West side story

Realism must shape India's response to events in WANA

With all the domestic preoccupations this week, few in India are paying attention to momentous developments in West Asia and North Africa (WANA). With the siege of Tripoli by rebel forces, aided by European powers, the bell tolls for Libyan leader Muammar Gaddafi. In Syria, the India-Brazil-South Africa (IBSA) initiative to prevent a Libya-like attack and secure political change through peaceful means is now facing new obstacles. Having ensured a change of regime in Libya, after Egypt, the West may well focus on Syria. India has had long-standing good relations with Libya and Syria, but neither is of great strategic importance to India today. Rather, the Arab nations of the Gulf, including Saudi Arabia, the United Arab Emirates (UAE) and other Gulf states, matter more for India from a purely economic (oil and remittances) as well as a strategic perspective. This part of the Arab world remains relatively stable for now.

India also has important strategic relations with Israel, a country that must now behave with greater maturity given that the regional balance may be shifting in its favour. Libya is not an important source of oil for India, but people-to-people relations between India and Libya have remained good and strong and the Indian government must move quickly to ensure that good relations are established with the new regime in Tripoli. China has been fleet-footed, since its dependence on Libyan oil is higher than India’s. A spokesman of the Chinese Foreign Office said on Tuesday, “The Chinese side respects the choice of the Libyan people.” India has maintained silence till now. Libya accounts for about 2.2 per cent of global crude oil production, while Syria’s share is just about 0.5 per cent. Libya is the 11th largest source of oil imports into China but is an insignificant supplier to India with a share of just about 0.5 per cent in Indian crude oil imports. India has diversified its oil import sources in recent months, buying more from Venezuela, Iraq and Nigeria, apart from the traditionally more important sources in Saudi Arabia and the UAE.

In the end, for India the main concern over the situation in Libya and Syria is less about direct oil supplies and more about oil prices and overall economic activity in the region. If Libyan oil exits the world market in the near term, as a consequence of the instability that is likely to follow Mr Gaddafi’s final exit and the inevitable regime change, global crude supplies will be hit. This would push the prices up in the near term, till new supplies can be secured. Apart from this, the continued turmoil in West Asia will hurt overall construction and other economic activity in the region, impacting inward remittances of dollars from Indians working there. All of this could push oil prices up at a time when India remains under pressure on the inflation front and its current account deficit is rising once again. Indian diplomacy in the region has vacillated between hesitant support for popular uprisings and the desire not to rub Arab opinion up the wrong way. It is in India’s interest to take a long-term view of its geo-economic stake in good relations with the Arab world and adopt meaningful postures that serve her immediate and long-term economic and strategic interests.