China’s Belt and Road Initiative (BRI) suggest suggest (BRI) China’s Initiative and Road Belt from emerging conflict connectivity and the Trump, President US by initiated war trade the Brexit, from stemming Uncertainties Europe. with up engagement step to wishes Modi, Minister Prime under India, too so countries’, ‘like-minded so-called with relations deepen to seek states member EU and its the As India. towards policy and Dutch (EU) Union in European itself presents of opportunity A unique window reality, where most attention in EU–Indian in EU–Indian attention most where reality, and present past beyond moving means This in is place. geo-economics on afocus that diplomacy is in place, and the Japanese approach of engaging with India can provide provide India can of engaging with approach Japanese and the in is place, diplomacy sub-national Enhanced stage. next the to relations in bringing assist India can with engagement of European in approach achange Separately, connectivity. waterways’ (BBIN) India and Nepal Bhutan, Bangladesh, the of realizing vision long-term the and Framework, Alliance Solar International the under collaborations Indo-Dutch for potential the Forum, INDUS of the approach bottom-up the highlighted: are cases Three ground. the on connectivity for sustainable opportunities details brief policy Clingendael this an as example, Netherlands the Taking between relations and approaches. interests share sides two the where afield and is both, by apriority considered is It and India. Europe between cooperation for such aframework provide can connectivity sustainable on Afocus cooperation. economic of strategic that to relationships business-to-business and government-to-government traditional beyond go should relations EU-Indian norm, the becoming increasingly is geo-economics As China’s Initiative. and Road Belt Trump and President by initiated war trade the Brexit, from stemming concerns amidst level anext to cooperation EU-India take to an impetus been has There of operations in India. of operations and scale needs the to cater India to engaging with while advantage, comparative on based lead the taking states member certain with EU approach acoordinated develop to made be should efforts greater Moreover, countries. for European a roadmap connectivity in EU–India relations in EU–India connectivity Sustainable gap: the Bridging 2018 OCTOBER order, strengthening a multipolar Asia, Asia, a multipolar order, strengthening international arules-based of promoting issues on and Indian stakeholders European the between convergence growing revealed have Track 1.5 dialogues recently Only stability. and prosperity mutual strengthening to a view with and economics, of politics intersection the at and activities vision ashared develop to made be now should efforts Greater security. and maritime cyber – including field security in the initiatives and ongoing – already deep run –which ties economic day-to-day on focused been has relations
Maaike Okano-Heijmans & Vishwesh Sundar Policy Brief Clingendael Policy Brief
and connectivity.1 All agree that much flows into India. The Netherlands is India’s potential remains untapped, even if official sixth largest trading partner in the EU summit declarations and memorandums of and 28th largest globally, and its fifth understanding signed between India and largest investor. Conversely, India in 2016– the EU – and the Netherlands (NL) – for 2017 was the EU’s ninth largest trading years already have listed a wide variety of partner and the third destination for Indian fields for (potential) cooperation. Building foreign investments, after Mauritius and on the normative convergence and shared Singapore. Bilateral trade in commercial perception of challenges to the multilateral services – business services, information and system, can the EU and its member states communication technologies (ICT), transport galvanize stakeholders to act on the vision and travel – has almost tripled over the past of sustainable connectivity as a way of decade, increasing from €10.5 billion in furthering their economic and geo-strategic 2005 to €28.8 billion in 2016. Contrary to interests? the balance of trade for goods, the services’ trade balance is tilted in India’s favour, with This Clingendael Policy Brief addresses Indian exports to the EU accounting for just this question, taking the case of the over half of the total.2 Netherlands as an example and focusing on Even if trade figures feature prominently the political–economic field. It finds that the for many a politician talking about EU or a Indo–Dutch Sustainability (INDUS) Forum, particular EU member state’s relations with Dutch membership of the International India, trade – and the geopolitics of trade – Solar Alliance (ISA), and waterways’ has not featured high in the politics of the connectivity are positive examples of bilateral relationship. The Joint Statement practical projects where rhetoric can be that followed the EU–India Summit in New matched by substance. Greater investments Delhi in October 2017 illustrates this. Trade in subnational diplomacy, complementing and economic cooperation appear only after the state-to-state level, are a crucial step sections on the strategic partnership, foreign in how to realise this. Also, the EU and policy and security, and global challenges. its member states should ensure that the Leaders express their ‘shared commitment bilateral and EU–India tracks reinforce one to strengthening the economic partnership another. Framing all efforts in a new narrative between India and the EU’ and note ‘the of sustainable