockade. Some reports suggest a Saudi plan to transform the peninsular Emirate into an island by building an artificial canal and military base along the Saudi-Qatari border.5 Despite the economic challenges, Doha has managed to deal with the situation effectively without showing signs of a compromise.

2  The World Bank. 2017. Per Capita Income, https://data.worldbank.org/indicator/ ny.gdp.pcap.cd, last accessed on 26 May 2019. 3  BBC News. 2017. ‘Qatar Crisis: What You Need to Know’, 19 July, https://www.bbc. com/news/world-middle-east-40173757, last accessed on 26 May 2019. 4  Ibid. 5  Financial Express. 2018. ‘Saudi Arabia Plans to Turn Peninsula of Qatar into an Island; Here’s How’, 9 April, http://www.financialexpress.com/world-news/saudi-arabia-plansto-turn-peninsula-of-qatar-into-an-island-heres-how/1126923/, last accessed on 26 May 2019.

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With the failure of Kuwait to mediate between the warring parties, 2018 witnessed the US6 and Oman7 exploring backchannel diplomacy to bring the two sides to the negotiating table. However, as neither side is in a mood for compromise and accommodation, the crisis has continued. Qatar has refused to accept any demands of the Saudi-Emirati coalition as it views them as an assault on its sovereignty. For their part, Saudi Arabia and the UAE have refused to scale down their principal demands vis-à-vis Qatar, namely, ending of support to the Muslim Brotherhood, no independent engagement with Iran and closing down of Al-Jazeera.8 Foreign Policy The Emirate has invested a considerable amount of resources in foreign policy during the reign of Emir Hamad bin Khalifa al-Thani (1995–2013). Since deposing his father through a bloodless coup in 1995, he has skilfully used energy wealth to transform a small, non-descriptive city-state into a modern, glitzy and active Emirate, emulating the Dubai model. Under his leadership, Doha began using its financial power to further its regional interests through an activist foreign policy. Since then, it has intervened in a host of regional conflict and tensions including Afghanistan, Egypt, Iraq, Lebanon, Libya, Palestine,9 Sudan, Syria and Yemen. On a few occasions, its interests and policies were antagonistic towards some of its immediate neighbours, especially Saudi Arabia. This often created tension between the two sides; and Qatari support for Muslim Brotherhood in Egypt, Libya and Syria, for example, ran counter to Riyadh and its harbouring of Brotherhood elements, including Hamas, has been one of the major factors leading to the GCC crisis of 2017. After months of wrangling, in June 2018, Doha filed a case in the International Court of Justice (ICJ) arguing that the UAE-imposed 6  Krieg, Andreas. 2018. ‘One Year On, Trump Remains the Cause of—And Solution to— The Qatar Crisis’, in Middle East Eye, 23 May, https://www.middleeasteye.net/opinion/ one-year-trump-remains-cause-and-solution-qatar-crisis, last accessed on 26 May 2019. 7  Toumi, Habib. 2019. ‘Oman: No Solution in Sight for Qatar Crisis’, in Gulf News, 19 March, https://gulfnews.com/world/gulf/oman/oman-no-solution-in-sight-for-qatarcrisis-1.62767417, last accessed on 26 May 2019. 8  BBC News. ‘Qatar Crisis: What You Need to Know’. 9  Jahal, Entsar Abu. 2018. ‘Egypt Struggles to Edge Qatar Out of Palestine’, in Al-Monitor, 6 April, http://www.al-monitor.com/pulse/originals/2018/04/egypt-efforts-keep-qataroutside-palestinian-political-scene.html, last accessed on 26 May 2019.

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­ oycott measures in the aftermath of the diplomatic row have violated the b International Convention on the Elimination of All Forms of Racial Discrimination. On 23 July, in a provisional ruling, the ICJ asked the UAE to allow Qatari families separated by the embargo to be reunited; to allow Qatari students to complete their education in the UAE or to obtain their educational records; and to allow affected Qataris access to the Emirati courts.10 Following the ruling, Emirati Minister of State for Foreign Minister, Anwar Gargash, tweeted that the UAE has already implemented these measures.11 In a significant political move in December, Doha announced its decision to withdraw from the Organization of the Petroleum Exporting Countries (OPEC) from January 2019 and became the first Gulf country to leave the oil cartel.12 The GCC crisis resulted in Doha getting closer to Iran and Turkey. If the political relations with Tehran were resumed in August 2017, Turkey announced the expansion of its military base in the Emirate and, in December, announced that its strength would be increased from 3,000 to 5,000.13 At the global level, Qatar maintains a close alliance with the US and hosts the Al-Udeid airbase that has been the command headquarters of US Air Force Central Command in the Persian Gulf, which acted as the headquarters of the US air force operations in the Iraq War of 2003 and the allied campaign against the Islamic State of Iraq and Syria (ISIS) since 2014. Therefore, after the initial support for the Saudi-led blockade,14 the 10  South China Morning Post. 2018. ‘UN Court Orders UAE to Protect Rights of Qataris in Wake of Diplomatic Breakdown’, 24 July, https://www.scmp.com/news/world/middleeast/article/2156577/un-court-orders-uae-protect-rights-qataris-wake-diplomatic, last accessed on 26 May 2019. 11  Reuters. 2018. ‘U.N. Court Orders UAE to Lift Measures Against Qataris’, 23 July, https://af.reuters.com/article/worldNews/idAFKBN1KD1SN, last accessed on 26 May 2019. 12  Indonesia pulled out of OPEC in 2008 when it became a net importer of oil; it rejoined OPEC in January 2016 but suspended its membership in November that year over the demand for a production cut. Ecuador and Gabon also pulled out of OPEC in 1992 and 1995, respectively, only to rejoin a few years later. 13   Bekdil, Burak Ege. 2017. ‘“Nothing More Natural”: Turkey-Qatar Procurement Business Flourishes’, in Defense News, 13 December, https://www.defensenews.com/industry/2017/12/13/nothing-more-natural-turkey-qatar-procurement-business-flourishes/, last accessed on 26 May 2019. 14  Bloomberg. 2019. ‘Ending the Qatar Blockade Is Crucial to U.S.  Interests’, 29 May, https://www.bloomberg.com/opinion/articles/2019-05-29/ending-qatar-blockadeshould-be-priority-for-donald-trump, last accessed on 30 May 2019.

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Trump administration did a volte-face and settled for a neutral stand and urged both parties to maintain GCC unity, which is crucial to fight Iran.15 In January 2018, the US and Qatar held their first joint strategic dialogue since the GCC crisis and discussed a host of regional and bilateral issues and concerns.16 This was seen as a belated American renewal of its security commitments to Doha.17 Economy Like other GCC countries, the Qatari economy is intrinsically linked to an excessive dependence upon hydrocarbon production and exports. Having the third largest gas reserves after Russia and Iran, Qatar is also among the biggest producers and exporters of natural gas. This makes Qatar among the richest countries in the world, and in 2018, its GDP stood at US$167 billion, while GDP grew by a modest 1.6 per cent. Its sovereign wealth fund is estimated at US$320  billion.18 The Emirate has invested over US$8–10 billion in infrastructure development projects to prepare for the FIFA World Cup in 2022, and this extravagance has also invited criticisms over labour rights and harsh working conditions.19 In the wake of the GCC crisis, Qatar dealt with the issue of shortage of food and consumer goods by using its wealth through imports. Responding to the closure of the Saudi borders—its normal route for the import of fresh vegetables, fruits and other easily perishable consumer items—Qatar has increased trade with Iraq, Oman as well as far away Turkey. Imports of essential items from India have also increased due to the blockade. While other sectors of the economy have avoided a significant downturn, the aviation industry has been affected severely. The prohibition of the use of the airspace of the neighbouring country has affected the operations of  Ibid.  US Department of State. 2018. Press Releases, https://www.state.gov/r/pa/prs/ ps/2018/01/277776.htm, last accessed on 26 May 2019. 17  US Department of Defense. 2019. ‘U.S. and Qatar Sign MOU Reaffirming Qatar’s Commitment to Supporting U.S.  Military Activities at Al Udeid Air Base’, 14 January, https://dod.defense.gov/News/News-Releases/News-Release-View/Article/1731648/ us-and-qatar-sign-mou-reaffirming-qatars-commitment-to-supporting-us-military-a/, last accessed on 26 May 2019. 18  Qatar Investment Authority. https://www.qia.qa/, last accessed on 26 May 2019. 19  BBC News. 2018. ‘Qatar World Cup 2022: Workers Have Been Left “Unpaid”— Amnesty International’, 26 September, https://www.bbc.com/sport/football/45649439, last accessed on 26 May 2019. 15 16

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Qatar Airways and it has posted a net operational deficit of US$69 million in 2017–18.20 The economy is over-dependent upon the hydrocarbon sector, which accounts for 90 per cent of the Qatari exports, 70 per cent of government revenues and nearly 60 per cent of the GDP.21 It has a proven oil reserve of 25 billion barrels, which is comparatively smaller than some of its oil-­ rich neighbours like Saudi Arabia, but at the current rate of production, Qatari oil reserves can last for another 50 years (Table 1.1). Nonetheless, Qatar is not a big player in the international oil market, and this was the main reason for its decision to pull out of the OPEC. At the same time, Qatar is a significant player in the international gas market. As of 2018, it has proven gas reserves of 25 trillion cubic metres, third after Russia and Iran, and makes up nearly 13 per cent of the global total natural gas reserves. With 103.4 billion cubic metres exports in 2017, it is the largest supplier of liquefied natural gas (LNG) in the world, with India being one of Qatar’s largest markets. According to the World Bank, the Qatari GDP growth had slowed down due to a drop in oil prices and this was further affected by that Qatari crisis to reach its lowest growth in two decades.22 During 2018, the economy showed signs of recovery due to the stabilization of the hydrocarbon prices and data for the fourth quarter of 2017–18 showed that the economy has adjusted to the shock, with growth rising to 2.2 per cent on a year-on-year basis. During 2018, the GDP grew by 2.3 per cent, rising to 3 per cent over the medium term,23 as energy receipts eased fiscal constraints and current account deficits. The US$10 billion Barzan natural gas facility, with a capacity of 1.7 billion cubic feet per day, is expected to become functional in 2020.24 As a response to the boycott, Qatar has cultivated new supply chains through 20  Dudley, Dominic. 2018. ‘Qatar Airways Slumps into the Red With $69M Loss, as Impact of Boycott Becomes Clear’, in Forbes, 19 September, https://www.forbes.com/ sites/dominicdudley/2018/09/19/qatar-airways-slumps-to-loss/#19a621f37e70, last accessed on 26 May 2019. 21  CIA World Factbook. 2018. Qatar, https://www.cia.gov/library/publications/theworld-factbook/geos/qa.html, last accessed on 26 May 2019. 22  The World Bank. 2019. ‘Qatar Economic Update’, April, https://www.worldbank.org/ en/country/gcc/publication/qatar-economic-update-april-2019, last accessed on 26 May 2019. 23  Ibid. 24  Ibid.

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Oman to prevent food shortage25 and has received assistance from Iran26 and Turkey27 in the form of food and medical supplies. After a brief slump due to blockade by the Arab Quartet, the banking sector has rebounded, thanks to the injection of energy funds by the government to the tune of US$26 billion. Society The Qatari society comprises a small demography, educated youth population, strong energy-driven economy, closed polity and a tribal social system. The state has been founded on the basis of the Wahhabi interpretation of Islam with Sharia being the only source of law.28 The society largely adheres to Najdi-tribal customs and Wahhabi teachings. Concerning issues such as human rights violations, lack of freedom of speech and discriminations against women, minorities and expatriates, the situation in Qatar is no different from other GCC countries. Political associations and criticisms of the monarchy or government are not tolerated. Though the Emirate is considered the pioneer in the promotion of independent media in the Arab world, the scope for freedom of expression and criticisms does not include the Qatari government, its leaders or policies. In recent years, Doha has come under closer scrutiny and criticisms over the exploitative and harsh working conditions faced by the construction workers who are employed in the infrastructure projects in preparation for the 2022 FIFA World Cup.29 Reports suggest extreme working and living conditions and a high rate of suicide among the expatriate workforce.30 Qatari women continue to face discrimination due to  Tharoor, Ishaan. 2018. ‘The Persian Gulf Crisis Has No Winners, Except Maybe Iran’, in The Washington Post, 7 June, https://www.washingtonpost.com/news/worldviews/ wp/2018/06/07/the-persian-gulf-crisis-has-no-winners-except-maybeiran/?noredirect=on&utm_term=.3e87a18351f7, last accessed on 26 May 2019. 26  Batrawy, Aya. 2018. ‘Iran and Turkey Help Wealthy Qatar Thrive, 1 Year into Blockade’, in The Times of Israel, 5 June, https://www.timesofisrael.com/iran-and-turkey-helpwealthy-qatar-thrive-1-year-into-blockade/, last accessed on 26 May 2019. 27  Ibid. 28  CIA World Factbook. Qatar. 29  BBC News. ‘Qatar World Cup 2022: Workers Have Been Left “Unpaid”—Amnesty International’. 30  Human Rights Watch. 2019. World Report: Qatar, https://www.hrw.org/worldreport/2019/country-chapters/qatar, last accessed on 26 May 2019. 25

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c­ ustomary laws and despite the legal equality enshrined in the 2003 constitution, women face a host of constraints in public and private lives.31 Partly in response to international scrutiny and criticisms, the Emirate has taken several steps to create more humane working and living conditions for its foreign workers. In May 2018, Qatar joined the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights but with a range of reservations which deprive women and migrant workers of some the treaties’ safeguards.32 In September, the Emir signed into law the Gulf region’s first refugee asylum law aimed at allowing Saudi, Emirati and Bahraini citizens who are married or have business interests in the country and are interested in prolonging their stay.33 In the same month, Qatar passed a law that allows sizeable migrant workers to leave the country without an exit permit, a provision which will allow workers to leave the country without the need for permission from their employer. Sectors not covered by the new Labour Law include those in the military, public sector, domestic work and provides for employers to apply for exclusion.34 In April, the International Labour Organization (ILO) inaugurated its first project office in Doha for a three-year cooperation programme to help the Emirate in achieving its commitments to improve the rights of the migrant workers.35 It has also announced a plan to end the much-criticized kafala system, prevalent in all the GCC countries.36 Under the sponsorship system, the migrant workers are tied down to employers on whose work visa they entered the Emirate with limited scope for a change of job or sector. However, no concrete measures have been introduced by Qatar during the period under review. In a significant move, Qatar also announced plans for the naturalization of the expatriate workers who have spent a long duration of time in the Emirate but no major steps have been announced until the end of the year.37 Another significant move was the draft bill approved by the Qatari cabinet in April and this would enable  Ibid.  Ibid. 33  Ibid. 34  Ibid. 35  Ibid. 36  Ibid. 37  Ibid. 31 32

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foreigners to own properties in the Emirate. This came against the backdrop of visa-free entry facility for citizens of 80 countries introduced the previous year.38 The economic prosperity of the Emirate is not reflected in gender parity and Qatari women face restrictions in public and private spheres and endure discriminatory treatment in terms of marriage, divorce, child custody and inheritance.39 The participation of women in the workforce is high and stands at 59 per cent as against 51 in the UAE.40 This is because Qatari women have better access to education, healthcare and the presence of various western university campuses. Qatar has a Gender Development Index of 1.031 (the high being 0.991 of Norway) and the Gender Inequality Index of 0.2006 (the best being 0.048 of Norway).41 In a significant reform process, in September, Qatar passed a law on granting permanent residency to children of Qatari women married to non-Qatari men.42 This measure allows those children to receive health and educational services, rights to invest in the economy and own real estate. However, the law falls short of granting equal rights to women in conferring nationality to their children or their non-Qatari husbands. Religious freedom in the country is also restrictive and the law recognizes only the Abrahamic faiths, namely, Islam, Christianity and Judaism. The overwhelming majority of the citizens, as well as the resident population, are Sunni Muslims. A small portion of the citizen population is Shia, while Christians, Hindus and Buddhists are the minorities among the expatriates. Only the Christians are allowed to maintain public places of worship within the allocated areas or in churches that have been approved. The rest of the minorities does not have any public places for worship and could pursue their religious expressions only in private.43 38  Economic Times. 2018. ‘Qatar Approves Draft Law on Property Ownership by Foreigners’, 21 April, https://realty.economictimes.indiatimes.com/news/industry/qatarapproves-draft-law-on-property-ownership-by-foreigners/63854935, last accessed on 26 May 2019. 39  Human Rights Watch. World Report: Qatar. 40  CIA World Factbook. 41  United Nations Development Programme (UNDP). 2018. Human Development Index: Qatar, Statistical Update, http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/QAT.pdf, last accessed on 26 May 2019. 42  Human Rights Watch. World Report: Qatar. 43  Open Doors. Qatar, https://www.opendoorsusa.org/christian-persecution/worldwatch-list/qatar/, last accessed on 26 May 2019.

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Bilateral Relations India has maintained friendly ties with Qatar, focusing on the energy imports. The Emirate is among the few countries in the world and the only one in the Persian Gulf with which India has signed a long-term energy procurement agreement. This is a testimony to the strong relations shared by both the countries. Political Ties While Prime Minister Narendra Modi visited the Emirate in June 2016,44 the first visit by External Affairs Minister, Sushma Swaraj, had to wait until December 2018, more than a year after the Qatari crisis. She interacted with her Qatari counterpart Mohammed bin Abdulrahman al-Thani and called on Emir Tamim bin Hamad al-Thani. She discussed various issues of bilateral and regional relevance and exchanged views on the developments in the Persian Gulf and the international energy market. As part of diasporic diplomacy, she also interacted with the Indian community in Doha. During the visit, both decided to establish a joint commission ‘to strengthen the relations between the two countries in various fields’.45 And the commission would be responsible for the following: 1. Formulating the required basis to strengthen the relations between the two countries particularly in the economic, commercial, cultural, scientific, technological, information technology and educational fields. 2. Following up the implementation of the Agreements concluded between the two countries; and finding the suitable solutions for the resulting problems of the implementation thereof. 44  PMIndia. 2016. ‘India-Qatar Joint Statement during the PM’s Visit to Qatar’, 5 June, https://www.pmindia.gov.in/en/news_updates/india-qatar-joint-statement-during-thepms-visit-to-qatar/?tag_term=qatar&comment=disable, last accessed on 26 May 2019. 45   Government of India (GoI), Ministry of External Affairs (MEA). 2018. ‘Joint Declaration to Establish a Joint Commission Between the Government of the Republic of India and the Government of the State of Qatar’, 29 October, https://www.mea.gov.in/ outoging-visit-detail.htm?30541/Joint+Declaration+to+Establish+a+Joint+Commission+B etween+the+Government+of+the+Republic+of+India+And+the+Government+of+the+Stat e+of+Qatar, last accessed on 26 May 2019.

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3. Facilitating the exchange of information and expertise; and encouraging bilateral consultation in service of cooperation between the two countries.46 The joint commission was the follow-up of the agreement during Prime Minister Modi’s 2016 visit. This was also discussed during the visit of Qatari Prime Minister and Interior Minister Abdullah bin-Nasser al-Thani to India in December that year. In addition to these high-level contacts, several other engagements at the ministerial and official levels have been taking place between the two. Nonetheless, discussions on threats and common security concerns have also been a part of Indo-Qatari engagements. India had signed a defence cooperation agreement during the visit of Prime Minister Manmohan Singh to Doha in December 2008 and this was renewed in 2013. The two sides have formed a Joint Defense Cooperation Committee (JDCC) and have met four times since then.47 The Indian navy and coast guard have maintained linkages with the Qatari navy to promote better understanding and strengthening cooperation in maritime security through regular exchanges, visits and port calls.48 However, the ongoing GCC crisis appeared to have dampened India’s military-related engagements with Doha. Trade and Commerce Commercial ties are the most critical component of the Indo-Qatari relations. In 2017–18, India imported goods worth US$8.41 billion from Qatar, while exporting commodities worth US$1.47  billion (Table  7.1 and Fig. 7.1). This means a massive trade imbalance in favour of Qatar and is primarily due to the energy trade. India gets about 50 per cent of LNG imports from Qatar and the bilateral trade witnessed a marginal increase from US$8.43  billion in 2016–17 to US$9.88  billion (Table  7.2 and Fig. 7.2), mainly due to rise in hydrocarbon prices.  Ibid.   GoI, MEA. 2016. ‘India-Qatar Relations’, December, https://www.mea.gov.in/ Portal/ForeignRelation/Qatar_Dec_2016.pdf, last accessed on 26 May 2019. 48  Indian Navy. 2019. ‘Passage Exercise Held between Indian Navy and Qatar Navy’, 26 February, https://www.indiannavy.nic.in/content/passage-exercise-held-betweenindian-navy-and-qatar-navy-0, last accessed on 26 May 2019. 46 47

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Table 7.1  India-Qatar trade relations (US$ million) 2013–14 India’s exports to Qatar India’s imports from Qatar Total bilateral trade Share in India’s total trade

969.06 15,707.99 16,677.04 2.18

2014–15

2015–16

2016–17

2017–18

1,054.98 902.04 784.56 1,471.88 14,604.71 9,022.16 7,646.22 8,409.02 15,659.69 9,924.20 8,430.78 9,880.90 2.06 1.54 1.28 1.28

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 7.1  India-Qatar bilateral trade 18 16 14 12 10 8 6 4 2 0

2011-12

2012-13 2013-14 2014-15 Exports Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Table 7.2  Share of oil in India’s imports from Qatar (US$ million) Year

Oil imports from Qatar

Total oil imports

Qatar’s share in total oil imports

2013–14 2014–15 2015–16 2016–17 2017–18

14,590.81 13,415.31 7,942.43 6,762.10 7,207.82

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

8.04 8.58 8.19 6.55 5.45

Imports from Per cent of Qatar Oil in imports from Qatar 15,707.99 14,604.71 9,022.16 7,646.22 8,409.02

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

92.89 91.86 88.03 88.44 85.72

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Fig. 7.2  Share of energy in India’s imports from Qatar 94 92 90 88 86 84 82

2011-12

2012-13

2013-14

2014-15 2015-16 Share in Per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

The primary commodities imported from Qatar include LNG, organic and inorganic chemicals, plastic, aluminium, fertilizers, salt, sulphur, propylene, ammonia and urea. On the other hand, India’s major exports to the Emirate include copper, iron and steel, cereals, organic chemicals, petrochemical products, vegetables, fruits, dairy products, meat and meat products, textiles and clothes, jewellery and so on. Qatar was India’s 25th largest trading partner in 2017–18 and contributed to 1.28 per cent of India’s total trade. On the other hand, India is the third largest export destination for Qatar after Japan and South Korea and tenth largest source of imports.49 Energy Ties The Indo-Qatari trade is driven and dominated by energy relations. India’s state-owned Petronet has a long-term agreement with RasGas of Qatar for importing 7.5 million metric tons of LNG annually. In addition, Indian 49  Alagos, Peter. 2018. ‘India’s Exports to Qatar Jump 87% in 2018’, in Gulf Times, 26 September, https://www.gulf-times.com/story/607394/India-s-exports-to-Qatar-jump87-in-2018, last accessed on 26 May 2019.

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companies also do spot purchasing. Qatar thus has emerged as India’s largest supplier of LNG and Qatar meets nearly 65 per cent of its LNG needs.50 Hence, India is also a significant market for Qatari gas accounting for nearly 15 per cent of its LNG exports. Both countries have agreed to expand their cooperation in the field of energy, in addition to exploring opportunities for collaboration in education, healthcare, tourism and so on.51 India’s total energy imports from Qatar in 2017–18 stood at US$7.21 billion, marginally higher than US$6.76 billion registered a year earlier (Table 7.2 and Fig. 7.2). Nonetheless, this was far below the peak of US$14.59  billion witnessed in 2013–14. The main reason for the smaller energy bill is the sharp decline in international oil prices since 2015–16. Energy comprises over 85 per cent of India’s total imports from Qatar, but the Emirate’s share in India’s total energy imports is small at 5.45 per cent (Table 7.2 and Fig. 7.2). In spite of the marginal increase in imports, the percentage of Qatar in India’s energy imports has declined from 6.55 per cent in 2016–17 to 5.45 per cent a year later. As the figures indicate, there has been a consistent decline in the Qatari share in India’s energy imports, despite the former’s more significant share in the gas imports. The reason for this is not a decline in the quantity of imports from Qatar but India’s growing energy imports and the diversification of supplies. As a result, Qatar’s share in India’s energy imports from the Persian Gulf region has also dropped from about 12 per cent in 2016–17 to 10.28 per cent a year later. Around the same time, imports from countries such as Saudi Arabia, Iraq and Oman have witnessed growth (Table  7.3 and Fig. 7.3).

50  LNG World News. 2018 ‘Qatar Seeking Stronger LNG Cooperation with India’, 21 March, https://www.lngworldnews.com/qatar-seeking-stronger-lng-cooperation-withindia/, last accessed on 26 May 2019. 51  GoI, Embassy of India, Doha, Qatar. 2018. ‘Remarks by Mr. P.  Kumaran, Ambassador of India to the State of Qatar at the Official Reception to Celebrate India’s 69th Republic Day’, 28 January, https://www.indianembassyqatar.gov. in/Inter views?id=eyJpdiI6InhiV09ETmxWRjRnQ3lpaEthclgyZVE9PSIsInZ hbHVlIjoiSHlRUVhlbWw1VExSc2hoaUxKNUdlUT09IiwibWFjIjoiN2ExN2Y3ZTc 3 O G U w Y TA 3 N G Y z M T M z M j Q 4 M D B l Y T Q w M T g 5 N z Q 5 Y W Y y Y W E y NmY3NjFlMzNkNGE1ODk4ZmNmODU2NCJ9, last accessed on 26 May 2019.

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Table 7.3  India’s energy imports from Qatar (in US$ million)

India’s energy imports from Qatar India’s total energy imports Total energy imports from the Persian Gulf Share in total energy imports (in per cent) Share in energy imports from Persian Gulf (in per cent)

2013–14

2014–15

2015–16

14,590.81

13,415.31

7,942.43

2016–17 6,762.10

2017–18 7,207.82

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75

85,300.30 50,992.26

8.04

8.58

8.19

13.71

15.73

15.58

56,335.34

70,090.81

6.55

5.45

12

10.28

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 7.3  Share of Qatar in India’s energy imports 18 16 14 12 10 8 6 4 2 0

2011-12 2012-13 2013-14 Share in Total Imports

2014-15 2015-16 2016-17 2017-18 Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Investments The flow of investments from Qatar has been abysmal. The country with the largest per capita income in the world is the 67th largest source of foreign direct investment (FDI) into India. During April 2000 and December 2018, only US$27.93  million came from Qatar and out of

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this US$4.05 million was invested in 2018.52 Even among the Persian Gulf countries, Qatar was not prominent and ranked last in the sixmember GCC. Investment issue figured prominently in recent political engagements and both sides agreed to explore the possibilities of enhancing the two-­ way flow of investments. Qatar Investment Authority (QIA)—the arm of the state-owned sovereign wealth fund—has shown interest in investment opportunities in petrochemicals, hospitality and healthcare. Qatar Airways has shown interest in entering the Indian aviation industry53 and some media reports suggest the unlikely possibility of Doha investing in the beleaguered Jet Air, where the Abu Dhabi-based Etihad has 24 per cent stakes.54 In the light of the crisis within the GCC, Qatari companies are looking to diversify their investment portfolios both in terms of geographic spread and economic sectors, and India could be an attractive market if the latter overcomes its traditional bottlenecks and inefficiency. Several Indian companies are also exploring opportunities in Qatar, especially in IT, service, tourism, retail and construction sectors and have increased their footprints over the past decade. Many Indian companies, like Larsen & Toubro and Shapoorji Pallonji, have been participating in the booming construction industry linked to the World Cup. During the visit of Emir Tamim al-Thani in March 2015, many business deals with private companies have been signed for the developmental projects in Qatar. Medanta, an Indian company working in the healthcare sector has an understanding with the multispecialty hospital in Doha. Expatriates At the end of 2018, the size of the Indian expatriate community is estimated at approximately 700,000 and this comprises nearly a third of the total expatriates in the Emirate. The Indians are engaged in varied sectors 52  GoI, Department for Promotion of Industry and Internal Trade. Foreign Direct Investment Statistics, https://dipp.gov.in/publications/fdi-statistics, last accessed on 26 May 2019. 53  The Economic Times. 2018. ‘Qatar Airways Will Soon Apply for Launch of an Indian Airline: Akbar Al Baker’, 6 June, https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/qatar-airways-will-soon-apply-for-launch-of-an-indian-airlineakbar-al-baker/articleshow/64476085.cms, last accessed on 26 May 2019; The Economic Times. 2018. ‘Qatar Airways Plans to Start Airline in India’, 20 February, https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/qatar-airways-plans-tostart-airline-in-india/articleshow/63003509.cms, last accessed on 26 May 2019. 54  Ibid.

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of the economy and profession. A large portion is the unskilled workforce and is involved in the domestic sector or the construction industry. Though the actual breakup is not available, a significant number are professionals, including doctors, engineers, business executives, middle/ senior managers, educators, auditors, IT professionals, consultants and architects, among others; they are also a significant source of remittances into the country. Though they are gainfully employed, there are reports of Indians facing problems due to harsh working conditions, unpaid wages and visa irregularities. These gain media publicities and are often reflected in the parliamentary debates.55 Towards mitigating such issues, both countries have formed a Joint Working Group (JWG) during the visit of External Affairs Minister, Swaraj in October aimed at addressing labour-related matters.56

Challenges The biggest challenge for Indo-Qatari relations has been the inability to realize the potentials in trade, commerce and investments. Despite hopes and promises of Qatari investments in National Infrastructure and Investment Fund (NIIF) of India, no tangible progress could be noticed. Lack of follow-up of major trade and investment MoUs has been an impediment. India has largely failed to capitalize on the opportunities available in Qatar, especially its large sovereign wealth fund estimated at US$320 billion and Doha’s propensity to diversify its investment portfolios abroad. The ongoing geopolitical competition both within the GCC and in the region has been a challenge. Both as a sign of its independent foreign policy and as a defiant strategy, Qatar has charted an independent policy  GoI, MEA. 2018. ‘Question No. 4298 Nonpayment of Wages to Workers in Qatar’, 21 March, https://mea.gov.in/lok-sabha.htm?dtl/29688/QUESTION_NO4298_ NONPAYMENT_OF_WAGES_TO_WORKERS_IN_QATAR, last accessed on 26 May 2019. GoI, MEA. 2018. ‘Question No. 383 Death of Workers’, 12 December, https:// mea.gov.in/lok-sabha.htm?dtl/30725/QUESTION_NO383_DEATH_OF_WORKERS, last accessed on 26 May 2019. 56  GoI, MEA. 2018. ‘Joint Declaration to Establish a Joint Commission Between the Government of the Republic of India and the Government of the State of Qatar’, 29 October, https://mea.gov.in/bilateral-documents.htm?dtl/30541/Joint_Declaration_to_ Establish_a_Joint_Commission_Between_the_Government_of_the_Republic_of_India_ And_the_Government_of_the_State_of_Qatar, last accessed on 26 May 2019. 55

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away from Gulf unity. This, in turn, resulted in Doha getting closer to Tehran and Ankara. Though India has good relations with Qatar and its new allies, they come into conflict with India’s relationships with other players in the saga, namely, Saudi Arabia, the UAE and, above all, the US. While it has managed to stay away from the Qatari crisis and its negative fallouts, the prolongation of the crisis would exert pressure on India’s Gulf policy and its desire to maintain closer ties with all the countries along the Persian Gulf. The third challenge is the growing forays of China in the region and Beijing has been strengthening its economic presence in the region and enhancing its strategic and commercial investments. Due to financial prowess and quick decision-making, Beijing has received an enthusiastic endorsement from the Gulf countries, including Qatar, for the international connectivity projects, the Belt and Road Initiative (BRI) and the Maritime Silk Route (MSR). Thus, Qatari desire to find new friends and allies beyond its immediate vicinity converges with the Chinese initiatives in the Persian Gulf. As China expands its economic footprints in the region, India will have to evolve a coherent response and find ways to cooperate with China in Qatar and other countries or compete with Beijing to secure its interests. In either way, it is essential for India to step up its political, diplomatic, economic and people-to-people contacts with Qatar. Despite its strong presence and historical advantages, India has been found wanting when it comes to taking initiatives and delivering on promises.

