Distinguished Lectures Distinguished Lectures

India and the EU: Challenges, concerns and Brexit: The way forward

  • Distinguished Lectures Detail

    By: Amb (Retd) Bhaswati Mukherjee
    Venue: National Law School of India University, Bangalore
    Date: August 03, 2017

How did Europe meet India?

1. India’s relations with Europe go back to millennia. It is a historic relationship, going back to pre-colonial and colonial times. One has only to recall both the Silk Route stretching all the way westward to Italy from Patliputra (now Patna) and the Spice Route, both iconic reminders of our past, which brought the ships of our future colonizers to our shores, to the historic and beautiful Coromandel Coast, later renamed as the Spice Coast. The importance and continuing relevance of our historic connections with Europe can never be over emphasised. As US turns its back on Europe, despite President Trump’s recent visit to Paris on 14th July, 2017, is India reaching out to an important but neglected strategic partner?

Dialectics in making: Commonalities and Differences

2. India-EU relations date back to the early 1960s. Our leadership, from the very inception, had a clear perspective regarding its relations with the former EEC. India was among the first to establish diplomatic relations with the European Economic Community (EEC) in 1962. Since then, the Grouping grew from a common market to a common currency and from a Community to a Union, with many competencies transferred to it from Member States, especially after the Lisbon Treaty. Simultaneously, India’s engagement with the EU also grew commensurately, complementing and supplementing our relations with EU Member States.

3. The supranational Institutions of the European Union, in the post-Lisbon Treaty era, are an intergovernmental sui generis political and legal entity. Under international law, sovereign legitimacy lies in the national capitals of the member states of the European Union. The institutions of the European Union derive their authority based upon sovereign rights delegated by member states to Brussels. It is important to underline that the European Union is not an inter-governmental organisation. It is an intra-State entity where on certain key areas competencies have been ceded by Member States under the Lisbon Treaty. Outside the EU, these nuances are often poorly understood, especially in the context of a complex bilateral relationship such as the India-EU one.

4. It has often been pointed out that although separated widely by geography as well as history, there are nevertheless striking parallels in the journey of EU and India and this phenomenon naturally impacts upon the relationship. Both have gone through a unique process of institution building to balance the rights of their citizens with the need for cohesion; they represent the two largest democracies in the world (if one counts the EU as a single member State); culturally and linguistically they are among the most diverse regions on the planet. Relations which were once focussed on trade and development now encompass the political and security environment, scientific and technological development, climate change and other interests in an increasingly globalised world. Business and trade relations, continue to have the highest priority. The commitment to democracy and rule of law, to the market economy as well as inclusive development which promotes the welfare of all segments of society through progressive public policy is a defining factor in the India-EU relationship.

Summit Level Dialogue: A Privileged Partnership

5. Thanks to the vision of former Prime Minister Shri Atal Bihari Vajpayee and the supportive role of then Portuguese Presidency of the European Union, led by the Portuguese PM Antonio Gueterres, presently UNSG, the first India-EU Summit was held in Lisbon in June, 2000. Such was the personal chemistry between the Indian leadership led by Prime Minister Vajpayee and the EU Troika at Summit level that at the suggestion of Portugal, the EU decided to institutionalise annual Summits with India, the venue to rotate between the Presidency and India. After the Lisbon Treaty, the Summit when hosted by the EU has been held in Brussels. The 14th Summit to be held on 6th October, 2017, will be held in New Delhi and hosted by Prime Minister Modi.

Emerging Challenges: Multiple Concerns

6. In September 2004, during the Dutch presidency of the European Union, the relationship was upgraded to a Strategic Partnership and given a well-rounded policy perspective with a Joint Action Plan in 2005 which was reviewed in 2008. The EU recognised India as a ‘regional and global leader, engaging increasingly on equal terms with other world powers’. The quest for a multi polar world led the EU, impacted by the profound political changes and tectonic shifts at the end of the 20th century, towards this partnership. The EU never understood or appreciated that emerging from the Cold War and attached to non-alignment, India had a different vision of multi-polarity. From the perspective of 2017, a fundamental flaw in the partnership document and its review was that both sides had differing visions of a strategic partnership which were never fully reconciled in the document.

