India s Engagement with the African Indian Ocean Rim States Speakers: Alex Vines, Head of Africa Programme, Chatham House Gareth Price, Head of Asia Programme, Chatham House Chair: Dr, James Brennan, SOAS Chatham House 21 April 2008 This summary is issued on the understanding that if any of the information is used, the speaker and Chatham House should be credited, preferably with the date of the event. In recent years India has strengthened its involvement in the African-Indian Ocean rim considerably. This shift in policy comes in part because of India s desire to compete with China s growing influence in the region. The Indian Ocean has immense significance to India s development. India s strategy is deepening not only commercially but due to concerns over its security and hegemony in the region, which are underpinned by India s 2004 maritime doctrine. The growing importance of the African-Indian Ocean rim to India is evidenced by increasing bilateral and trilateral efforts and improved relations, notably with Mauritius, the Seychelles, Madagascar and coastal states such as Mozambique, Kenya and Tanzania. Alex Vines and Gareth Price will discuss the motivations for African-Indian Ocean rim engagement and the implications for India and the region. Introduction: Alex Vines I would like to start by saying that this meeting holds particular relevance for the Africa Programme here at Chatham House because we, along with our sister institute in South Africa, The South African Institute of International Affairs (SIIA), have just published a jointly edited special issue of the South African Journal of International Affairs, entitled India in Africa. This special edition takes a current look at India in Africa and the challenges and opportunities presented by this engagement. So much has been written about China and Africa recently, and we felt that a more robust look at the engagement of India in Africa was necessary. The launch of the issue was policy-based, with the Indian foreign policy community's spotlight on Africa in the first week of April, when India hosted the first ever India Africa Summit in New Delhi. Gareth Price I know that Alex is going to use his discussion to talk specifically about the African-Indian Ocean rim and I will give a prelude to his piece by presenting an overview of Indian foreign policy.
There are a few ideas that contributed to India s foreign policy before 1990. First was a traditional policy of nonalignment, with its roots in anti-colonialism and pro-liberalism. Secondly, India s pro Soviet Union stance became a self fulfilling prophecy during Perestroika and the changing post-cold War international environment. The end of the Cold War gutted the core meaning of nonalignment and left Indian foreign policy without significant direction. The hard, pragmatic considerations of the early 1990s were still viewed within the nonaligned framework of the past, but the disintegration of the Soviet Union removed much of India's international leverage, for which relations with Russia and the other post-soviet states could not compensate. It is important to consider that those people who are now running the country grew up in these political times and that their political thinking was shaped by these events. In the early 1990s, after the collapse of the USSR, India went through an introspective period in its foreign relations. Domestically, India had to consider the exigencies of domestic economic reform and development. However, India still had a role to play as a moral leader for the developing world. It also had ambitions of positioning itself as a regional power in a multipolar world, evidenced by its interactions with other poles such as South Africa and Brazil. Traditional anti-colonialism became outdated in foreign policy and was superseded by the rising importance of economic factors. India had a wealth of small private firms investing abroad in IT and appropriate technologies. One example is Indian and Japanese buses exported to Afghanistan. While the Japanese buses were expensive and difficult to repair, the Indian buses were more suitable and easier to run. Since the late 1990s India s foreign policy taken another turn. New Delhi is showing its keenness to interact within international arenas and is pushing to secure a position on the reformed Security Council at the UN. Energy security is now a prime demands in 20-30 years time based on a high growth rate. India also faces direct competition from a rapidly expanding China. Both governments are committed to regional and sub-regional cooperation, and bilaterally both accord priority to resolving their border disputes as well as to their partnership in overseas investment, at times jointly bidding for energy projects. But despite the rhetoric, similar regional and global interests mean the two countries are often in competition. The relationship is marred by ongoing border disputes and competing geopolitical and economic interests in third countries. India has also strengthened its ties with the US considerably. There is a large Indian population living in America and although India s foreign policy does not contain China as much as the US would like, both countries share concerns over their Maritime policy and on Pakistan. Low-levels of public interest in international affairs may in part explain the short-termism of India s foreign policy. The population s focus is very much on the local rather than the global. For example, a new feature of India s aid has been credit lines and tied aid, providing benefits to India economically. Yet the government is unable to sell this concept as an aid project domestically because of the high levels of rural poor at home. India is of course a political recipient of aid for exactly those reasons. While India has the economic and political ambition to play a bigger international role, it has been much more pragmatic in its actions. Despite this, India comes with the least baggage of any of the potential global powers. It does not have a history of colonialism, human rights abuses, improper treatment of workers and it is learning that a policy of non-interference is less tenable under the current international framework. As such, India has something more to offer than China.
