Asia Times: Part 5: Partners in progress


	February 21, 2002	atimes.com

India/Pakistan

Asia Times Online presents this series of articles in collaboration with Heartland. Issues that are to be covered include: Does India need nuclear weapons?; energizing India; and New Delhi's learning curve.
Part I: How Asian is India?
Part 2: A democracy on the move
Part 3: One India, many Indias?
Part 4: Doing business in India

THE IMPORTANCE OF BEING INDIA
Part 5: Partners in progress
By Michel Caillouet

If you look at a map of the world published in the late 1980s and compare it with the world we live in today, you will still be able to recognize it but you will also find plenty of changes, many of them unforeseen. Events of the past decade have radically altered the global geopolitical landscape - the end of the Cold War with the disintegration of the Soviet Union followed by the emergence of Commonwealth of Independent States (CIS) nations in Central Asia, the gradual advent of democratic regimes and market economies in the Central and Eastern European nations, and the acceleration of the regional economic integration processes in different parts of the world, most notably in Europe but also in North and South America and South East Asia.

These geopolitical shifts have been accompanied by what has come to be known as the "death of distance". In the "global village" that has emerged thanks to unprecedented technological advances in information and communication technology and transportation, the significance of national borders has been somewhat eroded. This is, of course, facilitated by the global flow of capital, especially foreign direct investments, and the proliferation of the multinational enterprises. International organizations such as the United Nations and the World Trade Organization (WTO) have further catalyzed the process of globalization.

Of course, not all the effects of globalization are positive - transnational terrorism and organized crime, money-laundering and the drug trade are some of the pernicious effects of globalization that have emerged. "Global issues" such as the nuclear threat and environmental degradation can best be dealt with at the global level.

In the emerging multipolar world at the dawn of the third millennium, Europe and India are important regional and global players. Partnership between the world's two largest democratic entities is an important constituent for global peace, stability and progress. The foundation of the current phase of Europe's excellent political and economic relations with India was laid in 1963 when India was among one of the first developing countries to set up diplomatic ties with what was then a six-member European Economic Community (EEC).

However, contact between the European nations and the Indian subcontinent goes back at least 2,300 years to when Alexander the Great reached the Indus Valley. Trade took place between ancient Indian kingdoms and the Greek and Roman empires. During the medieval period there was little contact between India and Europe but the landing of Vasco da Gama at Calicut in 1497 led to the start of a new historic era in the modern Indian history. Subsequently, the Portuguese, the Danes, the Dutch and the French arrived in India, followed by the British. During the next few centuries the British ruled the Indian subcontinent and left behind a deep imprint on the Indian polity, economy, society and culture. Since gaining independence from the British empire in 1947 India has had diplomatic relations with all members of the European Union (EU).

As the EEC grew from the six founding members (Germany, France, Belgium, the Netherlands, Luxembourg and Italy), to nine (with the UK, Ireland and Denmark joining in 1973) to 10 (Greece joined in 1981), to 12 (with Spain and Portugal joining in 1986), and finally to 15 countries (Austria, Finland and Sweden joined in 1995), its relations with India have evolved and matured. India's bilateral relations with the UK were particularly strong in the 1950s and 1960s but the UK was not yet a part of the EEC/EC (European Commission). In the 1970s, EU-India relations took off with the signing of the first bilateral agreement, a Commercial Cooperation Agreement in 1974.

It was in the 1970s that EC-India development cooperation started. The relations were further boosted with the setting up of a diplomatic mission by the EC to South Asia in New Delhi. "The Delegation of the Commission of the European Communities for South Asia" had not only a long name but a large mandate as well, with responsibilities for coordinating the EC's bilateral relations with all the South Asian countries. The two sides signed the Commercial and Economic Cooperation Agreement in 1981. Development cooperation constituted the dominant theme of the partnership during that period. The economic reforms launched by India in 1991 marked a turning point in the relations and economic cooperation aimed at facilitating EU-India trade and investment came to the fore. With the setting up of the WTO in 1994, India and the EU emerged as important players in multilateral trade negotiations.

The EC's Asia Strategy in 1994 sought to steer the course of Europe's relations with Asia. It was also in 1994 that the "third generation" bilateral agreement with the India Cooperation Agreement on Partnership and Development took effect. This agreement and the Joint Political Statement signed along with it constitute the basis for the current bilateral relations.

In July 1996, the EC's strategy paper "EU-India Enhanced Partnership" laid out the road map for deepening relations. This communication set the stage for a comprehensive relationship between equal partners and emphasized the need for greater mutual understanding with a special focus on supporting the civil society dialogue. It advocated the pursuit of equilibrium between economic growth, social progress and environmental conservation. The European Council and the European Parliament endorsed this communication and called for the upgrading of political relations with India through, among other things, the staging of regular meetings at the highest political level between the two sides.

The first ever EU-India Summit was the result, therefore, of the desire on both sides to upgrade relations. Indian Prime Minister Atal Behari Vajpayee met the EU leadership represented by Portuguese Prime Minister Antonio Guterres, representing the EU presidency, Commission President Romano Prodi, and Council Secretary General Javier Solana.

