Look east for energy

Prime Minister Narendra Modi will be setting a new record for an Indian Prime Minister by his participation in four multilateral summits in November 2014. He will be in Myanmar for two meetings, the first with Asean heads of government. He then participates in the East Asia summit, which will bring him together with leaders of the US, Russia, China, Japan, South Korea, Australia and New Zealand.

He thereafter proceeds to Brisbane to participate in the G20 summit, bringing together leaders of the developed world and emerging markets. This involves interaction with advanced economic powers including the US, Canada, Australia and the leading economies of Europe, together with the emerging economies of Brics and Indonesia. Towards the end of the month he will attend the Saarc summit in Kathmandu which has political importance but shows little economic promise, thanks to Pakistani obduracy.

These meetings are taking place after a successful Brics summit. It led to the first tentative steps to end the global economic dominance of the US and its European partners by the establishment of the Brics Development Bank and the Asian Infrastructure Bank in China. These institutions should be realistically seen as complementing, supplementing, but not supplanting institutions such as the World Bank, the IMF and Asian Development Bank. India needs to make this clear as the multiplicity of institutions for developmental funding fits in with its belief in a multipolar world. If some countries take serious objection to American unilateralism, an equal number have serious misgivings about Chinese expansionism.

Ever since former Prime Minister Narasimha Rao set India on the path to economic liberalisation, one of the most productive aspects of Indian diplomacy has been the country’s growing economic integration with the economies in its eastern neighbourhood, across the Straits of Malacca to the South China Sea and the Pacific Ocean. The greatest security concern of Japan and Asean countries has been the Chinese propensity to use its growing military power to enforce its maritime territorial claims. India has happily put aside the self-doubt and pusillanimity that characterised the response of the UPA government to Chinese aggressiveness.

A clear manifestation of this change occurred in Washington, when the Modi-Obama Joint Statement affirmed the “importance of safeguarding maritime security and ensuring freedom of navigation and overflight throughout the (Asia-Pacific) Region, especially in the South China Sea”. This was followed by shedding earlier fears on equipping the Vietnamese armed forces.

The supply of naval patrol boats and expanded training facilities to the Vietnamese armed forces will hopefully be followed with equipping the Vietnamese with supersonic Brahmos Cruise Missiles, to meet Chinese maritime challenges. There should necessarily be effective answers to Chinese policies of “strategic containment” of India, through its nuclear and missile proliferation to Pakistan and the strategic encirclement of India in the Indian Ocean region.

Modi, who has developed an excellent personal rapport with his Australian counterpart Tony Abbot, will proceed from the G20 summit in Brisbane to Sydney, Canberra and Melbourne for interactions with the 2,90,000-strong Indian community, an address to the Australian parliament, and extensive discussions with the business and investor community.

Virtually every major Indian IT company has an office in Australia. Indian private investment in copper and coal mining in Australia is growing. Major Indian companies ranging from Tata Power and the Aditya Birla Group to Sterlite Industries, Petronet LNG and the Adani Group have significant investment interests in Australia. Even the state-owned NMDC has an agreement with Australian mineral giant Rio Tinto for joint exploration in India and Australia. But, transformational reforms are called for in our mining sector before foreign investors invest significantly in exploration in India.

India and Australia are set to expand military cooperation. It would be useful to establish institutional links between our Andaman and Nicobar Command and its counterparts in nearby Perth. Moreover, India and Australia should work for a system of cooperative security across the Straits of Malacca with Asean partners, especially Indonesia. India also needs to finalise a comprehensive economic partnership agreement with Australia, as it has done with Japan and South Korea.

Discussions are likely on the possibility of Indian participation in the American-led Trans Pacific Partnership (TPP) for developing a free trade, investment and economic partnership extending from India to the US, Mexico and Canada. Fourteen countries including Australia, New Zealand, Japan, South Korea and four Asean members —Vietnam, Singapore, Malaysia and Brunei — have joined negotiations on the TPP. Indonesia, the Philippines and Cambodia have expressed interest. There are naturally apprehensions in India on issues like IPR, investment protection and government procurement. These could be discussed with Abbot, who has taken a keen interest in the TPP.

Modi’s visit to Australia is taking place when there are drastic changes emerging in the global energy situation. The US is now the largest producer of oil in the world. It is also becoming a significant exporter of natural gas across its Atlantic and Pacific shores. Canada is also emerging as a major exporter of gas across the Pacific. Both Japan and South Korea, major buyers of Australian LNG, will soon have alternate sources of supply. The US is building additional LNG capacity of 80 million tonnes per year, predominantly for export. Oil and gas prices will stabilise or fall as the global energy scenario inevitably changes. Australia is also increasing its LNG exports substantially from its Indian Ocean terminals, to reach 83 million tonnes annually in 2017, and expand further, thereafter.

Given Western Australia’s proximity to India’s east coast, Modi’s visit would be the ideal occasion to give momentum to efforts for long-term agreements for imports of LNG from Australia, which would facilitate the development of petrochemical, fertiliser and power industries along our east coast. India’s excessive dependence on imports of oil and gas from the politically volatile Persian/Arab Gulf region should be reduced.

The writer is a former high commissioner to Pakistan

COMMENT NOW