KOLKATA - Given that India's image in Europe is
changing towards that of a dynamic trailblazer with a
knowledge-based economy - sentiments echoed by European
Commission President Romano Prodi - the May 1 landmark
development of 10 new countries joining the ranks of the
15-member European Union (EU), according to experts,
gives India one of the most important opportunities of
the 21st century to develop an alternative base for
prosperity and cooperation, and to enter into new
relationships.
"India's foreign policy seems to
be preoccupied with relations with the United States,
China and Pakistan, and with security issues related to
India's proximate and extended neighborhood," said J N
Dixit, an ex-foreign secretary who also served in
different capacities in Indian embassies around the
globe. "Whatever assertions there may be about the world
having become unipolar with the United States of America
as the central prism, the accompanying reality is that
of there are other centers of political and economic
importance. Europe collectively is such a center. What
one has to keep in mind is that a good relationship with
Europe provides an important equation in the long term
to further India's interests."
In what Prodi,
who was once the prime minister of Italy, termed as "a
unique historic task to further the integration of the
continent by peaceful means", 10 "acceding countries" -
Poland, Cyprus, The Czech and Slovak Republics, Hungary,
Estonia, Latvia, Lithuania, Malta and Slovenia - joined
the EU on May Day. That was the EU's largest enlargement
ever in terms of scope and diversity. Previous
expansions have been more modest with Denmark, Ireland
and the United Kingdom joining in 1973, Greece in 1981,
Spain and Portugal in 1986, and Austria, Finland and
Sweden in 1995.
And for India, the current
formation of the EU is indeed turning out to be of
enormous significance and importance: after all the
country enjoys a "multidimensional relationship" with
the EU, and the recent enlargement will augment the EU
marketplace from 350 million to 450 million consumers,
and, at 10 trillion euros (US$11.8 trillion) will
account for a fourth of the world's gross national
product.
Besides, says Dixit, "countries of the
EU are India's largest trading partners", and, after the
enlargement, the EU has also emerged as a foremost
investor, a major destination for Indian service
providers, especially for the information
technology-enabled sector that is currently facing a
major backlash in the US.
Admittedly, the EU
could be India's next manna in terms of trade and
political relations, since the two regions have been
trying hard to be friends for a long time. Formal
relations between India and the EU began in 1963, when
India - being one of the first developing countries -
set up separate diplomatic relations with the European
Economic Community (EEC). The Indian ambassador in
Belgium was also given a separate accreditation to the
EEC. In 1968, the European monetary system was created,
in 1973 a single market, and in 1993 a single currency
arrangement for the whole of Europe. From 1999, India's
relations with the EEC expanded, parallel to these
developments.
Regular annual discussions between
the European presidency and the government of India
started from 1992. That arrangement was
institutionalized at the apex level with the annual
Indo-Europe summit of 2000. High-level discussions
between the government of India and EU officials became
more intense from the beginning of 2002. From the
beginning of 2002 to the middle of 2003, the European
commissioners for enterprise and information,
development of humanitarian aid, the commissioner for
external relations and the EU high representative for
common foreign and security policy started visiting
India. This was followed by a visit from the European
commissioner for trade, and culminated in November last
year with the first-ever visit of Prodi.
"In the
political sphere too, there is parallelism and
convergence of policy orientations between India and
Europe," says Dixit, adding that, "as far as the
phenomenon of political and military unilateralism
characterizing conflict-management by the US goes, India
and Europe have the shared conviction that this should
be replaced by effective multilateral arrangements under
the umbrella of the UN."
India and Europe are
also engaged in a cooperation program to strengthen
civil aviation structures and maritime transport
activities. This includes civil air-safety, airline
management, air-traffic management and the building and
maintenance of airports. Similar cooperation agreements
have been signed in the spheres of science and
technology based on the complementarity of needs. The
European community, at present, is engaged in nearly 55
research projects with Indian partners, focused on
agriculture, environment, utilization of natural
resources and information technology. India is also the
largest receiver in Asia of non-governmental funds from
the EU. These funds are generated for tribal empowerment
projects, educational projects, income generation
projects and food security projects.
However,
what is more significant is that India and the EU share
a healthy trade relationship already, and therefore,
says a paper of the London-based Center of Economic
Policy Research (CEPC), the immediate and direct effect
of the enlargement for India would be burgeoning trade
prospects. Economic - particularly commercial -
transactions between India and Europe account for 25
percent of India's foreign trade, surging from 9.9
billion euros in 1991 to 27.5 billion euros in 2003. The
current volume of bilateral trade is likely to increase
to 35 billion euros by the year 2005 and 50 billion
euros by the year 2008.
Europe is also the
largest source for foreign direct investment into India
at present. EU investments in India have increased from
78 million euros in 1991 to 4 billion euros in the year
2003-2004. These investments are particularly important
because most of the investment flows have been in the
infrastructure sector of India's economy: namely power,
oil-refineries, telecommunications and transport
sectors. Moreover, the European Commission has agreed to
provide resources to India for making elementary
education universal, and for building "human capital"
and rural development.
Nevertheless, the
enlarged EU could also be a thorn, in some ways, in
India's side. There are two important issues, close to
India's heart, on which there are differences between
the EU and India. The first relates to nuclear
non-proliferation. "Although the controversies of 1998
and 1999 - when India tested its nuclear weapons - have
died down, there are reservations about India's nuclear
weaponization in Europe," said Dixit.
The second
is the difference of opinion concerning the management
of international trade under the World Trade
Organization (WTO). Just last December, the long
developing bonhomie between India and the EU received a
setback when the European Commission said it would
dispute Indian trade restrictions at the WTO because
India's anti-dumping measures have hit 50 million euros
in EU exports and may break WTO rules. "EU exporters
have lost exports due to these measures," a European
Commission statement said, "but even more important is
the fact that India is misusing anti-dumping instruments
to prevent foreign firms from making a way into the
Indian market."
Senior members from the EU have
also expressed their disappointment that India and
Brazil took particularly negative stances at the Doha
and Cancun WTO meetings. "There seems to be some lack of
understanding of the social and economic compulsions
under which India has to adjust to the process of
globalization," the European Commission said.
Still, CEPC and others are optimistic that both
India and the new EU will reinforce the positive
relationship they share, to promote greater trade and
investment links. "With the enlargement, the India-EU
relationship is now destined to enter a new phase, one
that will present challenges as well as opportunities,"
CEPC says.
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