CHAPTER 8

Saudi Arabia

Key Information Ruling family: Al-Saud; Ruler: King Salman bin Abdulaziz al-Saud (since 23 January 2015); Crown Prince: Prince Mohammed bin Salman al-­Saud (since 21 June 2017); National Day: 23 September; Parliament: 150-­member nominated Majlis al-Shura; Last Parliamentary Election: NA; Major Group in Parliament: NA; National Carrier: Saudi Arabian Airlines. Socio-Economic Indicators Area: 2,149,690 sq. km; Population: 33,091,113 (July 2018 est.); Native: 63 per cent; Expats: 37 per cent; Religious Groups: Citizens (Sunni 85–90 per cent; Shia 10–15 per cent); Residents (NA); Youth: 15.58 per cent; Population growth rate: 1.63 per cent (2018 est.); Life expectancy at birth: 75.7 years (2018 est.); Major population groups: Arab 90 per cent (approx.); Afro-Asian 10 per cent (approx.); Literacy rate: 94.7 per cent (2015  est.); National Currency: Saudi Riyal (SAR); GDP: US$683.83 billion; Foreign Trade: Export US$221.1 billion (2017 est.), Import US$119.3 billion (2017 est.); Defence budget: 9.85 per cent of GDP (2016); Sovereign Wealth Fund: US$717.9 billion; External Debt: $205.1  billion (2017  est.); Per capita income: US$54,500 (2017  est. World Bank); Oil reserves: 266.2 billion bbl. (2018 est.); Gas reserves: 8.619  trillion cu m (2018  est.); HDI rank: 39/189; Infant Mortality

© The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_8

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Rate: 12.1 deaths/1,000 live birth (2018  est.); UN Education Index: 0.786; Gender Inequality Index: 0.234 (2017); Labour Force: 13.8 million (2017); Unemployment rate: 28.5 (2015 est.); Urban Population: 83.8 per cent of total population (2018); Rate of Urbanization: 2.17 per cent (2015–20 est.); Last National Census: 2011. India Related Indian Cultural Centre: None; Number of Indians: 2.8  million (approximately 2018 est.); Number of places of worship for Indians: None; Indian Schools: 40; Indian Banks: State Bank of India (1); Currency exchange rate: SAR 1 = INR 18.41 (March 2019); Last visit to India by the ruler: King Abdullah  bin Abdulaziz al-Saud, January 2006, Crown Prince Mohammed bin Salman February 2019; Last Indian Prime Minister to visit: Narendra Modi, April 2016. * * * The Kingdom of Saudi Arabia is emerging as an important strategic partner of India in the Persian Gulf. Its significance rests in its vast oil reserves and exports and its global influence as a leading Islamic country that houses the two holy mosques revered by Muslims all over and home to nearly three million Indians who live and work there. With growing political contacts and business ties, Saudi Arabia has emerged as a vital pillar of New Delhi’s outreach to the Gulf. Despite increasing western criticisms of Riyadh’s foreign policy choices and concerns over human rights records under the leadership of King Salman and Crown Prince Mohammed bin Salman al-Saud (MbS), India has chosen to elevate and intensify ties with the Kingdom. This manifested in some interesting bilateral developments, including a multifold increase in two-way flow of investments, growing security and defence ties and a better appreciation of each other’s security and foreign policy interests. Several developments in 2018 underline the burgeoning ties, including India’s participation in Janadriyah Festival, the national cultural and heritage celebrations organized by the Saudi government as the honoured guest and Prime Minister Narendra Modi’s meeting with MbS during the G20 summit.

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Domestic Developments The domestic political, economic and social situations of the Kingdom have been under intense speculation and international scrutiny in recent years and they only increased in 2018. This is not only because of Saudi Arabia’s stature as a leading Islamic country with vast oil reserves and strong economic credentials but also because of its closed political system and largely conservative society. The lack of transparency and systematic flow of information add to speculations over its long-term viability. The growing humanitarian crisis in Yemen, partly as a result of the Saudi-led intervention in the Yemeni civil war, and the murder of well-known Saudi journalist Jamal Khashoggi by Saudi agents led to heightened international criticism of the Kingdom and its leadership. The role of MbS, as the young Crown Prince is widely known, has come under the international spotlight as he was allegedly in touch with the Saudi team that handled and executed Khashoggi. His position as the successor remains intact even though King Salman was forced to take some measures to clip his wings in the wake of the Khashoggi affair. Politics The Kingdom of Saudi Arabia follows a unique political system rooted in local tribal customs and the Hanbali interpretation of Islam that patronizes and rewards loyalty while suppressing, co-opting or, in extreme circumstances, even eliminating any form of dissent.1 The system worked well for the Al-Saud, who have gradually started to promote Saudi nationalism in addition to the religious and tribal credentials. The family has ruled since the establishment of the Kingdom in 1932 by King Abdulaziz bin Abdulrahman al-Saud or Ibn Saud. After his demise in 1953, his eldest son Saud bin Abdualaziz al-Saud became the ruler. After a power struggle, the family settled for a linear succession whereby Saud was replaced by his half-brother Faisal bin Abdualaziz al-Saud in 1964. Since then three other sons of Ibn Saud, namely, Khalid bin Abdulaziz al-Saud (1975–81), Fahd bin Abdulaziz al-Saud (1982–2005) and Abdullah bin Abdulaziz al-Saud (2005–15) ruled the Kingdom. Upon the demise of Abdullah in January 2015, his half-brother and Crown Prince, Salman bin Abdulaziz al-Saud 1  In January 2016, for example, Shia cleric Nimr al-Nimr was executed along with 47 others for inciting and participating in violence and disobeying the ruler and inciting sectarian strife.

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took over the reins. Through a gradual process of change, Salman elevated his son Mohammed as Crown Prince in June 2017. This means that the practice of linear succession has ended and the power within  the  ruling family has become concentrated in the Salman clan. Under the patronage of his father, MbS has accumulated vast powers and initiated measures to project a reformist agenda domestically and anti-­ Iranian posture externally. To gain wider legitimacy and scuttle dissent, he reached out to the vast youth population, estimated to be about 25–30 per cent of the population, through socio-economic reform measures. While doing so, he systematically sidelined, superseded and even delegitimized some of the established power centres, including powerful princes, prominent businesspeople and state-supported clergy. Many of the established elites have already lost their sheen and popular respect due to their perceived involvement in corrupt practices and extravagant lifestyles and hence became easy targets for MbS and his drive for the consolidation of power. Though the fast pace of changes created grave disquiet within the Kingdom2 and surprised international observers,3 the Crown Prince has successfully established his credentials as a strong leader with a vision. He has done this by acting against those who have the propensity to raise uncomfortable questions and project themselves as a challenger to the established norms without the state patronage.4 However, throughout the year, there were speculations of King Salman clipping the powers of MbS.5 The Crown Prince’s power consolidation efforts resulted in several members of the royal family, ministers, businesspersons, religious leaders, university professors, journalists and social activists finding themselves behind bars. This process, which began when MbS was named Crown Prince in 2017, continued in 2018. Authorities detained many female activists who were advocating for the lifting of the ban on women driving including Eman al-Nafjan, Hatoon al-Fassi, Loujain al-Hathloul and 2  Maksad, Firas. 2019. ‘More Change Than It Can Handle’, in Foreign Policy, 22 April, https://foreignpolicy.com/2019/04/22/riyadh-may-have-unleashed-more-change-thanit-can-handle/, last accessed on 27 May 2019. 3  Ibid. 4  Some of the activists and journalists who have either been incarcerated or eliminated include Hatton al-Fassi, Loujain al-Hathloul, Jamal Khashoggi and Abdullah al-Duhailan. 5   Carey, Glen and Abu-Nasr, Donna. 2018. ‘Saudi Prince’s Protectors Can’t Stop Speculation over His Fate’, in Bloomberg, 25 November, https://www.bloomberg.com/ news/articles/2018-11-25/saudi-prince-s-protectors-can-t-stop-speculation-over-his-fate, last accessed on 27 May 2019.

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­ thers during the run-up to and after the announcement of an end of the o female driving ban in June.6 The issue of women’s right to drive has been a longstanding issue in the Kingdom and strong opposition from the established clergy inhibited successive rulers to accede to the demands of the liberal section of the society, including prominent women. Supported by their husbands, in August 1990, a group of women openly defied the ban and drove on the roads of Riyadh.7 This evoked severe retribution from the clergy forcing the monarchy to act against those involved. The issue resurfaced in 2007–08 when Wajeha al-Huwaider submitted a petition to King Abdullah to lift the ban and filmed herself driving on a public road.8 She was detained twice in 2006 but was released within hours after reportedly signing a written statement to stop her activism.9 After popular protests broke out in 2011 across the Arab world, a group of activists led by Manal al-Sharif started an online campaign called Women2Drive.10 This social media campaign not only gained international attention but also caught the imagination of scores of young men and women who aspired for greater freedom of movement at home. Following the defiance showed by Huwaider and al-Sharif, many Saudi women tried to film themselves driving on the roads in Saudi Arabia. Hathloul gained international attention after she was arrested on the Saudi-Emirati border on 26 October 2014 and was incarcerated for two months. She was freed in early 2015 after her commitment not to drive within the Kingdom.11 However, Hathloul’s social media activism encouraged others to demand an end to the driving ban and became a broader campaign  to include other social issues like an end to the male guardianship  system. Eventually, the monarchy relented and in September 2017 it was announced that a new programme would be developed for issuing driving licences to women and this came into force in June 2018. Ten women including 6  Human Rights Watch. 2018. ‘Prominent Saudi Women Activists Arrested’, 1 August, https://www.hrw.org/news/2018/08/01/prominent-saudi-women-activists-arrested, last accessed on 27 May 2019. 7  Begum, Rothna. 2017. ‘The Brave Female Activists Who Fought to Lift Saudi Arabia’s Driving Ban’, in Human Rights Watch, 29 September, https://www.hrw.org/ news/2017/09/29/brave-female-activists-who-fought-lift-saudi-arabias-driving-ban, last accessed on 27 May 2019. 8  Ibid. 9  Ibid. 10  Ibid. 11  Ibid.

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Rema Jawdat became the first female Saudi citizens to be given the driving licence and, until the year-end, over 5,000 were issued the same.12 In late 2017, as part of power consolidation, MbS ordered the incarceration of several princes including Miteb bin Abdullah, the then Minister of National Guard, and Waleed bin Talal, the wealthiest Saudi businessman under unknown corruption charges.13 According to media reports, a dozen princes and businessmen who were detained in the Ritz Carlton Hotel in Riyadh were released only after they agreed to pay millions of dollars in ‘fine’. Through a press release issued in January 2018, the Saudi government claimed that the exchequer had raised US$100 billion in settlements from those detained on corruption charges.14 Many, however, viewed the episode as a royal purge against potential challengers to MbS.15 Moreover, several prominent and independent clerics faced the wrath of the Crown Prince and were detained. In September 2017, religious scholar Salman al-Awdah was arrested along with several others and all were subsequently charged with relations with the proscribed Muslim Brotherhood and conspiring with foreign governments and organizations to destabilize the Kingdom. Awdah remains in prison and the authorities reportedly demanded a death penalty for him.16 Another prominent religious figure, Safar al-Hawali, along with his three sons, was arrested in June 2018. Hawali was perceived to be closer to the Muslim Brotherhood and was detained for his allegedly critical views on the Saudi-led boycott of Qatar.17 12  BBC. 2018. ‘Saudi Arabia Issues First Driving Licences to Women’, 5 June, https:// www.bbc.com/news/world-middle-east-44367981, last accessed on 27 May 2019. 13  Kirkpatrick, David D. 2017. ‘Saudi Arabia Arrests 11 Princes, Including Billionaire Alwaleed bin Talal’, in The New  York Times, 4 November, https://www.nytimes. com/2017/11/04/world/middleeast/saudi-arabia-waleed-bin-talal.html, last accessed on 27 May 2019. 14  Kalin, Stephen and Paul, Katie. 2018. ‘Saudi Arabia Says It Has Seized over $100 Billion in Corruption Purge’, in Reuters, 30 January, https://in.reuters.com/article/saudi-arrestscorruption/saudi-arabia-says-it-has-seized-over-100-billion-in-corruption-purge-idINKBN1FJ0NH, last accessed on 27 May 2019. 15  Ibid. 16  Human Rights Watch. 2018. ‘Saudi Arabia: Prominent Cleric May Face Death Penalty’, 12 September, https://www.hrw.org/news/2018/09/12/saudi-arabia-prominent-clericmay-face-death-penalty, last accessed on 27 May 2019. 17  Middle East Monitor. 2018. ‘Activists Circulate New Details about Arrest of Saudi imam’, 14 July, https://www.middleeastmonitor.com/20180714-activists-circulate-newdetails-about-arrest-of-saudi-imam/, last accessed on 27 May 2019.

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Interestingly, both Awdah and Hawali were prominent Sahwa scholars who were critical of the Saudi foreign policy and its closer ties with the US and were detained in the 1990s for their political activism. At that time, the Islamist Sahwa movement was suppressed by a mixed-use of repressive action and co-option, and it was believed that Awdah and Hawali secured their freedom after promising to restrain their anti-government activities.18 Their renewed detention, along with several scholars sympathetic towards the Muslim Brotherhood, has been part of Crown Prince’s non-­ tolerant policy towards the Muslim Brotherhood both within and outside the Kingdom.19 The growing internal disquiet and international criticisms due to the crackdown on dissent reached feverish pitch following the killing of Saudi journalist Jamal Khashoggi on 2 October within the premises of the Saudi consulate in Istanbul. The Washington Post columnist built his journalistic career covering the Afghan jihad against the Soviet Union in the 1980s and, on more than one occasion, interviewed Osama bin-Laden.20 During his long career in the services of the monarchy, Khashoggi held several high-profile media positions including the deputy editor of the English daily Arab News and editor-in-chief of the Arabic daily Al-Watan.21 In the context of the closed political and media worlds of the Kingdom, these are positions generally reserved for individuals closer to the royal family. Moreover, he served as the media adviser to Prince Turki al-Faisal when the latter was the Saudi ambassador to the US during 2007–08. At the same time, Khashoggi found himself to be out of favour with MbS mainly because of his well-known credentials as a sympathizer of the Muslim Brotherhood whose influence the Crown Prince sought to curb, if not eliminate. Khashoggi was also one of the few individuals who, in private conservations, criticized the Saudi move to isolate Qatar. Amidst 18  Lacroix, Stephane. 2011. ‘Saudi Islamists and the Potential for Protest’, in Foreign Policy, 2 June, https://foreignpolicy.com/2011/06/02/saudi-islamists-and-the-potentialfor-protest/, last accessed on 27 May 2019. 19  Wittes, Tamara Cofman. 2018. ‘On Jamal Khashoggi, the Muslim Brotherhood, and Saudi Arabia’, in Brookings, 19 October, https://www.brookings.edu/blog/order-fromchaos/2018/10/19/on-jamal-khashoggi-the-muslim-brotherhood-and-saudi-arabia/, last accessed on 27 May 2019. 20  Ibid. 21  Hubbard, Ben and Kirkpatrick, David D. 2018. ‘For Khashoggi, a Tangled Mix of Royal Service and Islamist Sympathies’, in The New York Times, 14 October, https://www.nytimes. com/2018/10/14/world/middleeast/jamal-khashoggi-saudi-arabia.html, last accessed on 27 May 2019.

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the crackdown of individuals identified with or sympathetic towards the Muslim Brotherhood including Awdah and other friends of Khashoggi, the journalist fled the Kingdom in September 2017 to the US where he had a permanent residency status. In his column in The Washington Post on 18 September 2017, he argued that MbS had made the Kingdom ‘unbearably repressive’ and confessed that, to avoid arrests like some of his friends and associates, he had opted to go into a self-imposed exile in the US.22 He further added: I have made a different choice now. I have left my home, my family and my job, and I am raising my voice. To do otherwise would betray those who languish in prison. I can speak when so many cannot. I want you to know that Saudi Arabia has not always been as it is now. We Saudis deserve better.23

This column transformed the sympathizer of the Muslim Brotherhood as a prominent Saudi dissident voice in the US and a sought-after personality among the Washington elite. He was praised for his criticisms of some of the policies pursued by the Crown Prince and was hailed as a progressive liberal Saudi voice.24 For the Crown Prince, however, this was a problem, as the dissent was undoing his image-building exercise in the US as a reformer. With each column, the gap between the image that MbS was seeking in the US and the dimmer picture depicted by Khashoggi was widening, and his columns were perceived to be a threat to the interests of the Kingdom and the Crown Prince. This resulted in MbS reaching out to the journalist through his aides who tried to first coax and then coerce him to stop criticizing the Kingdom and the Crown Prince  in international media.25 Neither coercion nor offers of co-option through monetary incentives worked in resolving the crisis, forcing the team to take recourse of the Istanbul operation eventually.26 22  Khashoggi, Jamal. 2017. ‘Saudi Arabia Wasn’t Always This Repressive. Now It’s Unbearable.’ in The Washington Post, 18 September, https://www.washingtonpost.com/ news/global-opinions/wp/2017/09/18/saudi-arabia-wasnt-always-this-repressive-nowits-unbearable/?noredirect=on&utm_term=.9b99fabb49b7, last accessed on 27 May 2019. 23  Ibid. 24  Hubbard and Kirkpatrick. The New York Times. ‘For Khashoggi, a Tangled Mix of Royal Service and Islamist Sympathies’. 25  Al-Jazeera. 2019. ‘MBS Had Threatened to Use “A Bullet” on Jamal Khashoggi: Report’, 8 February, https://www.aljazeera.com/news/2019/02/mbs-threatened-bulletjamal-khashoggi-report-190208061807936.html, last accessed on 27 May 2019. 26  Ibid.

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Investigations have not conclusively revealed whether the team had planned the murder in advance and executed it or the murder was the outcome of a botched kidnap operation inside the Saudi consulate.27 The complete details and sequence of events may never be known, but it was clear that the murder of Khashoggi and dismemberment and disposal of his body and how the authorities managed the post-murder crisis had considerably harmed Saudi interests. After days of flip-flops and growing pressure by the Turkish government and investigators, on 20 September, the Kingdom officially admitted to the murder of the journalist inside its consulate in Istanbul. The authorities acknowledged that 18 suspects including close aides of MbS and intelligence officials were dismissed from their positions for involvement in the operation and were taken into custody.28 On 25 October, the office the Saudi public prosecutor announced that it was bringing in charges against the accused of premeditated murder but at the same time denied any involvement of MbS.29 This position was maintained despite the CIA concluding an active role of the Crown Prince in the entire episode.30 On 15 November, the Saudi Public Prosecutor’s Office revealed that they were seeking death penalty for the five main accused involved in the murder of Khashoggi and the dismemberment of his body. To placate international anger, the King and the Crown Prince met the son and other family members of the murdered journalist on 23 October, and the meeting was widely publicized in the Saudi media.31 Despite the damage control exercises, the murder proved to be a costly affair for MbS. Though not fatal for his position, the incident permanently 27  BBC News. 2018. ‘Jamal Khashoggi: All You Need to Know about Saudi Journalist’s Death’, 11 December, https://www.bbc.com/news/world-europe-45812399, last accessed on 31 May 2019. 28  TRT World. 2018. ‘Fury as Saudi Arabia Admits to Jamal Khashoggi’s Killing in Consulate’, 2 October, https://www.trtworld.com/turkey/fury-as-saudi-arabia-admits-tojamal-khashoggi-s-killing-in-consulate-21004, last accessed on 27 May 2019. 29  Editorial Board. 2018. ‘Saudi Arabia Admits Khashoggi’s Murder Was Premeditated. Fine. Who Premeditated It?’, in The Washington Post, 25 October, https://www.washingtonpost.com/opinions/global-opinions/saudi-arabia-admits-khashoggis-murder-was-premeditated-fine-who-premeditated-it/2018/10/25/24c20338-d884-11e8-aeb7ddcad4a0a54e_story.html?utm_term=.26233cbf20b9, last accessed on 27 May 2019. 30  Ibid. 31  Reuters. 2018. ‘Saudi King, Crown Prince Meet Khashoggi Family Members: SPA’, 23 October, https://www.reuters.com/article/us-saudi-khashoggi-king/saudi-king-crownprince-meet-khashoggi-family-members-spa-idUSKCN1MX1XP, last accessed on 27 May 2019.

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damaged his global image. Turkey, where the incident took place, vowed to thoroughly investigate the circumstances of Khashoggi’s disappearance when it was first reported by his fiancée who was waiting for him outside the consulate.32 The Turkish police and security concluded that the journalist was killed; his body was sawed into pieces and was disposed of in different locations. Despite all the efforts, his remains could not be located.33 The interests shown by his high-profile friends in Turkey and the US as well as the international media made the Khashoggi affair one of the most important global developments in 2018.34 The incident threatened to derail the diplomatic relations between Saudi Arabia and Turkey35 and Turkish President Recep Tayyip Erdogan managed to mobilize international opinion against MbS.36 A section of the Washington elite also turned against the Kingdom and increased the spotlight on the developments inside the Kingdom and its foreign policy, especially the Saudi-led military intervention in Yemen.37 Towards the end of the year, in December, King Salman through a royal decree reshuffled the cabinet and introduced a number of new faces. The most important change was the demotion of Foreign Minister Adel al-Jubeir as Minister of State (MoS) for Foreign Affairs, most likely because of the way the Khashoggi murder was handled by the ministry under his charge. He was replaced by former long-time finance minister Ibrahim al-­ Assaf who had lost his position in a reshuffle in November 2016. Another important ministry that witnessed a change was the Ministry of National Guard where the incumbent Khalid bin Abdulaziz al-Muqrin, a non-royal, was replaced by Abdullah bin Bandar al-Saud, the youngest son (b. 1986) of the oldest surviving brother of King Salman. In addition, a number of young, third and fourth generation royals were appointed in various important positions, including, most notably, the appointment of Badr bin Sultan al-Saud as deputy governor of Makkah province.  BBC News. ‘Jamal Khashoggi: All You Need to Know about Saudi Journalist’s Death’.  Ibid. 34  Ibid. 35  Ibid. 36  Kirkpatrick, David D. ‘Turkey’s President Vows to Detail Khashoggi Death “in Full Nakedness”’, in The New York Times, 21 October, https://www.nytimes.com/2018/10/21/ world/middleeast/erdogan-khashoggi-turkey-saudi-arabia.html?action=click&module=Top +Stories&pgtype=Homepage&fbclid=IwAR2D_3ZPUtk8AFX1WIywjKR35el60McV5p4j4 T889f2Dx-nhNWFJqps38Lw, last accessed on 27 May 2019. 37  Abdulrazaq, Tallha. 2018. ‘No, Khashoggi and Yemen Are Not Saudi Arabia’s “Internal Affairs”’, in TRT World, 19 December, https://www.trtworld.com/opinion/no-khashoggiand-yemen-are-not-saudi-arabia-s-internal-affairs-22618, last accessed on 27 May 2019. 32 33

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Foreign Policy The proactive foreign policy pursued under King Salman and Crown Prince MbS has come under closer international scrutiny due to a host of actions such as military intervention in Yemen in March 2015, diplomatic and politico-economic boycott of Qatar in June 2017, reopening of political dialogue with Iraq in August 2017 and speculations about an understanding with Israel.38 These actions of Saudi Arabia are based on two principles, namely challenging the Islamic Republic of Iran and neutralizing political Islam. The first is based on the Saudi perception of growing Iranian influence and expansion in the Middle East and Tehran’s quest for domination in the Persian Gulf. The second is based on the changing Saudi view that political Islam, in its moderate and militant manifestations, poses a severe threat to the existence of the Gulf monarchies. Both the perceptions are shared by Bahrain and the UAE; other members of the Gulf Cooperation Council (GCC)—Qatar, Oman and Kuwait—have a more nuanced understanding. The differences of opinion have not led to any serious Saudi distrust with Kuwait and Oman because of their leadership pursuing a more pragmatic policy of not entirely ignoring the Saudi concerns. This, however, is not the case with Qatar whose pursuance of a parallel policy, patronization of the Muslim Brotherhood and allowing its state-funded media, especially the Al-Jazeera to criticize the policies of Saudi Arabia and the UAE created a dangerous wedge and led to the boycott decision that took Qatar and the world by surprise in 2017. Doha’s adept handling of the situation and eventually securing the neutrality of the Trump administration underlined the lack of strategic consideration in Saudi decision-making. In 2018, Saudi Arabia faced severe foreign policy challenges due to another poor decision and even poorer management. The murder of Khashoggi not only threatened to derail the diplomatic ties with Turkey39 but also brought renewed international attention to the destructive Saudi-­ led military campaign in Yemen. The biggest challenge for Riyadh was to 38  Kabalan, Marwan. 2018. ‘Why Saudi Arabia’s Foreign Policy Is Failing’, in Al-Jazeera, 21 November, https://www.aljazeera.com/indepth/opinion/saudi-arabia-foreign-policyfailing-181120113409460.html, last accessed on 27 May 2019. 39  The Economist. 2018. ‘How the Killing of Jamal Khashoggi Affects Turkish-Saudi Relations’, 1 November, https://www.economist.com/the-economist-explains/2018/11/01/how-thekilling-of-jamal-khashoggi-affects-turkish-saudi-relations, last accessed on 27 May 2019.

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handle the growing criticisms within the US, especially the Congress, over Saudi policies and choices.40 As a direct outcome of the Khashoggi incident, members of the US Congress lobbied for an end to US military support for the Saudi campaign in Yemen and an end to arms deals with the Kingdom. Under Congressional pressure, the Trump administration sought to decrease American involvement in the Yemen war but rejected the idea of ending arms sales to the Kingdom on the premise of economic benefits accruing to the US.41 During the year, the US support for the war in Yemen included ‘intelligence sharing, aerial refuelling and the deployment of advisers to Saudi Arabia for border security and anti-ballistic missile purpose’.42 The Khashoggi affair, however, resulted in the US ceasing the refuelling of Saudi aircraft in Yemen.43 Other western countries, like Canada,44 France,45 Germany46 and the UK47 began considering scaling down and even ending arms sale to the Kingdom, but no formal cancellation was announced until the end of the year.

40  Abdulrazaq. TRT World. ‘No, Khashoggi and Yemen Are Not Saudi Arabia’s “Internal Affairs”’. 41  Ibid. 42  Blanchard, Christopher M. 2018. ‘Saudi Arabia: Background and U.S.  Relations’, in Congressional Research Service, 21 September, https://fas.org/sgp/crs/mideast/RL33533. pdf, last accessed on 27 May 2019. 43  Kiley, Sam. 2018. ‘US Decision to Stop Refueling Saudi Jets Attacking Yemen “Means Nothing”’, in CNN, 12 November, https://edition.cnn.com/2018/11/11/middleeast/usend-airborne-refueling-saudi-arabia-analysis-intl/index.html, last accessed on 27 May 2019. 44  Fisk, Robert. 2018. ‘Trudeau Won’t Stop $12bn of Arms Sales to Saudi after Khashoggi’s Death Because Money Always Wins over Murder’, in The Independent, 1 November, https:// www.independent.co.uk/voices/jamal-khashoggi-saudi-arabia-canada-justin-trudeau-lavarms-yemen-mohammed-bin-salman-a8612221.html, last accessed on 27 May 2019. 45  Irish, John and Tessier, Benoit. 2019. ‘Amid Outcry over Yemen War, Saudi Ship Leaves France without Arms Cargo’, in Reuters, 10 May, https://www.reuters.com/article/usyemen-security-france-arms/amid-outcry-over-yemen-war-saudi-ship-leaves-france-without-arms-cargo-idUSKCN1SG15N, last accessed on 27 May 2019. 46  Noack, Rick. 2018. ‘Germany Halts Approval of Future Arms Deals to Saudi Arabia as Pressure Builds over Jamal Khashoggi Killing’, in The Independent, 22 October, https:// www.independent.co.uk/news/world/europe/germany-saudi-arabia-arms-deals-jamalkhashoggi-dead-murder-merkel-trump-a8595876.html, last accessed on 27 May 2019. 47  Merrick, Rob. 2019. ‘UK Arms Sales to Saudi Arabia Are Causing “Significant” Civilian Deaths in Yemen, Damning Report by Peers Says’, in The Independent, 16 February, https:// www.independent.co.uk/news/uk/politics/saudi-arabia-uk-arms-sales-weapons-yemencivil-war-house-lords-report-a8781181.html, last accessed on 27 May 2019.

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The Khashoggi affair and international spotlight on the humanitarian situation in Yemen had not diluted the Saudi desire to challenge Iran. It continued to reach out to Iraq by courting the influential cleric Muqtada al-Sadr,48 and to an extent, this led to Sadr’s Saairun alliance emerging as the largest party in the May 2018 parliamentary elections. The resumption of political ties with Baghdad—diplomatic mission was reopened in April 2019—was motivated by the Saudi concerns to counter the growing Iranian influence in Iraq. Though the immediate outcomes were not significant, the long-term efficacy of the Saudi overtures towards Baghdad cannot be denied. Cultivating powerful groups and expecting them to do well in the Iraqi body politic are a precondition for any Saudi ability to challenge and minimize the Iranian swing. Riyadh might pursue the same strategy in war-torn Syria and go beyond its current policy of merely supporting anti-Assad forces like the Free Syrian Army (FSA). In May 2018, when President Trump announced the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), the Kingdom came out in support of the move. Indeed, this contrasted with shock and misgivings expressed in various other capitals, especially in Europe. Welcoming the move to pull out of the nuclear deal and reimpose sanctions on Iran, a statement issued by the Saudi embassy in Washington observed: The Kingdom of Saudi Arabia supports and welcomes the steps announced by President Donald Trump regarding the United States’ withdrawal from the Iran nuclear deal. The Kingdom also supports reinstating economic sanctions on the Iranian regime, which have been suspended under the nuclear deal. The Kingdom’s previous support for the nuclear deal concluded by Iran and the P5+1 group of countries was based on Saudi Arabia’s conviction in the need to take all possible steps that may assist in non-proliferation of weapons of mass destruction in the Middle East and the world. The Iranian regime, however, took advantage of the economic benefits afforded by the lifting of sanctions and used them to continue its destabilizing activities in the region, especially by developing its ballistic missiles and supporting terrorist organizations in the region, including Hezbollah and the Houthi militias, which used the capabilities provided by Iran to target civilians in the 48  Al-Jazeera. 2017. ‘Iraq’s Muqtada al-Sadr Makes Rare Saudi Visit’, 31 July, https://www. aljazeera.com/news/2017/07/iraq-muqtada-al-sadr-rare-saudi-visit-170731073908238. html, last accessed on 27 May 2019.