Alex Vines Colonial history has tied a number of African-Indian Ocean rim countries to the India subcontinent since the 16 th Century. Mozambique was a staging post for the Portuguese in Goa and often used over stamped Indian rupees. The British East Africa Protectorate (now Kenya and parts of Uganda) was originally administered out of Bombay and Indian rupees were its currency from 1897-1920. Today rupees remain the currency of the Seychelles and Mauritius and a significant Indian diaspora lives along the coast of East and Southern Africa, particularly in Mauritius, Kenya and South Africa. India has its most comprehensive diplomatic presence in this part of Africa, with embassies or high commissions in Kenya, Tanzania, Mozambique, South Africa, Seychelles, Madagascar and Mauritius. In a former lifetime I was an archaeologist, and on an excavation in Zimbabwe we came across Indian trade goods, including Indian trade beads. It shows how strong 16 th century Indian branding was that when the Portuguese arrive, their bead couldn t sell because of the widespread use of the Indian bead. The point I am making is that the history of engagement is long and deep. There are seventy thousand nationals of Kenya of Indian origin, India-Africa trade stood at US $867 million in 1991. By 2006-7, India s exports to Africa stood at $8.4 billion, while imports aggregated $11.4 billion, having almost doubled since the previous year. The overall surge in imports from Africa is mainly due to these increased Nigerian oil imports, which now represent India s second largest source of imported crude. This is followed by Gold from South Africa. ONGC Videsh also invested $750 million to acquire a 25 percent partnership in the Greater Nile Petroleum Company (GNOP) in Sudan in 2003. Today, India gets 3.24 million tonnes of equity oil from GNOP. Over the past five years, India has extended credit worth $2 billion to African countries, of which more than half has already been taken up. Its economic links are moving beyond its traditional Indian Ocean and Commonwealth partners. Investment in Cote d Ivoire, for example, is expected to grow to $1 billion by 2011, which represents 10 percent of all Indian foreign investments over the past decade. Increasingly it is China, rather than Pakistan that worries New Delhi s policy makers. In 1999, China s trade relations with Africa were less than that of India s. Since then, Sino- African trade has soared to $55 billion. India s concern about Chinese expansion is very real and most visible in the African-Indian Ocean rim, with deepening ties such as defence agreements with Mozambique and the Seychelles. The opening of an Indian surveillance installation in Madagascar symbolises the importance of the Indian Ocean as New Delhi s back yard. Most of India s imports and exports travel by ship, so keeping sea lanes safe is a strategic priority. India is looking to expand its commercial activities across Africa and Indian business is not shy of instability. India s most important relationship in the African-Indian Ocean rim is with Mauritius which has 1.25 million inhabitants of Indian origin. The island has become a significant provider of offshore banking and investment services for a number of South Asian countries (particularly India), as well as for member states of SADC and the IOR-ARC. Mauritius, a stable middle-income country with a bilingual and skilled workforce, is also attractive for foreign investment because of its good and soon- to-be-expanded port facilities. China has recently decided to use Mauritius as a tax free conclave.
India regards mainland Africa as a source of natural resources and somewhere to expand its commercial base, but its behaviour in the African-Indian Ocean rim is strategic and military. India is wary of Pakistani, the US and particularly Chinese military influence, which has led to the increasing significance of the African-Indian Ocean rim states. Mauritius has regularly supported India from selective membership of IOR-ARC on issues related to defence. Since it was published in 2004, India s Maritime Doctrine has shaped India s policy in the Indian Ocean. It asserts that all major powers of this century will seek a toehold in the Indian Ocean Region and envisages an ambient naval presence from the Strait of Hormuz to the Strait of Malacca. Chinese diplomatic and economic expansion in the Indian Ocean is watched particularly closely by India. China is increasing its access to global ports and airfields and developing special diplomatic relationships from the South China Sea to the Arabian Gulf. The state-owned China Harbour Engineering Company, with a $198 million Chinese loan, helped Pakistan complete Phase I for its deep-sea port at Gwadar, just 72 kilometres from the Iranian border at the mouth of the strategic Strait of Hormuz, a major conduit for global oil supplies. The significance of the Indian Ocean to India s economic development and security is immense. Most of India s trade is by sea and nearly 89% of its oil arrives by sea. Avoiding disruption in the sea lanes of communication in the Indian Ocean are vital for India s economy. China has also increased its presence in the Seychelles. The most impressive embassy in Victoria today belongs to the Chinese - staffing some forty diplomats. India was particularly alarmed that Chinese President Hu Jintao ended his tour of eight African states in early 2007 by visiting the Seychelles. Symbolically in March 2007, 10 members of China s communist Youth League arrived in the Seychelles, the first of a group of more than 300 youth volunteers. Increasing Chinese activity in the Seychelles resulted in External Affairs Minister Pranab Mukherjee signalling India s concern to Beijing over its direct encroachment into what India regards as its sphere of influence. India s response to perceived threats has been to deepen its military activities with Seychelles, Mauritius and Madagascar. The Indian navy has patrolled the Exclusive Economic Zone of Mauritius since 2003. India has similarly agreed on defence co-operation with Seychelles through a Memorandum of Understanding drawn up in 2003 for India to patrol its territorial waters. A further response has been India s first listening post on foreign soil, which began operations in northern Madagascar in July 2007. New Delhi has apparently rented land for $2.5 million from the Malagasy government in order to construct a radar surveillance station with high-tech digital communication systems to watch shipping movements. Also, in 2006, a defence agreement was signed in Maputo to enable the Indian navy to organise regular patrols off Mozambique s coast and to supply it with arms and services for defence purposes. Finally, piracy and counter-terrorism also feature in India s increasing naval interest in the African-Indian Ocean rim. Regular acts of piracy in the sea off Somalia has made that country s waters the most dangerous for merchant shipping in the world. Indian ships are not immune; an Indian commercial vessel and its 35 crew were hijacked by Somali gunmen in March 2006, for example. In conclusion, India s African-Indian Ocean rim strategy is deepening and, unlike India s engagement in other parts of Africa, is not simply about India s economic interests, but is underpinned by India s 2004 maritime doctrine.