connectivity can help deliver ongoing efforts of both sides to re-engage the strategic vision and framework that is towards relaunching negotiations for an needed in EU–India relations. India–EU Bilateral Trade and Investment Agreement (BTIA)’, which have now been stalled for years. Then, a variety of bilateral Strong ties on trade, services cooperative mechanisms on specific sectors/ and investment… issues are introduced.3 Separately, only five of the declaration’s total of 53 paragraphs address global challenges and multilateral The EU is India’s largest trading partner and cooperation. This includes one paragraph in its second largest investor, accounting for which leaders reaffirm ‘the crucial role of the more than 13 per cent of India’s overall trade rules-based multilateral trading system’. and almost one-quarter of all investment …But trade is not just for businessmen and trade negotiators 1 Connectivity is about forging stronger economic, What the figures and statements hide is that institutional, and people-to-people connections trade today is about much more than just between countries and regions. While China’s BRI trade. Economic insecurities stemming from is clearly the most well-known and well-financed initiative of this kind, many countries and regions – including Japan, the Association of South-East Asian Nations (ASEAN), and most recently the EU – 2 EU–India relations, Fact Sheet, Brussels, 20 June have come up with connectivity initiatives of their 2018. Available online. own, both in unilateral and multilateral settings. 3 India–EU Joint Statement, 14th India–EU Summit, More on this below. New Delhi, 6 October 2017. Available online.
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Brexit, Trump’s trade war, and competing the agenda in a structured setting.4 With value propositions on connectivity are clear this in mind, European Commission Vice- evidence of this. Unfortunately, this fact President for Jobs, Growth, Investment, and is little accounted for in bilateral relations Competitiveness Jyrki Katainen proposed between the EU/NL and India, judging from a High-Level Strategic and Economic the scant investment in strategic–economic Dialogue in Delhi in November 2016. The cooperation. Formal processes like Indian response was muted, however, and negotiations on the BTIA are important, but the initiative was not pursued. Hearing of the have been stalled since 2013. Few expect proposal, one Indian official lamented that the EU and India to move past this deadlock the EU and India today already have some in the foreseeable future. 32 ongoing dialogues, which are currently being reviewed.5 To others, however, this only In today’s volatile world, more attention confirms the need to rationalise and upgrade should now go to (in)formal processes these dialogues, while adding strategic addressing economic integration and perspective. bilateral/multilateral cooperation in the system of global economic governance. For their part, the EU and its member EU–India cooperation in these fields has states need to turn abstract rhetoric into been scant, thus hampering more profound an appealing framework for cooperation discussion on whether the European that incorporates a long-term vision for countries and India want the same thing cooperation with India, with concrete action when they say they want a ‘rules-based points for on-the-ground cooperation. After order’. This is important as, clearly, they do all, pragmatic cooperation that brings local, not: the current rules benefit the EU and visible, and quick(er) solutions to practical EU member states more than they benefit challenges will have greater effect if they are India, and New Delhi wants to rewrite some part of a shared narrative on dealing with of those rules more than the EU does. bigger issues such as regional power shifts and the acceptable (financial and political) Admittedly, the EU and India have met costs of reaching this objective. in annual macro-economic dialogues and World Trade Organisation (WTO) mini-ministerials to discuss issues such Towards a shared vision for as the global economic outlook and the Europe and India WTO deadlock. Still, there is a need – and scope – for the EU and India to deepen cooperation. Geo-economic issues, A focus on sustainable connectivity can add including connectivity and global value that frame or vision to EU–India relations. chains, economic and financial governance Within this comprehensive framework, and trade diplomacy, have rapidly risen the two sides can cooperate on pressing in importance. Discussions should also domestic issues, and at the same time be held on mini- or multilateral efforts to address broader regional and global protect and maintain the rules-based order; challenges. transparency and (financial) standards related to government procurement, state- In recent years, the EU, its member states, owned enterprises and state subsidies; and India have made significant investments climate and environmental cooperation; in furthering connectivity and sustainability and security challenges linked to as a strategy and a practice. Unfortunately, connectivity, such as the digital economy initiatives now work in parallel, rather than and cyber-attacks. More institutionalised in tandem. In September–October 2018, cooperation on these matters is a necessity, not a luxury. 4 The same can be said of the EU’s relations with Although the EU is a key trade and other countries in Asia. investment partner of India, strategic 5 Indian official at the India Strategy Group, Lisbon, economic cooperation is still not on 6 June 2018.