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Kingdom of Saudi Arabia and Yemen, as well as, repeatedly targeting international shipping lanes in a blatant violation of UN Security Council resolutions. The Kingdom reaffirms its support of the strategy previously announced by President Trump towards Iran, and hopes the international community will take a firm and unified stance against the Iranian regime, and its destabilizing aggression in the region, its support to terrorist groups, particularly Hezbollah and the Houthi militias, and its support of the Assad regime— who has committed heinous crimes against its people that led to the death of more than half a million civilians, including through the use of chemical weapons.49

The statement underscored the Saudi anxiety over Iran’s growing military presence and political influence in the region as well as flagged the evolving US-Saudi understanding of the handling of various issues in the Middle East. This contrasted with the lukewarm Saudi endorsement of the nuclear deal piloted by the Obama administration. At the same time, Saudi Arabia has not hedged its foreign policy interests only with the US but has worked on improving its economic, political and diplomatic ties with other global and regional powers, especially, Russia, China and India. Moscow has emerged as a strong partner of Riyadh in managing the international energy market, especially in the aftermath of the drastic drop in the oil and gas prices between 2014 and 2016.50 In 2017, King Salman visited both Beijing (March) and Moscow (October). The visit to Russia was the first royal visit to Moscow since the founding of the Saudi state in 1932 and revealed Saudi thinking in expanding its international cooperation.51 Security issues and business deals took precedence during both the visits and underlined the Saudi strategic thinking vis-à-vis global powers as it did not wish to continue its indifference 49  Embassy of the Kingdom of Saudi Arabia. 2018. ‘Kingdom of Saudi Arabia’s Statement on the United States Withdrawal from the JCPOA’, 8 May, https://www.saudiembassy.net/ news/kingdom-saudi-arabias-statement-united-states-withdrawal-jcpoa, last accessed on 27 May 2019. 50  The Conversation. 2018. ‘Saudi Arabia Is Allying with Russia to Shore Up Oil Prices as OPEC’s Power Wanes’, 8 December, https://theconversation.com/saudi-arabia-is-allyingwith-russia-to-shore-up-oil-prices-as-opecs-power-wanes-108310, last accessed on 27 May 2019. 51  Ellyatt, Holly. 2017. ‘Russia Rolls Out the Red Carpet for Saudi King with Billion-Dollar Deals on the Table’, in CNBC, 5 October, https://www.cnbc.com/2017/10/05/saudiking-visits-russia-as-billion-dollar-deals-on-the-table.html, last accessed on 27 May 2019.

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towards Russia, whose military presence in Syria undermined some of its strategic objectives vis-à-vis Damascus.52 Even with China, Riyadh responded enthusiastically to President Xi Jinping’s ambitious Belt and Road Initiative (BRI) and signed investment and arms deals worth millions of dollars.53 In addition, Saudi Arabia has been using its financial aid to win regional support and, in June, provided a bailout package to Jordan to the tune of US$2.5 billion. It also deposited US$2 billion in the Yemeni Central Bank to help it shore up the economic situation. Economy The Saudi economy has been gradually recovering from the cascading effects of low oil prices during 2014 and 2016 (Table 1.3). The international market showed signs of recovery in 2017 and was consolidated in 2018 and in December the price stood at US$57 per barrel.54 This was possible primarily due to changes in the oil market backed by Saudi fiscal initiatives and economic reforms under Vision 2030 55 and National Transformation Plan 2020.56 As part of domestic revenue generation mechanism, the government initiated several measures and these include the introduction of value-added tax (VAT) on some goods57; residency fees of US$27 per person on expatriates and their families58; and reduction of subsidies on domestic energy consumption.59 As outlined in Vision 2030, the government took steps to diversify the economy with structural  Ibid.  Arab News. 2019. ‘Future Opportunities between Saudi Arabia and China Are Very Big: Crown Prince’, 22 February, http://www.arabnews.com/node/1456356/saudi-arabia, last accessed on 27 May 2019. 54  Markets Insider, ‘Crude Oil Prices’, https://markets.businessinsider.com/commodities/oil-price, last accessed on 28 May 2019. 55  Vision 2030, https://vision2030.gov.sa/en/ntp, last accessed on 27 May 2019. 56  Ibid. 57  Kerr, Simeon and Omran, Ahmed Al. 2018. ‘Saudi Arabia and UAE Introduce 5% VAT in Bid to Narrow Deficits’, in Financial Times, 2 January, https://www.ft.com/content/ b1742920-efd0-11e7-b220-857e26d1aca4, last accessed on 27 May 2019. 58  EY. 2017. ‘Saudi Arabia to Introduce Expatriate Dependent Levy’, June, https://www. ey.com/gl/en/services/people-advisory-services/hc-alert%2D%2Dsaudi-arabia-to-introduce-expatriate-dependent-levy, last accessed on 27 May 2019. 59  Climate Scorecard. 2018. ‘Saudi Arabia Subsidies’, 1 January, https://www.climatescorecard.org/2018/01/saudi-arabia-subsidies/, last accessed on 27 May 2019. 52 53

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reforms to develop non-oil sectors, such as tourism,60 entertainment61 and trading. Encouraging private sector participation in diversification was part of this effort and is expected to generate much-needed employment opportunities for the Saudi youth.62 The gross domestic product (GDP) growth was put at 2.21 per cent after a contraction of 0.74 reported in 2017.63 This is expected to continue in 2019 and improvement in the international oil market and fiscal and structural reforms in the oil and non-oil sectors are expected to push the economic growth to over 2 per cent. The non-oil sector, finance, insurance, banking and manufacturing are expected to drive the growth. Within the ambit of Vision 2020, the government launched the National Industrial Development and Logistic Programme (NIDLP) in July 2017; it is planning to attract investments worth US$427  billion in the ­manufacturing, mining, energy and logistics sectors, and this is expected to attract private sector investments.64 During the year, the budgetary expenses were the highest in the history of the Kingdom and reached US$239 billion or 1.1 trillion Saudi Rials, and this trend is expected to continue in 2019 driving the economic growth.65 Based on increased oil prices and fiscal measures, the IMF forecasts that the fiscal deficit would drop to 4.6 per cent of the GDP in 2018.66 Further steps are taken by the government to improve the local  Newton, Kevin. 2019. ‘Can Saudi Arabia Become a Tourism Destination?’ in Middle East Institute, 5 April, https://www.mei.edu/publications/can-saudi-arabia-become-tourism-destination, last accessed on 27 May 2019. 61  The Guardian. 2018. ‘Saudi Arabia to Spend Billions on Expanding Entertainment Sector’, 23 February, http://www.theguardian.com/world/2018/feb/23/saudi-arabiato-spend-billions-on-expanding-entertainment-sector, last accessed on 27 May 2019. 62  Nazer, Fahad. 2017. ‘Saudi Youth at Centre Stage of Vision 2030’, in The Arab Weekly, 26 March, https://thearabweekly.com/saudi-youth-centre-stage-vision-2030, last accessed on 27 May 2019. 63  Azhar, Saeed. 2019. ‘Saudi Economy Grows 2.21 Percent in 2018, Modest Growth Seen in 2019’, in Reuters, 31 January, https://in.reuters.com/article/us-saudi-economygdp/saudi-economy-grows-2-21-percent-in-2018-modest-growth-seen-in-2019-idINKCN1PP0SK, last accessed on 27 May 2019. 64  National Industrial Development and Logistic Program, https://vision2030.gov.sa/ en/NIDLP, last accessed on 27 May 2019. 65  Jadwa Investment. ‘The Saudi Economy in 2019’, http://www.jadwa.com/en/download/saudi-economy-2019/research-8-1-1-2-1-1-1-1-1, last accessed on 27 May 2019. 66  International Monetary Fund Country Reports. 2018. ‘Saudi Arabia: 2018 Article IV Consultation-Press Release and Staff Report’, 24 August, https://www.imf.org/en/ 60

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business environment and remove restrictions on foreign direct investment (FDI) in various sectors of the economy. These are expected to spur foreign investments in the private sector. The government is planning to lower the level of unemployment from the current rate of 12.8 per cent to 9 per cent by 2020 through economic and social reforms.67 To achieve this target, the government expanded the number of employment segments reserved for Saudi nationals throughout the year, mainly targeting the retail sector. The scope of job opportunities is expected to widen in 2019, with more retail and wholesale businesses being ring-fenced against expatriate employment. Responding to a question in Lok Sabha on the impact of these labour reform measures  on Indian expatriate workers in Saudi Arabia, External Affairs Minister Swaraj informed the house that expatriates are to be progressively restricted from 12 September 2018 onwards for working in 12 sectors, viz. watch shops, optical stores, medical equipment stores, electrical and electronics shops, outlets selling car spare part, building material shops, outlets selling all types of carpets, automobile and mobile shops, shops selling home furniture and ready-made office material, sale outlets of ready-made garments, children clothes and men’s supplies, household utensils shops and pastry shops.68

According to Jadwa Investment—a Saudi based financial analyst—the inflation during the year ‘was up by 2.5 per cent year-on-year, compared to an average of 0.8 per cent in 2017. The sharp rise in the yearly prices was partly due to the introduction of VAT and energy and utilize price reform enacted’ towards the end of 2017.69 The oil sector has done well, and the Kingdom produced 10.4 million barrels per day (mb/d) in June 2018, the highest level since December 2016 before the Organization of the Petroleum Exporting Countries (OPEC) agreed for a production cut. Publications/CR/Issues/2018/08/24/Saudi-Arabia-2018-Article-IV-Consultation-PressRelease-and-Staff-Report-46195, last accessed on 27 May 2019. 67  Oxford Business Group. 2018. ‘Saudi Arabia: Year in Review 2018’, https://oxfordbusinessgroup.com/news/saudi-arabia-year-review-2018-0, last accessed on 27 May 2019. 68  GoI, MEA. 2018. ‘Question No. 134 Job Losses to Indian Citizens’, 19 December, https://mea.gov.in/lok-sabha.htm?dtl/30776/QUESTION_NO134_JOB_LOSSES_ TO_INDIAN_CITIZENS, last accessed on 27 May 2019. Also see Oxford Business Group. ‘Saudi Arabia: Year in Review 2018’. 69  Jadwa Investment. ‘The Saudi Economy in 2019’.

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Moreover, non-oil exports registered a marked increase of 26 per cent year-on-year in April. Riding on the market reform, the Saudi Ease of Doing Business score improved to 63.5 points,70 moving closer to the frontier in seven out of ten Doing Business Indicators, namely Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Protecting Minority Investors, Trading Across Borders and Enforcing Contracts.71 Reforms like the launching of a new electronic single-window clearance for contract enforcement and extension of hours of operations at Jeddah Port to ease movement of exports and imports are notable initiatives.72 Key sectors such as tourism, hospitality, entertainment and trading are opened for foreign investments and there is some progress in the partial privatization of state assets.73 Moreover, a new bankruptcy law came into force in August.74 In April, the Kingdom reversed its earlier policy introduced in 2010 and began issuing tourist visas and is hoping to attract 30 million—almost the current population—of holidaymakers by 2030.75 Keen on moving the economy away from the over-dependence upon the oil sector, MbS is the moving force behind this newly found Saudi commitment for tourism and leisure industry.76 A proposed project to develop 22 islands in the Red Sea off the Saudi coast as a tourism hub, with potential to attract SAR 22 billion (US$5.86 billion) private investments, was announced in December.77 In September, a 450-kilometre Haramain high-speed rail line connecting 70  The World Bank. 2019. ‘Ease of Doing Business in Saudi Arabia’, http://www.doingbusiness.org/en/data/exploreeconomies/saudi-arabia, last accessed on 27 May 2019. 71  Ibid. 72  The World Bank. 2018. ‘Doing Business Report: Saudi Arabia Continues Comprehensive Reform Efforts to Improve Business Climate’, 31 October, https://www.worldbank.org/ en/news/press-release/2018/10/31/doing-business-report-saudi-arabia-continues-comprehensive-reform-efforts-to-improve-business-climate, last accessed on 27 May 2019. 73  Oxford Business Group. ‘Saudi Arabia: Year in Review 2018’, https://oxfordbusinessgroup.com/news/saudi-arabia-year-review-2018-0, last accessed on 27 May 2019. 74  Lawrence, Jeremy. 2018. ‘Saudi Arabia’s Bankruptcy Law Comes into Effect’, in Arabian Business, 19 August, https://www.arabianbusiness.com/latest-news/402961saudi-arabias-bankruptcy-law-comes-into-effect, last accessed on 27 May 2019. 75  Newton. ‘Can Saudi Arabia Become a Tourism Destination?’. 76  Elliott, Annabel Fenwick. 2018. ‘Visiting Saudi Arabia Has Never Been Easier—Here’s Why You Should Go’, in The Telegraph, 3 October, https://www.telegraph.co.uk/travel/ news/saudi-arabia-new-tourist-visa-where-to-visit/, last accessed on 27 May 2019. 77  Bridge, Sam. 2018. ‘Red Sea Project Set to Add $5.8bn to Saudi Arabia’s GDP’, in Arabian Business, 14 December, https://www.arabianbusiness.com/travel-hospitality/409733red-sea-project-set-to-add-58bn-to-saudi-arabias-gdp?utm_source=Jar vis&utm_

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Mecca and Medina with the Red Sea city of Jeddah was opened. Built at a cost of US$7.87 billion, this is one of the most significant transportation projects in the Middle East, targeting nearly 60  million hajj and umrah passengers annually to improve connectivity and tourism.78 Society Four salient features define the Saudi society, namely, young demography, lavish lifestyle, fundamentalist religious orientation and tribal customs. This had led to a situation whereby many sections of the society, especially women and Shias, face problems. The Shias form about 10–15 per cent of the total Saudi population which stands at 32 million (2018) and are concentrated in the oil-rich Eastern Province as well as in Najran and Medina. Historically, the Shias of Saudi Arabia have complained of socio-political and economic marginalization and discrimination, despite a higher rate of education attained by them.79 The problems faced by the Shia minorities have often created an internal schism within the Kingdom due to the frustration of the community over denial of religious and cultural rights and negative remarks by the state-backed clergy reflected even in school textbooks. The authorities, on the contrary, tended to view the Shias as being more loyal to Iran, especially after the Islamic Revolution. The differing perceptions have contributed to continued tension. To improve the relations with the Shia minorities, King Abdullah initiated some measures, including the removal of derogatory references about Shias in textbooks, the nomination of Shias to official positions, including membership in the Shura Council.80 However, the problem resurfaced after some Shia youths, who were inspired by the Arab Spring events in Bahrain, protested in Qatif, creating panic among the authorities. medium=arabianbusiness.com&utm_campaign=recommended, last accessed on 27 May 2019. 78  Reuters in Jeddah. 2018. ‘Saudi Arabia Opens High-Speed Rail Linking Islam’s Holy Cities’, in The Guardian, 25 September, https://www.theguardian.com/world/2018/sep/25/saudiarabia-opens-high-speed-rail-link-between-holy-cities, last accessed on 27 May 2019. 79  Minority Rights Group International. 2015. https://minorityrights.org/wp-content/ uploads/2015/11/MRG_Brief_Saudi_Nov15_v1.pdf, last accessed on 27 May 2019. 80  United States Commission on International Religious Freedom. 2018. Annual Report: Saudi Arabia, https://www.uscirf.gov/sites/default/files/Tier1_SAUDI%20ARABIA.pdf, last accessed on 27 May 2019.

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Scores of arrests were made in the wake of skirmishes between Shia protesters and security forces, and according to Human Rights Watch, since 2011, hundreds of Shias have been arrested and prosecuted on charges of violence, terrorism, organizing protests, disrespect to the monarchy and incitement.81 Women are the other significant segment who face structural impediments, problems and restrictions in terms of their movement, lifestyle and decision-making and remain guided by the customary and sharia laws. Institutionalized discrimination and subjugation leave Saudi women with limited or restricted access to their fundamental rights. One of these is the Guardianship Law which places adult women at the mercy of their male relatives for acquiring higher education, seeking employment, travelling abroad as well as undergoing some medical/surgical procedures.82 For long, this law had come under severe criticism, both within and outside the Kingdom.83 In May 2018, several women activists who have been vocal about the need for revocation of the guardianship system were arrested on charges of conspiracy and for being in contact with foreign media.84 Until the ban was lifted in June, Saudi women were also forbidden from driving.85 Women also face problems because of social norms, such as dress code and gender segregation. In recent years, some changes can be noticed in the attitude of the society and the monarchy, leading to mixed-audience concerts and allowing women to attend public sports events.86 Some of these measures have come under the aegis of MbS, who has projected himself as a social and economic reformer.87 Media and civil society enjoy only limited space in the Kingdom. Media houses are mostly owned by the ruling elite and work under the patronage of the royal family. Both media and civil society conduct themselves 81   Coogle, Adam. 2018. ‘Saudi Arabia’s “Reforms” Don’t Include Tolerance of Shia Community’, in Human Rights Watch, 21 September, https://www.hrw.org/ news/2018/09/21/saudi-arabias-reforms-dont-include-tolerance-shia-community, last accessed on 27 May 2019. 82  BBC. 2019. ‘Saudi Arabia’s Enduring Male Guardianship System’, 8 January, https:// www.bbc.com/news/world-middle-east-46789875, last accessed on 27 May 2019. 83  Ibid. 84  Ibid. 85  Ibid. 86  Ibid. 87  Ibid.

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according to social norms and hierarchy, whereby any vocal criticism of the king, crown prince and the ruling family is considered taboo and can be punished.88 Online and internet contents are monitored, censored and can lead to arrests and punishment. In January Saleh al-Shehi, a journalist associated with Al-Watan daily, was arrested and sentenced to five years after he suggested that the royal court was involved in corruption during a television debate.89 According to Reporters Without Borders, during the year, dozens of journalists were detained on charges of showing disrespect to the monarchy, spreading misinformation and links with foreign media.90 Freedom House terms Saudi Arabia to be ‘Not Free’ and its overall freedom score was 7 out of 100, where the latter represents Most Free status.91 Despite these issues and problems, Saudi Arabia continues to maintain a high score in terms of Human Development Index (HDI) primarily due to its strong welfare and social security credentials. People enjoy a good lifestyle and near-universal free access to education and healthcare. Its HDI value of 0.853 is higher than the global average of 0.728 and its Gender Development Index (GDI) value of 0.877 is closer to the global average of 0.941.92 However, the Gender Inequality Index (GII) of 0.234 is far below the global average of 0.441.93 The Kingdom ranks 39th in the world in terms of HDI.94

88  Freedom House. 2019. Freedom in the World Report 2019: Saudi Arabia, https:// freedomhouse.org/report/freedom-world/2019/saudi-arabia, last accessed on 27 May 2019. 89  Middle East Monitor. 2018. ‘Prominent Saudi Columnist Jailed for Accusing Royal Court of Corruption’, 9 February, https://www.middleeastmonitor.com/20180209-prominent-saudi-columnist-jailed-for-accusing-royal-court-of-corruption/, last accessed on 27 May 2019. 90  Reporters without Borders. 2018. ‘At Least 15 Journalists Held Arbitrarily in Saudi Crackdown’, 9 February, https://rsf.org/en/news/least-15-journalists-held-arbitrarilysaudi-crackdown, last accessed on 27 May 2019. 91  Freedom House. Freedom in the World Report 2019: Saudi Arabia. 92  United Nations Development Program (UNDP). 2018. Human Development Report: Saudi Arabia, http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/SAU. pdf, last accessed on 27 May 2019. 93  Ibid. 94  UNDP. 2018. Human Development Report: Saudi Arabia, http://hdr.undp.org/en/ countries/profiles/SAU, last accessed on 27 May 2019.

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Bilateral Relations The Indo-Saudi relations improved further in 2018, building on the robust political and diplomatic engagements between the two countries under Prime Minister Narendra Modi and King Salman. While Prime Minister Modi visited the Kingdom in April 2016, the expected visit of the King in 2017 did not materialize due to internal churning in the Kingdom and the highly anticipated visit of Crown Prince Mohammed bin Salman had to wait until early 2019. Nonetheless, the year witnessed many developments in political, economic and defence relations, with the Modi-MbS meeting in Buenos Aires in November being the highpoint. Political Ties The year began with the maiden visit of External Affairs Minister Sushma Swaraj to the Kingdom on 6–8 February. The EAM visited the country to participate in the inauguration ceremony of the Janadriyah Festival (February 2018) organized under the aegis of the Saudi National Guard. She participated in the event, where India was ‘the guest of honour’ for the annual national event wherein tribal culture and heritage of the Arabian Peninsula are showcased. It was one of the most prestigious yearly events where the ‘guest’ country is named, underlining the friendly ties between the two. Inaugurated by King Salman, India was given this honour in 2018 and was represented by Swaraj. This was also the first time India was accorded this privilege and the Ministry of External Affairs termed this gesture as ‘due recognition of the strategic partnership, close ties and historical linkages between the two countries’.95 As part of its status as ‘guest of honour’, the Indian pavilion was termed Saudi ka dost Bharat (India, A Friend of Saudi Arabia) and this showcased Indian values and traditions through several cultural events, including dance and music performances. Displaying its rich and plural tradition and cultural heritage, the Indian pavilion had presentations of yoga, Ayurveda, textile and tourism. In her inaugural speech, Swaraj thanked the host and 95  Government of India (GoI), Ministry of External Affairs (MEA). 2018. ‘India “Guest of Honour” Country at the Janadriyah Festival in Saudi Arabia’, 7 February, https://mea.gov. in/press-releases.htm?dtl/29442/india+guest+of+honour+country+at+the+janadriyah+fest ival+in+saudi+arabia, last accessed on 27 May 2019.

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underlined the opportunities to further build upon the bilateral relations.96 The Indian pavilion attracted many Saudis, Indians and other nationals who enjoyed the culture displays, dances and musical extravaganza.97 During the visit, Swaraj met her Saudi counterpart Adel al-Jubeir98 and discussed bilateral issues. She ‘re-affirmed India’s support to peace’ in the Middle East and the Persian Gulf and ‘called for collective efforts in fighting the menace of terrorism’. Swaraj also underlined the need for ‘taking the strategic partnership to a higher level and in a variety of sectors’ and said that ‘India’s flagship programmes including “Make in India”, “Digital India” complement with Vision 2030 launched by Saudi Arabia and invited Saudi investments in India’.99 The External Affairs Minister also called on King Salman and thanked him for bestowing the ‘guest of honour’ status to India and for the welfare of the Indian community in Saudi Arabia. On 6 February, Swaraj met and addressed a large gathering of the Indian community and assured them that their welfare continues to be a top priority of the government.100 Two days before the visit of EAM  Swaraj, her deputy, Gen. V.  K. Singh, visited the Kingdom on 3–5 February to monitor the preparation of the Indian participation in the Janadriyah Festival. During the visit, Singh met Saudi Minister of National Guard Prince Khalid al-Ayyaf and discussed the Indian participation and jointly addressed a press conference.101 Swaraj’s visit was followed by the visit of Finance Minister Arun Jaitley during 18–19 February to co-chair the 12th India-Saudi Arabia Joint 96  GoI, MEA. 2018. https://mea.gov.in/press-releases.htm?dtl/29442/india+guest+of+ honour+country+at+the+janadriyah+festival+in+saudi+arabia, last accessed on 27 May 2019. 97  Al Sati, Saud M. 2018. ‘An Ode to Rich Saudi Culture’, in The Pioneer, 1 March, https://www.dailypioneer.com/2018/columnists/an-ode-to-rich-saudi-culture.html, last accessed on 27 May 2019. 98  Jubeir was demoted to Minister of State for Foreign Affairs in a cabinet reshuffle on 27 December 2018 and former Finance Minister Ibrahim al-Assaf was made the Acting Foreign Minister. 99  GoI, MEA. ‘India “Guest of Honour” Country at the Janadriyah Festival in Saudi Arabia’. 100  The Hindu. 2018. ‘Sushma Swaraj Meets Saudi Counterpart Adel al-Jubeir’, 7 February, https://www.thehindu.com/news/national/sushma-swaraj-meets-saudi-counterpart-adelal-jubeir/article22680605.ece, last accessed on 27 May 2019. 101  GoI, Indian Embassy. 2018. ‘Spandan’, http://www.indianembassy.org.sa/images/ spandan-new1.pdf, last accessed on 27 May 2019.

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Commission Meeting (JCM) and the inauguration of the India-Saudi Business Council.102 In addition to the JCM, during his visit, Jaitley met Saudi Minister for Trade and Investment Majid al-Qassabi and discussed various bilateral issues. He also met top Saudi businesspeople at the Council of Saudi Chambers and Minister of Energy and Industry Khalid al-Falih. Jaitley also called on King Salman and ‘discussed bilateral relations and ways of developing and enhancing them in various fields’.103 In November, Prime Minister Modi met Crown Prince Mohammed bin Salman on the sidelines of the G20 summit in Buenos Aires. This was the fourth such high-level meeting between the Prime Minister and the Saudi leadership since the Brisbane G20 summit in November 2014. The meeting attracted international attention as it came within weeks after the Khashoggi affair. Unlike other powers, India refrained from commenting on this matter as it eschews from commenting on the internal affairs of friendly countries. In their meeting in Argentina, Prime Minister Modi and MbS discussed various issues of bilateral importance and focused on enhancing the two-way flow of investments. The Crown Prince reportedly told the Prime Minister that Saudi Arabia is ‘finalizing an initial investment in India’s National Investment and Infrastructure Fund, a quasi-­ sovereign wealth fund, to help accelerate the building of ports, highways and other projects’.104 Foreign Secretary Vijay Gokhale, who was accompanying the prime minister, informed the media that the ‘two leaders have agreed that we will now set up a mechanism at the leadership level which will go into the possibilities of concrete actions in terms of investments … technology … manufacturing across various sectors of energy to food security and to infrastructure to defence’.105 He further underlined that the ‘mechanism will be worked out shortly and we will expect that in the next two to three years there 102  Business Standard. 2018. ‘Arun Jaitley to Visit Saudi Arabia’, 17 February, https:// www.business-standard.com/ar ticle/news-ani/ar un-jaitley-to-visit-saudi-arabia-118021700507_1.html, last accessed on 27 May 2019. 103  The Times of India. 2018. ‘Arun Jaitley Meets Saudi King, Discusses Ways to Boost Ties’, 19 February, https://timesofindia.indiatimes.com/india/arun-jaitley-meets-saudi-king-discusses-ways-to-boost-ties/articleshow/62987711.cms, last accessed on 27 May 2019. 104  Miglani, Sanjeev and Hajali, Hesham. 2018. ‘Saudi Crown Prince Meets Modi in Argentina, Plans to Ramp Up Investments’, in The Reuters, 30 November, https://in. reuters.com/article/saudi-crownprince-india/saudi-crown-prince-meets-modi-in-argentina-plans-to-ramp-up-investments-idINKCN1NZ08O, last accessed on 27 May 2019. 105  Roy, Shubhajit. 2018. ‘G20 Summit: PM Modi Meets Saudi Crown Prince, Mechanism to Enhance Investments in India to Be Set Up’, in The Indian Express, 1 December, https://

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will be significant scaling up in the Saudi investments in India’.106 Other notable bilateral meetings include the visit of Indian Chief of the Naval Staff Admiral Sunil Lanba in February, which was in line with the mutual commitment to expand bilateral defence and security cooperation.107 India condemned the renewed missile attack on Riyadh and other cities in March. A statement issued by the Ministry of External Affairs (MEA) said: ‘We strongly condemn the renewed missile attacks targeting civilian areas in the direction of Riyadh and other cities of Saudi Arabia. We are deeply concerned about the escalating situation threatening the lives of innocent civilians. We reiterate our resolve to fight terrorism and violence in all its forms.’108 India expressed similar sentiments when other Saudi cities came under missile or rocket attacks from the Houthis.109 Trade and Commerce Bilateral trade is an essential and integral component of the burgeoning Indo-Saudi relations. In 2018, the Kingdom was the fourth largest trading partner of India and its third largest source of energy imports. Accounting for 4.74 per cent, it is the 15th largest destination for Indian exports.110 On the other hand, for the Kingdom, India is the third largest export destination and eighth largest source of imports.111 In 2017–18, the bilateral trade stood at US$27.48 billion of which India’s import component was US$22.07  billion, while its exports worth US$5.42  billion (Table 8.1 and Fig. 8.1). In terms of bilateral trade, there was an increase indianexpress.com/article/india/pm-modi-saudi-prince-mohammed-bin-salmang20-5473524/, last accessed on 27 May 2019. 106  Ibid. 107  Indian Navy. 2018. ‘Visit of Admiral Sunil Lanba, Chairman, Chiefs of Staff Committee and Chief of the Naval Staff to Saudi Arabia’, https://www.indiannavy.nic.in/content/visitadmiral-sunil-lanba-chairman-chiefs-staff-committee-and-chief-naval-staff-saudi-arabia, last accessed on 27 May 2019. 108  The Wire. 2019. ‘India Condemns Drone Attacks Targeting Oil Installations in Saudi Arabia’, 16 May, https://thewire.in/diplomacy/india-condemns-drone-attacks-oil-installations-saudi-arabia, last accessed on 27 May 2019. 109  Ibid. 110  GoI, Directorate General of Foreign Trade. 2018. www.dgft.gov.in, last accessed on 27 May 2019. 111  World Integrated Trade Solution. Saudi Arabia, https://wits.worldbank.org/ CountryProfile/en/Country/SAU/Year/2016/TradeFlow/EXPIMP/Partner/by-country, last accessed on 27 May 2019.