7. EU’s approach was somewhat heavy handed and non transparent. The negotiations could hardly be considered to have been conducted on the basis of sovereign equality. The Indian Foreign Office and its Embassy in Brussels responded with their own strategy paper which was far more pragmatic and realistic. It stressed the bilateral nature of the document. It also highlighted India’s interests in systematically expanding cooperation and consultation at the UN, including obtaining EU’s support for India’s candidature for permanent membership of the Security Council. The Indian side insisted that the strategic partnership should be based upon a ‘relationship of sovereign equality based on comparative advantage and a mutuality of interests and benefits’. Keeping in mind the tendency of the EU to equate India with Pakistan, which was called ‘hyphenation’, India insisted that the partnership should be kept "immune from the vicissitudes of either side’s relationship with a third party.” This indirect reference to Pakistan was inserted with great difficulty, since the prospective strategic partnership with India was being strongly opposed by Pakistan.

8. The partnership document was thus based on ideological pillars on both sides that were diametrically opposed to each other. This was normal considering the historical background and the flow of international events at that time. For India, having become a nuclear weapon state and facing two hostile nuclear armed neighbours, one of whom was actively trying to destabilize India at its border and within, in J&K as well as through terrorist attacks such as the attack on the Indian Parliament in New Delhi in 2001, her partnership priorities naturally included consultation mechanisms at the highest level on the sharing of active intelligence, cooperation in combating international terrorism including stopping the flows of terrorist financing, de-hyphenation and EU’s support for India’s concerns regarding its dangerous and volatile neighbourhood. For EU, its priorities for the partnership continued to be an absolute commitment to hyphenation, to bringing India into the NPT and rolling back its nuclear weapon status. EU also hoped for an active human rights dialogue with India, repeatedly pointing out that China had never objected to such a dialogue, provided that the Dalai Lama was not mentioned! Coming to a common position required skilled negotiators on both sides. This has now changed fundamentally but challenges still remain.

9. Analysing this difference in approach, a prominent political scientist, Pohl points out: "The EU’s approach to bringing its relationship with India to a "strategic” level rested on two premises—that India, as a like-minded democracy and emerging global power, would share the same notion of responsibility for global security, and that it would accept the EU as a true strategic player.” The EU was of the view that India should now actively join not just peacekeeping and peace building but also peace enforcement and become an effective new pole in a unipolar world dominated by USA. European thinking was not in sync with the Indian perspective. ‘Effective Multilateralism’ was taken by New Delhi as a euphemism for intervention. Its tautology was suspect and was reflected in the ambiguity of the actual document. While the basic issues were never fully addressed, the political declaration of September 2005 unsuccessfully attempted to bridge this perception gap verbally.

10. Twelve Summits later, the relationship ran into a crisis when two Italian Marines killed two Indian fishermen in India’s territorial waters off the Kerala coast and arrested. Refusing to compromise, Italy held the India-EU relationship to ransom, delaying the 13th Summit by four years. Italy could not permanently block the dynamics of the India-EU Summit Partnership. There were persistent reports that Summit dates had been finalised, despite the Italian Marine case being unresolved, through direct intervention by the President of the European Council with the Office of the Indian Prime Minister. Though negotiations were continuing on the Marine case, Summit dates were finally agreed upon. Sometimes in foreign policy, the meeting really is the message! Such was certainly the case for the 13th India EU Summit hosted in Brussels on 30 March 2016 in the shadow of a terrorist attack in Brussels on 22nd March, 2016. Of even greater significance was that it was held before the interim resolution of the Marines case in May 2016. It possibly demonstrated Italy’s inability to hold hostage for an indefinite period a valuable strategic partnership to further its own narrow bilateral agenda. It took place in the background of a deepening crisis in Syria, the rise of the ISIS and a fully fledged migrant crisis for Europe being faced in its outer periphery, notably by Greece.

11. Do Summit level consultations invigorate the partnership? The 13th India-EU Summit enabled our Prime Minister to develop close ties with the EU leadership. It highlighted international terrorism as an unacceptable affront to open and democratic societies of Europe and India. It is widely expected that the 14th Summit on 6th October 2017 will provide a breakthrough in the background of ‘fortress America’ and Europe’s search for new allies in Asia.

