India steps up the game with Saudi Arabia

The meeting between PM Modi and the Saudi Crown Prince Mohammed bin Salman in Buenos Aires earlier today on the sidelines of the G20 summit should not come as surprise. Basically, India has stuck to its stance that the internal affairs of another country are simply not its business; nor is India going to be prescriptive to other countries: “What Jamal Khashoggi?”

Our pundits should take note that India exercises its discretion as a “hard state” when its self-interests are involved. It is one thing to be preachy toward the Maldives about the latter’s democracy deficit but it is another thing to try to do that with Saudi Arabia.

Notably, what comes nonetheless as pleasant surprise is that PM is the first world leader MBS met after arrival in Buenos Aires. And, even more so, that PM called on the Crown Prince at his residence.

The latter part shows how anxious India is to preserve and build up its hugely productive partnership with Saudi Arabia, which has been steadily on an upward curve in the recent years. The proposed Saudi investment in the $44 billion Ratnagiri Refinery project (Saudi Aramco will hold 25 percent stake) and the Saudi help to create a strategic oil reserve for India have transformed the bilateral relationship.

The Saudi press statement on the meeting between PM and MBS suggests that substantive discussions took place to boost the bilateral cooperation. Indeed, new opportunities are arising. MBS’ ambitious reform program (Vision 2030) aims at diversifying the Saudi economy and reduce its over-dependence on income from oil exports. This means that the Saudis are looking for opportunities of partnership in the non-oil sectors. India must cash in on the new opportunities.

The Saudi press statement flagged agriculture, fertilizer and solar energy as promising sectors for India. Having said that, Saudi “readiness to supply India with all of its needs of oil and petroleum products” is of critical importance to India in the near future with a strong likelihood of the Saudis cutting back on oil production to shrink the current global oversupply, which in turn might increase the oil price, which is currently at $59 per barrel, to somewhere between $75-80.

Of course, Indians are the largest community of expatriates in Saudi Arabia – estimated to be over 4 million. (It used to be just 1 million in 2000.) And their remittances to India accounted for 11.6 percent of all remittances in the FY 2016-2017, according to Reserve Bank of India estimates.

In political terms, India-Saudi relations have a renewed flavor today. For a start, the two countries have successfully de-hyphenated their respective ties with Pakistan from their mutually beneficial bilateral cooperation. The Indian-Saudi-Pakistani triangle is stabilizing. Second, more importantly, the searing experience of the past two months since the murder of Jamal Khashoggi on October 2 has left indelible scars on Saudi Arabia’s relations with the West, including with the US. (See my Indian Punchline blog titled Post-Khashoggi US-Saudi tis become iffy.)

How the Khashoggi affair plays out still remains to be seen but what emerges is that the Saudi-American strategic ties (dating back to the historic meeting between Franklin Roosevelt and King Abdul Aziz aboard the USS Quincy in Great Bitter Lake, Egypt in 1945), built on the matrix of Americans controlling Saudi Arabia’s fabulous oil resources in lieu of which Washington provided seamless security guarantee for the Kingdom, have practically run their course or have simply outlived their utility for both sides.

We may expect in the coming period a robust Saudi diplomatic and political thrust to rev up its ‘Look East’ policies with a view to strengthen ties with Asian powers. (The Kremlin has already signaled that President Vladimir Putin will have a meeting with MBS in Buenos Aires.) All in all, therefore, it is just as well that PM called on MBS and was his first visitor among foreign dignitaries to do so. The early bird catches the worm, as they say.