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Table 8.1  India-Saudi Arabia bilateral trade (US$ million) 2013–14

2014–15

2015–16

2016–17

2017–18

Exports 12,218.95 11,161.43 6,394.23 5,110.28 5,410.70 Imports 36,403.65 28,107.56 20,321.33 19,972.40 22,069.96 Total trade 48,622.60 39,268.98 26,715.56 25,082.68 27,480.66 Share in India’s total trade 6.63 5.18 4.15 3.8 3.57 Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 8.1  India-Saudi Arabia bilateral trade 60 50 40 30 20 10 0

2011-12

2012-13 2013-14 2014-15 Exports Imports

2015-16 2016-17 Total trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

of 9.56 per cent from the previous year, but the Saudi share in India’s total foreign trade dropped by 0.23 per cent during the same period. Nonetheless, bilateral trade is expected to grow further with both sides agreeing to enhance economic and commercial ties during the bilateral meetings in 2018. The issue was discussed in the 12th India-Saudi JCM meeting in Riyadh in February and areas such as farm sector, IT and defence were identified as potential sectors for enhancing trade and commerce. Besides crude oil, the critical Indian imports are organic and inorganic chemicals, plastics, fertilizers, aluminium, copper, iron, salt and sulphur, among others. India’s exports to Saudi Arabia include cereals,

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organic chemicals, petroleum products, machinery and mechanical appliances, vehicles and automobile accessories, iron and steel products, ceramic products, textile, apparels, spices, meat and slaughtered animals, tea, coffee, fruits and more. Both the countries accord priority to one another in developing commercial relations. In 2017, Saudi Arabia constituted the Saudi Centre for International Strategic Partnership (SCISP), which identified India as one of the eight countries with which the Kingdom plans to elevate partnership to a strategic level.112 A proposal in this regard to establish a ‘Strategic Partnership Council’ between the two countries at the highest level is under consideration and was discussed in a meeting held in between NITI Aayog and SCISP in New Delhi in July 2018.113 The degree of importance and urgency attached can be understood by the three visits undertaken by Saudi Minister of Energy, Industry and Mineral Resources Khalid alFalih in February, April and October. While he met Indian leaders, including Prime Minister Modi in February, and discussed plans to enhance bilateral trade, in October he attended the second India Energy Forum. In April he attended the ministerial meeting of the 16th International Energy Forum.114 Energy Ties Energy supplies play a pivotal role in the Indo-Saudi relations. During 2017–18, India bought 18 per cent of its total crude oil imports from the Kingdom. The latter has been the largest supplier of oil to India, but during the past two years, Iraq has overtaken as the highest source of oil for India. In 2017–18, India imported 40.33 million tons of crude oil from Saudi Arabia, which was an increase from 36.16 million tons imported in the previous year. On the other hand, from Iraq New Delhi imported 46.61 million tons of crude oil in 2017–18, which was an increase from 45.74 million tons a year earlier. In total, India imported 207.3 million

112  The other countries are the US, the UK, Germany, France, China, Japan and South Korea. 113  GoI, Embassy of India, Riyadh, Saudi Arabia. 2018. ‘India-Saudi Arabia Economic & Commercial Brief’, http://www.indianembassy.org.sa/india-saudi-arabia/india-saudi-business-relations, last accessed on 27 May 2019. 114  Ibid.

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tons of crude oil in 2017–18, which was slightly lower than 220.4 million tons imported a year earlier.115 In terms of the value of trade, Indian energy imports from Saudi Arabia were worth US$17.82 billion in 2017–18 comprising 13.47 per cent of the total energy imports of US$132.29 billion (Table 8.2). Imports from Saudi Arabia marginally increased from the previous year’s figure of US$15.58 billion. In terms of share in India’s total imports from Saudi Arabia during 2017–18, crude oil made up 80.73 per cent as against 78.02 in the previous year (Table 8.2 and Fig. 8.2). Saudi share in India’s energy imports from the Persian Gulf stood at 25.42 per cent, which was a marginal decline from 27.66 recorded in 2016–17 (Table 8.2 and Fig. 8.2). Saudi Arabia is undoubtedly India’s most prominent and reliable partner in its energy security and has committed to increasing the supplies in case of need. There are suggestions that it would step up and bridge the shortage if India were unable to import oil from Iran due to American sanctions (Table 8.3 and Fig. 8.3).116 The Kingdom has been helping India in enhancing its strategic oil reserves and is committed to investing in the energy sector in India. As a part of this commitment, in 2017, Saudi Aramco joined Abu Dhabi Table 8.2  Energy imports from Saudi Arabia (US$ million) Year

Oil imports from Saudi Arabia

Total oil imports

Saudi share in total oil imports

2013–14 2014–15 2015–16 2016–17 2017–18

32,781.57 23,212.88 15,177.91 15,583.08 17,816.06

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

18.07 14.84 15.65 15.11 13.47

Imports from Per cent of oil Saudi Arabia in imports from Saudi Arabia 36,403.65 28,107.56 20,321.33 19,972.40 22,069.96

90.05 82.59 74.69 78.02 80.73

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

115  The Hindu. 2019. ‘Iraq Remains Top Oil Supplier to India’, 1 May, https://www. thehindu.com/business/iraq-remains-top-oil-supplier-to-india/article27005247.ece, last accessed on 27 May 2019. 116  Live Mint. 2019. ‘India Will Stop Importing Crude Oil from Iran after US Ends Sanction Waiver: Official’, 23 April, https://www.livemint.com/industry/energy/indiawill-stop-importing-crude-oil-from-iran-after-us-ends-sanction-waiver-1556008925244. html, last accessed on 27 May 2019.

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Fig. 8.2  Share of oil in India’s imports from Saudi Arabia 100 90 80 70 60 50 40 30 20 10 0

2011-12

2012-13

2013-14

2014-15 2015-16 Share in Per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Table 8.3  India’s energy imports from Saudi Arabia (US$ million)

Energy import from Saudi Arabia Total energy import Total import from Persian Gulf Share in total imports Share in imports from Persian Gulf

2013–14

2014–15

2015–16

32,781.57

23,212.88 15,177.91

2016–17

2017–18

15,583.08

17,816.06

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75 85,300.30 50,992.26 56,335.34 70,090.81 18.07 30.81

14.84 27.21

15.65 29.77

15.11 27.66

13.47 25.42

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

National Oil Company (ADNOC) and a consortium of Indian companies to develop a US$44  billion refinery in Ratnagiri and Aramco signed a memorandum of understanding (MoU) to this effect in April.117 However, 117  Asharq Al-Awsat. 2018. ‘Saudi Aramco Signs MoU to Build Refining and Chemicals Complex in India’, 11 April, https://aawsat.com/english/home/article/1234456/saudiaramco-signs-mou-build-refining-and-chemicals-complex-india, last accessed on 27 May 2019.

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Fig. 8.3  Share of Saudi Arabia in India’s oil imports 35 30 25 20 15 10 5 0

2011-12 2012-13 2013-14 Shre in Total Imports

2014-15 2015-16 2016-17 2017-18 Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

due to protests by local farmers over land acquisition,118 the provincial Maharashtra Government has stayed the project.119 This is a significant setback for the project and there are suggestions it would be shifted to another location along the Arabian Sea.120 Investments India and Saudi Arabia have been working to increase the two-way investment flow and, in recent years, both have emerged as the most significant sources of FDI in each other’s markets. In 2018, Saudi FDI into India was worth US$10.21 million and the overall FDI from the Kingdom between 118  Business Standard. 2018. ‘Won’t Allow Ratnagiri Refinery to be Set Up at “Any Circumstance”: Uddhav’, 12 April, http://www.business-standard.com/article/currentaf fairs/won-t-allow-ratnagiri-refiner y-to-be-set-up-at-any-circumstanceuddhav-118041201104_1.html, last accessed on 27 May 2019. 119  Business Line. 2018. ‘Maharashtra Stays Land Acquisition for Ratnagiri Refinery Project’, 28 November, https://www.thehindubusinessline.com/news/national/maharashtra-staysland-acquisition-for-ratnagiri-refinery-project/article25616103.ece, last accessed on 27 May 2019. 120  Ibid.

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April 2000 and December 2018 was US$210.58 million with Saudi Arabia ranking 41st largest source of FDI into India.121 Among the GCC countries, the Kingdom ranks 3rd after UAE (10th) and Oman (31st).122 According to the Indian embassy in Riyadh, several Saudi companies including Aramco, SABIC and others are interested in investing in the Indian market in energy and other sectors. Since June 2018, Al-Fanar group have started work on setting up a 300 MW power project in the Kutch region in Gujarat with an estimated investment of US$300  million.123 Plans to further enhance Saudi investments in India are ongoing and have been part of the bilateral discussions. At the same time, several Indian private sector companies have been operating in the Kingdom either as wholly owned subsidies or through joint ventures. Many have set up businesses to provide contracting and trading services in real estate, logistics, IT, tourism and other sectors. According to the Saudi Arabian General Investment Authority (SAGIA), as of 2017, there were 322 Indian companies which were given licences to run businesses and this had brought investments worth US$1.4 billion into Saudi Arabia.124 Indian companies are eyeing to invest in the Saudi market, especially in the newly launched infrastructure, tourism and entertainment projects. In November, the Ministry of Trade and Commerce issued a statement expressing plans for better Indian participation in the developmental projects in Saudi Arabia under the Vision 2030 programme.125 Expatriates According to the MEA data, there is a significant decline in the number of Indian workers living in the Kingdom during the past two years. In December 2017, the number was reportedly 3.2  million,126 but in 121  GoI, Department for Promotion of Industry and Industrial Trade. https://dipp.gov. in/publications/fdi-statistics, last accessed on 27 May 2019. 122  Ibid. 123  GoI, Embassy of India, Riyadh, Saudi Arabia. ‘India-Saudi Arabia Economic & Commercial Brief’. 124  Ibid. 125  Suneja, Kirtika. 2018. ‘India Eyes Investment Opportunity in $500 Billion Infra Projects in Saudi Arabia’, in The Economic Times, 26 November, https://economictimes.indiatimes. com/news/economy/finance/india-eyes-investment-opportunity-in-500-billion-infra-projects-in-saudi-arabia/articleshow/66807669.cms, last accessed on 27 May 2019. 126  GoI, Embassy of India, Riyadh, Saudi Arabia. 2018. ‘India-Saudi Bilateral Relations’, December, https://mea.gov.in/Portal/ForeignRelation/India-Saudi_Bilateral_Relations_ December_2018.pdf, last accessed on 27 May 2019.

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December 2018, it came down to 2.8 million.127 This was a remarkable drop of 400,000 within a year. One of the explanations could be the expatriate-­dependent fee imposed by the Saudi government as part of its plan to shore up domestic revenues and encourage the nationalization of employment in the private sector. However, the Ministry of External Affairs denies any impact of the hike in the fee on the number of Indian workers in the Kingdom. In January, Minister of State for External Affairs M. J. Akbar had informed the Rajya Sabha that about ‘80 percent of Indian workers are engaged in blue-collar and semi-skilled jobs and are not allowed to bring families. Therefore, the impact of expatriate dependent fee will be limited to a small fraction of the resident Indian community. The imposition of expatriate dependent fee has not resulted in any decrease in numbers’ as per the records of the MEA.128 However, if the media reports were to be believed, the fee has impacted the numbers and led to, in the words of one commentator, ‘exodus of foreigners’ from the Kingdom, forcing the government to review the matter.129 Despite the drop, the Indian community continues to be the largest expatriate community in the Kingdom. Hajj The annual hajj pilgrimage contributes to the cultural ties and people-to-­ people contacts for centuries and hence is an important aspect of the bilateral relations. In 2018, the number of Indians who performed the annual pilgrimage stood at 175,025 and this was one of the largest contingents by nationality.130 This was a marginal increase from 170,000 in the previous year. For the first time, over 1,300 Indian women pilgrims performed hajj without a male mahram (male relatives, including husband, father, son  Ibid.  GoI, MEA. 2018. ‘Question No. 1932 Hike in Expatriate Dependent Fee Imposed by Saudi Arabia’, 4 January, https://mea.gov.in/rajya-sabha.htm?dtl/29324/question+no+19 32+hike+in+expatriate+dependent+fee+imposed+by+saudi+arabia, last accessed on 27 May 2019. 129  Nereim, Vivian, Algethami, Sarah and Shahine, Alaa. 2018. ‘Saudi Arabia Reviews Expat Fees as Economy Feels Sting’, in Bloomberg, 9 December, https://www.bloomberg. com/news/articles/2018-12-09/saudi-arabia-said-to-review-expat-fees-as-economy-feelssting, last accessed on 27 May 2019. 130  GoI, Embassy of India, Riyadh, Saudi Arabia. ‘India-Saudi Bilateral Relations’. 127 128

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and brother) based on the initiative of the Saudi government, which had removed the condition for a male mahram for women pilgrims. In December, Minister of Minority Affairs Mukhtar Abbas Naqvi visited Saudi Arabia to sign an agreement for 2019. During his meeting with Saudi Minister for Hajj, Mohammed Saleh Benten, Naqvi thanked King Salman and the Saudi government for making the 2018 hajj a success. He added that the Indian government ‘in coordination and cooperation with Saudi Arabian government, Indian consulate and various concerned agencies in Saudi Arabia, is working to ensure safety and better facilities, medical facilities for pilgrims during Hajj 2019’.131

Challenges The Indo-Saudi relations are at a crossroads and may transform into a strategic partnership if both the countries recognize their potentials, limitations and shortcomings in their policies. The regular political and diplomatic contacts show their mutual commitments to enhance economic and commercial relations and to strengthen defence and security cooperation. Some of the necessary steps have been taken to realize the commitments and this has resulted in developments such as Aramco’s commitment to invest in the West Coast Refinery and Petrochemical Project (earlier known as Ratnagiri Refinery and Petrochemical Limited). In the defence arena, the enrolling of Saudi cadet for the pre-commission training programme in the National Defence Academy in Pune in December 2017 was a significant development. Though not insignificant, these are small in terms of the potentials and promises on both sides. While there is no shortage of desire, future movements depend on the responsiveness of the Indian bureaucracy and industries in pushing forward commercial ties. If the projects are delayed and regularly face legal hurdles or political troubles, then it would be difficult to attract serious Saudi investments. The challenge for India is even bigger in handling the regional situation. The continuing internal division within the GCC, the US decision to withdraw from the Iranian nuclear deal and return of the sanctions against Iran have an adverse effect upon Indo-Saudi relations. India cannot afford 131  Press Information Bureau (PIB), GoI, Ministry of Minority Affairs. 2018. ‘Bilateral Annual Haj 2019 Agreement between India and Saudi Arabia Signed at Jeddah’, 13 December, http://pib.nic.in/newsite/PrintRelease.aspx?relid=186371, last accessed on 27 May 2019.

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to ignore Saudi concerns vis-à-vis Iran after elevating the bilateral ties to the level of ‘strategic partnership’.132 From the Saudi viewpoint, the threats posed by the Islamic Republic and its growing military presence in the Middle East are as real as India’s concerns on China’s expanding presence in South Asia and not appreciating this would mean that India disregards Riyadh’s concern. Handling the Iran file will be the toughest foreign policy challenge for India in the coming years. The third challenge is rather global. As the US has been losing its interest in the Middle East, Russia and China are increasing their engagements with the Persian Gulf. Despite the Syrian civil war, President Vladimir Putin has been taking an interest in other disputes in the region and India cannot ignore Moscow’s growing appetite for geopolitical engagements in the Middle East and the Persian Gulf. The same holds true for China whose Belt and Road Initiative has evoked a favourable response from the Gulf Arab countries, including Saudi Arabia.

132  Bhattacharjee, Kallol. 2019. ‘India, Saudi Arabia to Launch Strategic Partnership Council’, in The Hindu, 18 February, https://www.thehindu.com/news/national/indiasaudi-arabia-to-launch-strategic-partnership-council/article26305632.ece, last accessed on 27 May 2019.

CHAPTER 9

UAE

Key Information Political System: Federation of seven Emirates ruled by different families; Ruling Family: Dubai (Al-Maktoum); Abu Dhabi (Al-Nahyan); Sharjah (Al-Qasimi); Ras al-Khaima (Al-Qasimi); Ajman (Al-Nuaimi); Fujairah (Al-Sharqi); and Umm al-Qaiwan (Al-Mu’alla); President: Khalifa bin Zayed al-Nahyan (since 3 November 2004); Prime Minister and Vice President: Mohammed bin Rashid al-Maktoum (since 11 February 2006); National Day: 2 December; Parliament: 40-member, partially elected Federal National Council; Last Parliamentary Election: 3 October 2015; Major Group in Parliament: N/A; National Carrier: Emirates (Dubai); Etihad Airways (Abu Dhabi). Socio-Economic Indicators Area: 83,600 sq. km; Population: 9,701,315 (July 2018 est.); Native: 12 per cent (approx., 2018  est.); Expats: more than 88 per cent (approx., 2018 est.); Religious Groups: Citizens (Sunni 85 per cent; Shia 15 per cent); Resident (Muslim 76 per cent; Christian 9 per cent; Hindu and Buddhist 10 per cent; and Others 5 per cent); Youth: 7.64 per cent; Population growth rate: 1.44 per cent (2018); Life expectancy at birth: 78.7 years (2018 est.); Major population groups: Emirati 11.6 per cent, South Asian 59.4 per cent (includes Indian 38.2 per cent, Bangladeshi 9.5 per cent, Pakistani 9.4 per cent, others 2.3 per cent), Egyptian 10.2 per cent, Philippino 6.1 per cent, © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_9

211

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other 12.8 per cent (2015  est.); Literacy rate: 93.8 per cent (2015  est.); National Currency: Emirati Dirham (AED); GDP: US$382.57  billion (2017); Foreign Trade: Export US$308.5  billion (2017  est.), Import US$229.2  billion (2017  est.); Defence budget: 4.86 per cent of GDP (2017); Sovereign Wealth Fund: US$1319.5  billion; External Debt: $237.6  billion (2017  est.); Per capita income: $68,600 (2017  est.); Oil reserves: 97.8  billion bbl.; Gas reserves: 6.091  trillion m3; HDI rank: 34/189; Infant Mortality Rate: 5.5 deaths/1,000 live birth (2018  est.); UN Education Index: 0.74; Gender Inequality Index: 0.232; Labour Force: 5.344 million; Unemployment rate: 1.6 per cent (2016 est.); Urban Population: 86.5 per cent; Rate of Urbanization: 1.71 per cent (2015–20 est.); Last National Census: 2005. India Related Indian Cultural Centre: Abu Dhabi (inaugurated in 2009); Number of Indians: 3.3  million (approx. 30 per cent of the total resident population); Number of places of worship for Indians: 2 Temples; 1 Gurudwara; 35 Churches; Indian Schools: 60; Indian Banks: State Bank of India (1); Bank of Baroda (7); Union Bank of India (1); Punjab National Bank (1); IDBI Bank (1); ICICI Bank (1); Yes Bank (1); HDFC, Indian Overseas Bank, Andhra Bank, Axis Bank, Canara Bank, Corporation Bank, Federal Bank, Oriental Bank of Commerce; Currency exchange rate: AED 1 = INR 18.79 (March 2019); Last visit to India by the ruler: Crown Prince Muhammed bin Zayed, January 2017; Last Indian Prime Minister to visit: Prime Minister Narendra Modi, February 2018. * * * The United Arab Emirates (UAE) has emerged as the centre of India’s new approach towards the Persian Gulf ever since Narendra Modi became prime minister. Trade ties and diaspora population play an important role in India prioritizing the Emirate. There are considerable political contacts and understandings between the two leaderships during the past five years and this has contributed to the warmth in their relations. Prime Minister Modi undertook his second visit to the UAE in February 2018, thereby making it the fourth high-level bilateral visit in as many years. Both ­countries are expected to build on the current thaw and explore new areas of cooperation such as space and defence.

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Domestic Developments Politics The socio-economic transformation is at the forefront of the UAE, comprising seven Emirates, namely Abu Dhabi, Dubai, Sharjah, Fujairah, Ajman, Ras al-Khaimah and Umm al-Qaiwan ruled by seven different families, emerging as a leading Arab country. Following the departure of the British in 1971, these Emirates opted to form a federation with a constitutional arrangement.1 The Federal Supreme Council (FSC), made up of the rulers of the seven Emirates, is the highest constitutional body that runs the affairs of the country. The FSC elects a president and prime minister among its members as the heads of state and government, respectively. As per the convention, since 1971, the ruler of Abu Dhabi is elected president and the ruler of Dubai serves as prime minister and vice president. Currently, Khalifa bin Zayed al-Nahyan, the ruler of Abu Dhabi, serves as the president, but after he suffered a stroke in 2014, his half-­brother, Crown Prince Mohammed bin Zayed al-Nahyan (commonly referred as MbZ) has been acting as the de facto ruler of Abu Dhabi and the President of the UAE. In addition to the FSC, the Emirates have a Federal National Council (FNC) which functions as an advisory body. The 40-member FNC was formed under the Constitution of 1971 and, until 2006, was an entirely nominated body. According to a cabinet order issued on 10 August 2006, a new system of its composition was promulgated whereby half the members are elected and the other half nominated for a four-year term. The limited election to the FNC is conducted by the National Election Committee (NEC) which nominated the Electoral College that, in turn, elects the 20 members, while rulers of the seven Emirates appoint the remaining members. The representation of the Emirates rests on the size of the population; while Abu Dhabi and Dubai have 8 members each, Sharjah and Ras al-Khaimah send 6 each and the remaining 12 are equally divided among Ajman, Fujairah and Umm al-Qaiwan. The last election to the four-year FNC was held in October 2015, in which 19 men and 1 woman were elected from among 329 candidates.2 The Electoral College had 224,279 members at that time.3  At one point, both Qatar and Bahrain had contemplated joining the federation but subsequently chose to be separate and independent Emirate. 2  Remeithi, Naser Ali. 2015. ‘FNC Election Winners Cleared to Take Seats’, in The National, 11 October, https://www.thenational.ae/uae/government/fnc-election-winners-cleared-to-take-seats-1.33636, last accessed on 31 May 2019. 3  The Official Portal of the UAE Government. 2019. ‘The Federal National Council’, https://www.government.ae/en/about-the-uae/the-uae-government/the-federalnational-council-, last accessed on 31 May 2019. 1

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In December 2018, the President of the UAE issued a directive to reserve 50 per cent of the FNC seats for women as part of the Emirati reform programme in empowering women and to increase their participation in public life and national development.4 The next election, due in 2019, will, therefore, be a critical one for gender equality in the UAE. Besides the formal advisory body and informal mechanism of meetings with the rulers and other influential members of the ruling family, the UAE does not have avenues for political activities. Partly due to the smaller size of the Emirati population (for example, in 2018, out of the 9.7 million residents, only 12 per cent or 1.2 million are Emirati citizens), close-­ knit family structure, tribal practices of consultation and reverence and social welfare arrangement based on rentier economy, the demands for reforms are not significant. On various occasions, some sections of the Emirati population have petitioned for political openings, since the Arab Spring of 2011, the mood was sober. One of the key demands was to make the FNC a fully elected body with some legislative powers but these were rejected by the rulers.5 A section of the society, especially with Islamist leanings and with sympathies towards Muslim Brotherhood, have argued for making the country a constitutional monarchy in practice, whereby the day-to-day affairs of the country could be run by elected representatives.6 The rulers, however, are not amenable to such demands and view them as a sinister plot to destabilize the Emirates. Under the leadership of Crown Prince MbZ, the state has cracked down on anyone demanding political opening or even mildly criticizing the political system. Expressing views contrary to the official positions on domestic or foreign issues resulted in a more intrusive approach towards social media. This has attracted criticism and condemnation from international human rights agencies. Nonetheless, the Emirati rulers have consciously adopted a policy of incremental social reforms. 4  Badam, Ramola Talwar. 2018. ‘Sheikh Khalifa: UAE’s Federal National Council to be 50 Per cent Women’, in The National, 8 December, https://www.thenational.ae/uae/government/sheikh-khalifa-uae-s-federal-national-council-to-be-50-per-cent-women-1.800357, last accessed on 31 May 2019. 5  The Economist. 2011. ‘Getting Twitchy about Democracy’, 30 June, https://www.economist.com/middle-east-and-africa/2011/06/30/getting-twitchy-aboutdemocracy, last accessed on 31 May 2019. 6  Katzman, Kenneth. 2017. ‘The United Arab Emirates (UAE): Issues for U.S.  Policy’, CRS Report, No. RS21852, 28 June, https://www.refworld.org/pdfid/595f590b4.pdf, last accessed on 31 May 2019.

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Foreign Policy As MbZ navigates the country through regional tensions and turbulence, the Emirati foreign policy has come under intense international scrutiny. Along with the Saudi Crown Prince Mohammed bin-Salman (MbS), the Emirati leader is seen as the leading figure in an activist Gulf Arab policy on a host of issues. This mainly focuses on containing Iran’s growing regional influence and military expansion and in thwarting the possibilities of Muslim Brotherhood gaining regional popularity or influence in any country in the Gulf or beyond. The Arab Spring protests and the conclusion of the Joint Comprehensive Plan of Action  (JCPOA) were the primary triggers that have driven MbS and MbZ to seek the maintenance of status quo in the region. To an extent, both the leaders are boisterous over the election of Donald Trump as president of the US and his strong anti-­Iranian disposition. The decision of the UAE to join hands with Saudi Arabia (and Bahrain and Egypt) in initiating the Qatar boycott in June 2017, even at the risk of fracturing the Gulf Cooperation Council (GCC), can be seen within this regional context. The UAE is prepared to go to any length to stop and challenge perceived Iranian regional hegemony. Despite its small size and limited population base, the UAE has become increasingly assertive on a host of issues that dominate the Persian Gulf and has strengthened its alliance with Saudi Arabia. The UAE was not influenced or affected by the international chorus over the Khashoggi affair that marred the image of MbS. On the Qatari crisis, the UAE shares the Saudi view that Doha’s independent policy, understanding with Iran and its patronization of Islamist groups are counterproductive to the safety and security of the region, especially GCC countries. On Libya, the UAE has been pursuing a policy that effectively violates United Nations Security Council (UNSC) Resolution 2259 (2015),7 which prohibits any assistance to any militant group in Libya. The Emirates has been actively supporting and arming General Khalifa Haftar and his Libyan National Army (LNA) that has, since early 2018, intensified the armed bid to take over control of the whole country, including the capital Tripoli that is currently under the UN-backed Government of National Accord (GNA) headed by Prime 7  United Nations. 2015. ‘UNSC Resolution 2259’, 22 December, https://unsmil.unmissions.org/sites/default/files/UNSC_RES_2259_Eng_1.pdf, last accessed on 31 May 2019.

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Minister Fayez al-Sarraj.8 France, Egypt and the UAE have reportedly provided military assistance, including air support to the LNA in its bid to wrest control of Libya.9 The UAE has been equally active in Yemen and is closely aligned with Saudi Arabia. It has committed a large military force in Yemen that included personnel on the ground and nearly 30 fighter aircraft. It has been trying to dislodge the Iran-backed Ansar Allah from its positions in Sana’a and other parts of northern Yemen. The coalition force led by Saudi Arabia and the UAE, also comprising Bahrain, Kuwait, Egypt, Jordan, Morocco, Senegal, Sudan, the US, France and the UK, has only achieved limited success and is accused of worsening the already bad humanitarian crisis in Yemen. Nonetheless, with the conclusion of a ceasefire agreement for Hodeida in December 2018, some respite in fighting can be expected in 2019, though both sides have been dragging their feet. At the same time, 2018 witnessed some differences between the UAE and Saudi Arabia that surfaced over supporting the Southern Transition Council (STC), a secessionist movement that advocates the division of Yemen as it existed before the unification carried out in 1990. While the Emirates has been supporting the STC for taking control of the principal ports in the South,10 the internationally recognized government headed by President Abdrabbuh Mansour Hadi backed by Saudi Arabia has been critical of the STC over the issue of dividing Yemen.11 To counter and appease the international criticisms over the humanitarian situation in Yemen, both the UAE and Saudi Arabia have increased their aid to Yemen with the UAE providing US$4 billion in assistance to Yemen, including US$1.25 billion, which came in 2018.12 8  Leassing, Ulf and Irish, John. 2019. ‘Libya Offensive Stalls, but Haftar Digs in Given Foreign Sympathies’, in Reuters, 15 April, https://www.reuters.com/article/us-libya-security-analysis/libya-offensive-stalls-but-haftar-digs-in-given-foreign-sympathies-idUSKCN1RR1R6, last accessed on 31 May 2019. 9  Ibid. 10  Middle East Monitor. 2018. ‘UAE Is Leading a “Coup” in South Yemen, Says Hadi’, 29 January, https://www.middleeastmonitor.com/20180129-uae-is-leading-a-coup-in-southyemen-says-hadi/, last accessed on 31 May 2019. 11  Ibid. 12  Aldroubi, Mina. 2019. ‘UAE and Saudi Arabia Announce $1 Billion in Humanitarian Aid for Yemen’, in The National, 26 February, https://www.thenational.ae/world/mena/ uae-and-saudi-arabia-announce-1-billion-in-humanitarian-aid-for-yemen-1.830500, last accessed on 31 May 2019.

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Economy The UAE is one of the most vibrant economies of the world, and at a gross domestic product (GDP) of US$470 billion in 2018, it is the second largest economy in the Middle East after Saudi Arabia. The Emirati rulers had recognized the need to move away from the oil sector and diversify the economy, long before it became the model for other Gulf Arab countries. Though hydrocarbon continues to remain the dominant sector and prime commodity in foreign trade and revenue, the expansion of services, shipping, aviation, tourism, entertainment, retail and real estate sectors have enabled the Emirates to weather the storm of fluctuating oil prices and its cascading impact on balancing the budget. The UAE has invested heavily in developing green energy and renewable sources of energy to devote its hydrocarbon—mainly oil but also gas—mostly for exports.13 This, for example, contrasts with Iran, which uses much of oil and gas production for domestic consumption. The Emirate has invested in the first nuclear power station in Barakah Power Plant, for which the work started in 2011 and is expected to be operational in 2019.14 Abu Dhabi is investing in Masdar City to boost its solar and renewable energy resources.15 The Emirates has invested heavily in the international market through the sovereign wealth fund (SWF) to strengthen the flow of revenues for the state. The critical component of the Emirati economic success story is the involvement of the private sector and the liberal business model attractive for foreign investments. In 2018, it ranked 11 in terms of a business-­ friendly environment, which has contributed to the UAE attracting some of the biggest international corporations for their Middle East and North Africa (MENA) and even global operations from Abu Dhabi and Dubai, and they include DHL, FedEx, Cisco, Hilton, Phillips, WSP, Landmark group, Lulu International, Total, Danube and so on. In terms of economic growth, the Emirati GDP grew marginally at 1.7 per cent from 0.8 per cent a year earlier. The contribution of the hydrocarbon sector to the economy was 25.9 per cent, one of the lowest among the Persian Gulf countries. The government is committed to reducing this 13  Kalehsar, Omid Shokri. 2019. ‘UAE Becoming a Leader in Renewable Energy’, in The Arab Weekly, 17 March, https://thearabweekly.com/uae-becoming-leader-renewableenergy, last accessed on 31 May 2019. 14  Emirates Nuclear Energy Corporation. 2018. ‘Barakah Nuclear Energy Plant’, https:// www.enec.gov.ae/barakah-npp/, last accessed on 31 May 2019. 15  Kalehsar, Omid Shokri. 2019. ‘UAE Becoming a Leader in Renewable Energy’.

