The German Chancellor Angela Merkel was in Delhi to co-chair the Fifth Biennial Inter Governmental Consultation (IGC) with Prime Minister Narendra Modi. The bilateral summit is meant to review and enhance relations between the two countries. The Chancellor was accompanied by 12 Cabinet ministers, secretaries and a big business delegation. Some 20 agreements and five Joint Declarations of Intent were signed: covering trade, investment, regional security, climate change and artificial intelligence.
Note that Merkel has been in India four times – 2007, 2011, 2015, and 2019 as she is into her 4th term in the office. She is a formidable leader of the most powerful economy of Europe. Despite the huge problem of migration in her country and humungous economic challenges in most of Europe, she survives as the Chancellor of Germany and the leader of the European Union. With such a strong leader and powerful economy, how is India dealing?
What have we gained from her four visits and our PM’s equal number of visits to Germany? Obviously, not enough. Compare the trade figures of Germany with India and China, China-Germany trade is $192 billion, and India-Germany is $22 billion. China runs a trade surplus with Germany of $13 billion, whereas India has a deficit of $5 billion or more. Furthermore, China now is the biggest trading partner of Germany, surpassing the United States, and India ranks 25th amongst Germany’s trading partners.
Admittedly, China opened up its economy much earlier than India and has built a big manufacturing hub for the world. But, India has big a market and human resource as those of China. Heiko Mass, the German Foreign Minister, accompanying Merkel described India as a pillar of stability in South Asia. It would be dangerous from a European point of view to construct an Asia policy too much on China especially as we have a partner in India that is much closer to our values and our understanding of democracy.
Similar sentiments were expressed days before Merkel’s visit to India, in the German Parliament which called for upgrading bilateral ties with India. Johan Wadephul, Deputy Leader, Joint Parliamentary Party of CDU, and its Bavarian sister party Christian Social Union, said, “We in Germany as well in Europe have so far focused more on China, while underestimating the significance of India. As the world’s largest democracy India is a natural partner of Germany within the larger alliance of multilateralists concerned about China”. Merkel herself said on the eve of her visit, “Discussion will be conducted always with a view of China”.
Why does India lag so far behind? Also, if India wants to become a 5-trillion economy sooner than later, doing business with countries like Germany would help her meet that ambitious target.
One plausible explanation for such slow growth in trade is New Delhi’s over-emphasis on terror and security across the globe, with each country it deals with, and diluting the ties in trade and economy. Our pre-occupation with Kashmir and ‘obsession’ with Pakistan impel such a security-driven foreign policy.
Apparently, in the aftermath of defanging of Article 370, we seem to be content in getting an endorsement from each country that matters, and each leader who visits our country, that the happenings in Kashmir are an internal matter of India. Even Germany had to issue a statement to that effect before Merkel flew from Germany.
We must ask ourselves if this is the right approach, Germany has little security footprint in South Asia. German soldiers are not interested or equipped to participate in international conflicts etc. So is it wise to engage Germany in security situation of the sub-continent
Germany is a mighty economy. Why not we try to draw on Germany’s economic and technological strengths for our growth and development? Germany has successfully replaced the fossil fuel and nuclear energy with renewable energy, with involvement of small and medium sector, generating green jobs etc. We have huge renewable resources; we are the convener of International Solar Alliance. Are we trying to nudge Germany and its companies in investing in renewable energy sector?
It is in fitness of things that Merkel announced one billion Euros into green projects in India. She placed climate change and RE at the centre of her talks in New Delhi. We should grab this opportunity with both hands and do more with Germany in this field.
From Germany’s point of view, they are looking at India as an option for business diversion if things got worse and unfavourable in China, either due to continuing US-China trade war, or the internal implosion in China. Many perceptive observers argue that Chinese authoritarian regime will fall sooner than later under its own contradictions, be it Hong Kong, Tibet, or Xinjiang. Germany should also be wary of China’s territorial disputes with a number of countries. Should the investors fold up in China, will India be the preferred alternative destination.
Also India’s growing market and stable multi-cultural democracy should be a surer bet for Germany. Having suffered several devastating wars caused by dictatorships, etc. Germany should be cognisant of political authoritarianism backed by economic imperialism, a lethal combination in world politics.
Compared to China, India possesses greater political goods. But India falters when it comes to economic competitiveness and creating conducive investment climate. German companies over 700 operating in India, see the huge market, but face the red tape, corruption and lack of adequate physical infrastructure. Such fault-lines need to be soon corrected. The need of the hour is to bring in structural reforms, change the complex labour laws, and land-ownership regulation etc.
Germany is by far the best country to try a pure economic approach. The European Union led largely by Germany would like to do business with India, as the social-political structure of the European Union is akin to those of the Union of India. Merkel urged that the India-European Free Trade Agreement needs a fresh attempt.
EU’s grievance is India’s non-economic, bureaucratic approach to trade and commerce. At one point in 1960s, the Indian Trade Centre in Brussels was run by bureaucrats, much to the discomfiture of European Union. The EU had made a formal request to GOI, to appoint technocrats in such positions. As I was doing my research on India and the European Union, the officials in Brussels shared this anecdote and commented that India is more political & less business-like.
Of all the countries in Europe, Germany typifies the economic culture in the European Union. One senior Indian diplomat told us in Paris, earlier our mandate was security and defence deals, now it is trade and commerce. But the strategy shift does not reflect on our trade figures.
It is time to re-focus on economy in our foreign policy. We could talk terror in passing with Germany, but stress on trade and investment and make Germany our strategic ally in building our economy, to 5-trillion or more. Germany known for its straight talk, wants to be a part of ‘New India’ growth and welcomes India as a economic-political counter-weight to China. Are we ready to take this offer?
The writer is Prof. International Politics, JMI