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Building a sustainableEU-India partnership

Gauri Khandekar

After nearly a decade, the Strategic Partnershipbetween the European Union (EU) and India launched

in 2004 still has to live up to its name. Te free trade agreement(FA) has added a strategic dimension to the partnership, butlong drawn negotiations soak up most of the attention andrisk pegging the entire relationship to their success or failure.Te volume of untapped overall potential appears to expandwith time. Tere is a need to set the priorities for a renewedpartnership that not only builds on progress made but also

addresses the real needs of each partner. rade is criticallyimportant. But beyond that, a new, forward looking partnershipbased on urbanisation, development and sustainable growthshould be sought.

THE NECESSARY PREMISE:

MUTUAL RECOGNITION

Te past two years have witnessed a positive evolution in theEU-India relationship. Te partnership has grown through

new initiatives and political and diplomatic engagementfrom both sides has increased. Negotiations on the free tradeagreement seemed to be coming closer to completion. Te

HIGHLIGHTS While acknowledging each

other as important global

actors, in practice the EU and

India do not see each other as

real strategic partners.

Long drawn FTA negotiationssoak up most of the attention

and risk pegging the entirerelationship to their success or

failure.

A new, forward-lookingEU-India partnership on

urbanisation, infrastructure,

development and sustainable

growth is needed.

ESPEUROPEAN STRATEGIC PARTNERSHIPS OBSERVATORY

POLICYBRIEF 9 | SEPTEMBER2013

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last bilateral summit held on 10 February2012 in New Delhi showed clear efforts tomove forward on the three priority areasof the partnership: trade, security andenergy. A roadmap for reinforced securitysector cooperation in the areas of counter-terrorism, cyber-security and counter-

piracy was agreed and two importantdeclarations were signed on enhancedCooperation in Energy and on Researchand Innovation Cooperation.

However, the EU-India relationshipis still far from being strategic. Whileboth partners acknowledge each other asimportant global actors, in practice theydo not see each other as real strategicpartners. Moreover, why or how either

could be strategic to anothers interestsremains relatively undefined. Limitedmutual understanding and an inadequaterecognition of their respective potentialare two critical brakes on the partnership.

Te EU looks at India largely as a tradingpartner, but also as an important regional andmultilateral foreign policy actor. However,it prematurely looks at India through thelens of its emergence, expecting perhapstoo much at times, especially on foreign

affairs. Overall, India remains a developingcountry with considerable levels of poverty.It is projected to be the worlds third largesteconomy in less than two decades, but firstit must overcome massive developmentchallenges. In this sense, the shift of prioritiesof the EU-India relationship to economicsand security has sidelined development fartoo quickly from the agenda.

India is also very much consumed by

internal issues and will not begin to

develop a global foreign policy mindsetuntil it has the solid economic base of aglobal power. Te countrys foreign policyis still relatively embryonic, prudent andconstricted. It is driven by self-interest andbased on the principle of non-interference.

India continues to struggle with the EUspost-modern complexities in what NewDelhi sees as a Westphalian world. Suchperception has been compounded byintra-European differences in addressingthe eurozone crisis. India needs to learnhow to manoeuvre through the fine linesof EU competences, without expectingmore than the EU can actually deliver.Te European Union is a sui-generisorganisation and New Delhi should learn

to deal with the EU without confusingit with Europe, a classic state poweror an inter-governmental organisation.Assuming that it will overcome the currentcrisis, the EU holds much potential asa major economic partner and a globalactor that can contribute to the stabilityof the international system. In short, bothpartners lack of real mutual understandinghas led to an overall under-performingpartnership.