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portion further by diversifying into the knowledge economy; currently, over 40 western universities and colleges have established their branches in the UAE, and these include New York University in Abu Dhabi, American University in Dubai, Canadian University in Dubai, American University in Sharjah and so on. According to Vision 2021, the Emirates hope to increase the non-oil contribution to the GDP to 80 per cent by 2021.16 The country’s influence in the international market has been an essential factor that contributed to economic growth. With a staggering total of US$828 billion, the UAE ranks third in terms of SWF, after Norway and China.17 The UAE is considering selling off stakes of its SWF in Emirates Global Aluminium, one of the largest companies in the country, to revive the economic growth, which was dented due to low oil prices of 2016–17. In terms of microeconomic indicators, the country has a healthy economic environment with only 4.5–5.0 per cent inflation and 1.9 per cent unemployment among the citizen population. In addition, non-oil sectors—such as agriculture, industries and manufacturing—and tertiary sectors—such as international trade—have witnessed significant growth in recent years and are the main drivers of the Emirati economy. Aviation is another primary source of diversification, and with 89 million passengers, Dubai has been the third busiest airport in the world in 2018 and the state-owned Emirates had a share of 65 per cent of passenger and 80 per cent cargo traffic during the year.18 The Dubai Ports World, the largest global operator, for example, handled 71.4 million TEU (twenty-foot equivalent units) of cargo during the year.19 Society The UAE is the most open, plural, tolerant and accommodative society in the Persian Gulf region. Its welcoming attitude towards the outsiders is exhibited by its demography, with only 15 per cent of the resident popula16  Rahman, Fareed. 2017. ‘UAE’s Non-Oil Contribution to GDP to Swell to 80% by 2021’, in The Gulf News, 18 September, https://gulfnews.com/business/uaes-non-oilcontribution-to-gdp-to-swell-to-80-by-2021-1.2092158, last accessed on 31 May 2019. 17  Sovereign Wealth Fund Institute. 2019. ‘Top 81 Largest Sovereign Wealth Fund Rankings by Total Assets’, https://www.swfinstitute.org/fund-rankings/sovereign-wealthfund, last accessed on 31 May 2019. 18  Abbas, Waheed. 2019. ‘DXB Remains World’s Busiest Airport in 2018’, in Khaleej Times, 14 March, https://www.khaleejtimes.com/business/aviation/dxb-remains-worldsbusiest-airport-in-2018-, last accessed on 31 May 2019. 19  DP World. 2019. ‘DP World Handles 71 Million TEU and Reports 2.9% Volume Growth in 2018’, https://www.dpworld.com/media/media-centre/2018-Q4-Throughput, last accessed on 31 May 2019.

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tion being Emirati citizens and the rest made up of expatriates of various nationalities and faiths. As of 2018, 55 per cent of the total resident population is of South Asian origin, including people from India, Pakistan, Bangladesh, Nepal and Sri Lanka, and this is the most dominant population group in the country in terms of ethnicity. Egyptians and other Arabs comprise nearly 12–15 per cent, while about 8–10 per cent of the resident population is of European and western origin. The Filipinos and Southeast Asians account for 6–8 per cent.20 In terms of diversity of faith, Muslims comprise nearly three-fourths of the total resident population, with about 85 per cent Sunni Muslims and 15 per cent Shia Muslims. Among the other prominent religious groups, 9–10 per cent is Christian, 8–9 per cent is Hindu and the rest adhere to different religious denominations.21 Though political rights are limited, with locals enjoying better economic and social security, the expatriate population enjoy considerable legal rights and live in a discrimination-free work environment. Women enjoy considerable social and economic rights, the same as their male counterparts, and with about 52 per cent, the Emirates have the largest share of women in their workforce.22 Though their conditions are better and improving, the Emirati women face some systematic legal discrimination, especially in terms of civil and family laws. For example, women need the consent of their guardians for entering into marriage. Similarly, they require the consent of their husbands to work outside the home and need to seek divorce only through courts, while husbands can unilaterally divorce their wives. In terms of domestic violence and sexual crimes, the laws are unfavourable to women.23 Nonetheless, the UAE is working to improve the legal and social conditions of women and for female empowerment. The critical aspect of the conditions of women is the greater social acceptance of them as equal partners and this is reflected in some of the social-cultural practices and shifts. The government has sponsored several initiatives towards empowering women to play a leading role in businesses, public administration as 20  CIA World Fact Book. 2019. ‘United Arab Emirates’, https://www.cia.gov/library/ publications/the-world-factbook/geos/ae.html, last accessed on 31 May 2019. 21  Ibid. 22  The World Bank. 2019. ‘Labor Force Participation Rate, Female’, https://data.worldbank.org/indicator/sl.tlf.cact.fe.zs, last accessed on 31 May 2019. 23  Freedom House. 2019. ‘UAE’, in Freedom in the World Report 2019, https://freedomhouse.org/report/freedom-world/2019/united-arab-emirates, last accessed on 31 May 2019.

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well as in defence and security sectors.24 The UAE has a higher Gender Development Index score or 0.968 and a low Gender Inequality Index score of 0.232. On both accounts, it is ranked 34th in the world.25 Due to its strong socio-economic performance, the UAE enjoys a high Human Development Index score of 0.863 and is ranked 34th in terms of its HDI score. At the same time, in terms of human rights situation and press freedom, the country continues to be unfavourable. Several cases of human rights abuse, primarily on account of political dissent, have been reported in recent years. At times, migrant workers, especially from the lower strata and those engaged in menial work, find themselves in exploitative work conditions and the complex politico-legal system is often an impediment to them securing justice.26 The Emirati media has less space for manoeuvre, as the press is either owned by the members of the ruling family or patronized by the state. Hence, the scope for independent reporting and free media is virtually non-existent and in terms of press freedom, the country ranks 133, according to Reporters Without Borders, which is a drop of five positions in 2018.27 In terms of censorship and surveillance of social media and freedom of expression, the country has been one of the worst performers in the region. A 2012 legislation prohibits any expression of dissent or criticisms in the social media against the government and the ruling family.28 Many bloggers, journalists and activists have borne the brunt of the 2012 cybercrime law and were either convicted or are languishing in jails without any charges being framed. In 2018, award-winning human rights activist Ahmed Mansoor was sentenced to a ten-year prison term for being critical of the human rights situation in the country.29 The Qatari crisis also witnessed greater state intrusion of the social media and curtailment of any views critical or contrary to the official position. In May 2018, for example, a British Ph.D. candidate, Matthew Hedges, who had arrived in the  Al Tayer, Saeed. 2018. ‘Empowering Women in the UAE’, in Gulf News, 27 August, https://gulfnews.com/opinion/op-eds/empowering-women-in-the-uae-1.2271413, last accessed on 31 May 2019. 25  United Nations Development Programme (UNDP). 2019. ‘UAE’, Human Development Reports, http://hdr.undp.org/en/countries/profiles/ARE, last accessed on 31 May 2019. 26  Freedom House. 2019. ‘UAE’, in Freedom in the World Report 2019. 27  Reporters without Borders. 2019. ‘UAE’, https://rsf.org/en/united-arab-emirates, last accessed on 31 May 2019. 28  Ibid. 29  Amnesty International. 2018. ‘UAE: Activist Ahmed Mansoor Sentenced to 10 Years in Prison for Social Media Posts’, 31 May, https://www.amnesty.org/en/latest/news/2018/05/ uae-activist-ahmed-mansoor-sentenced-to-10-years-in-prison-for-social-media-posts/, last accessed on 31 May 2019. 24

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Emirates for fieldwork related to his doctoral research, was detained by the security forces. He was sentenced to life in prison in November on charges of spying. Eventually, however, he was pardoned by the UAE ruler and allowed to return to the UK in late November.30

Bilateral Relations The UAE has emerged as India’s most reliable regional partner in the Gulf region, especially since the ascendance of Narendra Modi and his maiden visit to the Emirates in August 2015. This was the first prime-ministerial visit to the UAE since the May 1981 visit of Indira Gandhi. Modi’s visit was followed by the visits of Emirati Crown Prince Mohammed bin Zayed alNahyan in February 2016 and January 2017, with the second one as the Chief Guest of the Republic Day celebrations. During 2018, Prime Minister Modi visited the Emirates in February where he was accorded the honour of addressing the Sixth World Government Summit in Dubai as the guest of honour. The emerging buoyance of political and diplomatic outreach between the two countries is laying a strong foundation for future cooperation in economic, commercial, defence, security and other fields. Political Ties India and the UAE share strong political and diplomatic relations, which are intensified due to the personal bond between the two leaders. Prime Minister Modi made his second visit to the Emirates on 10–11 February 2018, and in addition to his meeting with Emirati leaders including Crown Prince Mohammed bin Zayed al-Nahyan, Modi addressed the World Government Summit on Technology for Development hosted by Dubai. The Prime Minister also met a select group of Emirati CEOs and business leaders and invited them to develop commercial contacts with India.31 During his meeting with the Crown Prince, the Prime Minister agreed on  Parveen, Nazia and Wintour, Patrick. 2018. ‘Matthew Hedges: Pardoned Academic Returns to UK’, in The Guardian, 27 November, https://www.theguardian.com/uknews/2018/nov/27/matthew-hedges-jailed-academic-returns-to-uk-after-uae-pardon, last accessed on 31 May 2019. 31  Ministry of External Affairs, Government of India (MEA, GoI). 2018. ‘India-UAE Joint Statement during State Visit of the Prime Minister of India to UAE (February 10–11, 2018)’, 11 February, https://mea.gov.in/bilateral-documents.htm?dtl/29476/IndiaUAE_ Joint_Statement_during_State_Visit_of_the_Prime_Minister_of_India_to_UAE_ February_1011_2018, last accessed on 31 May 2019. 30

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the need to develop further the bilateral ties within the framework of the Comprehensive Strategic Partnership signed in January 2017.32 Among the critical issues discussed during the meeting was the need for combating radicalism and improving counterterrorism and cooperation in space and defence technology.33 Prime Minister Modi addressed a gathering of the Indian community in the Dubai Opera House and unveiled the model of a Hindu temple to be constructed in Abu Dhabi.34 Five memorandums of understanding (MoUs), including one on Indian consortium comprising Oil and Natural Gas Corporation (ONGC), Bharat Petroleum (BPCL) and Indian Oil Corporation (IOC) for the acquisition of 10 per cent in the offshore oil field of Abu Dhabi National Oil Company (ADNOC) in Lower Zakum, was concluded.35 An MoU between the Government of Jammu and Kashmir and Dubai Port World (DPW) for the development of a multi-­model logistical hub in the state was also signed.36 On the commercial aspects, both leaders ‘directed concerned authorities to expeditiously conclude the ongoing negotiations on the new Bilateral Investment Treaty in order to provide necessary legal framework for investment promotion’.37 Other issues, like maritime security, cooperation in international forums and strengthening of militaryto-military ties, were also discussed during the meeting.38 In addition to Prime Minister Modi’s visit, a host of other political engagements took place during 2018. Commerce Minister Suresh Prabhu led a delegation for the meeting of the fifth India-UAE High-Level Joint Task Force on Investment held in January. In the same month, Minister of State for Power and Renewable Energy Raj Kumar Singh attended the World Future Energy Summit held in Abu Dhabi in January 2018.39 Petroleum Minister Dharmendra Pradhan visited the Emirates twice; first in May to flag off the first consignment of oil from ADNOC for India’s strategic oil reserves and the second in November to attend the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). During the latter visit, an MoU was signed between ADNOC and India’s Strategic Petroleum Reserves  Ibid.  Ibid. 34  Crown Prince MbZ announced this during Modi’s earlier visit in August 2015. 35  MEA, GoI. 2018. ‘India-UAE Joint Statement during State Visit of the Prime Minister of India to UAE’. 36  Ibid. 37  Ibid. 38  Ibid. 39  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’, December, https://mea.gov.in/ Portal/ForeignRelation/uae_december_2018.pdf, last accessed on 31 May 2019. 32 33

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Limited (ISPRL) ‘to explore the possibility of storing ADNOC crude at ISPRIL’s underground storage facility in Padur in Karnataka’.40 External Affairs Minister Sushma Swaraj visited Abu Dhabi in December41 to take part in the 12th meeting of the India-UAE Joint Commission Meeting (JCM). During the visit, she called on Crown Prince MbZ and discussed various bilateral, regional and international issues of mutual interest.42 She also met her Emirati counterpart Abdullah bin Zayed al-Nahyan and discussed important bilateral issues. The Minister inaugurated the ‘Zayed Gandhi Digital Museum for peace, tolerance and sustainability’43 which showcased ‘rare photographs, videos and objects representing the life, works and philosophy of both renowned leaders’.44 From the Emirati side, Foreign Minister Abdullah bin Zayed al-Nahyan (June),45 Minister of State for Foreign Affairs Anwar Gargash (March)46 and Minister of State for Defence Mohammed al-Bowardi (October)47 visited India to discuss bilateral issues. Foreign Minister Abdullah al-­ Nahyan also visited Gujarat, Maharashtra, Tamil Nadu, Telangana and Karnataka during his visit and interacted with both national and state leaders as well as business leaders. The UAE Foreign Minister also opened a consulate general office in Hyderabad in June.48

40  Press Information Bureau, Government of India (PIB, GoI). 2018. ‘ISPRL Signs Memorandum of Understanding with ADNOC to Explore Storage of Crude Oil at Padur Underground Facility in Karnataka’, 12 November, http://pib.nic.in/newsite/PrintRelease. aspx?relid=184695, last accessed on 31 May 2019. 41  This was her second visit and she visited the Emirate in November 2014, shortly after taking over as Minister of External Affairs. 42  MEA, GoI. 2018. ‘Visit of External Affairs Minister to United Arab Emirates (December 3–4, 2018)’, 30 November, https://www.mea.gov.in/press-releases.htm?dtl/30663/ Visit+of+External+Affairs+Minister+to+United+Arab+Emirates+December+34+2018, last accessed on 31 May 2019. 43  MEA, GoI. 2018. ‘Transcript of Sound-Bite by Secretary (ER) on Visit of External Affairs Minister to UAE’, 4 December, https://mea.gov.in/media-briefings.htm?dtl/30679/ Transcript_of_Soundbite_by_Secretary_ER_on_visit_of_External_Affairs_Minister_to_ UAE, last accessed on 31 May 2019. 44  The Indian Express. 2018. ‘Sushma Swaraj to Inaugurate Gandhi-Zayed Digital Museum for Peace in Abu Dhabi’, 2 December, https://indianexpress.com/article/india/sushmaswaraj-to-inaugurate-gandhi-zayed-digital-museum-for-peace-in-abu-dhabi-5475172/, last accessed on 31 May 2019. 45  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’. 46  Ibid. 47  Ibid. 48  MEA, GoI. 2018. ‘Official Visit of Foreign Minister of the UAE to India (June 24–30, 2018)’, 1 July, https://mea.gov.in/press-releases.htm?dtl/30031/Official_visit_of_ Foreign_Minister_of_the_UAE_to_India_June_2430_2018, last accessed on 31 May 2019.

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Security and Defence The bilateral security and defence ties too have been improving. Several Indian terror accused and fugitives have been extradited by the UAE authorities in the past years on India’s request. India and the UAE had first signed an extradition treaty in 1999 and this was renewed in 2013. Since the signing of the extradition treaty the UAE has extradited or deported 23 wanted persons to India. In March 2018, Md Farooq Yasin Mansoor, alias Farooq Takla, was extradited by Emirati authorities on a request from Indian security agencies. Farooq is considered a key aide of fugitive don Dawood Ibrahim who was involved in the 1992 blasts in Mumbai. Farooq was one of the key facilitators of the blasts in 1992 and the Indian agencies had sent a request for his extradition in October 2017.49 Later, in December, Christian Michael James, a British national, who has been accused in the Augusta Westland bribery case was extradited on cheating and criminal conspiracy.50 In addition, extradition and criminal proceedings of seven others are pending with Emirati authorities.51 India and the UAE have also agreed to have joint military exercises with all branches of the armed forces. After a gap of eight years, the Indian Air Force conducted the second joint exercise, Desert Eagle II, with their Emirati counterpart in June 2016  in Al-Dhafra Air Base in Abu Dhabi. The 10-day joint exercise witnessed the participation of ‘IAF Su 30 MKI participating along with Mirage 2000–9 and F-16 block 60 of the UAE Air Force’.52 The first India-UAE joint naval exercise, Gulf Star 1, took place off the coast of Abu Dhabi in March 2018. From the India side, Guided Missile Frigate INS Gomati and Guided Missile Destroyer INS Kolkata participated in the exercise. During the visit of the Emirati Defence Minister in October, it was reported that the UAE has shown interest in acquiring Tejas, the light combat aircraft made by HAL because

49  The Hindu. 2018. ‘Dawood Ibrahim’s Key Aide Extradited by UAE’, 8 March, http:// www.thehindu.com/news/national/dawood-ibrahims-key-aide-extradited-by-uae/article22986728.ece, last accessed on 31 May 2019. 50  MEA, GoI. 2018. ‘Fugitive Criminals Brought Back to India in Last Four Years’, https://mea.gov.in/Images/amb1/lu2528_26_2018_en.pdf, last accessed on 31 May 2019. 51  MEA, GoI. 2018. ‘Efforts Made to Bring Back Economic Offender and Present Status of Efforts’, https://mea.gov.in/Images/amb1/lu1551.pdf, last accessed on 31 May 2019. 52  PIB, GoI. 2016. ‘Exercise Desert Eagle-II Concludes Today’, 3 June, http://pib.nic. in/newsite/PrintRelease.aspx?relid=145958, last accessed on 31 May 2019.

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of its effective operability in desert environs.53 India-UAE defence cooperation has witnessed significant improvement since the renewal of the defence agreement in 2014 and the emphasis of both governments on cooperation in the areas of counterterrorism and combating radicalism in the last five years. Trade and Commerce Trade and commercial relations are an essential component of the Indo-­ Emirati ties, and in the light of growing political engagements and understandings, the trade between the two is expected to rise in the coming years. In 2017–18, the volume of business stood at US$49.88  billion, slightly lower than the previous year when it stood at US$52.68 billion. The UAE is India’s third largest trading partner after the US and China and its top trading partner in the Persian Gulf region. It is also the only oil exporting country with which India has a trade surplus and in 2017–18 the bilateral trade was in India’s favour to the tune of US$6.4  billion. India’s exports to the UAE stood at US$28.14 billion which was a considerable drop from the US$31.17 billion recorded a year earlier. This was primarily due to the Emirati economy, which witnessed a slowdown as a result of a decline in global oil prices. As the Emirati economy is expected to recover in 2019, India’s exports should also pick up. In terms of Emirati exports to India in 2017–18, it stood at US$21.74 billion, which was a marginal increase from US$21.51 billion a year earlier. In terms of total trade, Indo-UAE trade was 6.49 per cent in 2017–18 as against 7.98 per cent the previous year (Table 9.1 and Fig. 9.1). The major Indian export commodities include petroleum products, precious metals, stones, gems and jewellery, minerals, food items (cereal, sugar, fruits and vegetables, tea, meat and seafood), textile (garments, apparels, synthetic fibre, cotton and yarn) and engineering and machinery products and chemicals. On the other hand, major Indian imports from the UAE are petroleum and petroleum products, precious metals, minerals, chemicals, wood and wood products and dates, among others.

53  Gurung, Shaurya Karanbir. 2018. ‘UAE “Interested” in HAL-Made Light Combat Aircraft Tejas’, in The Economic Times, 17 October, https://economictimes.indiatimes. com/news/defence/uae-interested-in-hal-made-light-combat-aircraft-tejas/articleshow/66253936.cms, last accessed on 31 May 2019.

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Table 9.1  India-UAE bilateral trade (US$ million) 2013–14

2014–15

2015–16

2016–17

2017–18

India’s exports to UAE 30,520.42 33,028.08 30,290.01 31,175.50 28,146.12 India’s imports from UAE 29,019.82 26,139.91 19,445.68 21,509.83 21,739.11 Total bilateral trade 59,540.24 59,167.99 49,735.69 52,685.33 49,885.23 Share in India’s total trade 7.79 7.80 7.73 7.98 6.49 Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 9.1  India-UAE bilateral trade 80 70 60 50 40 30 20 10 0

2011-12

2012-13 2013-14 2014-15 Exports Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

In their meeting in February, Prime Minister Modi and Crown Prince MbZ discussed the possibilities of enhancing trade and commercial relations, particularly in the field of the non-oil sector. According to the joint statement issued at the end of the meeting, ‘With an aim to devise a long-­ term strategy on trade enhancement, the two leaders decided to examine various tariff and non-tariff barriers and agreed to focus on encouraging trade in identified commodities and to expand access of goods and services in both markets.’54 Further they acknowledged the ‘positive effect’ the 54  MEA, GoI. 2018. ‘India-UAE Joint Statement during State Visit of the Prime Minister of India to UAE’.

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‘Indian and UAE companies in each other’s market has in bilateral trade promotion effects’ and ‘welcomed the decision to open an office of Confederation of Indian Industry (CII) in Dubai and the Dubai Chambers of Commerce (DCC) in Mumbai to support businesses at both ends’.55 Energy Trade Energy imports play an essential role in Indo-Emirati relations. As an import-dependent nation for its energy security needs, India looks to the Persian Gulf countries for its growing appetite for hydrocarbon requirements. Along with Iraq and Saudi Arabia, the UAE is a significant supplier. Besides exporting crude oil, the UAE is committed to enhancing India’s strategic oil reserves through favourable terms. The ADNOC agreed to grant 10 per cent concession in the Lower Zakum oil fields to a consortium of Indian companies.56 According to the Ministry of External Affairs (MEA), we are getting a 10 percent concession in that. There was a total 40 percent stake available and 10 percent concession agreement has been signed today. This is important because this is the first time ever that an Indian consortium, and Indian company has received an oil concession anywhere in the Gulf. It means that for almost 40 years, it is a 40 years concession, we will receive about 2.2 million tons of oil per year so both in terms of our energy security and in terms of the signal that in a very competitive field, with a number of oil majors, there were companies from all over the world, the first concession agreement has been signed between ADNOC and India and it truly reflects the transformation in the relationship.57

The UAE also committed to participate in the new refinery that is being planned along the western coast of India at an estimated cost of US$44 billion.58 The UAE became the first country to join the India-­ initiated

 Ibid.  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’. 57  MEA, GoI. 2018. ‘Transcript of Media Briefing by Foreign Secretary of India at Abu Dhabi on Prime Minister’s Visit to Jordan, Palestine & UAE (February 10, 2018)’, 11 February, https://mea.gov.in/media-briefings.htm?dtl/29475/Transcript_of_Media_Briefing_by_ Foreign_Secretary_of_India_at_Abu_Dhabi_on_Prime_Ministers_visit_to_Jordan_Palestine_ amp_UAE_February_10_2018, last accessed on 31 May 2019. 58  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’. 55 56

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International Solar Alliance (ISA) launched by Prime Minister Modi in New Delhi in 2016.59 In 2017–18, India imported US$9.08 billion worth of energy products from the UAE and this was a marginal decrease from US$9.46  billion imported in the previous year. However, the Emirati share in India’s overall energy imports dropped significantly from 9.7 per cent in 2016–17 to 6.86 per cent the following year (Table 9.2 and Fig. 9.2). This was primarTable 9.2  Share of oil in India’s imports from the UAE (US$ million) Year

Oil imports from UAE

Total oil imports

UAE share in total oil imports

Imports from the UAE

Per cent of oil in imports from UAE

2013–14 2014–15 2015–16 2016–17 2017–18

13,263.35 13,509.04 7,912.80 9,457.60 9,080.71

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

7.31 8.64 8.16 9.17 6.86

29,019.82 26,139.91 19,445.68 21,509.83 21,739.11

45.70 51.68 40.69 43.97 41.77

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 9.2  Share of oil in India’s imports from the UAE 60 50 40 30 20 10 0

2011-12

2012-13

2013-14

2014-15 2015-16 Share in Per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

 Ibid.

59

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ily due to increased Indian imports from Iraq and the emergence of the US as an energy supplier. In terms of import basket, crude oil accounted for 41.77 per cent of India’s imports from the UAE in 2017–18 as against 43.97 per cent the previous year. Correspondingly the Emirati share in the Indian imports from the Persian Gulf stood at 12.95, which was a drop of nearly 4 per cent from the previous year (Table 9.3 and Fig. 9.3). Table 9.3  India’s energy imports from UAE (in US$ million)

Energy imports from UAE Total energy imports Energy imports from the Persian Gulf Share in total energy imports (per cent) Share in energy imports from the Persian Gulf (per cent)

2013–14

2014–15

2015–16

13,263.35

13,509.04

7,912.80

2016–17 9,457.60

2017–18 9,080.71

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 106,400.75 85,300.30 50,992.26 56,335.34 70,090.81 7.31

8.64

8.16

9.17

6.86

12.47

15.84

15.52

16.79

12.95

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 9.3  Share of the UAE in India’s oil imports 18 16 14 12 10 8 6 4 2 0

2011-12 2012-13 2013-14 Share in Total Imports

2014-15 2015-16 2016-17 2017-18 Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

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Investments The UAE continues to be among the top investors in India and, in 2018 alone, US$721  million came from that country in the form of foreign direct investment (FDI). Between April 2000 and December 2018, the UAE has invested US$6.05 billion in India through the FDI route and remains the tenth largest source of investment flows into India globally and the first among the Persian Gulf countries.60 According to the Ministry of External Affairs, the Emirati investments in India are primarily concentrated in five core sectors, namely service sector (9.5 per cent), power sector (nearly 9 per cent), construction and infrastructure sector (8.8 per cent), aviation sector (7.5 per cent) and tourism and hospitality sector (7.3 per cent).61 Among other significant developments, in October 2017, the Abu Dhabi Investment Authority (ADIA) announced investment of US$1 billion seed fund in the National Infrastructure and Investment Fund (NIIF) to develop infrastructure sector in India.62 This, however, falls well short of the US$75 billion that was flagged as the potential Emirati investment in India in the joint statement issued during Prime Minister Modi’s visit in August 2015.63 The ADIA is also committed to investing US$1 billion in the affordable housing scheme launched by the HDFC Bank of India and another US$500  million in the renewable energy sector and other investment projects in the highway development projects.64 In the private sector, ‘DP World and NIIF have set up a US$3 billion fund that will invest in ports and logistics sector in India.’65 Moreover, both countries are discussing joint investment possibilities in third countries, including Afghanistan.66 During the visit of Sushma Swaraj in December, an MoU on joint

60  Ministry of Commerce and Industry, Government of India (MoCI, GoI). 2019. ‘FDI Statistics’, https://dipp.gov.in/publications/fdi-statistics, last accessed on 31 May 2019. 61  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’. 62  Ibid. 63  MEA, GoI. 2015. ‘Joint Statement between the United Arab Emirates and the Republic of India’, 17 August, https://www.mea.gov.in/bilateral-documents.htm?dtl/25733/Joint_ Statement_between_the_United_Arab_Emirates_and_the_Republic_of_India, last accessed on 31 May 2019. 64  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’. 65  Ibid. 66  Ibid.

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investment in developmental projects in Africa was signed between the two countries.67 Over the years, many Indian public and private sector companies and banks have been operating in the UAE. Among the major Indian companies who have made their presence include Larsen and Toubro, Essar, Dodsal, Punj Lloyd, Engineers India and TCIL. Most of them are engaged in the construction sector. According to data released by the Federal Competitiveness and Statistics Authority of the UAE, at the end of 2015, Indian FDI into the Emirates stood at US$6.5 billion (almost the same as from the UAE into India) and India is the third source of FDI into the Emirates after the UK and US.68 In addition, the Indian expatriates have made significant portfolio investments in the real estate sector. According to Dubai Land Development Department, Indians are the largest foreign investors in the real estate in Dubai, with an investment of US$5.5 billion in 2016–17 and this comprises nearly 13 per cent of the total investment in the sector.69 Expatriates As of 2018, the UAE has the largest number of expatriate Indian community anywhere in the world. With about a 3.1 million population, the Indian community is the largest expatriate population in the Emirates70 and accounts for a third of the total resident population. The community is versatile and its presence felt in almost all sectors of the economy. Nonetheless, ‘Exact figures regarding the total number of labourers in different Job Roles and companies in United Arab Emirates is not available as the authorities there do not share such data.’71 Many have established successful businesses, while several of them have done exceptionally well as 67  Bhaumik, Anirban. 2018. ‘India Ties Up with UAE for Africa Development Projects’, in Deccan Herald, 5 December, https://www.deccanherald.com/national/india-partners-uaedevelopment-706449.html, last accessed on 31 May 2019. 68  MEA, GoI. 2018. ‘India-UAE Bilateral Relations’. 69  Department of Economic Development, Government of Dubai. 2018. Dubai Economic Report 2018. http://brl.gov.ae/StudiesAndResearchDocument/Dubai-Economic-Report2018-Full-Report.pdf, last accessed on 31 May 2019. 70  MEA, GoI. 2018. ‘Population of Overseas Indians’, https://mea.gov.in/images/ attach/NRIs-and-PIOs_1.pdf, last accessed on 31 May 2019. 71  MEA, GoI. 2018. ‘Question No. 852 Indian Workers Abroad’, 7 February, https:// mea.gov.in/lok-sabha.htm?dtl/29441/QUESTION_NO852_INDIAN_WORKERS_ ABROAD, last accessed on 31 May 2019.

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professionals in risk analysis and banking, among others. A sizeable portion is engaged in medium level professional positions in banking, engineering, architecture, medical and educational sectors. There are hundreds of Indian schools catering to the needs of the Indian community and there are several public places of worship for Hindus, Christians and Sikhs. A new Indian temple, modelled along Akshardham Temple (New Delhi), is being built in Abu Dhabi on the lands donated by the ruler of Abu Dhabi.72 Due to the presence of a large expatriate population, the cultural contacts and education cooperation between India and the UAE has improved significantly in the past decades. As of 2018, the UAE has 60 Indian schools and 6 universities and institutions of higher learning including Manipal University, Amity University, BITS Pilani (Dubai and RAK), IIM Indore (Dubai branch), IMT (Dubai campus) and S.  P. Jain School of Global Management. Two other Indian universities M.  G. University, Kottayam, and Symbiosis University, Pune, had plans for opening branches in the UAE; however, they wrapped up the plans due to lack of response. Nonetheless, according to the Ministry of External Affairs, ‘Manipal Institute announced that they are establishing their first Medical college in Dubai and work on that is beginning and finally the Dubai Multi-­ commodities Exchange is signing an agreement with a Nagpur based company called Crop Data and that is going to create 500 electronic trading platforms to enable farmers to sell their produce directly over those electronic trading platforms which eliminates middlemen and gets the farmer much more income directly into their hands.’73

Challenges The bilateral relations have not faced any problems except for the slow pace of developments at the Indian end. The relations have been flowering in recent years primarily due to growing political contacts between the two countries. There are several areas where both sides have pledged 72  The Hindu Business Line. 2018. ‘Modi Launches Project for First Hindu Temple in Abu Dhabi’, 11 February, https://www.thehindubusinessline.com/news/world/narendra-modi-launches-project-for-first-hindu-temple-in-abu-dhabi/article22721036.ece, last accessed on 31 May 2019. 73  MEA, GoI. 2018. ‘Transcript of Media Briefing by Foreign Secretary of India at Abu Dhabi on Prime Minister’s Visit to Jordan, Palestine & UAE (February 10, 2018)’, 11 February, https://mea.gov.in/media-briefings.htm?dtl/29475/Transcript_of_Media_ Briefing_by_Foreign_Secretary_of_India_at_Abu_Dhabi_on_Prime_Ministers_visit_to_ Jordan_Palestine_amp_UAE_February_10_2018, last accessed on 31 May 2019.

