The real UAE deal

The visit of Sheikh Moham-med bin Zayed Al Nahyan, crown prince of Abu Dhabi and next President of the United Arab Emirates, is significant, coming within six months of Prime Minister Narendra Modi’s UAE trip. Sheikh Mohammed last visited India in summer 2003, becoming crown prince the following year, when I was ambassador in Abu Dhabi. Despite the Dubai ruler being UAE’s vice-president and Prime Minister, as a special gesture Sheikh Mohammed’s visit has been treated as a state visit, Mr Modi in a tweet calling him “my close friend”.

Nine odd agreements relate to subjects spelt out for cooperation in the joint statement during Mr Modi’s UAE visit. The phrase used was “transformative” economic partnership, marrying Indian economic liberalisation and entrepreneurship with Emirati funding, free market philosophy and oil and gas reserves.

Bilateral annual trade was to be lifted from its current $60 billion to over $100 billion. Likewise, Emirati investment in Indian infrastructure development, via a special purpose vehicle, was to touch $75 billion being eminently doable for Abu Dhabi Investment Authority (ADIA), the controlling sovereign fund of nearly $1 trillion.

The agreements cover cyber security cooperation, infrastructure development, renewable energy, currency swap, space and more mundane issues like insurance, culture, skill development and a deal between Exim Bank and Dubai. Most of these issues were discussed in 2003 or probably since then in bilateral exchanges. What then makes this visit significant

Firstly, the UAE has always played a balancing game between India and Pakistan, getting workers from both while ensuring politics and differences were left at home. India was historically the destination for education, medical treatment, etc., till oil wealth allowed the Gulf countries to turn Westward. While the older generation, represented by Sheikh Mohammed’s father Sheikh Zayed or the current Dubai ruler’s father Sheikh Rashid, remembered the India link fondly, for the current generation and their progeny Indians are basically domestic staff or office aides.

During my tenure as ambassador (from 1999 to 2003), the Indian diaspora numbered one million in a three-million population. Now it touches 2.6 million, the population having also trebled. UAE’s rulers are now trying to connect to both Indias — the exporter of blue-collar workers and the one wooed globally as a potential market and engine for growth.

Secondly, this re-assessment began after Bharatiya Janata Party’s rise in 1998, the nuclear tests and India’s growing convergence with the US under President George W. Bush. The 9/11 attacks on the US were also a wake-up call that business as usual could not continue, i.e. Dubai as a money-laundering centre justified on old pleas that no local laws were broken. Dubai began graduating, albeit slowly, to financial probity, besides finally beginning to respond to Indian requests for counter-terror cooperation. The first terrorist deportations began during my term, albeit selectively and by linking to favours in the civil aviation field.

Thirdly, the UAE has been wary of Iran, even prior to the current Shia-Sunni friction in the region, alleging Iran forcibly occupied its three islands as the British withdrew in 1971 and the UAE was created.

With Iran becoming important for India with the Taliban’s rise and Atal Behari Vajpayee engaging it in 2001-03, the UAE stepped up to neutralise this emerging alliance, realising that as one of only three countries having had diplomatic relations with the Taliban regime, they stood to lose. Thus, Sheikh Mohammed came to India in a hurriedly scheduled visit as I was completing my UAE term in August 2003. Iran, liberated from sanctions, now looms in UAE’s thinking.

Fourthly, wanting to diversify its economy, it realises that as an entrepôt for Indian exports to the region, it needs closer cooperation with India. It also needs to diversify its sovereign fund investments to hedge risk.

Three stories dominated the television as Sheikh Mohammed received a ceremonial welcome in the front court of Rashtrapati Bhavan — the stock-market meltdown, the death of the Siachen survivor and David Headley alleging Ishrat Jehan was a Lashkar operator.

As regards the first, delay in finalising the methodology for UAE investment in Indian infrastructure flows from an old conundrum — the UAE wanting sovereign guarantees for their investments while seeking market-driven gains. The fiasco of their Etisalat investment in telecommunications, courtesy their associate Shahid Balwa getting embroiled in the 2G scam, will condition their decision. Sheikh Mohammed will reach Mumbai as the market mood is sombre.

The latter two stories underscore the Pakistan factor in India-UAE relations. When the UAE joins India in condemning countries using terror as state policy, they have Iran, and not Pakistan, in mind. The Shia-Sunni stand-off lurks ominously in the background as India engages the Gulf Cooperation Council ruling families. That is why the Vajpayee-Brajesh Misra line was for balanced engagement of the two camps. Pakistan remains for the UAE and Saudi Arabia the ultimate port of call to counter conventional and nuclear security threats following the US retreat from the region. Thus, the UAE will throw some strategic concessions to India, like deporting sympathisers of the Islamic State of Iraq and Syria, which the UAE itself fears, or agreeing to a strategic oil reserve in India. But it is not about to abandon Pakistan, Sheikh Mohammed having been taught flying by a Pakistani Air Force instructor, or open its ADIA coffers without counter-balancing advantage to itself.

Mr Modi’s warm embrace of Sheikh Mohammed would be noted in Tehran. Gulf ruling family princes have grown up watching supplicants, low and mighty, in their fathers’ Majlises. They respond best to polite straight talking than favour seeking. That is why accompanying minister Anwar Gargash declared: “We want India to find the right channel for investment”. Hopefully, as euphoria abates, more realistic targets can be set and geostrategic overhang understood.

The writer is a former secretary in the external affairs ministry. He tweets at @ambkcsingh