Brexit: a Challenge or an Opportunity? Stakes for India

12. Is Europe going into reverse gear with Brexit and the impending divorce from UK? Five centuries ago, King Henry VIII, impatient with the demands of the papacy and refusal to annul his first marriage, broke with Rome and established the Church of England. That step changed Rome forever and established today’s roughly 85 million Anglicans. That was England’s first divorce from Europe and the European empire. This divorce is more complicated. The origins of English euro-scepticism, it has often been stated, originated with the Protestant Reformation. Historical parallels can sometimes be misleading but the echoes from the past can resonate in the future. In the ultimate analysis, the Brexit majority vote represented the rejection of globalisation and the natural opposition of the English to a bigger outside power, in this instance the European Union, the Commission and the Brussels bureaucracy. Analysts say that "it is also caused by the most pernicious and debilitating Little English drug called nostalgia”. Nostalgia for Empire and the past remain the ideological heart of the passionate debate for separation from Europe. It is indeed ironical that on the European side too there is little or no recognition of UK’s past glory. Anglo-French historian Robert Tombs has aptly remarked that when Europeans talk about history they refer to the Roman Empire, the Renaissance and the Enlightenment. Great Britain is overlooked.

13. The result of the victory of the pro-Brexit camp was like a seismic upheaval. It split the United Kingdom between England and Wales on one hand and Scotland and Northern Ireland on the other. It brought to the forefront the possibility of another Scottish referendum, this time for separation from United Kingdom. It sharply demonstrated the divide between upwardly mobile, well educated, multicultural English youth who voted to remain, especially in the city of London and the conservative, white, often racist, older and aging sections of English society who equated all of UK’s ills with EU membership. It sharply impacted world markets and brought the Pound to a new low. It brought to an end Prime Minister Cameron’s political career.

14. When and how will Brexit happen? Prime Minister May’s call for elections on 8th May, 2017, two years ahead of schedule proved to be a costly diplomatic blunder, as catastrophic as Cameroon’s decision to call for a referendum. The elections held on 8th June 2017 had been dubbed ‘a Brexit election’ with the Prime Minister expecting a comfortable majority for the Conservative Party ahead of the difficult negotiations. The reality was that the Conservatives failed to get a majority in the Parliament rendering more complex the on-going Brexit negotiations which must be completed by end May, 2019.

15. The complex nature of the EU- UK divorce is only now being analyzed and understood. It involves not only separation of UK from EU and the single market it represents but also separation from the WTO to which it is a party as an EU member. Every free trade agreement that UK enjoys with the other 53 WTO member countries has to be renegotiated by UK. These negotiations cannot commence until a final free trade agreement has been worked out between UK and EU post Brexit. This would also impact negotiations that are essential to conclude a trade agreement between India and the UK. UK can only apply to rejoin the WTO as an individual country after this process is complete. Moreover, every WTO member would need to agree to UK’s individual membership to the WTO.

16. The Economist in its lead editorial, ‘The Road to Brexit’ in October 2016 has urged Prime Minister May to take a soft Brexit by negotiating an interim trade deal through temporary membership of the European Economic Area i.e. an arrangement identical to the one Norway enjoys with the EU. It entails contribution to the EU budget and accepting free movement. In return, UK can buy time to ensure WTO accession and trade arrangements with the EU and other countries, while still under the shelter of the single market. Admittedly, this would be difficult for the pro Brexit camp to accept since their worry is that UK could then stay in this ‘half way house’ forever.

17. Politics in UK after Teresa May’s self-imposed ‘Brexit General Election’ reveals a stalemated society and politics, deeply divided between those who support and those who passionately reject the decision to leave the EU. Voting to leave was much easier than actually leaving! Political analysts are now talking of a ‘fuzzy Brexit’, representing a constructive ambiguity where UK tries to "muddle through” and stay within Europe while leaving the EU! Insiders argue that this would imply a much longer transitional period, with UK remaining inside the EU Customs Union in a modified form and a compromise agreement on UK’s contribution to the EU budget. Some form of continuing jurisdiction by the European Court of Justice could also be part of this emerging deal.

18. There appears to be a power shift away from her headed by Chancellor Philip Hammond. A Cabinet source revealed a "broad consensus” on seeking an off-the-shelf transition deal – effectively maintaining the status quo for around three years after Brexit, beyond March, 2019. Informal sources point to a huge movement within the Cabinet in favour of a substantial transition period, a direct fall out of the recent election which Ministers interpret as a failure to endorse May’s plan for a hard Brexit. Hammond confirmed to BBC that UK’s relationship with the EU could look "similar in many ways” until 2022 – despite formally leaving the bloc in 2019. A majority of Cabinet Ministers confirmed they were comfortable with a lengthy transitional period of around three years, with continued free movement of people, single market access, a customs union arrangement and potentially oversight from a supranational tribunal structure. Even more interesting was Home Secretary Amber Rudd’s announcement that EU nationals would be free to come to the UK during the transition period as long as they register with the authorities. This is totally at variance with Teresa May’s public statements on this issue.