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stronger cooperation, but delivery in terms of realization of these goals continues to be sluggish. This is primarily due to lack of appetite in the Indian market and bureaucratic apathy and inefficiency in India to live up to political commitments and goals. The collapse of the Jet Airliner where Etihad had invested 24 per cent is a significant setback in the bilateral relations. The 2015 Emirati pledge of US$75  billion has not materialized primarily because of Indian inability to plan and absorb such a massive investment. The Emirati activism vis-à-vis Yemen and Iran might become a problem should Abu Dhabi demand Indian support or endorsement. At the same time, the Emirates have promised to meet the shortfall in oil imports should India be forced to stop oil imports from Iran. One of the controversial incidents that pertained to bilateral relations was the case of the Princess Latifa al-Maktoum, the daughter of the ruler of Dubai, Mohammed bin Rashid al-Maktoum, who was reportedly deported back to Dubai with help from Indian authorities. The controversy erupted in early 2018, when a British NGO alleged that the princess was trying to escape from the Emirate because of the controlled social environment of her family with the help of a former French marine by using a boat through international water. The illegal boat was reportedly accosted by the Indian Coast Guard off the coast of Goa and she was asked to surrender. Eventually, all those found on the boat were detained and returned to their countries, including the princess.74 Though in terms of bilateral ties, the issue did not spark any controversy, due to the media highlight the issue became a major point of speculation as far as the Indian role was concerned. From the Indian point of view, it is important that such matters are handled with more care and due diligence to avoid speculations and controversy.

74  India Today. 2018. ‘Runaway Dubai Princess, Apprehended Off India Coast, Back in UAE: Report’, 18 April, https://www.indiatoday.in/world/story/runaway-dubai-princessapprehended-off-india-coast-back-in-uae-report-1215152-2018-04-18, last accessed on 31 May 2019.

CHAPTER 10

Yemen

Key Information Ruling Group/Party: General People’s Congress/Houthis; President: Abdrabbuh Mansur Hadi (since 25 February 2012); Mohammed Ali al-­Houthi, President of the Revolutionary Committee (since 22 January 2015); Prime Minister: Maeen Abdulmalik Saeed (since 18 October 2018); National Day: 22 May; Parliament: 111-member nominated Shura Council and 301-member elected House of Representatives; Last Parliamentary Election: 21 February 20121; Major Group in Parliament: General People’s Congress; National Carrier: Yemen Airlines. Socio-Economic Indicators Area: 527,968  sq. km; Population: 28.66  million (2018  est.); Native: NA; Expats: NA; Religious Groups: Muslim 99.1 per cent (Sunni 65 per cent; Shia 35 per cent); Others (Jewish, Bahai, Hindu and Christian) 0.9 per cent (2010  est.); Youth: 21.26 per cent; Population growth rate: 2.17 per cent (2018 est.); Life expectancy at birth: 66.2 years (2018 est.); Major population groups: Predominantly Yemeni Arabs; some Afro-­ Arabs, South Asian and European; Literacy rate: 70.1 per cent (2015 est.); National Currency: Yemeni Rial (YER); GDP: US$18.21 billion (2017); 1  A special election was held on 21 February 2012 to remove Ali Abdullah Saleh under the terms of a Gulf Cooperation Council-mediated deal during the political crisis of 2011.

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Foreign Trade: Export US$384.5 million (2017 est.), Import $4.079 billion (2017 est.); Defence budget: 3.97 per cent of GDP (2014); Foreign Reserve: US$245.1 million (2017 est.); External Debt: $7.068 billion (31 December 2017 est.); Per capita income: US$2,500 (2017 est.); Oil reserves: 3  billion bbl.; Gas reserves: 478.5  billion m3; HDI rank: 178/189; Infant Mortality Rate: 44.6 deaths/1,000 live birth (2018  est.); UN Education Index: 0.35; Gender Inequality Index: 0.834 (2017); Labour Force: 7.425 million (2017 est.); Unemployment rate: 27 per cent (2014 est.); Urban Population: 36.6 per cent (2018); Rate of Urbanization: 4.06 per cent (2015–20  est.); Last National Census: 2004. India Related Indian Cultural Centre: None; Number of Indians: 10,4002; Number of places of worship for Indians: A number of Old Hindu Temples in Aden; Indian Schools: One; Indian Banks: None (Bank of India has a branch incorporated into National Bank of Yemen); Currency exchange rate: YER 1 = INR 0.28 (March 2019); Last visit to India by the ruler: President Ali Abdullah Saleh, March 1999; Last Indian Prime Minister to visit: None since 1947. * * * The international uproar and discomfort over the humanitarian crisis in Yemen increased after the murder of Saudi journalist Jamal Khashoggi in the premises of the Saudi consulate in Istanbul on 2 October 2018. The brutality of the killing disclosed by the Turkish authorities galvanized international opinion against the Kingdom of Saudi Arabia and Crown Prince Mohammed bin Salman al-Saud (MbS). The incident led to a serious debate within the US Congress regarding Saudi Arabia, leading to a bipartisan consensus that demanded stronger American measures to curb Crown Prince’s foreign policy adventurism, especially in Yemen. Over the past three years, the conflict in the already impoverished country has 2  The number of Indian nationals, which was estimated around 14,000 in 2010, declined to about 5000 by June 2011 following political instability and violence in the country. However, only around 3000 Indians are currently registered with the embassy.

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pushed Yemen into one of the worst humanitarian crises in the twenty-first century. Despite efforts by the United Nations (UN)3 and other international groups, the situation remained critical throughout 2018. India was directly affected by the Yemeni conflict and, in 2015, had to rescue its citizens caught in the conflict through evacuation. New Delhi has been concerned over the worsening situation and its fallout on the SLoC that passes through the Bab al-Mandeb, which is critical for the global oil supplies from the Persian Gulf. Any disruption of the SLoC will stress the developing economies of the world, including India that depends on the energy trade with the Gulf. Hence, New Delhi has been supporting the UN-sponsored mediation efforts towards ending the conflict. India has also been contributing humanitarian aid to Yemen in the form of food and medicine supplies through the UN-recognized Yemeni government and has participated in the Friends of Yemen conference to generate funds for humanitarian assistance.

Domestic Developments Raging Conflict and Peace Process The widespread protests of 2011 and the ensuing conflict intensified by the Saudi-led military intervention4 have brought Yemen on the brink of collapse and disintegration. Developments in 2018 further indicated that the stakeholders (Table 10.1) in the civil war are not only reluctant to end the conflict but also have drifted away from reconciliation. There have been ruptures within various factions involved in the strife and one of the more specific examples of the internal struggles and squabbles was the assassination of former president Ali Abdullah Saleh in December 2017 by Houthi rebels after he indicated a willingness to reconcile with Saudi Arabia and break away from the Houthi coalition.5 3  United Nations Security Council. 2019. ‘Amid Humanitarian Crisis, Yemen Advancing towards Peace as Ceasefire in Hodeidah, Key Ports Holds, Special Envoy Tells Security Council’, 9 January, https://www.un.org/press/en/2019/sc13659.doc.htm, last accessed on 3 June 2019. 4  The Guardian. 2018. ‘Yemeni Group Launches Lawsuit against Saudi Crown Prince in Paris’, 10 April, http://www.theguardian.com/world/2018/apr/10/yemeni-grouplaunches-lawsuit-against-saudi-crown-prince-in-paris, last accessed on 3 June 2019. 5  Al-Jazeera. 2017. ‘Yemen: Ex-President Ali Abdullah Saleh Killed’, 10 December, https://www.aljazeera.com/news/2017/12/houthi-media-ali-abdullah-saleh-killedsanaa-171204123328290.html, last accessed on 3 June 2019.

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Table 10.1  Parties to Yemen civil wara Group

Past affiliation

Present affiliation

Houthis

Saleh and Iran Houthis

Iran (extent unclear)

Loyalists of Late President Saleh President Hadi’s Government Southern Separatists AQAP Saudi Arabia, UAE and Arab Coalition

Fighting against Houthis under Saleh’s nephew Tarek (army general with ties to the UAE)

UAE

UAE

President Hadi

President Hadi

a McDowall, Angus and Yaakoubi, El Aziz. 2018. ‘Factbox: Who is fighting in Yemen’s disastrous war?’ in Reuters, 12 November, https://www.reuters.com/article/us-yemen-security-factbox/factbox-who-isfighting-in-yemens-disastrous-war-idUSKCN1NH1ZU, last accessed on 3 June 2019

Similarly, in January 2018, the Southern Resistance Forces (SRF), an armed wing of separatist Southern Transitional Council (STC), which is backed by the UAE, took control of the port city of Aden.6 This prompted Prime Minister Ahmed bin Dagher to accuse the STC of staging a coup against the internationally recognized government of Yemen. The situation could be brought under control only after the return of President Abdrabbuh Mansur Hadi and his government to Aden from their exile in Saudi Arabia.7 Hadi’s return followed a full-scale assault by the government forces and the aerial campaign by the SRF backed by Saudi-led coalition on the crucial Red Sea port of Hodeida on 13 June. The fighting intensified, with the government forces pushing back the Houthi rebels, but they were unable to take over the port entirely. The fighting severely damaged the infrastructure and brought an estimated two million civilians under siege and threatened to shut down the only remaining major functional port in the country that was handling 80 per cent of the commercial goods and aid inflow into

6  BBC News. 2019. ‘Yemen Profile—Timeline’, 18 February, https://www.bbc.com/ news/world-middle-east-14704951, last accessed on 3 June 2019. 7  Xinhua. 2018. ‘Yemen’s President Returns to Aden from Saudi Arabia’, 15 June, http:// www.xinhuanet.com/english/2018-06/15/c_137254332.htm, last accessed on 3 June 2019.

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Yemen.8 Despite international efforts, by the end of the year, fighting around Hodeida continued, thereby affecting the flow of aid into the country. The stalemate in the port city was accompanied by Houthi missile attacks on Saudi Arabia9 and threats to use ballistic missile against international shipping passing through Bab al-Mandeb10 and this prompted the United Nations to renew efforts to revive the Yemeni peace process.11 In the meantime, an airstrike by the Saudi-led coalition on a bus on 29 August in Saada resulted in the death of at least 29 children and injuries to 30 others. This once again brought the problem of civilian and non-­ combatant casualties in the conflict to the forefront.12 Though the Joint Forces Command of the coalition admitted the error of judgement and expressed ‘regret’ over the ‘mistaken’ killing of children,13 the government forces and the Saudi-led coalition came under strong international criticism. The incident forced the coalition to hold back further offensive on Hodeida and provide the Houthi rebels a crucial respite to regroup and strengthen their control over the port city. Amidst the escalating violence, growing civilian casualties and threats to humanitarian assistance, the UN Special Envoy for Yemen, Martin Griffith, who was appointed to the position in February 2018, formally invited all the warring parties for consultation in Geneva.14 The talks did not materialize due to the failure of the Houthi representative to show up and the latter blamed the Saudi-led coalition of blocking the delegation from travelling to Geneva.15 8  Al-Jazeera. 2018. ‘Saudi Arabia, UAE, Launch Attack on Yemen’s Port City of Hudaida’, 13 June, https://www.aljazeera.com/news/2018/06/saudi-uae-launch-attack-yemenport-city-hudaida-180613054921062.html, last accessed on 3 June 2019. 9  Human Rights Watch. 2018. ‘Saudi Arabia/Yemen: Houthi Missile Attacks Unlawful’, 2 April, https://www.hrw.org/news/2018/04/02/saudi-arabia/yemen-houthi-missile-attacksunlawful, last accessed on 3 June 2019. 10  International Crisis Group. 2019. ‘Bab al-Mandab, Yemen’, 29 May, https://www.crisisgroup.org/it/node/5813, last accessed on 3 June 2019. 11  Al-Jazeera. ‘Saudi Arabia, UAE, Launch Attack on Yemen’s Port City of Hudaida’. 12  BBC News. 2018. ‘Yemen War: Saudi-Led Air Strike on Bus Kills 29 Children’, 9 August, https://www.bbc.com/news/world-middle-east-45128367, last accessed on 3 June 2019. 13  The New York Times. 2018. ‘Saudi Coalition Admits Error in Yemen Airstrike That Killed Dozens’, 2 September, https://www.nytimes.com/2018/09/02/world/middleeast/saudiarabia-yemen-strike.html, last accessed on 3 June 2019. 14  Doucet, Lyse. 2018. ‘Ending Yemen’s Never-Ending War’, in BBC News, 23 August, https://www.bbc.com/news/world-middle-east-45270225, last accessed on 3 June 2019. 15  Nebehay, Stephanie. 2018. ‘Yemen Peace Talks Collapse in Geneva after Houthi Noshow’, in Reuters, 8 September, https://www.reuters.com/article/us-yemen-securityun-idUSKCN1LO08Z, last accessed on 3 June 2019.

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The failure of the UN-mediated talks in Geneva between the warring parties, however, did not completely derail the peace process. For his part, Griffith admitted the need for creating a conducive environment for the Houthi representatives to travel to Geneva.16 Despite the absence of the Houthis, some critical discussions took place between the UN mediators and the government representatives, especially on confidence-building measures, prisoner releases, increasing humanitarian access, particularly in the city of Ta’izz in southwest, and the reopening of the Sana’a a­ irport.17 There were also discussions on allowing the injured in Sana’a to fly to Cairo for medical attention and the coalition representatives agreed to the medical evacuation.18 After intense western scrutiny over the Khashoggi affair and increasing civilian deaths in Yemen, the US shifted its position and publicly called for a ceasefire in the country. On 30 October, US Secretary of Defense James Mattis19 and the US State Department called on the participants in the Yemeni conflict to agree to a ceasefire ‘in the next 30 days’. Mattis also said he expected the warring parties at the peace talks.20 Subsequently, new dates were announced for talks in Sweden. The two sides—the government and Houthi rebels—eventually met under the UN-sponsored talks during 6–13 December, and agreed to a ceasefire in Hodeida in the light of the worsening humanitarian crisis. The Houthi rebels and the Yemeni government agreed to a deal—the Stockholm Agreement—that contained the following: (a) An agreement on the city of Hodeidah and the ports of Hodeidah, Salif and Ra’s Isa, calling for an immediate ceasefire and the ­redeployment of forces to create a demilitarized zone around the country’s vital Red Sea trade corridor; (b) An executive mechanism on activating the prisoner exchange agreement;

 Ibid.  Ibid. 18  Ibid. 19  His resignation in December 2018 over President Donald Trump’s policy shift vis-à-vis Syria was a setback to the Yemeni talks. 20  Seligman, Lara and Gramer, Robbie. 2018. ‘U.S. Pushes for Cease-Fire in Yemen’, in Foreign Policy, 31 October, https://foreignpolicy.com/2018/10/31/u-s-pushes-for-ceasefire-in-yemen/, last accessed on 3 June 2019. 16 17

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(c) A statement of understanding on Ta’izz to discuss the future of the contested city; and (d) Unconditionally continue the consultation in January 2019  in a location agreed by both parties.21 On 21 December, the UN Security Council adopted Resolution 2451, endorsing the Stockholm Agreement.22 The Hodeida ceasefire, which came into effect in January 2019, raised the hopes for UN-sponsored peace talks in Yemen. However, continued fighting and growing threats of terrorist groups finding a fertile ground after their defeat in Iraq and Syria have made the Yemeni situation fragile. Economy The ongoing conflict and civil war have destroyed the Yemeni economy. The situation has become so acute that the war-torn country now entirely relies on international aid for food, fuel and medical supplies. There is hardly any functional business and revenues from limited oil exports and remittances from Yemeni expatriates in the Gulf Arab countries are too small to pay for the import of necessities. According to the World Bank, the Yemeni gross domestic product (GDP) shrunk by 50 per cent since 2015 when it stood at US$45 ­billion.23 Though no official economic data is available, international agencies ­working on humanitarian assistance suggest that the poverty in Yemen has reached alarming levels with extreme cases of malnutrition among ­children.24 More than 80 per cent of the Yemeni citizens now live below poverty line.

21  United Nations Security Council. 2018. ‘Stockholm Agreement’, 20 December, https:// undocs.org/S/2018/1134, last accessed on 3 June 2019. 22  Borger, Julian. 2018. ‘UN Agrees Yemen Ceasefire Resolution after Fraught Talks and US Veto Threat’, in The Guardian, 21 December, https://www.theguardian.com/world/2018/ dec/21/un-yemen-ceasfire-stockholm-resolution-us, last accessed on 3 June 2019. 23  The World Bank. 2018. GDP Data, https://data.worldbank.org/indicator/NY.GDP. MKTP.CD?locations=YE, last accessed on 3 June 2019. 24  Taylor, Erin. 2018. ‘Yemen: An Additional One Million Children at Risk of Famine as Food and Fuel Prices Soar’, in Save the Children, 18 September, https://www.savethechildren.org/us/about-us/media-and-news/2018-press-releases/yemen-additional-one-million-children-risk-of-famine, last accessed on 3 June 2019.

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In September 2018, Save the Children reported that in addition to 4.2 million children ‘at risk of famine’ another ‘one million severely food insecure children in Yemen risk falling into famine as families struggle to afford basic food and transport to health facilities for treatment’. This, according to the UK-based NGO, ‘brings the total number of children in Yemen at risk of famine to 5.2 million’.25 The devastated country has rendered millions of people homeless and jobless. Estimates suggest that more than 600,000 jobs were lost and hundreds of thousands of civil servants and pensioners have not received their regular salary or payments since 2016. More than 1.5 families no longer receive social security benefits. As a result, the Yemeni Rial depreciated considerably and has lost half its value against the US dollar since the start of the civil war in 2015. The authorities sought to manage the liquidity by printing money, while Saudi Arabia deposited US$2 billion in the Yemeni central bank in January 2018 to shore up the Rial. The Yemeni currency had weakened to 250 Rials to the dollar in April 2016.26 Soaring prices have put essential commodities such as food, water and medicine out of the reach of many Yemenis. Humanitarian Situation The United Nations has described Yemen as the most significant emergency in the world, as more than 22 million out of 28 million citizens need urgent humanitarian assistance. Nearly 10 per cent of its population is internally displaced. According to the UN, the total number of people facing pre-famine conditions, that is, entirely reliant on external aid for survival, could soon reach 14 million or nearly half the total population of the country.27 Assessments made in 2017 identified 107 out of the 333 districts to be at the risk of famine.28 Only half of the health facilities in the country are functioning and many Yemenis are too poor to access the open ones.  Ibid.  The New York Times. 2018. ‘Saudi Coalition Admits Error in Yemen Airstrike That Killed Dozens’, 2 September, https://www.nytimes.com/2018/09/02/world/middleeast/saudiarabia-yemen-strike.html, last accessed on 3 June 2019. 27  United Nations Security Council Report. 2018. ‘The Situation in the Middle East’, 23 October, https://www.securitycouncilreport.org/atf/cf/%7b65BFCF9B-6D27-4E9C8CD3-CF6E4FF96FF9%7d/s_pv_8379.pdf, last accessed on 3 June 2019. 28  Ibid. 25 26

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The country suffers from significantly high levels of water-­borne diseases, with cholera epidemic affecting a vast majority of its population.29 At the end of 2017, one aid agency estimated that 130 children under the age of five were dying every day due to extreme hunger and disease and nearly 50,000 small children died during the war.30 Nearly 394,000 children under the age of five are suffering from severe acute malnutrition (SAM) and require urgent treatment. Only 10 per cent of the children under the age of six months are exclusively breastfed and a majority of the children are deprived of a healthy diet. Only 15 per cent of the children are eating the minimum acceptable diet for survival, growth and development.31 One report suggested that in the Hodeida governorate that witnessed intense fighting throughout 2018, the cases of cholera had jumped by 40 per cent during the rainy season.32 According to the UN and other agencies involved in humanitarian activities, the ongoing cholera epidemic33 is crumbling the health infrastructure and ‘pocket-like conditions of ­famine’34 have worsened the situation in Yemen.35 Since April 2017, more than 1.1 million suspected cases of cholera were identified, causing 2,310 associated deaths. Twenty-one out of 22 governorates or 305 out of 333 districts have been affected by cholera. The cumulative number of ­suspected cholera cases between 27 April 2017 and 23 September 2018

29  Save the Children. 2017. ‘Alarming Cholera Spike in Yemen Coastal Region’, 1 September, https://www.savethechildren.org.uk/news/media-centre/press-releases/alarming-cholera-spike-yemen-coastal-region, last accessed on 3 June 2019. 30  United Nations Security Council. ‘The Situation in the Middle East’. 31  UNICEF. 2019. ‘Humanitarian Action for Children 2019—Yemen’, in Relief Web, 29 January, https://m.reliefweb.int/report/2970689, last accessed on 3 June 2019. 32  Save the Children. 2017. ‘Alarming Cholera Spike in Yemen Coastal Region’. 33  World Health Organization. 2018. ‘Outbreak Update—Cholera in Yemen, 7 December 2018’, in Relief Web, 7 December, https://reliefweb.int/report/yemen/outbreak-updatecholera-yemen-7-december-2018, last accessed on 3 June 2019. 34  ‘A famine is declared when the three thresholds of food insecurity, acute malnutrition and mortality are all breached together. The three criteria are that at least one household in five faces an extreme lack of food, that more than 30 percent of children under the age of five are suffering from acute malnutrition or wasting, and that at least two out of every 10,000 people are dying each and every day,’ Mark Lowcock, Under-Secretary-General for Humanitarian Affairs, UN. 35  United Nations Security Council. 2018. Security Council Report: Chronology of EventsYemen, 6 December, https://www.securitycouncilreport.org/chronology/yemen.php, last accessed on 3 June 2019.

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was 1,207,596 with 2,530 associated deaths. Indeed, children under the age of five represent 30.5 per cent of the total suspected cases of cholera.36 In Hodeida, more than 570,000 people, or 25 per cent of the population, were forced to flee their homes.37 According to the UN, the Red Sea port has the largest number of sick people in the country and more than 70 per cent of its population, especially children, are at the risk of malnutrition and ‘as many as 250,000 people may lose everything—even their lives’.38 The Saudi-led air strike in July damaged the main sanitation facility and water supply network, thereby doubling the suspected cholera cases and increased the risk of a new wave of the epidemic.39 Above all, since 2011, at least 225,000 Yemenis were killed and another 500,000 were injured and this represents 2.5 per cent of the total population of the country.

Bilateral Relations Even before the outbreak of the civil war in 2011, India only had limited bilateral ties with Yemen. There have been no significant political engagements between the countries in a decade, and indeed no Indian prime minister has ever visited Yemen since India’s independence in 1947. At the cultural level, India is home to a sizeable Yemeni diaspora population of Hadrami origin who live in the city of Hyderabad and the west coast, including the Konkan and Malabar regions. Only limited familial, business or cultural contacts exist between the Hadrami diaspora and Yemen. Before the outbreak of the civil war, some limited oil trade existed between the two countries, but this came to a complete halt in 2016 due to the intensity of the war and the closure of nearly all oil plants in Yemen. With the return of limited oil production, 2017–18 witnessed import of small quantities of oil by India. Since the intensification of the conflict in 2015, India faced two significant crises in Yemen. The first was the safety and security of about 5,000 36  United Nations Office for the Coordination of Humanitarian Affairs. 2016. ‘Yemen: Cholera Outbreak—Oct 2016’, in Relief Web, 6 October, https://m.reliefweb.int/disaster/37281/ep-2016-000107-yem, last accessed on 3 June 2019. 37  United Nations Security Council Report. 2018. ‘The Situation in the Middle East’. 38  Al-Jazeera. 2018. ‘Saudi Arabia, UAE, Launch Attack on Yemen’s Port City of Hudaida’, 13 June, https://www.aljazeera.com/news/2018/06/saudi-uae-launch-attack-yemenport-city-hudaida-180613054921062.html, last accessed on 3 June 2019. 39  United Nations Security Council Report. 2018. ‘The Situation in the Middle East’.

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Indians who were living and working in the country when the Saudi-led coalition airstrikes began in March 2015. This led to Operation Raahat, spearheaded by the Indian navy, in which nearly 3,000 persons, including around 1,200 foreign nationals, were rescued between March and April 2015.40 Another 1,000 Indians were flown out of the country by Air India.41 In 2016, India faced another situation following the abduction of Father Tom Uzhunnalil from Kerala in Yemen. Help from friendly countries in the region, including Oman and the involvement of the Vatican, resulted in the release of the priest in September 2017.42 India has been extending support and humanitarian assistance to Yemen through food and medical supplies and through its participation in Friend of Yemen conferences to generate funds.43 During the visit of Yemeni Deputy Prime Minister and Foreign Minister Abdulmalik al-Mekhlafi in July 2017, New Delhi pledged to provide health and educational facilities to Yemeni citizens. It also increased the number of Indian Council for Cultural Relations  (ICCR) scholarships and Indian Technical and Economic Cooperation (ITEC) programmes of the Ministry of External Affairs (MEA) for the Yemeni youth. The year 2018 witnessed a new twist when the Ambassador of the UAE to India sought New Delhi’s diplomatic support for the coalition forces’ operation in Hodeida. In an interview with The Hindu, Ahmed Albanna observed that the ‘operation at Hodeidah would secure the energy lanes of India with the Gulf and that the Arab coalition had sourced a large quantity of relief material from India to help the Yemeni population’.44 He further added that, while the coalition does not expect India to extend 40  The Economic Times. 2018. ‘Narendra Modi’s Call to Saudi King Helped India’s Operation “Rahat” in Yemen: Sushma Swaraj’, 7 January, https://economictimes.indiatimes. com/news/politics-and-nation/narendra-modis-call-to-saudi-king-helped-indias-operationrahat-in-yemen-sushma-swaraj/articleshow/62405284.cms, last accessed on 3 June 2019. 41   For details see Dipanwita Chakrovortty, Persian Gulf 2016–17. (Chakrovortty, Dipanwita. 2017. ‘Yemen’, in Persian Gulf 2016–17: India’s Relations with the Region, P. R. Kumaraswamy and Meena Singh Roy (Eds.), Pentagon Press, Delhi.) 42  Persian Gulf 2018, p. 223. 43  Government of India (GoI), Ministry of External Affairs (MEA). 2017. ‘India’s Humanitarian Assistance to Republic of Yemen’, 27 December, https://mea.gov.in/pressreleases.htm?dtl/29255/indias+humanitarian+assistance+to+republic+of+yemen, last accessed on 3 June 2019. 44  Bhattacherjee, Kallol. 2018. ‘Arab Group Wants India on Board in Yemen’, in The Hindu, 18 June, https://www.thehindu.com/news/national/arab-group-wants-india-onboard-in-yemen/article24194744.ece, last accessed on 3 June 2019.

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military support, New Delhi can ‘help by extending diplomatic support to the Hodeidah operation on the international platforms’. Conscious of the Indian sensitivities, he reminded that the ‘campaign is in accordance with the resolutions of the UN and invitation from the legitimate government of Yemen. Our Foreign Minister will brief his Indian counterpart on the issue.’45 Likewise in August, an editorial which was critical of the Saudi role in the Yemeni crisis46 evoked sharp criticism from its ambassador in India. He said, ‘It is important to understand that the Saudi Arabia-led military coalition is providing military assistance to Yemen based on an official request from its internationally recognised government headed by President Hadi to counter the violence of the Houthi terrorist groups. The UN Security Council, in its Resolution 2216, imposed an arms embargo on Houthi terrorists and categorically placed the onus on the rebels to end any provocations or threats to neighbouring States, release all political prisoners and end the recruitment of children.’47 Though India refrained from formally reacting to the statement of the Emirati Ambassador, it has undoubtedly extended humanitarian aid, estimated at US$3 million.48 The growing political ties between India and the UAE have increased the Arab expectations from India over Yemen. Trade and Commerce As the conflict has nearly devastated the Yemeni economy, the scope for bilateral trade has diminished considerably. Even before the crisis, Yemen was  not an important trading partner in the Persian Gulf region; in 2013–14, the bilateral trade stood at US$2.09 billion, with India exporting goods to the tune of US$1.3 billion while importing US$780 million worth of goods, mostly crude oil (Table 10.2 and Fig. 10.1). Since  Ibid.  Al Sati, Saud. 2018. ‘Yemen War: Saudi Arabia Forced to Act, Says Riyadh’s Envoy to New Delhi’, in The Hindu, 14 August, https://www.thehindu.com/news/national/ yemen-war-saudi-arabia-forced-to-act-says-riyadhs-envoy-to-new-delhi/article24693172. ece, last accessed on 3 June 2019. 47  Ibid. 48  GoI, MEA. ‘India’s Humanitarian Assistance to Republic of Yemen’. 45

46

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Table 10.2  India-Yemen bilateral trade (US$ million)

India’s exports to Yemen India’s imports from Yemen Total bilateral trade Share in India’s total trade

2013–14

2014–15

2015–16

2016–17

2017–18

1,306.99 782.18 2,089.17 0.27

992.13 540.68 1,532.82 0.20

399.79 6.88 406.67 0.06

446.13 4.81 450.94 0.07

563.46 153.05 716.52 0.09

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

Fig. 10.1  India-Yemen bilateral relations 3 2.5 2 1.5 1 0.5 0

2011-12

2012-13 2013-14 2014-15 Exports Imports

2015-16 2016-17 Total Trade

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

then, bilateral trade has slumped considerably; it stood at US$406 ­million in 2015–16 and US$450 million in 2016–17. It marginally improved in 2017–18 to reach US$716  million, with Indian exports reaching US$563 million while imports are standing at US$153 million. The Yemeni share in India’s total foreign trade continues to be minuscule and stood at 0.09 per cent. With the Hodeida ceasefire being agreed upon in December and hopes of progress in the peace process, bilateral trade might increase in the coming years if other political and economic conditions improve.

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Energy The bilateral trade is dominated by energy, which constitutes about 90 per cent of India’s imports from Yemen (Table 10.3 and Fig. 10.2). During the year under review, India imported US$138 million worth of crude oil from Yemen following the resumption of limited oil production and exports. The share of the Yemeni crude in India’s energy imports has been small even before the conflict and the resumption of oil trade did not improve the situation. For example, in 2013–14, the Yemeni share in India’s total oil imports was 0.42 per cent and, in 2017–18, after the resumption of imports from that country, it stood at 0.10 per cent (Table 10.3 and Fig. 10.2). As a result, the share of Yemeni oil in India’s imports from the Persian Gulf region was also small and stood at 0.72 per cent in 2013–14 and dropped to 0.19 per cent in 2017–18 (Table 10.4 and Fig. 10.3). Expatriates A small Indian expatriate community continue to live in the country despite the conflict. According to the MEA, nearly 500 non-resident Indians (NRIs) and about 10,000 people of Indian origin are reported to be living in Yemen at the end of 2018.49 The Ministry periodically issues advisory to the Indian citizens to avoid travel to Yemen and the last such Table 10.3  Share of oil in India’s imports from Yemen (US$ million) Year

2013–14 2014–15 2015–16 2016–17 2017–18

Oil imports from Yemen

Total oil imports

Yemen’s share in total oil imports

Imports from Yemen

Per cent of oil in imports from Yemen

762.62 516.68 0.01 0.00 138.02

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61

0.42 0.33 0.00 0.00 0.10

782.18 540.68 6.88 4.81 153.05

97.50 95.56 0.15 0.00 90.18

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

49  GoI, Embassy of India, Sana’a, Republic of Yemen. ‘Indian Diaspora in Yemen’, http:// eoisanaa.org/indian-diaspora-in-yemen/, last accessed on 3 June 2019.