STRATEGIC MISMATCH

Te EU and India have expandedcooperation in areas broadly consideredas strategic by the two sides, but withoutreally addressing respective strategicpriorities. For example, after the Mumbai2008 bombings, the EU and Indiaembarked on bilateral and multilateralsecurity cooperation. While the two

partners share similar perceptions of

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traditional and non-traditional securitythreats at the international level, theydo not firmly contribute to addressingrespective security concerns. WhilePakistan features very high on Indiaslist of external security threats, the EUhas preferred to adopt a neutral position

between the two neighbours. While Indiasees Chinas rise with suspicion, the EUand its member states prioritise relationswith Beijing. Indias biggest threat,however, comes from naxalism (Maoistmilitant groups operating in a number ofIndian states) at home, as well as separatistmovements spread across the countrywhere cooperation with the EU offerslittle added value. On the multilateralstage, the EUs inability to support Indias

biggest strategic foreign policy goal permanent membership of the UnitedNations Security Council has led tomuch disappointment in New Delhi.

For its part, the EU would like India tocooperate more on international maritimesecurity and piracy. India has one navalwarship, the INS Sukanya, in the Gulfof Aden and cooperates with the EUthrough SHADE (Shared Awareness andDe-confliction), an ad hoc arrangement

established in Bahrain in December 2008.However, India deploys independentlyand is not part of Operation Atalanta(EU Naval Force Somalia) or the othertwo multinational maritime coalitionoperations: CF-151 and OperationOcean Shield. India diverges stronglywith the EU and the West in general onoperations within Somali territory, whichit considers as interventionist. Te EU as asecurity actor is seen by India through the

prism of NAO and New Delhi remains

unwilling to expand cooperation withany military alliance or operation notsanctioned by the UN. As an emergingcountry, it also no longer wishes to playthe role of junior partner in a Western-led approach.

On bilateral counter-terrorism cooperation,beyond the existing joint working group,collaboration will remain limited forthe foreseeable future. A Europol-IndiaAgreement, which has been in the pipelinefor a few years, would not grant Indiaaccess to sensitive material, especially giventhat intelligence-sharing within Europolis very limited. It also provides no evidentadded value to Indias existing Interpolmembership. Plans to explore an EU-India

Mutual Legal Assistance reaty (MLA)and an EU-India Agreement on Extraditionappear to have been abandoned. On cybersecurity, reluctance on the EUs side topursue capacity-building in India has heldup cooperation.

Te EU also lacks visibility in India. Tereis significant activity between India andindividual member states, but most of suchcooperation takes place outside any EUframework. Joint ventures on renewable

energy between European and Indianfirms are increasingly commonplace.Recent examples include the joint venturebetween Italys energy services companyNewEn and Indias Kolkata-based EnfragySolutions to develop innovative softwaretools to monitor and model energyconsumption in a factory; or the onebetween Belgium-based Ikaros Solar andIndian Pune-based Intellux Electronicsto build photovoltaic grids. Germany has

loaned India 250 million to build one

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of the worlds largest solar photovoltaicpower plants at Sakri in the Indian stateof Maharashtra, the total cost of which is370 million. Under a memorandum ofunderstanding signed by Nuclear PowerCorporation of India Ltd (NPCIL) andAreva in February 2009, France is currently

constructing six nuclear reactor plants inJaitapur, Maharashtra, and has committedto providing a lifetime fuel supply for theunits. Te UK is set to begin negotiationswith India on a bilateral civil nuclear deal,which would facilitate the entry of Britishcompanies into Indias emerging atomicpower sector and foresees technologytransfers from the UK to India. Bringingsuch cooperation under an EU frameworkcould help improve the perception of the

partnership in India.

Conflicting international energy policieswithin the EU have also had a majorbearing on the EU-India partnership. Afteryears of negotiations, the EU-India Agree-ment for Research and DevelopmentCooperation in the Peaceful Uses of NuclearEnergy could be signed at this yearssummit. It would not be surprising howeverif New Delhi continues to prioritisecooperation with individual member

states like France, which ensures theactual sale of nuclear fuel and technologyto India. Te EU also faces considerablecompetition from other countries. Tehistoric 2008 US-India Civil NuclearAgreement opened the door for Indiascooperation with the world on civilnuclear energy. Canada and Australia areengaged in uranium sales to India andRussia has committed to constructing 12nuclear plants across the country. Indian

officials compare the EU-India energy

dialogue to the US-India energy dialogue,which was inspired by the former but hasfar outperformed it. Unless a competitivepackage can be offered at the EU level,energy cooperation between the EU andIndia will continue to be fragmented, withmember states dealing individually with

New Delhi instead.

