The Indian Ministry of External Affairs (MEA) rarely comments on developments that do not directly concern India, and when it does, it tends to be purposefully low-key. So observers were surprised by its prompt and enthusiastic welcome of full normalization of ties between the United Arab Emirates (UAE) and Israel, and its reference to both countries as key strategic partners. But indeed, the Abraham Accord speaks to India’s vital national interests. Not only does the accord link two of India’s most substantial trade partners, but it is also likely to have a very positive effect on the South-West Asian region as a whole.
Over the past few decades, India has reinvigorated its age-old networks across the Arabian Sea. It currently has a diaspora of eight million people in the South West Asian region remitting nearly $50 billion back to India annually. Thanks heavily to the import of two thirds of India’s crude oil requirements from the Gulf, India’s annual trade with the region stands at more than $150 billion – over a third of that with the UAE alone. India also maintains a substantial and increasingly lucrative two-way exchange with the UAE in investment and services. The people-to-people contacts between India and the UAE have been simultaneously growing by leaps and bounds: Dubai, for instance, counts Indians as its largest tourist group as well as some of its biggest investors in the real estate and the free zones.
With so much at stake, India has carefully built supportive diplomatic architecture with the South West Asian countries. Unlike others, India has studiously avoided adopting a prescriptive or intrusive or adventuristic regional profile; preferring instead to plod along with a consensual narrative that often seems disconnected from the ground reality. Through this cautious and incremental approach, India has constructed low-profile bilateral alliances aimed at promoting regional stability and security. It has fostered low-key cooperation in defense, security and anti-terrorism domains bilaterally with the important regional countries, including both the UAE and Israel. In doing so it has avoided costly defence entanglements. While such “timidity” prevents outblown expectations, it earns India few IOUs from the ruling establishments.
The UAE-Israel accord could impact this structure in multiple ways. First, the normalization of ties between Israel and the UAE (and Bahrain) seems likely to lighten the drag the Palestinian conundrum has long imposed on India’s dealing with the two sides of this equation. It would also seem to take the wind out of the sails of those using political Islam to malign India’s secularism. On the other hand, the accord pushes India to adjust to the new realities stemming from the accord itself, the diminishing Pax Americana, and a buyers’ oil market. These and other factors will likely trigger far-reaching changes in regional geopolitics.
While it is a bit early to speculate about the endgame, a lot depends on the direction this incipient re-polarization takes. Will other moderate Arab states normalize their ties with Israel? What is the reaction of the regional opponents of the accord, such as Iran and Turkey? Increased instability could grievously affect Indian interests by putting Indian diaspora lives in danger, raising oil prices, etc. It is sufficient to recall the trauma of the Iraqi invasion of Kuwait in 1990 inflicted on the Indian economy.
Looking back to the positive, the UAE-Israel accord has the potential to disrupt the current economic order in the region in several domains, where a large complementarity exists between the signatories: Israel has niche strengths in defense, security and surveillance – as well as arid farming, solar power, horticultural products, high-tech, gem and jewelry manufacture and pharmaceuticals. Tourism, real estate and financial service sectors on both sides have suffered due to the pandemic, and this more overt relationship promises a reciprocal boost to these areas. The Gulf Cooperation Council (GCC) states are large exporters of capital, which Israel needs to power its tech sector.
Further, Israel has the potential to supply skilled and semi-skilled manpower to the GCC states, particularly from the Sephardim and Mizrahim ethnicities, many of whom speak Arabic. Even the Israeli Arabs may find career opportunities to bridge the cultural divide. Israel is a “start-up nation” and its stakeholders could easily fit in the various duty-free incubators in the UAE. As India has significant engagement with the GCC states in many of these domains, and has a substantial tech sector itself, for India there is obvious gain from a trilateral collaboration, development and exchange — and the issue from these efforts would logically have India as a large and close market.
India has always believed that harmony in the South-West Asian region best serves her national interests. She can therefore be counted upon to work with regional stakeholders, including the UAE, to make sure the UAE-Israel accord moves towards these objectives.