"We resolve that in the 21st century the EU and India shall build a new strategic partnership founded on shared values and aspirations characterized by enhanced and multifaceted cooperation," the joint statement issued at the summit declared. "We, based on the shared universal values of democracy and the respect for human rights, rule of law and fundamental freedoms, stress our commitment to promote socio-economic development and prosperity, as well as international peace, stability and security. We also derive strength from our traditions of diversity, plurality and tolerance."

In the political field, the summit served not only to consolidate the existing dialogue but, above all, to lend it a new impetus by reviewing all issues of common interest such as the environment and nuclear non-proliferation. On the economic front, both parties agreed to examine all obstacles to trade and investment in India and to improve cooperation in the WTO framework. Both parties agreed to continue the dialogue at the highest level by holding regular summits.

EU-India trade on the rise
Total EU-India trade increased from 9.975 billion euros in 1991 to 25.644 billion euros (about US$22.5 billion) in 2000, registering an impressive growth rate of 157 percent. In parallel, both EU exports to and EU imports from India roughly doubled during the same period. After five years of healthy growth between 1994-99, EU-India trade in 2000 grew by 25.92 percent.

The EU's major items of imports from India in 2000 were: textiles and clothing (32.15 percent), gems and jewelry (12.24 percent), leather and leather goods (11.03 percent), chemical and related products (7.93 percent), agriculture and related products (8.57 percent) and engineering goods (9.20 percent). It is interesting to note that textiles and clothing, leather and leather goods, and gems and jewelry constitute more than 50 percent of the EU's total imports from India. Besides, the EU has emerged as a major business partner for India in the field of information technology (IT).

The EU's major items of exports to India in were: gems and jewelry (37.90 percent), engineering goods (29.73 percent), chemical and related products (8.55 percent), metal and metal products (5.84 percent) and transport equipment (3.74 percent).

The EU has emerged as India's largest investor in terms of actual inflows during the 1990s. During the post-liberalization period of 1991-2000, the EU became the No 1 investor, with 2.67403 billion euros worth of actual foreign direct investment (FDI) inflow into India, ahead of the US (2.21673 billion euros).

EC India's largest bilateral donor
On the development front, the European Commission, together with its member states, is India's largest bilateral donor. The commission has committed 2 billion euros in development cooperation with India since 1976 and the overall development cooperation strategy focuses on sustainable economic and social development, especially of the poorest sections of the population.

The EC has supported, through major investments, India's initiatives for reform of sectoral policies in primary education (150 million euros in 1993-94 with another 200 million euros in the pipeline) and health and family welfare (200 million euros in 1996). Special emphasis has been laid on rural development with participation of the groups to be targeted. Priority sectors have been agroeconomy, agriculture, and land resources, irrigation, health, primary education, food security, livestock and fisheries, and rural infrastructure. Population and community development are the underlying themes of many EC-funded development programs. India is the largest recipient of non-governmental organization (NGO) funds from the European Union in Asia (under the co-financing scheme).

The European Community Humanitarian Office (ECHO) has been forthcoming in providing emergency humanitarian assistance to victims of natural disasters - whether it was the super-cyclone in Orissa in October 1999 or the terrible earthquake in Gujarat in January 2001 or the floods in Orissa last July. Gujarat attracted unprecedented solidarity from the EU, and its combined emergency assistance from governmental and non-governmental sources crossed the landmark figure of 100 million euros.

EU-India economic cooperation
The EU gives funds for institution building (eg, on quality and standards), business-to-business activities (eg, the "Europartenariat" - a business event during which 300 European small and medium-sized enterprises (SMEs) visited Delhi to meet with about 400 Indian SMEs in March 1999) under the "Asia-Invest Program", investment promotion, urban development (under the "Asia-Urbs" program aimed at promoting links between EU and Asian municipal organizations), and industrial and transport cooperation. Apart from the sub-commissions and working groups, the High Level Economic Dialogue enables regular consultations on trade, monetary and economic matters and addresses the fundamental problems that prevent trade and economic contacts from flourishing.

Toward a civil society
With a view to broadening the EU-India dialogue beyond the official level to embrace people-to-people level links, the EU-India foreign ministers meeting at Helsinki in December 1999 launched the idea of an EU-India Round Table and EU-India Think Tank Network. These two initiatives were endorsed by the EU-India Summit and have since been put into action. The inaugural meetings of the two networks have come up with a range of ideas and suggestions, which will be put up to the second EU-India summit in November for consideration and approval.

There is a tremendous potential waiting to be tapped to foster EU-India relations by promoting civil-society links. The geographic distance between India and Europe cannot be a hurdle in the meeting of minds thanks to progress in telecommunications, culminating in the advent of the Internet. The rich heritage of art and culture, languages and literature and philosophical thought and religious traditions that characterizes both regions provides a sound basis to build further on the common ground between the EU and India. That common ground covers fundamental democratic values, respect for human rights and the rule of law, and concern for the social and economic well-being of both regions' citizens.

The process of European integration has been unique and unprecedented. It has to be therefore understood in its proper perspective. On the other hand, knowledge about today's India is limited in the EU. This relative lack of awareness and understanding about each other is an impediment to the further growth of relations. The Indian government as well as the European Commission recognize this shortcoming and are determined to overcome it in the future.

((c) Heartland. This version has been edited by Asia Times Online.)
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