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Fig. 10.2  Share of oil in India’s imports from Yemen

Share in Per cent

120 100 80 60 40 20 0

2011-12

2012-13

2013-14

2014-15 2015-16 Share in Per cent

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Table 10.4  India’s energy imports from Yemen (in US$ million) 2013–14

2014–15

2015–16

2016–17

2017–18

India’s energy imports 762.62 516.68 0.01 0.00 138.02 from Yemen India’s total energy 181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 imports Total energy imports 106,400.75 85,300.30 50,992.26 56,335.34 70,090.81 from Persian Gulf Share in total energy 0.42 0.33 0.00 0.00 0.10 imports (in per cent) Share in Persian Gulf 0.72 0.61 0.00 0.00 0.19 (in per cent) Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

warning was released in April 2016.50 Nonetheless, some migration through Horn of Africa region, especially Eritria and Djibouti, has been taking place to government-controlled areas in and around Aden. Some 50  GoI, MEA. 2016. ‘Travel Advisory for Indian Nationals Travelling to Yemen’, 1 April, https://mea.gov.in/press-releases.htm?dtl/26588/travel+advisory+for+indian+nationals+t ravelling+to+yemen, last accessed on 3 June 2019.

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Fig. 10.3  Share of Yemen in India’s oil imports

Share in percent

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

2011-12

2012-13

2013-14

Share in Total Imports

2014-15

2015-16

2016-17 2017-118

Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Indians have travelled to the impoverished and war-torn country for humanitarian work as part of the international effort. A large population of Hadramis of Yemeni descent, and having Indian citizenship, estimated at 300,000, live in Andhra Pradesh, Kerala and Telangana. Some of them have maintained familial ties and cultural contacts with their places of origin in Yemen. However, the ongoing conflict has considerably affected the travel and contacts between the two.

Challenges The conflict in Yemen is far from over, and death and destruction caused due to the conflict resulted in growing international efforts to end the war. India has strong bilateral ties with the main external protagonists of the war, including Saudi Arabia, the UAE and Iran. This can be useful leverage to bring the warring parties to the negotiation table. However, New Delhi has not made any significant diplomatic move in this direction despite the public remarks by the Emirati Ambassador to India. The reluctance also highlights the limitations of India’s diplomatic influence as well as Yemen not being a priority area for India.

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Nonetheless, India has maintained ties with the UN-recognized government of Yemen. It, however, closed its embassy in Sana’a in April 2015 and shifted Yemeni operations to Djibouti. It continued to extend humanitarian assistance in the form of food and medical supplies and greater access to Yemeni youths in Indian educational institutions and healthcare centres. The biggest challenge before India is to balance its ties with regional rivals and their conflicting interests and actions, especially in Yemen, and to ensure the continuing supply of energy imports. This presupposes that the Yemeni crisis would not escalate further, and hence Yemen poses an indirect challenge to India’s more substantial interests and diplomatic efforts in the Persian Gulf.

CHAPTER 11

GCC

India has been maintaining strong relations with all members of the Gulf Cooperation Council (GCC); it has been facing stress and diplomatic dilemma due to the internal crisis within the organization over Qatar, which came into the open in June 2017. The decision of Saudi Arabia, the UAE and Bahrain, along with Egypt, to boycott Qatar over foreign policy differences has impeded India’s ability to forge and strengthen institutional cooperation with the GCC. Qatari insistence of pursuing an independent and parallel policy on a host of regional issues, especially over Iran, Muslim Brotherhood and domestic upheavals in some Arab countries, has come into conflict with the positions held by Riyadh. Though India maintains friendly relations with all the members of the regional group, an early and amicable resolution of the crisis is of paramount importance to India. While it has strong business and trade ties with all countries, during the past five years, there has been noticeable Indian proximity with the UAE and Saudi Arabia.

Internal Developments The GCC was formed as a loose alliance of six Gulf Arab monarchies— Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE—in 1981 partly as a response to the Islamic Revolution in neighbouring Iran. The threat perceptions over the fallout of the revolution were shared by the monarchies who sought to ward off any cascading effect upon them. The © The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_11

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exclusion of Iraq, which, at that time, was pursuing a war with Iran and of  Yemen, was not accidental; both these countries, despite their oil resources, were too radical for the Gulf monarchies to be part of the club. It was hoped that shared concerns and a not-so-different welfare and governance model would evolve the GCC into a security architecture and a common market. One of the primary goals of the GCC has been to come to each other’s rescue during national emergencies.1 The first real threat to the GCC came in August 1990 when one of the monarchies—Kuwait—came under attack from Iraq. The monarchies had to rely upon external support to rebuke President Saddam Hussein’s invasion of the Emirate and to restore the status quo. The dependency upon foreign powers, especially the US, to rescue and secure the existence of a fellow member exposed the vulnerability of the GCC. Despite decades of promises and declarations, the GCC could not emerge as a strong political, economic and security alliance. Indeed, in its fourth decade of existence, each monarchy preferred to have its own political system and separate national carrier, follow independent foreign policies and avoid strong military cooperation. Economic cooperation was the only arena where progress could be noticed, but the group remains divided over common currency and market. After much deliberation, visa-free travel was accepted by the member states. The outbreak of the Arab Spring protests in December 2010  in Tunisia  posed a new threat to the Gulf monarchies. While rentier-based welfare state model kept the population content, if not happy, the uprising in various Arab countries and the fall of long-serving rulers changed the way the Gulf monarchies were approaching their citizens and their concerns. Their threat perception multiplied as the threat was internal over issues of governance, propriety, corruption and transparency.2 Individuals and group that demanded any reform or openness in the political arena became a suspect and the Muslim Brotherhood and its affiliates were banned and Shia activists were viewed with suspicion. Across the region, many were incarcerated and stripped of their citizenship and some were even executed.3 1  The Gulf Cooperation Council. 2019. ‘The Charter’, http://www.gcc-sg.org/en-us/ AboutGCC/Pages/Primarylaw.aspx, last accessed on 31 May 2018. 2  Narbone, Luigi and Lestra, Martin (Eds). 2015. The Gulf Monarchies Beyond the Arab Spring: Changes and Challenges. Fiesole, Italy: European University. 3  Amnesty International. 2019. ‘Human Rights in Middle East and North Africa: Review of 2018’, https://www.amnesty.org/en/latest/research/2019/02/human-rights-in-themiddle-east-and-north-africa-2018/, last accessed on 31 May 2018.

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The protests in Bahrain heightened the fears and monarchies sought to woo the public through symbolic gestures, superficial reforms, financial handouts or suppression of any form of dissent. Meanwhile, Saudi Arabia, Qatar and to a lesser extent the UAE underwent a leadership change. Upon the death of his half-brother Abdullah, Salman became King in January 2015 and after brief tenures of his half-brother Muqrin (23 January–21 April 2015) and nephew Mohammed bin Naif (29 April 2015–21 June 2017), in June 2017 Salman named his eldest son from his third marriage, Mohammed bin Salman, as the crown prince and successor. Though he has been officiating since January 2014 following the indisposition of his elder half-brother Khalifa bin Zayed al-Nahyan as President of the UAE, Mohammed bin Zayed has been more active and assertive in regional affairs. Meanwhile, in an unprecedented move, in June 2013 Emir Hamad relinquished in favour of his son Tamim bin Hamad al-Thani. The new leaders were not only looking for the legitimacy of their citizens through popular moves but have adopted an aggressive foreign policy to enhance their credentials as nationalists and influential leaders. They, especially Saudi and Emirati leaders, started to pursue an assertive and aggressive strategy to counter the growing Iranian regional influence and supported non-Islamist leaders and groups. They also reached out to leaders across the Middle East to maintain the status quo and worked against Islamists gaining power or influence.4 Qatar, on the other hand, pursued a different policy. Rather than following the Saudi-Emirati moves against the uprising, Doha supported Islamist movements throughout the region. Though it did not allow the Muslim Brotherhood to flourish within its territory, Doha provided sanctuary to many Islamist preachers, members, sympathizers and groups.5 With the help of the Al-Jazeera network, Qatar also promoted and fanned youth protests in Arab capitals as a process of democratization of the Arab world.6 Above all, it initiated understandings with regional powers, especially Iran 4  Hassan. 2019. ‘The Arab Alliance Is a Circular Firing Squad’, in Foreign Policy, 3 June, https://foreignpolicy.com/2019/06/03/the-arab-alliance-is-a-circular-firing-squad/, last accessed on 31 May 2018. 5  Roberts, David B. 2019. ‘Reflecting on Qatar’s “Islamist” Soft Power’, Policy Brief, Brookings Center for Religious Peace and World Affairs, Georgetown University, April, https://www.brookings.edu/wp-content/uploads/2019/04/FP_20190408_qatar_roberts.pdf, last accessed on 31 May 2018. 6  Khatib, Lina. 2013. ‘Qatar’s Foreign Policy: The Limits of Pragmatism’, International Affairs, vol. 89, no. 2, pp. 417–431.

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and Turkey, to further its interests in various theatres affected by the upheaval, including Libya and Syria.7 These, in turn, created a severe wedge between Saudi-Emirati and Qatari leaderships, which eventually culminated in the Gulf crisis of June 2017. Backed by Bahrain, the UAE and Egypt, Riyadh imposed a political, economic and diplomatic boycott of Qatar. The Qatari crisis is the most significant existential threat to GCC as a regional grouping since its establishment in 1981. Diplomatic and political efforts by Kuwait, Oman and the US have failed to bring both the sides to the negotiating table.8 Qatar’s ability to manage the economic blockade with relative ease underlined not only its financial prowess but also its ability to find regional and international support.9 Oman, which remained neutral on the political differences, provided significant economic backing to Doha in importing essential goods and services.10 The fragmentation of the GCC was exposed during the 39th annual summit of the organization held in Riyadh in December 2018. The news of King Salman extending a formal invitation to the Emir of Qatar raised hopes of a reconciliation. However, in the absence of adequate pre-­summit preparations, Doha preferred to be represented in the summit by a Minister of State, thereby quashing any chances of a reconciliation.11 The closed-­ door meeting ended without any statement or communiqué.12 Political challenges apart, the GCC economies are facing problems for over a decade since the global recession of 2008–09. Due to their strong linkages with the western economies, the GCC countries felt the meltdown effect and lost the lucrative returns on their investments in the US  Shahtahmasebi, Darius. 2019. ‘New Iran-Turkey-Qatar Axis Is Rising in the Middle East, and It Has Saudi Arabia Furious’, in RT, 22 March, https://www.rt.com/op-ed/454512alliance-iran-qatar-turkey-saudi/, last accessed on 31 May 2018. 8  Hubbard, Ben. 2018. ‘That Punishing Blockade? “We’ve Moved On,” Qatar Says’, in The New York Times, 19 December, https://www.nytimes.com/2018/12/19/world/middleeast/qatar-blockade-goods.html, last accessed on 31 May 2018. 9  Hassan. 2018. ‘Qatar Won the Saudi Blockade’, in Foreign Policy, 4 June, https://foreignpolicy.com/2018/06/04/qatar-won-the-saudi-blockade/, last accessed on 31 May 2018. 10  AlBawaba. 2017. ‘Oman, the Only Winner in Qatar Crisis’, 12 September, https:// www.albawaba.com/business/oman-wins-qatar-crisis-1020650, last accessed on 31 May 2018. 11  The Hindu. 2018. ‘Bahrain Criticises Qatar Emir for Not Attending GCC Summit’, 9 December, https://www.thehindu.com/news/international/bahrain-criticises-qatar-emirfor-not-attending-gcc-summit/article25704958.ece, last accessed on 31 May 2018. 12  Ibid. 7

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and European Union markets.13 The problem was magnified after they were confronted with a sharp drop in demand for oil between 2014 and 2016. As the international oil prices dropped below US$50 per barrel, the GCC economies were on the verge of collapse due to a significant loss in revenues.14 As Table  11.1 indicates, the GCC economies are heavily Table 11.1  SWF, current account deficit and share of petroleum in the GDP and state revenues Country

SWF (US$ billion)a

Saudi Arabia Bahrain Kuwait Oman Qatar UAE

290 15.4 592 6 320 1,190.8

Current account Share of petroleum Share of petroleum deficit (US$ billion) industry in GDP in revenue (per cent)b (per cent)c 11.5 (2017)d

23.1

87

−2.219 (2018)e 4.684 (2017)f −10.759 (2017)g 16.652 (2018)h 27.491 (2017)i

2.0 36.6 21.8 14.2 13.1

85 90 75 70 30

a SWFI. 2019. ‘Top 81 Largest Sovereign Wealth Fund Rankings by Total Assets’, https://www.swfinstitute.org/fund-rankings/sovereign-wealth-fund

The World Bank. 2019. ‘Oil Rents 9% of GDP)’, https://data.worldbank.org/indicator/ny.gdp.petr.rt.zs Central Intelligence Agency, The World Factbook. 2019. https://www.cia.gov/library/publications/ the-world-factbook/ d OPEC. 2019. ‘Saudi Arabia Facts and Figures’, https://www.opec.org/opec_web/en/about_us/169.htm e CEIC. 2019. ‘Bahrain Current Account Balance’, https://www.ceicdata.com/en/indicator/bahrain/ current-account-balance f OPEC. 2019. ‘Kuwait Facts and Figures’, https://www.opec.org/opec_web/en/about_us/165.htm g CEIC. 2019. ‘Oman Current Account Balance’ https://www.ceicdata.com/en/indicator/oman/ current-account-balance h CEIC. 2019. ‘Qatar Current Account Balance’ https://www.ceicdata.com/en/indicator/qatar/ current-account-balance i OPEC. 2019. ‘UAE Facts and Figures’, https://www.opec.org/opec_web/en/about_us/170.htm b c

13  Habibi, Nader. 2009. ‘The Impact of the Global Economic Crisis on Arab Countries: A Year-End Assessment’, in Middle East Brief, No. 40, December, Crown Center for Middle East Studies, Brandies University, http://www.brandeis.edu/crown/publications/meb/ MEB40.pdf, last accessed on 31 May 2018. 14  Al-Marri, Fahad Hussain. 2017. ‘The Impact of Oil Crisis on Security and Foreign Policy in GCC Countries: Case Studies of Qatar, KSA and UAE’, Research Paper, November, Arab Center for Research and Policy Studies, Doha, https://www.dohainstitute.org/en/ Lists/ACRPS-PDFDocumentLibrary/Impact%20of%20oil%20crisis.pdf, last accessed on 31 May 2018.

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dependent upon the hydrocarbon resources and, in most cases, their foreign trade is linked to the energy sector. The falling oil prices compelled the oil-producers cartel—the Organization of the Petroleum Exporting Countries (OPEC)—to cooperate with Russia to stabilize the global oil market by imposing production cuts. This, in return, led to price rise and the resumption of oil revenues for the GCC countries.15 By December, the oil price reached US$70 per barrel  (Table 1.4). Though it was lower than the peak of US$110 witnessed in June 2014, this contributed to the recovery of the GCC economies. However, it proved insufficient to address a host of their problems and challenges and obliged many countries to introduce measures to generate additional revenues. These include a reduction in the subsidy of essential services such as electricity and water supplies, the imposition of taxes on consumer goods through value-added tax (VAT) and levying of residency taxes on the expatriate population.16 Some have tried to diversify their economies into new areas to reduce their excessive dependency upon the energy trade. This is aimed at generating employment opportunities for the citizens away from the oil industry, while generating new sources of revenues for the government.17 Some Gulf economies see Dubai and Abu Dhabi as successful models for emulation, and countries like Bahrain, Saudi Arabia and Qatar have heavily invested in various non-oil sectors of the economy.18 According to the World Bank, the gradual increase in oil prices during the past two years has resulted in the recovery of the GCC economies. The economic growth for the group was expected to reach 2 per cent in 2018, up from minus 0.3 per cent in 2017, the latter owing to higher oil ­production and a slower pace of fiscal consolidation.19 With the narrowing of the current account deficit, the region largely remained immune to the 15  Nussbaum, Alex. 2019. ‘Oil Gains as Russia, Saudis Signal Commitment to Production Cuts’, in Bloomberg, 16 January, https://www.bloomberg.com/news/articles/2019-01-15/ oil-held-gains-near-52-as-signs-of-tighter-supply-lend-support, last accessed on 31 May 2018. 16  IMF. 2016. ‘Diversifying Government Revenue in the GCC: Next Steps’, 26 October, https://www.imf.org/external/np/pp/eng/2016/102616.pdf, last accessed on 31 May 2018. 17  IMF. 2018. ‘How Should GCC Countries Diversity Their Economies and Promote Inclusive Growth?’ 9 December https://www.imf.org/en/News/Articles/2018/12/07/ NA120918-how-should-gcc-countries-diversify-their-economies-and-promote-inclusivegrowth, last accessed on 31 May 2018. 18  Ibid. 19  The World Bank. 2019. ‘World Bank Gulf Economic Monitor’, 29 April, https://www. worldbank.org/en/country/gcc/publication/gulf-economic-monitor, last accessed on 31 May 2018.

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financial volatility that undermined other emerging economies in mid2018. The World Bank expects the economic growth of the GCC to strengthen gradually in the medium term to reach 2.7 per cent by 2020 as higher energy prices and rising government spending would lift output and market sentiments.20 The growth of Saudi Arabia is expected to rebound at 2 per cent in 2018–19 from a contraction in the previous year and this would strengthen the growth across the region. External and fiscal imbalances are also expected to narrow down, with Saudi Arabia and the UAE achieving near budgetary balance by 2020, along with Qatar and Kuwait returning to current account surpluses during 2018–20.21

India and the GCC As other chapters highlight, the GCC countries are the most important ones for India’s foreign relations. Besides trade, commerce, energy and expatriate components, them being a maritime neighbourhood make these countries vital for India’s strategic and security interests.22 This resulted in New Delhi developing close cooperation with all these countries, most visible since Narendra Modi became prime minister in May 2014. Counterterrorism, combating radicalism, organized crimes and terror finance and protection of the sea lines have emerged as the most significant aspects of the bilateral relations between India and the GCC countries.23 Prime Minister Modi and his cabinet colleagues have visited the region several times. Modi’s first visit to the region in August 2015 created a new dynamic between India and the Gulf Arab countries.24

 Ibid.  Ibid. 22  Singh, Abhijit. 2017. ‘India’s Middle Eastern Naval Diplomacy’, ORF Commentaries, 28 July, https://www.orfonline.org/research/india-middle-eastern-naval-diplomacy/, last accessed on 31 May 2018. 23  This is reflected in the Joint statements issued during the visits of Prime Minister Modi to the GCC countries and during visits of GCC leaders to India. To access the joint statements, see www.mea.gov.in, last accessed on 31 May 2018. 24  Kumaraswamy, P. R. 2019. ‘Modi’s Agenda 2.0 for the Middle East,’ IDSA Comment, 24 May, https://idsa.in/idsacomments/modi-agenda-2.0-for-them i d d l e - e a s t - prkumaraswamy-240519, last accessed on 31 May 2018. 20 21

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In February 2018, Prime Minister Modi visited Oman and the UAE,25 while External Affairs Minister Sushma Swaraj visited Saudi Arabia to attend the Janadriyah Festival, where India was the ‘guest of honor’ country.26 Finance Minister Arun Jaitley visited the Kingdom in February to co-chair India-Saudi Business Council and India-Saudi Joint Committee meeting.27 Furthermore, Minister Swaraj visited Kuwait in October to enhance bilateral ties.28 India and the GCC countries share the strategic vision of political stability, economic prosperity and regional security both in South Asia and the Persian Gulf. There is a convergence of view regarding terrorism as a common threat to both the regions and have been cooperating in counterterrorism.29 The shared political and security concerns of India and GCC translated into efforts for peace, security and stability, including in the maritime domain. Some progress has been made even in defence cooperation, especially with countries like Oman, the UAE and Saudi Arabia. The GCC countries are in the midst of significant political, economic and social transformation and this in turn partly contributed to the instability. By adopting a neutral position on the Qatari crisis, India hopes for an amicable resolution of the intra-GCC differences without any external interference or influence.30 25  MEA, GoI. 2018. ‘Visit of Prime Minister to Palestine, United Arab Emirates and Oman (February 9–12, 2018)’, 27 January, https://www.mea.gov.in/press-releases. htm?dtl/29397/Visit_of_Prime_Minister_to_Palestine_United_Arab_Emirates_and_ Oman_February_912_2018, last accessed on 31 May 2018. 26  MEA, GoI. 2018. ‘Official Visit of External Affairs Minister to Saudi Arabia (February 6–8, 2018)’, 5 February, https://mea.gov.in/press-releases.htm?dtl/29413/ Official+visit+of+External+Affairs+Minister+to+Saudi+Arabia+February+68+2018, last accessed on 31 May 2018. 27  The Economic Times. 2018. ‘Arun Jaitley Meets Saudi King; Discusses Ways to Boost Ties’, 19 February, https://economictimes.indiatimes.com/news/economy/foreigntrade/arun-jaitley-meets-saudi-king-discusses-ways-to-boost-ties/articleshow/62986683. cms, last accessed on 31 May 2018. 28  MEA, GoI. 2018. ‘Visit of External Affairs Minister to State of Qatar and State of Kuwait (October 28–31, 2018)’, 26 October, https://www.mea.gov.in/outoging-visitdetail.htm?30535/Visit+of+External+Affairs+Minister+to+State+of+Qatar+and+State+of+ Kuwait+October+2831+2018, last accessed on 31 May 2018. 29  Mohammed Sinan Siyech. 2017. ‘India—Gulf Counterterrorism Cooperation’, Middle East Institute, Washington, DC, 21 December, https://www.mei.edu/publications/indiagulf-counterterrorism-cooperation, last accessed on 31 May 2018. 30  MEA, GoI. 2017. ‘India’s Official Statement Following the Recent Developments Related to Qatar’, 10 June, https://mea.gov.in/press-releases.htm?dtl/28523/Indias_ official_statement_following_the_recent_developments_related_to_Qatar, last accessed on 31 May 2018.

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Trade and Commerce The GCC is the most crucial trading bloc of India and has a total trade of US$103.47  billion in 2017–18, accounting for 13.45 per cent of total foreign trade during the year (Table  11.2). This was an increase of US$6.5 billion or 15 per cent from the previous financial year. However, in terms of cumulative share, GCC witnessed 1.2 per cent decline as India’s foreign trade significantly increased from US$660  billion in 2016–17 to US$769 billion the following year (Table 11.2 and Fig. 11.1). The latter is almost closer to the US$795 billion recorded in 2011–12. The GCC is vital for India’s energy security and energy imports are the most critical component of the bilateral trade. As reflected in Table 11.3, the GCC countries have been a significant supplier of crude oil and natural gas to India. The overall share of the region in India’s oil imports has been witnessing a gradual decline as highlighted in Table 11.3 due to India’s diversification strategy. Since 2016–17, for example, India has been importing shale oil from the US. Nonetheless, at 32 per cent in 2017–18, the share of the GCC is significantly more than any other geographically contiguous countries (Fig. 11.2). At the institutional level, India-GCC free trade agreement (FTA) has been in limbo since the signing of the framework agreement on economic cooperation in August 2004. Differences over tariffs have been a stumbling block and the Qatari crisis has only diminished the prospects of an early agreement. The last bilateral meeting on the FTA took place in 2008.

Table 11.2  India-GCC bilateral trade (in US$ million) Country

2013–14

2014–15

2015–16

2016–17

2017–18

Bahrain 1,202.60 919.23 1,011.04 762.40 987.94 Kuwait 18,214.69 14,580.85 6,217.20 5,960.27 8,531.34 Oman 5,763.45 4,131.69 3,865.50 4,018.79 6,703.76 Qatar 16,677.04 15,659.69 9,924.20 8,430.78 9,880.90 Saudi Arabia 48,622.60 39,268.98 26,715.56 25,082.68 27,480.66 UAE 59,540.24 59,167.99 49,735.69 52,685.33 49,885.23 Total trade with GCC 150,020.62 133,728.43 97,469.19 96,940.25 103,469.83 India’s total trade 764,605.09 758,371.89 643,296.75 660,207.28 769,107.15 Share in total trade 19.62 17.63 15.15 14.68 13.45 Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

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Fig. 11.1  GCC’s share in India’s external trade 25 20 15 10 5 0

2011-2

2012-13

2013-14 2014-15 2015-16 GCC's Share in India's External Trade

2016-17

2017-18

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Table 11.3  India’s energy imports from GCC (in US$ million) 2013–14 India’s total energy imports Energy imports from GCC Total imports from Persian Gulf GCC share in total imports (per cent) GCC share in imports from Persian Gulf (per cent)

2014–15

2015–16

2016–17

2017–18

181,382.59 156,400.01 96,953.06 103,163.20 132,294.61 78,630.85

63,314.27 35,771.49

35,695.82

43,175.86

106,400.75

85,300.30 50,992.26

56,335.34

64,079.19

43.35

40.48

36.90

34.60

32.64

73.90

74.23

70.15

63.36

67.38

Source: Adapted from Directorate General of Foreign Trade, New Delhi, www.dgft.gov.in

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Fig. 11.2  Share of GCC in India’s energy imports 80 70 60 50 40 30 20 10 0

2011-12 2012-13 2013-14 Share in Total Imports

2014-15 2015-16 2016-17 2017-18 Share in Imports from Persian Gulf

Source: Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India

Expatriates While the region has been an important trade partner, the most significant aspect of the bilateral relations has been the presence of a large expatriate Indian community who are gainfully employed in a host of sectors and services. Besides professionalism, their inclination of not getting involved in local issues has been an asset and their contribution to the development of the GCC economies is well recognized.31 At the end of December 2018, there are about 8.5 million people of Indian origin living and working in the GCC countries and they constitute about 27 per cent of India’s global diasporic and expatriate community (Table  11.4). Within the GCC, the largest number of Indians or 3.1  million reside in the UAE and is followed by 2.8  million in Saudi Arabia. During the year, 295,000 went to GCC countries under the ECR category. The strong Indian community has not only contributed to the economic development of the host countries but impacted India’s economic 31  Embassy of India, Riyadh. 2017. ‘India-GCC Relations’, 2 July, http://www.indianembassy.org.sa/india-saudi-arabia/india-gcc-relations, last accessed on 31 May 2018.

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Table 11.4  Population of overseas Indians in GCC countries (December 2018) Country

Non-resident Indians (NRIs)

Bahrain Kuwait Oman Qatar Saudi Arabia UAE Total GCC Total global

Persons of Indian Origin (PIOs)

Overseas Indians

Share within GCC (per cent)

312,918 928,421 688,226 691,539 2,812,408

3,257 1,482 919 500 2,160

316,175 929,903 689,145 692,039 2,814,568

3.70 10.88 8.06 8.10 32.93

3,100,000 8,533,512 13,113,360

4,586 12,904 17,882,369

3,104,586 8,546,416 30,995,729

36.33 27.57

Source: GOI, MEA

progress. Besides the employment benefits of millions of families back home, the expatriates contribute to Indian GDP growth through their annual remittances and, in 2017–18, nearly US$30 billion came from the Gulf as remittances. At the same time, the growing Arabization of the labour force, the influx of women in the labour market, and cheaper labour force from countries like Nepal, Bangladesh and the Philippines will adversely affect the flow of Indian workers to the GCC countries. One notices this trend in the Saudi market which had about 3.1 million Indian workers in 2017, but this had dropped to 2.8 million in 2018.32 In recent years, the Government of India has viewed them as a socio-­ cultural bridge with the GCC and has increased its contacts and engagements with the expatriate communities through measures like heightened political engagements, diplomatic outreach and easing of investment procedures by NRIs in the domestic market. Indeed, public diplomacy with the diasporic population has become an integral part of the Indo-GCC political relations.

Challenges In the light of the internal rift over Qatar, India has to manage a delicate balance in its relations with the GCC. It has adopted a non-interfering approach with all the countries towards meeting its energy security, namely natural gas from Qatar and crude oil from other members of the GCC. Should the crisis  See Chap. 8 for further details.

32

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continue or intensify, the existence of the GCC shall be in jeopardy. Under such an eventuality, India will have to devise a policy whereby it could maintain its economic and security partnership with important countries of the bloc without affecting its ties with other countries. Such a balancing will not be easy as there is intense competition and rivalry among the GCC members and also because of the Iran factor. The other pressing challenge facing India is the growing economic inroads made by China into the GCC through trade, investments and joint ventures. The GCC countries which are looking for a non-western option have enthusiastically responded to China’s Belt and Road Initiative. China already has an FTA arrangement with GCC concluded in 2016 and its total trade stands at US$150 billion, which is 68 per cent larger than Indo-GCC trade.

CHAPTER 12

Policy Options

1. Iran Challenge: The return of American sanctions against Iran poses a severe diplomatic challenge as India wishes to have closer ties with both the countries. Complying with the sanctions would mean India would consider reducing its oil imports from Iran, but India cannot do this without alienating the Islamic Republic. The spiralling of US-Iran tension into a regional conflict would hamper the Indo-Gulf relations severely. Seeking a balance that would maximize its interests vis-à-vis the US as well as Iran will be the most testing policy for India. 2. Divided GCC: The division within the Gulf Cooperation Council (GCC) since July 2017 is a significant concern as India seeks close cooperation with all the six members of the group. So far, India has managed to keep out of the controversy and has been engaging with all the countries. However, it should engage with them more actively towards reducing tension and bridging gaps. Given Prime Minister Narendra Modi’s personal equation with  the principal players, India should offer its good offices to create an atmosphere of trust and reconciliation within the GCC. 3. Energy Security: As it seeks to comply with the US demands vis-­ à-­vis oil imports from Iran, India will have to look for alternative supplies to bridge the deficit. In 2018–19, it imported nearly 10 per cent or 23  million tons of crude oil from Iran. As  the US,

© The Author(s) 2020 P. R. Kumaraswamy, Md. Muddassir Quamar, Persian Gulf 2019, https://doi.org/10.1007/978-981-15-1432-6_12

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Saudi Arabia and the UAE have pledged support to meet any shortfall over Iran, India will have to develop long-term plans for diversification and energy security. 4. The China Factor: China’s ability to strengthen trade and commercial ties through grandiose initiatives, like the Belt and Road Initiative (BRI), is a formidable challenge to India and its less than optimal level of efficiency and functioning. India will have to find a way to match Chinese alacrity in forging commercial ties with the region or be ready to lose the Gulf market to China. 5. Gulf Investments: During the five years under Prime Minister Narendra Modi’s first government, the India-Gulf relations witnessed a significant improvement and one of the critical areas was bringing in greater Gulf investments into the Indian market. Despite significant pledges by the UAE and Saudi Arabia, the Indian market has not been conducive and the latest challenge was Etihad’s investment in the troubled Jet Airways. If needed, India will have to devise a policy not only to facilitate smoother foreign direct investment procedures but also to create a troubleshooting mechanism for contingency situations. The Ratnagiri petrochemical project, for example, is bogged down with local issues over land acquisition and, unless handled swiftly, India could miss out on a massive investment opportunity. 6. Economic Challenge: The core of India’s bilateral ties with the Persian Gulf lay in trade and commerce. While bilateral trade has shown signs of growth after a recent slump and downturn, it has not diversified and largely revolves around India’s energy imports and exports of commodities such as food, machinery and petroleum products. India will have to expand and diversify bilateral trade in other non-traditional areas such as defence products, healthcare equipment and industrial exports. For this purpose, India will require to devise a policy to improve productivity and efficiency in these sectors and make them competitive and attractive for the Gulf market. 7. Education and Health: The potential of education and health sectors for expanding ties with the Persian Gulf have remained unfulfilled as the investment possibilities in these sectors have not been adequate. In addition, to develop cooperation in the field of education and culture, public and private universities and higher education institutions such as IITs, IISC and IIMs as well as JNU

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should explore possibilities for greater cooperation with eminent educational intuitions in the region such as King Abdullah University of Science and Technology, King Fahd University of Petroleum and Minerals, Masdar Institute of Science and Technology, and Qatar University. Policy research institutions and think tanks should also be encouraged to explore possibilities of bilateral exchange programmes for a better and sustained understanding to meet the growing socio-economic aspirations of their youth. 8. Expatriates: Indian expatriates are a critical link between India and the Gulf Arab states. One of the major problems faced by them is the expat fees levied in Saudi Arabia, which is causing financial hardship. The Government of India had to take up this issue seriously so that the charges do not lead to a drop in the number of Indians in the Kingdom. Any reduction in the number of Indian workers in Saudi Arabia will lead to a large-scale exodus of Gulf returnees, which, in turn, will ruin the Keralite economy sustained by Gulf remittances. 9. Fighting Extremism and Terrorism: Fighting extremism and terrorism has been a top priority of the Government of India and, in this connection, it has received extraordinary support from the Gulf countries. As India continues to grapple with the problem both from local and global terrorist groups and cross-border terrorism, the need to continue partnering with the Gulf countries becomes pertinent and should be enhanced and intensified. 10. Defence and Military Cooperation: This is a new area India and the Gulf countries identified for developing ties and strengthening cooperation. Despite some apprehension over the close military and security cooperation between Pakistan and the Gulf countries, India should continue to forge better cooperation in this area and find ways to strengthen ties, especially with friendly countries such as Saudi Arabia, the UAE and Bahrain. The robust security cooperation with these countries will go a long way in securing India’s interests in the Middle East and help it improve its comprehensive strategic influence at the global level. 11. Continued Neglect: Despite heightened political contacts, the region continues to elicit only limited attention in the media and academic circles. Introduction of the region among schools and colleges, at least in the metropolitan centres, should be a signifi-

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cant step towards bridging the knowledge deficiency. The Government of India should consider establishing Indian Council of Social Science Research and Indian Council for Cultural Relations chairs and other endowments in the Gulf countries, especially when there is a growing interest and admiration for India’s importance and influence.