19. Labour Party leaders were quick to respond. Chuka Umunna, Labour MP and leading member of the ‘Open Britain’ campaign group, said it was "refreshing to hear Government Ministers facing up to the realities of Brexit at last” and acknowledged the Chancellor and Home Secretary had "brought a welcome dose of reality to the Brexit debate”. George Osborne, former chancellor and now editor of the Evening Standard, appeared to take Hammond’s interview as a vindication of his own position from June, 2017, that May’s Government need the "political equivalent of the cold shower” and a "realistic assessment of Britain’s approach to the Brexit talks”.

20. London’s popular and charismatic Mayor Sadiq Khan quickly noted that Brexit referendum result could be "trumped" if Labour used its next general election manifesto to commit to not leaving the EU, or to hold a second referendum on withdrawal. In a pointed intervention after days of conflicting signals on Brexit from senior Labour figures, Mr Khan insisted he was an "optimist" about the chances of the UK staying in the EU. Labour had been accused of an incoherent policy on Brexit after leader Jeremy Corbyn insisted the party wanted the UK to leave the EU single market while shadow Brexit Secretary Sir Keir Starmer said nothing was off the table.

21. The chief EU negotiator Michel Barnier was continuing to pressure the UK Government along with the European Parliament’s chief Brexit coordinator Guy Verhofstadt. British negotiators would need to demonstrate major progress on the paramount issue of citizens’ rights. If they fail to do so, Mr Verhofstadt would recommend to the European Council that negotiations on Brexit should not enter phase two relating to Britain’s future relationship with the EU. Mr Verhofstadt underlined: "I am adamant that the European Parliament, as the directly elected body representing European citizens, will also provide its assessment to the Council, via the adoption of a parliamentary resolution, about whether or not we can go into phase two. Our voice will be heard.” His comments are significant. It is clear that British negotiators would be required to satisfy the interests of the European Parliament on the complex issue of citizens’ rights, as the institution will provide a separate assessment on progress, creating another potential hurdle for Brexit talks.

22. His intervention follows reports that Michael Barnier, the EU's chief Brexit negotiator, had warned talks on a future trade deal could be stalled due to lack of progress on the highly contentious issue of a financial settlement with the UK – often referred to as the so-called "divorce bill”. While there has been no official figure provided by Mr Barnier’s team, speculation has placed the financial settlement as high as €100bn (£89bn). During the recently concluded second round of Brexit talks, negotiators failed to produce any substantial breakthrough on key disputes, including the financial settlement, the future rights of citizens and the Irish border.

23. Writing for the New York Times (August 20, 2017) Jenni Russell noted that the message of Christopher Nolan’s film ‘Dunkirk’ which has just released, "feeds national pride in Britain’s capacity to triumph eventually, no matter what the odds are. Nothing could be less helpful as Britain blunders towards Brexit”. She continues: "Britain is a country of mediocre education and limited skill. Our membership in the EU is not a set of restraints; it is what has been propping us up. If we insist on cutting ourselves off, parts of our economy will start to die.” She concludes: "Dunkirk is remembered so fondly only because, in the end, Britain was on the winning side. That was not because of its plucky spirit. It was because America, with its overwhelming resources, entered the war. There is no such ally waiting to rescue us now, as we start down the dangerous path of methodically shredding our links with our neighbours and friends.”

24. What are the stakes for India in this backdrop of intense speculation on the impact of Brexit on India EU business relations as well as on the India-UK partnership? It is generally agreed that with €72.5 billion worth of India- EU trade and €19.4 billion of India- UK trade at stake, all partners needed to think through this issue carefully in the business and commercial context. The Indian position was best summarized by a leading Indian industrialist Shishir Bajoria, Chairman of the Bajoria Group who noted: "We have 800 million young Indians who need jobs. We will trade with the UK, Brexit or no Brexit. And we will trade with the EU, Brexit or no Brexit.”

25. Clearly, this is a narrative still in the making with high stakes for all, India, UK and Europe. If responses are based only on national security templates, the global economy risks being seriously impacted. In the event of a harmful deal, harmful to either side, or no deal, the repercussions will be global, not national. Brussels will be blamed as much as London. As David Goodhart (author of "The Road to Somewhere: The Populist Revolt and the Future of Politics”) recently commented to the New York Times: "May be it is Europe’s ‘true-believers’ who need to embrace the spirit of constructive ambiguity.”

