K.C. Singh | Trade & Ukraine: Modi's fine balance in Europe

Prime Minister Narendra Modi visited Europe last week, from May 2 to 4, for comprehensive discussions with Germany and the five Nordic nations. After that, on the way home, he paid a quick working visit to France, enabling him to convey his felicitations in person to recently re-elected President Emmanuel Macron.

Two common elements in his discussions with Germany and France were Ukraine and Afghanistan. All discussions covered climate change, sustainable development, innovation, digitalisation, green and clean growth, etc. The European Union, with a population of 500 million and 27 members, provides a huge trading, investment, and technology bloc, which is a natural partner for India. The desire for a multipolar world is mostly shared by the Europeans, although Ukraine forces them to reimagine a strong American security role.

Germany is demographically, with 80 million population, and economically the powerhouse of Europe. Its GDP places it at number one in Europe and fourth in the world. The Ukraine war exposed Germany’s strategic hesitation as it delayed heavy weapons’ transfers, though it did scrap the Nord Stream II gas pipeline project with Russia. As the current chair of the Group of Seven (G-7), Germany has slowly come abreast with the other members of the EU which were more forthright in opposing Russian aggression. France was also seen as soft on Russia as President Macron kept talking to Russian President Vladimir Putin, despite his preoccupation with his own re-election. It is thus not surprising that in separate joint statements with India, Germany and France both reflected their positions, with varied emphasis.

Germany “reiterated its strong condemnation of the unlawful and unprovoked aggression against Ukraine by Russian forces”, while France merely “reiterated its condemnation”. India, of course, did not join the condemnation, strong or normal, but went on to jointly voice humanitarian concerns and the need for hostilities to end and dialogue and diplomacy to be resumed. That took care of the bear in the room and cleared the field for bilateral and plurilateral talks.

The trade between India and Germany is worth around $20 billion annually. But several new themes or redefined old themes can be seen now. There are several “Partnerships” listed, covering “Shared Values and Regional and Multilateral Interests”, “Green and Sustainable Development”, “Political and Academic Exchange, Scientific Cooperation, Mobility of Workforce and People” and, finally, “Global Health”.

On some, concrete action was initiated. Germany, with its demographic challenge and ageing population, needs skilled workers from abroad. A draft agreement was initialled on “Migration and Mobility”. This opens up avenues for the easy migration of skilled Indian workers. But the question arises how this synchronises with the “Atma Nirbhar Bharat” policy of the Modi government, which should be seeking to retain skilled citizens in India. The Chinese government does not market its skilled citizens.

The focus on climate change and renewables as well as the need to keep global warming within the 2º Celsius limit of the pre-industrial period base was prominent in the Prime Minister’s discussions with Germany, France and the five Nordic nations — Denmark, Finland, Sweden, Norway and Iceland. Interestingly, four of the five PMs were women. With Germany, the new focus on “agroecology” is significant. This year’s early heatwave across India, having affected the wheat crop in Punjab, is a sign of adverse climate change-engendered events likely in future. Hence, the focus is welcome on the need to manage natural resources, the challenges facing the rural population and small-scale farmers.

The Indo-German meeting was the Sixth Round of Inter-Governmental Consultations, which allowed a comprehensive review of bilateral relations in an “all-of-government” approach. At the multilateral level, the two nations have been part of “Group of Four”, or G-4, for nearly two decades. Along with Brazil and Japan, they have sought the reform and expansion of the UN Security Council. The interest of Germany and Japan has fluctuated, depending on the leaders in power. Former Chancellor Angela Merkel favoured a less than all-or-nothing reform, unlike India. It was necessary for Mr Modi to decipher Chancellor Olaf Scholz’s views on it.

On Afghanistan, of greater interest to India, both Germany and France echoed the standard concern about humanitarian situation, the resurgence of violence, the curtailment of access of women and girls to education and the human rights abuses and terrorism. Both agreed to continue providing humanitarian assistance. Only in the Indo-German statement was the Iran factor introduced, without naming the country, by demanding the restoration of the nuclear deal that former US President Donald Trump had scrapped.

Germany, as the G-7 chair, invited Mr Modi to the June 26-28 meeting at Elmau in the Bavarian Alps. Much was made of this in the Indian media, but the Germans have also invited Indonesia, South Africa and Senegal, three other prominent democracies. It is speculated that Indonesia, as the current G-20 chair, will be urged to disinvite Russia for the next meeting. Although India could dodge the Ukraine issue this time, as the focus could was on bilateral matters, that may not be so at the G-7 outreach. External affairs minister S. Jaishankar has made much of India importing less oil from Russia in a month than Europe does in a day. Germany is set to change that. An European Union ban on all oil imports from Russia is likely before that meeting. Currently, Europe imports about 2.2 million barrels of oil per day and a quarter of Europe’s gas requirements from Russia. Last year Europe spent $150 billion, with $104 billion on oil and the rest on gas. Saudi Arabia and the UAE have the surplus capacity to take that lag. But the question is will they, as they have strategically moved closer to the Iran-Russia-China axis. It may not stop the war, but would hamper the Russian war effort.

Joint statements broadly indicate the mutually perceived vision of future relations. The devil, as they say, is in the detail. The EU, especially Germany due to its automotive sector thrust, wants a Free Trade Agreement with India. India has not yet determined how to balance the opening of Indian markets against self-dependence. That the French companies withdrew from the latest submarine bid requiring Air Independent Propulsion technology to be shared shows reluctance to share cutting-edge technology. On the Rafale aircraft deal as well, it is unclear whether the Prime Minister’s intervention has helped or hindered technology sharing. The Anil Ambani episode was another distraction. High-profile visits may help, but fundamental interests prevail.