Index1

A al-Abadi, Haider, 11, 94, 96, 97, 99 Abdul-Mahdi, Adel, 11–12, 68, 93 Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), 222 Abu Dhabi Investment Authority (ADIA), 230 Afghan jihad, against the Soviet Union, 183 Agwani, M. S., 35 Ahvaz National Resistance, 11, 69 Air India, 114, 245 Akbar, M. J., 80, 108, 127, 145, 208 Alawi, Yusus bin, 144 Albanna, Ahmed, 245 Aligarh Muslim University, 34 Al-Watan, 183, 197 Al-Wefaq (National Islamic Society), 42, 43 Amal (Islamic Action Society), 43 Ansar al-Furqan, 11, 69 Ansari, M H, 35, 37

Anti-piracy operations, in Gulf of Aden, 147 Arabian Sea, 8, 37, 139, 142, 155, 206 Arab Monetary Fund, 47 Arab Spring protests, 121, 160, 215, 254 Araghchi, Seyyed Abbas, 80 Aramco, 204, 205, 207, 209 Arms embargo, on Houthi terrorists, 246 al-Arrayed, Jawad bin Salem, 49 Ashgabat Agreement (2011), 79, 147 al-Assa, Abdul Razzaq, 109 Augusta Westland bribery case, 224 B Bab al-Mandeb, 237, 239 Bahrain Al-Wefaq (National Islamic Society), 42, 43 Cassation Court, 45 discovery of new oil and gas field, 52, 54 domestic development, 41–44

 Note: Page numbers followed by ‘n’ refer to notes.

1

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INDEX

Bahrain (cont.) Economic Development Board, 47 Economic Vision 2030, 15 economy of, 46–49, 54 female-to-male labour force, 48 financial aid package, 46 foreign direct investment (FDI), 55 Gulf Air, 39, 47 human rights conditions in, 9, 42, 44–45 Khaleej al-Bahrain basin, 47, 54 Al-Khalifa family, 41 Legislation and Legal Opinion Commission of, 43 Majlis al-Nuwwab, 41, 43, 94, 95 Majlis al-Shura (the upper house), 45 al-Majlis al-Watani, 41 oil revenues, 47 Peninsula Shield Force (PSF), 42 petroleum industry of, 55 political controversies, 48 Qatar crisis (2017), 40 relation with; India (see Bahrain– India relations); Saudi Arabia, 40, 42, 46 Shia citizens of, 42 socio-economic indicators, 39–40 tourism infrastructure development, 47 trade with India, 51–55 universal civil rights, 41 Bahrain Independent Commission of Inquiry (BICI), 42, 44 Bahrain–India relations challenges in, 56–57 energy ties, 52–54 expatriates, 56 investments, 55–56 political ties, 50–51 trade and commerce, 51–52 Bankruptcy law, 194 Baqeri, Mohammed, 6 Belt and Road Initiative (BRI), 32, 91, 142, 176, 191, 210, 265, 268

Bidoons (stateless tribal community), 121, 122, 126 bin Abdullah, Miteb, 182 bin Dagher, Ahmed, 238 bin Hamad, Emir Tamim, 6, 122, 158, 159, 168, 255 bin-Laden, Osama, 183 bin Salman, Mohammed, 8–10, 23, 122, 177–180, 182–187, 194, 196, 198, 200, 215, 236, 255 reform initiative, 19 bin Talal, Waleed, 182 C Cavusoglu, Mevlut, 66 Chabahar Port (Iran), 60, 77, 78, 82, 88–90 China Belt and Road Initiative (BRI), 32, 91, 142, 176, 191, 210, 265, 268 relation with Gulf countries, 91, 176 China-Pakistan Economic Corridor (CPEC), 91 Cold War, 1, 31, 61, 75 Confederation of Indian Industries (CII), 50, 111, 227 Construction and Development of Transportation Infrastructure Company (CDTIC), Iran, 79 Contemporary Review of the Middle East, 36 Convention on the Legal Status of the Caspian Sea, 74 Corruption perception index, 20 Crude oil prices, 13 Cybercrimes, 80, 220 D Doing Business Indicators, 194 Doval, Ajit, 81

 INDEX 

Drug trafficking, 79, 80 Dubai Chambers of Commerce (DCC), 227 Duqm Port (Oman), 142, 146, 147 Duterte, Rodrigo, 123, 124 E Ease of Doing Business Index, 16, 17 Ebrahim, Zainab Abdulameer Khalil, 48 Economic reforms, in Gulf Arab countries, 33 Emirates Global Aluminium, 218 Energy market, 15, 55, 168, 190 Energy security, 32, 33, 60, 106, 112, 204, 227, 261, 264, 267–268 Energy trade, between India and Gulf countries, 26, 227, 237 Erdogan, Recep Tayyip, 186 Ethnic and religious discrimination, 70 Export-Import Bank of China, 73 F al-Faisal, Turki, 183 Federation of Indian Chambers of Commerce and Industries (FICCI), 109 FIFA World Cup (2022), 163, 165 Financial crimes, 63 Foreign direct investment (FDI), 55, 132, 152, 173, 193, 206, 207, 230, 231, 268 Freedom House, 18, 19, 76, 139, 197 Friends of Yemen conference, 237 G Gandhi, Rahul, 41, 51 GCC–India relations challenges in, 264–265 on energy security and energy imports, 261

273

expatriate community, 263, 264 free trade agreement (FTA), 261, 263 Janadriyah Festival, 178, 198, 199, 260 Modi’s visit and, 259 Swaraj’s visit and, 260 trade and commerce, 261 Gender Development Index (GDI), 76, 105, 126, 144, 167, 197, 220 Gender equality, 76, 214 Gender Inequality Index (GII), 40, 60, 76, 94, 105, 118, 126, 136, 144, 158, 167, 178, 197, 212, 220, 236 Global gender gap index, 18 Global oil reserves, Persian Gulf share in, 14 Global Organization of People of Indian Origin, 51 Gokhale, Vijay, 80, 200 Green energy, 217 Green Movement of 2009 (Iran), 62 Griffith, Martin, 239, 240 Guardianship Law, 196 Gulf Air, 39, 47 Gulf Cooperation Council (GCC), 254, 264 as alliance of six Gulf Arab monarchies, 253 Arab Spring protests, 254 crisis of 2017, 161 goals of, 254 internal developments, 253–259 on Iraq’s invasion of Kuwait, 254 Peninsula Shield Force (PSF), 42 population of Overseas Indians in, 264 relation with India (see GCC–India relations) Gwadar Port (Pakistan), 147 H Hadi, Abdrabbuh Mansur, 8, 216, 235, 238, 246 Hafter, Khalifa, 215

274 

INDEX

Hajj pilgrimage, 35, 195, 208–209 Hawali, Safar, 182, 183 Hezbollah, 5, 49, 189, 190 The Hindu, 245 Houthis arms embargo on, 246 attacks on Saudi border posts, 11 Iranian military support for, 5 missile attacks on Saudi Arabia, 5, 239 secessionist movement, 8 Stockholm Agreement (2018), 8, 240, 241 Human Development Index (HDI), 16, 17, 40, 60, 93, 94, 117, 118, 126, 136, 144, 158, 177, 197, 211, 212, 220, 236 Human rights violations, 9, 42, 106, 138, 165 Human Rights Watch, 44, 196 Hussein, Saddam, 254 Hydrocarbon joint ventures, between India and Gulf countries, 34 I Ibrahim, Dawood, 224 India concerns over BRI project, 32, 91, 268 Confederation of Indian Industry (CII), 50, 111, 227 energy imports, 26, 27, 33, 52–55, 77, 86, 87, 111, 113, 129, 131, 151, 152, 172, 173, 201, 204, 205, 228, 229, 248, 249, 262, 263, 268 energy market for Gulf countries, 55, 168, 190 foreign direct investment (FDI), 55, 132, 151, 152, 173, 193, 206, 207, 230, 231, 268 Gulf policy, 90, 176

Pulwama attack (2019), 83 Rupee payment mechanism, 85, 90 waiver for imports from Iran, 2, 89 Wassenaar Arrangement, 89 India-Iran Parliamentary Friendship Group, 80 Indian Community Welfare Fund, 133 Indian dependency, on the Persian Gulf, 33 Indian human resource agencies, 154 Indian Railway Construction Company Limited (IRCON), 79 India’s Strategic Petroleum Reserves Limited (ISPRL), 223 Indo-Arab Cooperation Forum (IACF), 50 Institute for Defence Studies and Analyses (IDSA), 34, 36, 146 Instrument in Support of Trade Exchanges (INSTEX), 3, 65, 67 International Conference for Reconstruction of Iraq, 103, 108, 127 International Convention on the Elimination of All Forms of Racial Discrimination, 162 International Court of Justice (ICJ), 64, 66, 161, 162 International Labour Organization (ILO), 166 International North-South Transport Corridor (INSTC), 79 International Reconstruction Fund Facility for Iraq (IRFFI), 108 International Solar Alliance (ISA), 127, 228 Internet penetration, in Gulf countries, 17, 19 Iran challenges in Syria, 67 clergy-imposed dress code, 62 confrontation with Israel, 67, 91

 INDEX 

constitutional movement (1905–1911), 74 domestic developments in, 8, 61–77; defence and security issues, 68–70, 79; economy, 61, 63, 70–74; foreign policy, 62, 64–68; politics, 61–64, 68; society, 74–77 economic sanctions against, 2 ethnic and sectarian fault lines, 8, 70 Farzad B gas field, 77, 79 financial crimes in, 63 foreign policy, 11, 31, 60–62, 64–68, 86 global isolation of, 4 Green Movement of 2009, 62 involvement in Iraqi politics, 67 Islamic Revolutionary Guard Corps (IRGC), 68 Islamization of, 75 and Joint Comprehensive Plan of Action (JCPOA), 1–6, 60, 63–65, 71, 81, 88 military expansionism in Middle East, 65 military support for Houthi rebels, 5 nuclear deal with US, 2, 11, 64, 77, 88 oil industry, 2, 4, 61, 71, 131 Pahlavi regime (1925–1979), 74 relation with India (see Iran–India relationship) religious minorities, discrimination of, 76 rivalry with Saudi Arabia, 5, 30 terrorist attack, 11, 82 troubles with Kurdish dissent, 68 unemployment, rate of, 73 women in key political institutions in, 77 Iran–India relationship American influence on, 60 Ashgabat Agreement, 79

275

Chabahar Port, 60, 77, 78, 82, 88–90 Chabahar-Zahedan Rail line, 79 Chinese influence on, 86 energy ties, 85–87 India-Iran Parliamentary Friendship Group, 80 investments, 87–90 Modi-Rouhani discussions, 78 oil imports, 2, 60, 83–86, 90 political ties, 78–83 Rupee-payment mechanism, 85, 90 trade and commerce, 83–85 Iran–Iraq War, 69, 114 Iraq civil unrest, 101 domestic developments in, 95–106 economic situation in, 103 elections for Council of Representatives, 94–96, 105 invasion of Kuwait, 120 Iranian involvement in, 67 Kurdish movement for statehood in, 68 Kurdish referendum, 99, 102, 111, 115 Majlis al-Nuwwab (Council of Representatives), 94, 95 military victory over ISIS, 94 reopening of political ties with Saudi Arabia, 187, 189 security situation in, 99, 101 Turkish military presence inside, 102 War of 2003, 162 Iraq Body Count (IBC), 99, 100 Iraq–India relations bilateral trade relations, 106–114 challenges in, 115 Confederation of Indian Industries (CII), 111 energy ties, 111–114 on establishment of Jaipur Foot Camp in Karbala, 111

276 

INDEX

Iraq–India relations (cont.) expatriates, 114 on expatriate workers, 114 on India’s trade with Kurdish Autonomous Region, 110 over Kurdish referendum, 111, 115 on supply of crude oil, 109, 111 trade and commerce, 109–111 Islamic jurisprudence, school of Jafari (Shia), 49 Maliki (Sunni), 49 Islamic Revolution, 77, 195, 253 Islamic Revolutionary Guard Corps (IRGC), 68, 69 Islamic State of Iraq and Syria (ISIS) allied campaign against, 162 attacks on military and civilian targets in Iraq, 12, 94 Iraq military victory over, 94 military defeat of, 11, 94, 99, 106 Islamist Sahwa movement, 183 Islamization, 75 Islam, spread of, 35 Israel airstrikes on Syria, 67 confrontation with Iran on, 67, 91 relation with India, 77, 90 J Jadwa Investment, 193 Jaitley, Arun, 199, 200, 260 James, Christian Michael, 224 Jamia Millia Islamia, 34 Janadriyah Festival, 178, 198, 199, 260 Jawaharlal Nehru University (JNU), 34, 268 Jet Air, 174 Job opportunity, in Gulf countries, 138, 193 Joint Comprehensive Plan of Action (JCPOA)

American withdrawal from, 2, 60, 85 Iran commitments to, 2, 65, 81, 139 Joint ventures, 34, 110, 207, 265 al-Jubeir, Adel, 186, 199, 199n98 K Kafala (sponsorship) system, 133, 154, 166 Al-Khalifa, Hamad bin Isa, 39–42, 50, 159 Khaleeji (Gulf Arab) cultural norms, 48 Khamenei, Ali, 3, 4, 59, 61, 62 Khashoggi affair, 10, 18, 23, 179, 186, 188, 189, 200, 215, 240 Khashoggi, Jamal, 9, 10, 179, 183–188, 236 Kurdish movement, for statehood in Iraq, 68 Kurdish referendum (2017), 12, 99, 102, 111, 115 Kurdish Workers’ Party (PKK), 102 Kurdistan Regional Government (KRG), 98, 99, 102, 111, 115 Kuwait Arab Spring protests, 121, 124 Bidoons (stateless tribal community) in, 121, 122, 126 Demafelis incident, 124 diplomatic row with Philippines, 123 domestic developments in; economy, 124–125; foreign policy, 122–124; politics, 119–122; society, 125–126 Five-Year Development Plan (2015–19), 125 foreign direct investment (FDI), 132 freedom of speech, 121 involvement in Qatari crisis, 122, 123 National Assembly of, 117, 119, 120, 126

 INDEX 

relation with India (see Kuwait–India relations) socio-economic indicators, 117–118 treatment of Filipino workers in, 123, 124 Vision 2035, 121, 125 Kuwait–India relations, 127 bilateral trade, 127–129 challenges in, 134 energy ties, 129–132 expatriates, 133 investments, 132 Joint Working Group, 130 on marginalization of Kuwait by India, 127 oil imports, 129–131 political ties, 127–128 refinery-cum-petrochemical project, 132 trade and commerce, 128–129 Kuwait Investment Authority (KIA), 132 Kuwait Petroleum Corporation, 132 L Labour force, nationalization of, 33 Labour rights, 163 Lanba, Sunil, 201, 201n107 Libyan National Army (LNA), 215, 216 Liquefied natural gas (LNG), 150, 151, 164, 169, 171, 172 M Majzooban-e-Noor (online newspaper), 76 Manama, 41, 46, 47, 50, 51 Mansoor, Farooq Yasin (Farooq Takla), 220, 224 Maritime Silk Route (MSR), 176 Martyr’s Foundation of Iraq, 108 Mattis, James, 240 MbS, see bin Salman, Mohammed

277

Medanta, 174 al-Mekhlafi, Abdulmalik, 245 Middle East Arab Spring protests, 121 educational programmes in Indian universities, 34 relation with India, 35 religious contacts with India, 35 Middle East Institute at New Delhi (MEI@ND), 36–37 Modi, Narendra, 21–23, 31, 57, 60, 78, 80, 88, 90, 118, 127, 136, 144–146, 145n37, 148, 150, 154, 155, 158, 168, 169, 178, 198, 200, 200n104, 200n105, 203, 212, 221, 222, 226, 230, 259, 260, 267, 268 Mohammed, Fatema Abbas Qasim, 48 Motishwar Mandir (Muscat), 154 Muslim Brotherhood, 6, 7, 161, 182–184, 183n19, 187, 214, 215, 253–255 Qatari support for, 161 Mysore University, 34 N al-Nahyan, Abdullah bin Zayed, 223 National Infrastructure and Investment Fund (NIIF), India, 175, 230 Natural gas reserves, in Persian Gulf, 55, 164 Nematollahi Gonabadi (Sufi Muslim order), 76 Netanyahu, Benjamin, 21, 140 Non-resident Indians (NRIs), 248, 264 O Office of the UN High Commission for Human Rights (OHCHR), 45

278 

INDEX

Oman Darfur rebellion (1963-76), 143 domestic developments in; economy, 15; foreign policy, 8, 118, 139, 155; politics, 137–139; society, 143–144 Duqm Port, 142, 146, 147 Emirati Vision 2021, 15 Houthi rebels, 140 involvement in Qatari crisis, 139, 256, 260 job market in, 138, 141 Khazzan gas field, 143 labour policy, 138 Majlis al-Shura (Consultative Council), 137 management of budgetary constraints, 141 Ministry of Commerce and Industries, 153 Netanyahu’s visit to, 140 oil reserves, 141, 150 rate of unemployment, 142 relation with India (see Oman–India relations) socio-economic indicators, 135–136 Sultanate of, 136, 137, 139, 144, 150–155 Oman-India Joint Investment Fund (OIJIF), 153 Oman–India relations anti-piracy operations, 147 Ashgabat Agreement (2011), 147 bilateral trade, 140, 149, 150 challenges in, 155 Chinese influence on, 147 comprehensive strategic partnership, 155 on conduct of military exercises; Al-Najah, 148; Eastern Bridge, 148; Naeem al-Bahr, 148 diplomatic relations, 145

energy ties, 136 expatriates, 143, 154 investments, 141 kafala system (sponsorship), 154 maritime trade and cultural exchange, 146 Motishwar Mandir, 154 MoUs/agreements, 146 Oman-India Joint Investment Fund (OIJIF), 153 Operation Rahat, 149 political ties, 145–147 security and defence, 146 Sultan Qaboos Grand Mosque, 154 trade and maritime ties, 145 on use of Duqm Port, 142 visit of Prime Minister Narendra Modi to Muscat, 144 ONGC Videsh Limited (OVL), 114, 222 Operation House of Cards (2018), 67 Operation Rahat, 149 Organization of Petroleum Exporting Countries (OPEC), 5, 71, 125, 150, 162, 162n12, 164, 190n50, 193, 258 Organized crimes, 79, 80, 259 Overseas Indian Facilitation Centre (OIFC), 50 Overseas Indians, in Gulf countries, 31, 264 P Pasargad Bank (Iran), 79, 85, 90 Passport Index, 18 Peninsula Shield Force (PSF), 42 Persian Gulf Series, 36 Petronet, 171 Popular Mobilization Unit (PMU), 99, 102 Prabhu, Suresh, 145, 150, 222

 INDEX 

Pradhan, Dharmendra, 222 Public debt-to-GDP ratio, 103 Putin, Vladimir, 210 Q Qaboos, Sultan, 135–137, 140, 143, 145, 145n37, 146 al-Qassabi, Majid, 200 Qatar Al-Udeid airbase, 162 Barzan natural gas facility, 164 crisis of June 2017; Kuwait involvement in, 160; Oman involvement in, 160 domestic developments; economy, 163–165; foreign policy, 161–163; politics, 159–161; society, 165–167 Dubai model, 161 economic boycott of, 187 economic prosperity of, 167 FIFA World Cup (2022), 163, 165 Gender Development Index (GDI), 167 Gender Inequality Index, 167 human rights violations, 165 hydrocarbon production and exports, 163 intra-Gulf dispute over, 134 kafala system, 166 as largest supplier of LNG, 172 Najdi-tribal customs and Wahhabi teachings, 165 Saudi-led boycott and blockade of, 158 socio-economic indicators, 157–158 state-owned sovereign wealth fund, 174 support for Muslim Brotherhood, 161 Qatar Airways, 164, 174

279

Qatar–India relations challenges in, 160, 175–176 Chinese influence on, 176 cooperation in maritime security, 169 energy procurement agreement, 168 energy ties, 171–173 expatriates, 165, 174–175 on GCC crisis, 163, 169 investments, 173–174 Joint Defense Cooperation Committee (JDCC), 169 Joint Working Group (JWG), 175 Modi, visit to Emirate, 168 people-to-people contacts, 176 political ties, 168–169 trade and commerce, 169–171 Qatar Investment Authority (QIA), 173 R Radicalization, among the Gulf returnees, 32 Rajab, Nabeel, 44, 45 RasGas, 171 Regional political challenges, in Persian Gulf GCC crisis, 6–7 internal tensions, 8–12 Iran and JCPOA, 1–6 Yemeni crisis, 7–8 Religious contacts, between India and Middle East, 35 Religious Freedom Report, 76 Religious minorities, discrimination of, 70, 76 Reporters without Borders, 76, 197, 220 Rouhani, Hassan, 3, 4, 10, 11, 22, 59–64, 78, 80, 88, 89 Russia, intervention in Syrian civil war, 67, 210

280 

INDEX

S Al-Sabah, Jaber al-Mubarak, 118, 119, 121, 127 al-Sadr, Muqtada, 68, 96, 97, 103, 189 Saleh, Ali Abdullah, 235n1, 236, 237 al-Sarraj, Fayez, 216 Saudi Arabia anti-Iranian posture, 180 anti-woman image of, 16 Aramco, 204, 205, 207, 209 bankruptcy law, 194 domestic developments; economy, 191–195; foreign policy, 187–191; politics, 179–186; society, 195–197 economic boycott of Qatar, 6, 187 foreign direct investment (FDI), 193, 206, 207 Houthi rebels missile attacks on, 5, 8, 11, 239 Khashoggi affair, 10, 18, 23, 179, 186, 188, 189, 200, 215, 240 local tribal customs, 179 military intervention in Yemen, 186, 187, 237 National Industrial Development and Logistic Programme (NIDLP), 192 National Transformation Programme 2020, 9 relation with Bahrain, 6, 40, 42, 46, 195, 215 relation with India (see Saudi–India relations) reopening of political ties with Baghdad, 189 rivalry with Iran, 5, 30 Saudi Vision 2030, 9, 15, 191, 199 Shura Council, 195 socio-economic indicators, 177–178 supply of US weapons to, 10 Women2Drive movement, 181

Saudi Arabian General Investment Authority (SAGIA), 207 Saudi Centre for International Strategic Partnership (SCISP), 203 Saudi–India relations challenges in, 209–210 energy ties, 203–206 expatriates, 207–208 hajj pilgrimage, 208–209 investments, 206–207 Janadriyah Festival, 178, 198, 199, 260 Joint Commission Meeting (JCM), 200, 202 Modi-MbS meeting, 198 political ties, 198–201 showcase of Indian values and traditions, 198 Strategic Partnership Council, 203 trade and commerce, 201–203 Saudi National Guard, 198 Save the Children, 242 Sea Lines of Communication (SLoC), 237 Sebacic Oman (Indo-Oman JV), 154 September 11 terror attacks, 32 Severe acute malnutrition (SAM), 243 Shale oil, supply of, 33, 261 al-Sharif, Manal, 181 al-Shehi, Saleh, 197 al-Shimmari, Najiha, 108 Shura Council, 138, 195, 235 Singh, Raj Kumar, 222 Singh, V. K., 107, 108, 128, 133, 199 Social security, 197, 219, 242 Societal discrimination and harassment, 76 Sotoudeh, Nasrin, 75 Southern Transition Council (STC), 8, 216, 238

 INDEX 

Sovereign wealth fund (SWF), 40, 60, 93, 117, 136, 158, 163, 174, 175, 177, 212, 217, 218, 257 State Bank of India, 40, 60, 118, 136, 153, 158, 178, 212 State General Reserve Fund of Oman, 153 Stockholm Agreement (2018), 8, 240, 241 Strait of Hormuz, 6, 139, 142, 155 Suicide bombers, 69, 82, 83 Swaraj, Sushma, 22, 50, 78, 81, 107, 108, 118, 127, 128, 133, 145, 168, 175, 193, 198, 199, 223, 260 Syria Ahvaz attack, 69 IRGC military strike on, 69 Israeli airstrikes, 67 Israeli–Iranian confrontation in, 67, 91 Operation House of Cards (2018), 67 Russian intervention in, 67, 90 T Territorial waters, 74 al-Thani, Hamad bin-Khalifa, 157, 159, 161, 255 Transparency International, 20 Trump, Donald, 1–5, 10, 31, 32, 60, 61, 63–66, 70, 85–88, 90, 102, 112, 122, 123, 140, 158, 163, 187–190, 215 Turkey–Iran relations, 6, 65, 66, 101, 102, 160, 162 U UAE–India relations challenges in, 232–233 on collapse of Jet Airliner, 233 Desert Eagle II (military exercise), 224

281

on energy security, 227 energy trade, 227–229 expatriates, 231–232 on extradition of terror accused and fugitives, 224 High-Level Joint Task Force on Investment, 222 Hindu temple, construction of, 21, 222 investments, 222, 230–231 Joint Commission meeting (JCM), 223 Modi’s address to gathering of Indian community, 222 political ties, 221–223 Princess Latifa al-Maktoum case, 233 security and defense, 224–225 on signing of the extradition treaty, 224 Swaraj’s visit to Abu Dhabi, 223 tariff and non-tariff barriers, 226 trade and commerce, 225–227 Zayed Gandhi Digital Museum for peace, tolerance and sustainability, 223 Unemployment, rate of, 40, 60, 73, 94, 104, 118, 136, 142, 158, 178, 193, 212, 236 United Arab Emirates (UAE) Arab Spring protests, 214, 215 Barakah Power Plant, 217 censorship and surveillance of social media, 220 domestic developments; economy, 217–218; foreign policy, 215–216; politics, 213–214; society, 218–221 Federal National Council (FNC), 211, 213, 214 Federal Supreme Council (FSC), 213 freedom of expression, 220 Gender Development Index, 220

282 

INDEX

United Arab Emirates (UAE) (cont.) gender equality, issue of, 214 Government of National Accord (GNA), 215 gross domestic product (GDP), 212, 217, 218 Human Development Index, 211, 212, 220 Lower Zakum oil fields, 222, 227 military intervention in Yemen, 216 National Election Committee (NEC), 213 National Infrastructure and Investment Fund (NIIF), 230 President of, 213, 214, 255 reform program in empowering women, 214 relation with India (see UAE–India relations) as second largest economy in the Middle East, 217 socio-economic indicators, 211–212 Southern Transition Council (STC), 8, 216, 238 sovereign wealth fund (SWF), 212, 217 support and arming of General Khalifa Hafter, 215 sympathies towards Muslim Brotherhood, 214 Vision 2021, 218 United States (US) economic sanctions against Iran, 2, 60, 63, 189 Joint Comprehensive Plan of Action (JCPOA), 2, 11, 60, 63–66, 72, 81, 85, 139, 189 Khashoggi affair, 10, 186, 188, 240 nuclear deal with Iran, 2, 3, 11, 61, 63, 64, 70, 77, 88, 189, 209 relation with India, 89, 90 as shale oil supplier, 33 supply of weapons to Saudi Arabia, 10

Universal civil rights, 41 UN Security Council, 190, 241, 246 resolutions of, 190, 241, 246 Uzhunnalil, Tom, 149, 245 V Value-added tax (VAT), 191, 193, 258 W Wa’ad (National Democratic Action Society), 42 The Washington Post, 10, 183, 184 Wassenaar Arrangement, 89 Weapons of mass destruction, 189 Women empowerment, 33, 138 Women, Peace and Security Index, 105 Women2Drive movement, 181 World Bank, 39, 46, 59, 60, 71, 93, 103, 124, 143, 157, 158, 164, 212, 241, 258, 259 World Food Programme, 108 World Future Energy Summit (Abu Dhabi, 2018), 222 X Xi, Jinping, 91, 191 Y Yemen civil war in; civilian casualties, 239; Hodeidah ceasefire (2019), 241, 247; outbreak of, 244; parties to, 238; stakeholders in, 237 domestic developments; economy, 241–242; humanitarian situation, 242–244; raging conflict and peace process, 237–241 Friends of Yemen conference, 237 gross domestic product, 241

 INDEX 

Houthi rebels, 237–240 humanitarian crises, 237 relation with India (see Yemen–India relations) Saudi-led fighting in, 239 social security, 242 socio-economic indicators, 235–236 Southern Resistance Forces (SRF), 238 Southern Transitional Council (STC), 238 Stockholm Agreement (2018), 241 Yemen–India relations challenges in, 250–251

283

energy ties, 248 expatriate community, 248 Hadrami diaspora, 244 Operation Raahat, 245 on outbreak of the civil war, 244 on safety and security of Indians, 244 trade and commerce, 246–247 Yemeni Rial, depreciation of, 242 Z Zainal, Fawzia Abdullah Yusuf, 48 Zarif, Javad, 64–66, 69, 81