Strengthening the bilateral partnership ispossible but both sides must be realistic asto what each can deliver and about theirrespective capacities and willingness torespond to the real strategic interests andpriorities of the other. While looking atthe future potential of each partner, thepartnership needs to be better tuned to thecurrent economic and political context in

both India and the EU.

PARTNERING ON SUSTAINABLE

URBANISATION

Europe needs to enhance growth andgenerate jobs and India needs to overcomeits massive development challenges.Development as a priority has beensidelined far too quickly in the EU-India partnership. With its own external

aid programme of $11.3 billion, NewDelhi has of recent refused internationaldevelopment aid. EU aid to India(which totalled 365 million during theperiod 2007-2013) will be discontinuedthereafter, while aid from some memberstates like the UK will stop by 2015. EU-India cooperation on development hastargeted in particular the environment,climate change, poverty reduction and theMillennium Development Goals (MDGs),

with over 100 projects worth 350 million

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since 2000. While aid is an importantaspect of development, for massive mid-income emerging countries like India andChina development encompasses a muchbroader set of issues, including urbanisationand modernisation. Poverty reduction

in these countries is

underscored by theprovision of betteropportunities for self-sustenance and growth,which can directly raisethe standards of livingof the population. Indiasmain challenges includebetter wealth distribu-tion, better infrastructureand planning, attracting

foreign direct investment (FDI), andtechnological innovation, which can helpit manage its expanding cities and growingpopulation more effectively. Conversely,addressing Indias development andurbanisation challenges would open upconsiderable business opportunities forthe EU and would fit in well with thethe EUs priorities concerning sustainabledevelopment. Te two partners must shapea new sustainable development agenda.

By 2030, India is projected to becomethe third largest world economy witha GDP of $13.7 trillion (PPP, and$7.9 trillion at MER, according toPricewaterhouseCoopers estimates), almostthree times more than its current GDPof $4.5 trillion (PPP, and $1.8 trillion atMER). But first it must overcome its massivedevelopment challenges. Between 2011and 2030, an additional urban populationof 250 million will require around 700-900

million m2

of commercial and residential

space a year, according to Mckinsey GroupInternational (MGI). MGI projectionsshow Indias urban population soaring from340 million in 2008 to 590 million in 2030and a 300 per cent rise in the countrysmiddle class to 91 million households.Te same study estimates that India will

need $1.2 trillion in capital investment tomeet the needs of infrastructure building(equivalent to $134 per capita per year,almost eight times todays level of spending):between 19,000 and 25,000 kilometres ofroad lanes will need to be paved annually(equal to nearly all road lanes constructedover the past decade), 7,400 kilometres ofsubways and transportation constructed, inaddition to the provision of adequate water,food and energy resources. According to

the study, India would need to build acity the size of Chicago every year for thenext 20 years in order to create enoughcommercial/residential space. GoldmanSachs estimates Indias infrastructureinvestment requirements to the tune of$1.7 trillion between 2010 and 2025. TeIndian government is looking at the privatesector to provide half of that investment(36 per cent of $514 billion earmarkedunder infrastructure investment in theEleventh Five Year Plan 2007-2012 came

from private sector investments).

Comprehensive development shouldbecome a cornerstone in the EU-Indiarelationship. Te EU could make useof this opportunity; supporting Indiasdevelopment and urbanisation couldhelp growth and job creation in Europe.Addressing development concerns wouldflow into economic and trade relations,employment and the social sector, as

well as energy and climate change.