Question & Answer Q. You did not mention Diego Garcia in your presentation. Can I ask why? A. I do mention Diego Garcia in my article, but I believe that it is not as important today as it has been during previously. Diego Garcia is not being allied to as much. Talk about it is coming more from Mauritius and Seychelles. Q. Has India not been pivotal in the FCO s appeal against the Chagossians right of return? A. What struck me was the silence of India on the issue. Gareth is correct in that there is a policy decision out of Delhi not to make noise about Diego Garcia. This is despite the fact that at the India-Africa summit recently the dissemination on the sidelines was that India are not the same as China. Q. You talked about India having a strategic policy in the African-Indian Ocean rim and an economic one in East Africa. What would you say India s interests are in the East? A. Commercial and private sector led investment such as pharmaceuticals, ICT and agribusiness exists on the East coast and the West. The difference on the East coast is India s historic footprint. Q. Could you say something about India s relations with South Africa? A. The history of India and South Africa is long and feted, stretching from Mahatma Ghandi to India s support for the anti-apartheid movement. More recently, we have seen the evolution of Indian Ocean rim agreements on trade through IOR-ARC. These did not work largely because countries such as Australia and South Africa were not committed to them. However, the IBSA forum has succeeded. Brazil, South Africa and India are now a club of middle-income countries with growing ambitions on the Security Council and seeking benefits in the WTO. The rhetoric of South-South cooperation contrasts with the ambitions of these countries they are not helping the lowest income countries. There is incoherence in their foreign policy and they have not yet recognised or addressed it. Q. What is the potential for tension between China and India to increase in the future? A. In terms of the Seychelles I don t think that there is. India s connection there is embedded in the navy, in hospitals...everywhere. They are investing as a counter to the Chinese. I do not think that the Chinese deliberately want to irritate India and I believe that we tend to overestimate Indian capacity to think through these political considerations. Mistakes are bound to happen but there will not be a flare up or a defense race. In fact, Indian and Chinese competition can be manipulated by African countries to their betterment it is a classic strategy. Q. Is there any appetite for India developing good governance/capacity building in African countries? A. India knows how helpful capacity building is. There are fewer scandals with them than with the Chinese. However, India has also clumsily attempted to copy package deals set up by the Chinese. In some cases these have come home to roost and officials in New Delhi have learnt their lesson the harsh way. Of course, India is heavily involved in peacekeeping operations on the continent, with a presence in Liberia, Cote d Ivoire and recently in the North East of DRC.
Scandals do occur with all peacekeeping nations, but that is more an issue to do with UN oversights and checks and balances an issue of blue helmets following standard operating procedures. It is becoming more and more the case that the Indian military are no longer engaged in peacekeeping operations to generate money. Their reputation has been exposed and they now find themselves in a position where they are able to pick and chose more where they become engaged. Q. What is India trying to do in West Africa? A. Diamonds are very important and India is desperate for more access to them. India is also concerned by increasing beneficiation policies, which close down its options. With the opening of Diamond Trading Company Botswana recently, Botswana now has one of the world s largest and most sophisticated diamond sorting and valuing operations. Namibia and Angola want the same and ultimately this is threatening India s polishing industry. India is also exporting to Senegal. One example is 350 brand new Tata buses to replace second hand Volvo buses in a deal worth $18 million. It also exports cars, medicines and technology on the West coast. India has a longer-term vision in Africa and most African countries would support India on the Security Council if any reform should take place. Where India sits on an African representative, most likely to be either Nigeria or South Africa, is difficult to tell. Q. The influx of new Chinese to Africa is well documented. Is there a similar influx of new Indians? A. In terms of East Africa it is very much the diaspora community who are still there. In West Africa the Indian population is clearly new. In Dakar they are eroding away the Lebanese privileged position and have them on the back-foot in business. The World Bank says that Indian firms employ a larger number of Africans in middle and senior management. This may be true but disputes and problems have occurred. For example, in Nigeria, union members abducted eleven Indian steelworkers in 2007 over a pay dispute. I think that the diaspora community has been alarmed by the Chinese encroachment and their complaints have led to a rolling out strategy, including the reopening of some previously closed Indian embassies. Q. Could you comment on the power interplay in the Indian Ocean, relating to the US and France s strong presence? I m thinking particularly of President Sarkozy s statement in February, where he talked about renegotiating defense agreements and fazing out of Djibouti. Is this of concern to India? A. A reduction in Djibouti does not mean a withdrawal of France from the African-Indian Ocean rim because they will always have a presence in Reunion. Also, I do not think that India has felt the need for engagement in the Comoros. End.