H I G H L I G H T S
• The Trans-Atlantic Alliance
• Internal Issues in the EU
• EU’s Indo-Pacific Strategies
The European Union (EU) and its Member-States have reasons to be happy with the first half of 2021 despite COVID-19 continuing to plague them, their relatively low levels of vaccination and continuing issues with vaccine suppliers. The positivity is a result of the change in guard in Washington DC and the avowed aims of the Biden Presidency to rebuild the trans-Atlantic alliance which had been severely dented by President Trump.
The Trans-Atlantic Alliance
One of the first things done by President Biden, after his inauguration, was to rejoin the Paris Agreement (on climate change), an action that was music to the pro-climate Europeans. Similarly, his initial telephonic calls with European leaders underlined the importance of the trans-Atlantic relationship.
President Biden’s first overseas visit, in June, brought him to Europe where he participated in the G7 Summit in the UK. He then flew to Brussels for a Summit of NATO leaders and with the EU before traveling to Geneva for a Summit with President Putin. The Summit with the Presidents of the European Council and European Commission saw forward movement in a long-standing EU-US dispute on subsidies to Airbus and Boeing. While there was a certain “bonhomie” between him and the European leadership with both underscoring their commonalities of approach on global issues at the G7, NATO and EU Summits, certain differences, particularly versus China were also visible.
Chinese aggressiveness, including from its Belt and Road Initiative activities in Europe, quite apart from negative perceptions about it from COVID, has brought the country squarely in the EU’s eyes. And so, despite of the massive trade and investment relationship with China with two-way EU-China trade in 2019 touching a whooping Euro 560 billion (12% of EU’s external trade), the EU now notes China as a ‘an economic competitor’ and a ‘systemic rival’.
The European Parliament has also been critical of China adopting resolutions on the crackdown in Hong Kong and on denial of huma rights to the Uyghur people. And, Interestingly, NATO also commented on China noting that its “growing influence and international policies can present challenges that we need to address together as an Alliance”.
While most in the EU recognize China as a major systemic challenge like the US, Germany remains a voice pushing for engagement and dialogue with China. The fact of huge German investments in China, particularly in the automotive sector, plus its massive trade with the country, are, of course, factors clearly visible to all in their position. Indeed, towards the end of 2020, EU and China had agreed to a Comprehensive Agreement on Investment (CAI) largely pushed by Germany. However, its ratification now appears on ice and with Chancellor Merkel to relinquish office later this year, there may not be an effective pilot for the agreement within the EU.
In so far as Russia, Germany and France wish to follow in the Biden footsteps and show willingness to engage President Putin and they proposed this to the other EU Member-States. However, most European nations, and particularly those from Eastern Europe and the Baltics, remain extremely wary of President Putin and don’t wish to see him ‘rewarded’ in any way. For NATO, too, ties with Russia were at their lowest and it was made clear that “Russia’s aggressive actions constitute a threat to Euro-Atlantic security” and there can be no business as usual.
BREXIT related issues continue to plague EU-UK ties. This was most visible during the G7 Summit where bilateral meetings between UK PM Johnson and EU leaders were quite frosty. A key issue is the movement of goods to and from Northern Ireland with the EU demanding that the channel separating the UK from Northern Ireland be treated as a kind of hard border for goods, as was agreed in the last-minute BREXIT deal at the end of 2020. This is politically untenable for the UK and with PM Johnson enjoying a surging popularity, unlikely to be a give-in to the EU. The US, with President Biden’s Irish roots, has also stepped in asking both sides to find a solution that maintains the integrity of the Good Friday agreements.
Internal Issues in the EU
Internal issues continue to bog the EU, particularly with right of center governments in Poland and Hungary. The latest is a row over legislative enactments by Hungary barring LGBT issues in school curriculum.
Right wingers raising their heads on race and anti-Islam issues is also now visible in France where Presidential elections will be held next year. In Germany, on the other hand, Chancellor Merkel’s CDU is most likely to be challenged by the Greens.
EU’s Indo-Pacific Strategy
In April, after some of its major Member States had announced their own approached to the Indo-Pacific, the EU announced its Indo-Pacific strategy.
Noting the intense geopolitical competition in the Indo-Pacific as well as pressure on supply chains plus human rights issues, the EU was clear that the South China Sea should remain free and open. While underscoring its strategic focus on the Indo-Pacific, the EU identified specific areas for action – ocean governance, health, research and technology, security and defence, connectivity, and tackling global challenges such as climate change other than overcoming the devastating human and economic effects of the COVID19 crisis, ensuring a sustainable and inclusive green socio-economic recovery, and creating more resilient health systems. The EU would work with partners having their own Indo-Pacific approaches.
