Adding fuel to the South Asian boiling waters Saudi Arabia has quite recently, released a 20 Riyal banknote to commemorate its presidency of organizing the G-20 Summit. What is interesting for the world and irks India, Pakistan and China is that on the world map shown on the banknote Ladakh, Gilgit-Baltistan and Kashmir have been removed from Pakistan and India. The Saudi move has roused angst amongst the three and has serious repercussions if not mended soon. Saudi Arabia opened new vistas of strategic relations with India as it slices a significant chunk away from the Muslim world in favour of Indian position on Kashmir. In view of the US, Israel and UAE understanding and Nagorno-Karabakh alignments India and Saudi Arabia have peddled forth towards a new era of relations where they pose a serious threat to Sino-Pakistan vision of South Asia and OBOR expansion in the Middle-East. The Riyal 20 banknote has some intent behind and the repercussions on their bilateral relations as also on the politics of South Asia and Middle East.
India and Saudi Arabia, the two regional giants have shared historical cultural relations since past but in the post-World War II scenario they developed distances on Kashmir and OIC politics. Kashmir determined the Indo-US, Indo-Pak and Indo-Saudi Arabia relations till the collapse of USSR and continues to influence the strategic shifts in the post-cold war era. Saudi Arabia, till recently, supported Pakistan’s stand on Kashmir. It also provided frequent economic packages to Pakistan to bail it out of critical situations like conflict with India, internal turbulences and jihadi operations. The Soviet intervention in Afghanistan and India’s proximity with the former also irked it. However, after the economic depression of 2008 Saudi Arabia has changed its policy towards Indian subcontinent as it can’t rely on a weak partner at the cost of rising India, the world’s largest prospective market.
It was in the nineties that the two sides took serious steps over improvisation of relations when Saudi Arabia helped India (home to second largest Muslim population in the world) attain the observer status in the Organization of Islamic Cooperation (OIC). It also became critical of Pak sponsored terrorism in India in the following years. King Abdullah of Saudi Arabia became the first state head to have visited India after a period of 52 years in 2006, thus finally breaking the ice. The move was coincided with a shift in India’s strategic relations with United States when India signed a nuclear deal with US in the same year. The Saudi king and the Indian Prime Minister Manmohan Singh also signed an agreement forging a strategic energy partnership that was termed the “Delhi Declaration”. The pact provides for a “reliable, stable and increased volume of crude oil supplies to India through long-term contracts” (CNN January 27, 2006). Both nations also agreed on joint ventures and the development of oil and natural gas in public and private sectors. An Indo-Saudi joint declaration in the Indian capital New Delhi described the king’s visit as “heralding a new era in India-Saudi Arabia relations” (BBC, January 27, 2006).
Saudi Arabia is India’s fourth largest trade partner (after China, USA and Japan) and is a major source of energy as India imports around 18% of its crude oil requirement from the Kingdom. In 2018-19 (as per DGFT), India-Saudi bilateral trade has increased by 23.83 % to US$ 34.03 billion. Indo-Saudi bilateral trade reached US$36 billion in the financial year 2019-20. The Indian investments in the Kingdom have grown significantly, especially after the signing of Bilateral Investment Promotion Agreement (BIPA) and Double Taxation Avoidance Agreement (DTAA) in 2006. However, the trade surplus is in favour of Saudi Arabia and recently it has focused on exploring more fields except oil in India. During the visit of Saudi Prince to India in February 2019, the declaration of a mammoth investment of US $100 billion in the next few years in different sectors like energy, refining, petrochemicals, infrastructure, agriculture, minerals and mining, manufacturing, education and health have paved a way for further consolidation of their mutual relations. The Ministry of Finance also signed an MoU with the Saudi Ministry of Energy, Industry and Mineral Resources in February 2019 to invest in India’s National Investment and Infrastructure Fund Limited (NIIF). The NITI Aayog-Saudi Centre for International Strategic Partnership workshop in Riyadh on 17-18 February, 2019 identified 40 potential projects for investments. Subsequent to the Framework Agreement signed between Invest India and SAGIA in February 2019, the Invest India Team visited the Kingdom multiple times and held wide interactions with the major players in the Kingdom in diversified sectors (Embassy of India, Riyadh, Saudi Arabia).
The Middle East
After the US move of withdrawing from active role in the region the new aspirants for dominance like Iran and Saudi Arabia are looking for diversification and intensification of relations with the prospective prolific partners. PM Modi’s visits to Middle East have also given significant energy to India’s policy objectives. India is a strategic partner of Iran, Saudi Arabia and Israel and has a tremendous scope of playing crucial role with its highly demanded soft power resources. In the meantime the increased Chinese presence and its ambitious OBOR project have triggered a new wave of strategic thinking in the region with the debilitated US and rejuvenating Israel.
In response to abrogation of special status under article 370 by India to Jammu & Kashmir Pakistan government had released a new political maps in September that claimed the Indian territories of Junagadh, Sir Creek, and Manavadar in Gujarat, Jammu and Kashmir and a part of Ladakh. Pakistan also proposed November 15, 2020 as the date for elections in disputed Gilgit-Baltisatn area which receives strong Indian protests. The revocation of Article 370 had the backing both of Saudi Arabia and UAE for whom India has emerged as a significant trade and strategic partner. The Saudi Arabian step of showing Kashmir as an independent state is just to disgrace the stakeholders especially Pakistan which had challenged its leadership recently over its Kashmir policy among the members of OIC. This led to the revocation of huge loans to Pakistan by Saudi government and the retaliation doesn’t end here. It also seems to be adapting to the new developments and alignments, the emergence of which takes shape in view of Turkish-Iranian dream of leading the Muslim world.
With the announcement in August of the U.S.-brokered Israel-UAE ‘normalization deal’ it appears that a new corridor of co-operation is being developed from the U.S. (and Israel), through the UAE (and Kuwait, Bahrain, and in part Saudi Arabia) through to India, as a regional counterbalance to China’s growing sphere of influence (Simson Watkins). India is likely to leave China behind as the top driver of growth in oil demand by 2024. India has also shored up its energy investments in the region. India’s ONGC Videsh has acquired a 10% stake in an offshore oil concession in Abu Dhabi, UAE, for $600 million (Economic Times). The August deal of ‘Israel-UAE thaw’ appears to have crafted a new zone of collaboration among US, Israel, UAE, Saudi Arabia and India in order to deal with the OBOR challenge from China. In the meantime the Saudi move highlights Kashmir as a major issue yet to be settled keeping the stakeholders away and pleading for the voices looking for a space in the highly volatile region. The move may have further ramifications for the region as it might have worked on behest of a clandestine director looking for ‘another Kuwait’ and entrench a strong foothold as part of a larger geostrategic plan. After receiving Indian protests to the move it would be wise for Saudi Arabia to mend the flaw and negotiate furtherance of bilateralism.
BBC. “New era for Saudi-Indian ties”. 27 January 2006. Retrieved on 14 Aug. 2020.
CNN. “India, Saudi Arabia in energy deal”. 27 January 2006. Retrieved on 4 June 2020.
Economic Times. November 3, 2019.
Embassy of India, Riyadh, Saudi Arabia. “India-Saudi Arabia Economic and Commercial Relations”. Retrieved on November 10, 2020. https://www.eoiriyadh.gov.in/page/india-saudi-business-relations/.
Watkins, Simson. “Two Major Power Blocs Are Vying For Power In The Middle East.” Oilprice.com. Retrieved on November 8, 2020. https://oilprice.com/Energy/Energy-General/Two-Major-Power-Blocs-Are-Vying-For-Power-In-The-Middle-East.html