6 Reasons why India inviting Abu Dhabi Crown Prince is a diplomatic masterstroke

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The Indian government has invited the crown prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al-Nahyan, to be the chief guest for the Republic Day celebrations in January 2017.

While the acceptance of the Indian invitation can be seen as a reciprocation of Modi’s UAE visit in August last year, there are a number of factors which suggest that this invitation was a smart diplomatic move by India:

1. Economic Ties

India is UAE’s number one trading partner while the Gulf nation is India’s third largest trading partner after the US and China.

UAE is India’s second largest export destination with over $60 billion in bilateral trade.

During Modi’s visit to UAE, it was decided to increase the current volume of bilateral trade by 60% in the next five years.

For India’s energy security, UAE is an important country as it gets 9.38% of total crude requirement from that country. The volume of supply in 2014-15 was 15.99 million tonnes.

On the other hand, economic ties with India and an opportunity to tap into the massive advanced technology and services industries in India to diversify an economy dependent primarily on energy is a lucrative option for UAE.

2. Regional Politics

UAE is a close ally of Pakistan, whom India is trying to diplomatically isolate over the issue of cross-border terrorism.

India as also trying to isolate Pakistan in the Organisation of Islamic Cooperation, the 57-nation bloc of Muslim countries that has formed the support base for Pakistan.

During Modi’s UAE visit, the two countries had condemned efforts, including by states, to use religion to justify, support and sponsor terrorism against other countries, or to use terrorism as instrument of state policy.

According to reports, the relationship between UAE and Pakistan has hit a dead end recently when Islamabad decided to remain neutral on the crisis in Yemen.

It may be recalled that UAE was among the countries that came out in India’s support within days of the recent Pathankot attack and even suggested that the terror strike should be investigated, in what’s seen as an indirect reference to Pakistan.

Countries like UAE and Qatar also strongly condemned the terror attacks on Uri army-base.

3. Infrastructure Development

Apart from trade relations, UAE is also set to invest in India’s infrastructure development drive in the future.

During Modi’s visit to UAE,  India and UAE signed a joint statement that, among other features, included an agreement to establish an India-UAE Infrastructure Investment Fund.

The fund aims to reach a target of $75 billion to support investment in India’s plans for rapid expansion of next generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks.


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4. UAE’s Investments in India

UAE’s investments in India have increased to nearly $1 billion over the past year as bilateral trade between the two countries strengthen.

UAE, which used to be the tenth largest investor in India is now the seventh largest investor with the investments from the country going up to about one billion dollars in the last one year.

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The total foreign direct investment inflows from UAE to India stood at $4.03 billion ending March 2016.

UAE’s DP World had announced that it seeks opportunities in India worth over $1 billion over the next few years.

5. Fight Against Terrorism

UAE has also been a credible partner of India’s in the latter’s fight against terrorism. The two countries have signed several pacts and extradition treaties for cooperation towards that end.

The Crown Prince has significant influence over the security and geopolitical policy formation on UAE. He also serves as the Deputy Supreme Commander of UAE Armed Forces.

The Indian Prime Minister has been keen on strengthening military ties as well with the country. India and Abu Dhabi have forged similar views on terrorism and expressed a joint commitment to fighting terrorism and eradicating it to the maximum extent possible.

In the recent past, UAE had handed over a number of Indians with suspected links with the ISIS, which proved to be helpful in India’s fight against terrorism.

6. Diaspora Remittance

UAE also has a significant amount of Indian diaspora, so it’s natural that the Indian government would take interest in improving relations with the country.

India receives over 50 per cent of its remittances from the Gulf region, a major chunk of which comes from UAE.

Figures show that the UAE is the biggest source of GCC remittances into India, accounting for 38.7 per cent, followed by Saudi Arabia with a 28.2 per cent share.

Remittances directly flow to the migrants’ families, helping them finance purchases of essential items, housing, school and medical services. Remittances act like an insurance for Indian households, increasing in times of need.

Crisil and the World Bank say that GCC remittances to India could fall further in future if oil prices stay low for an extended period, or suffer unexpected declines.

In this scenario it should be a priority for India to keep the remittances flowing in and making sure they are invested in domestic projects.

Crown Prince’s second visit to India

This will be the Crown Prince’s second visit to India after his three-day state visit in February this year.

An invitation to be the Republic Day chief guest is highly symbolic from the Indian government’s perspective.

New Delhi has been weaving strategy with hospitality to decide its chief guest for the Republic Day. The choice of chief guest every year is dictated by a number of reasons — strategic and diplomatic, business interest and international geopolitics.

While French President Francois Hollande was the chief guest this year, it was US President Barack Obama in 2015.

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During his two years at the helm, the prime minister’s  visits to Saudi Arabia, UAE, Qatar, Iran and other neighbouring countries has heralded a sea change in India’s strategic orientation towards the Middle East.

– Aneesh V / NRICafe.com

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