The announcement was a diplomatic plus for India with its major interest in the Indo-Pacific. At an India-EU Leaders’ Meeting in May, the two sides emphasized a “a free, open, inclusive and rules-based Indo-Pacific space”.
The second quarter of 2021 was a time of possible major forward movement in India-EU ties. Prime Minister Modi and Leaders of all 27 EU Member States participated in a virtual India-EU Leaders’ Meeting on 8th May 2021. The EU Leaders were in Porto, Portugal and an in-person Summit would have been a unique diplomatic opportunity to reach the entire EU leadership. COVID did not let that happen but India’s serious stake holding in the global order and the EU’s recognition of the same stands registered.
The India-EU Leaders’ Meeting was only the second time that the EU has used such a format; the other time being with President Biden in March this year. The Chinese had been keen on such an all-Leaders’ Meeting with the EU in September 2020 but, ironically, COVID prevented it from taking place!
The India-EU Leaders’ Meeting also celebrated 20 years of India-EU Summits which started in 2000 from Portugal when Shri Atal Behari Vajpayee was PM of India and Mr. Antonio Guterres, now the UN Secretary General, was Portugal’s Prime Minister and concurrently held the Presidency of the European Council. Interestingly, this time, the PM of Portugal, Mr. Antonio Costa, has familial links with Goa in India and greatly helped in pushing the dialogue.
In recent years, the European Investment Bank (EIB), one of the world’s largest development finance players, has become active in India financing key infrastructure including metros. A concrete outcome of the Leaders’ Meeting was an agreement for the EIB to provide Euro 150 million for the Pune Metro project. A Connectivity Partnership covering areas of digital, energy, transport and people to people connectivity was signed and should help in realizing concrete measures to strengthen India-EU links.
Partnership in climate change was underlined but the key issues at the global negotiations’ table, including the push for “net zero (GHG emissions) by 2050” and upping mitigation ambitions are bound to remain points of major contestation even though India, like the EU, is among the few major players on target to meet its commitments under the Paris Accord.
The Leaders’ Meeting took place against the backdrop of the huge fall-out of COVID in India and the support received from the EU and its Member-States. Obviously, vaccines and imperative for their affordable access across the world could not be shaded and India strongly pushed the EU to support its effort at the WTO to seek a waiver on COVD vaccine IPRs. Interestingly, even though at the India-EU virtual Summit in July 2020, both sides “called for the future COVID-19 vaccine to become a global common good”, the EU was reticent this time around. Obviously, commercial interests trump principles though the changed US position caught the EU off-guard and is bound to keep them under pressure at the WTO.
Given the fact that the EU’s real competency is as a common market and is in trade and economic issues, the most important take away from the Leaders’ Meeting is to restart negotiations on trade and investment, that have stalled for years, and have them overseen by a high-level interaction at ministerial level. The Joint Statement mentions separate trade and investment agreements, a useful approach of particular importance to India given that Bilateral Investment Protection Agreements were terminated in 2017 and there has not been much success in signing new Bilateral Investment Treaties. An investment agreement should also help change perceptions on Atmanirbhar Bharat, which gives an impression to some of protectionism on the part of India.
In the above context, the global size of the EU (GDP of USD 18 trillion, second only to US, and significantly ahead of China) and the fact that EU is India’s largest economic partner demands constant reiteration. In 2019-2020, it was India’s largest merchandise trading partner at around Euro 80 billion accounting for over 11% of India’s goods trade. Trade in services has also grown and is now just under Euro 30 billion. The EU is, moreover, the largest foreign investor in India with some 6000 European companies present in India. And the EU is the go-to place for the development of standards in India.
Ties between India and the EU, despite the Strategic Partnership between them, have an inherent propensity for problems. Recently, the issue hitting the headlines was recognition of COVID-19 vaccines with the EU not accepting COVISHIELD and COVAXIN and India threatening to quarantine EU citizens on their arrival in India. At the time of going to print, several EU Member States have accorded acceptance of COVISHIELD – given that this is a European vaccine, Astrazeneca, the issue wouldn’t have arisen had the Serum Institute of India made the required application with the European Medical Agency in time.
‘Cultivate Europe’ was noted as one of the action points for India’s foreign policy by External Affairs Minister Dr. S. Jaishankar in his book “The Indian Way”. It is good that the EU has recognized the importance of the Indo-Pacific, but it is really time to leverage economics and realize the potential of India-EU cooperation.
(The views expressed are personal)