Comprehensivedevelopmentshould becomea cornerstonein the EU-Indiarelationship

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angible achievements attributable to thepartnership would boost its strategic value.

Te EU-India partnerships could drawfrom good practices and innovation inother important relationships. At the2012 EU-China Summit, an EU-China

Partnership on Urbanisation was signed.Tis comprehensive urbanisation planoffers a platform for EU member statesto tap into the opportunities of Chinaspath to modernisation. It also adds anEU-China urbanisation forum to the EU-China annual summit. Te partnershipengages a wide range of stakeholders, fromexperts and the private sector to city mayorsand other politicians around issues such asclimate change, low carbon economy, city

planning and business. As envisaged in theJoint Declaration adopted in May 2012,the partnership aims to tackle urbanisationin a comprehensive way including publicservices, infrastructure investment andfinancing mechanisms, urban housing,urban industrial economy, energy supplyand demand management, urban mobility,green buildings, low carbon framework,and urban-rural integrated development,amongst other issues.

Te Sino-EU Sustainable UrbanisationPark set up by Euro-Sino Invest and theEU Chamber of Commerce in China isa pilot project in the context of the newpartnership. EU companies can establishthemselves in the business park compoundand showcase their model of sustainableurbanisation, all the while enabling thetransfer of sustainable high technology,quality and standards to China. Anothercollaborative project funded by the

EUs seventh framework programme is

Urbachina, a research project that assessesChinas urbanisation trends for the next40 years and provides possible scenarios.

Te EU and India could expand theirpartnership along similar lines. An EU-India

infrastructure and urban developmentroadmap could include projects on greengrowth, green buildings, infrastructuredevelopment and construction, urbantransport and city planning. A pilot projectcould be envisaged to turn an Indian villageinto a model town, complete with a cleanenergy grid, elastic infrastructure (whichcan expand with future growth), greenbuildings, and cutting edge technology.Such a project could be initiated by the

EU, open to EU member states (public andprivate sector) and partnered/contractedwith/by the Government of India. Ifsuccessful, the project could be replicatedon a larger scale. A second initiative couldconsist of twinning Indian cities withEuropean ones and creating an EU-Indiamayors forum, as developed in the EU-China partnership. Such a forum couldbecome the basis for mayors to debatedirectly about infrastructure projects andlink private or public enterprises to city

councils in India.

An EU-India partnership on urbanisationcould significantly advance the strategicvalue of the relationship and bring EUmember states under an EU platformfor a European initiative. Te EU-India partnership on urbanisation anddevelopment could also have an externaldimension, building on Indias emerging,if as yet limited, role as a donor country.

Cooperation between the two sides could

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e-mail: [email protected] / www.fride.orgISSN 2254-2531

ESPO is kindly supported by the Ministry for Foreign Affairs of Finland and

by the Federal Foreign Office of Germany.

produce relevant lessons and best practicesfor sustainable urbanisation elsewhere inthe developing world, for example in Africa.

CONCLUSION

So far the EU-India relationship haslacked the spark of a truly strategicpartnership. Part of the problem has beenthe inability of both sides to recogniseeach other as real strategic partnersto fulfil respective interests. rade is acrucial priority, but negotiations over theFA have overshadowed other aspectsof the relationship. A partnership ondevelopment and urbanisation is a long-term investment that could contribute to

enhancing the perception of the EU andIndia as strategic partners in each otherseyes and be mutually beneficial. Te EUwould tap into considerable businessopportunities and would confirm itscommitment to promoting sustainabledevelopment in India. New Delhi would

make strides to reconcile growth withsocial and environmental concerns. Suchcooperation could also provide a basisto enhance dialogue on internationaldevelopment cooperation, given Indiasgrowing role as an international donor.

Gauri Khandekar is researcher and head ofthe Agora Asia-Europe programme at FRIDE.

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