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the EU presented its strategy for improving contact between individuals through tourism, connectivity between Europe and Asia, cultural centres, and capacity-building focusing on connectivity that is sustainable, initiatives. comprehensive and rules-based.6 A few months earlier in May 2018, the Netherlands’ Launched in 2013, China’s Belt and Road Foreign Ministry published the policy Initiative (BRI) is clearly the grandest document Investing in Global Prospects, connectivity proposition in the world today – detailing the Dutch Cabinet’s focus on the backed by huge funds to implement projects 17 Sustainable Development Goals (SDGs) that are designed to serve specific Chinese as the international guiding principles for interests.8 Less well known is the fact that its policy on foreign trade and development Tokyo – in an overt attempt to offer an cooperation.7 For its part, India – with alternative to China’s BRI – from 2015 started Japan – had announced in September 2017 offering (Expanded) Partnerships for Quality an Asia–Africa Growth Corridor for quality Infrastructure ((E)PQI), mainly to countries infrastructure. in South-East Asia.9 In 2017, Tokyo then introduced its Free and Open Indo-Pacific While the Indian, EU, and Dutch documents Strategy (FIOPS), emphasising rule of law display striking similarities in spirit, they are in the maritime field alongside high-quality in no way aligned. The risk of competition infrastructure partnerships that provide rather than coordination among the various development assistance to bolster naval initiatives is thereby real. This is likely to military strength of countries in this region. be at the expense of achieving an (often For its part, India’s approach to connectivity unspoken) objective: offering a realistic primarily emphasises regional cooperation in counter-proposition to Chinese BRI projects South Asia, building on its Neighbourhood for countries in Europe, Asia, and Africa. First and Act East policies. The Bay of Bengal Initiative for Multi-Sectoral Technical and Connectivity conflict? Economic Cooperation (BIMSTEC) is Delhi’s Drawing on ASEAN’s Master Plan on preferred platform.10 A major part of Delhi’s Connectivity of 2016, connectivity is Ministry of External Affairs budget is directed often understood as consisting of three to this region, but still its financial firepower broad elements – namely physical or remains small. economic, institutional, and people-to- people connections. Economic connectivity concerns ‘hard’ connections in diverse fields – from transport, energy, and digital – to trade services – including in the transport and agro-food sectors. For its 8 A domestically driven foreign policy strategy, BRI part, institutional or ‘soft’ infrastructure is is aimed at fostering change in the increasingly about facilitating cross-border connections unsustainable Chinese economic and social model – as Chinese leaders and academics by lowering trade barriers – such as easing themselves admit, the current Chinese model is customs’ procedures and furthering market marred by production overcapacity, environmental integration. Third, connectivity comprises a degradation, and soaring inequalities. Maaike people-to-people dimension – enhancing Okano-Heijmans and Francesco Montesano, Economic diplomacy in EU–China relations: Why Europe needs its own OBOR, Clingendael Policy Brief, The Hague: Clingendael Institute, June 2016. Available online. 9 Japan’s approach emphasises standards such 6 The Joint Communication on Elements for an as social and environmental considerations, EU Strategy on Connecting Europe and Asia high-technology assistance, local job creation, of 19 September 2018 is to be adopted by the and consideration for the financial situation of European Council in October 2018. Details available recipients. For more details on Japan’s high-quality here. infrastructure and connectivity strategies, see for 7 Government of the Netherlands, Investing in Global example here. Prospects, 18 May 2018. Available online in English 10 Garima Mohan at the 5th #APRAN Roundtable on and in Dutch. Connectivity, 28 September 2018, Brussels.
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Figure 1 Connectivity’s three pillars
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