Continuing Challenges

26. India and Europe are pursuing domestic and foreign policy agendas, while facing many new global challenges. Their responses are based on their national security templates. In doing so, they are also shaping a new world order. Are their responses in tandem with each other? Can they be strategic partners in this new millennium?

27. What are these challenges? To redefine the partnership is the need of the hour. Both sides should agree on a common strategic paradigm. Negative perceptions must be fully addressed. Multiple crises within Europe have negatively impacted EU’s image among Indian media, public opinion and policymakers. Europe appears to be in accelerating decline, not ascent. Europe too has become inward looking with foreign policy taking a backseat. In the midst of confusing signal about the direction of Brexit negotiations, EU needs to project itself as a major global power centre, whose strategic perceptions globally and in India’s neighbourhood, coincide with India’s perspectives. With two permanent members in the Security Council, EU should demonstrate that it is a global political player, capable and willing to use military power when required or to play the role of a power broker during a global crisis.

28. It is unfortunate that the EU continues to be in a state of denial regarding the crises. The reluctance to give priority to the relations with India, over China is baffling, as is the insistence on a human rights dialogue with India. India can at best be at second place. This is privately commented upon by senior Indian officials who contrast it with the American approach. Most EU ambassadors here also privately acknowledge that that continuous finger pointing and focusing on India’s "flaws” or a one sided dialogue do not make for a good relationship. EU should accept that India, as a trillion dollar economy is a valuable asset for Europe and the trade and business partnership as important as with China.

29. The challenge posed by the Indo US partnership to the India EU strategic relationship has hardly been publicly discussed. Many Indians believe that given the complexities and sensitivities of India’s difficult neighbourhood and the threat of terrorist strikes from across its borders, an alliance with the USA is the need of the hour, rather than with the EU which appears divided and in decline. So far the Trump presidency has not turned its back on this partnership though it is too early for a definitive conclusion.

30. Under the present Indian Government of Prime Minister Modi, important measures were taken to reinvent, redirect and reinvigorate India’s foreign policy imperatives. How have these impacted relations with Europe? The EU High Representative Mogherini visited Delhi in April 2017 and reportedly had an excellent interaction with the Indian Prime Minister. The relationship seems to have now acquired a new momentum. EU sources in Belgium are confident that the forthcoming 14th Summit on 6th October, 2017, under a business minded and dynamic Prime Minister Modi will finally develop a new strategic paradigm with Europe. India is now at the forefront of global political dialogue and discussions. Many of its new global priorities including Security Council reform, climate change and global warming coincide with the EU. Others such as the need to reform the governance mechanisms of global financial institutions do not. In this 17 year journey since the first Summit, much water has passed under the bridge and many ideological differences have been put aside. Both realised the need to jointly address many agreed common strategic challenges in a difficult international scenario.

The Way Forward

31. What is the way forward? How do both sides respond to these multiple challenges? It requires political will as well as goodwill, recognition of each other’s strengths and a sustained media campaign on both sides. The message needs to be disseminated that in an emerging multi-polar world, the EU and India would be two important poles, essential to maintaining a transparent, democratic and strategic global narrative. Greater efforts in this direction are maybe required from the EU side. With a vibrant Indian middle class increasingly travelling to Europe and being often confronted with a negative portrayal of their country, it would be difficult to change Indian perceptions, unless Europe takes a more realistic and less critical approach to India. With Europe and the EU in crisis, Brexit in 2019 and in the sombre backdrop of Europe’s protracted sovereign debt crisis, it may be difficult to portray the EU as a major global power which is an important strategic partner for India. To achieve the full potential power of their relationship, the EU and India must also push forward on trade negotiations, carry out a critical and frank review of the whole partnership architecture, recruit more stakeholders—from lawmakers and civil society members to business leaders—into the dialogue, and shore up sources of funding for joint initiatives. Otherwise, the partnership is at risk of stagnation and political marginalization.

Concluding Narrative

32. To the rest of the world, Europe appears to be in accelerating decline, not ascent. In order to revive interest among Indian public opinion makers about Europe and its potential, the European Union should project itself as a major global power centre, whose strategic perceptions globally and in India’s neighbourhood, coincides with India’s perspectives. The EU, with two permanent members in the Security Council, should clearly demonstrate that, despite these crises, it continued to be a global political player, capable and willing to use military power when required or to play the role of a power broker during a global crisis. The difficulty lies in the collective EU mindset and their refusal to accept the gravity of the crises. The EU is in collective self denial. The question that logically arises is whether India and the EU are moving from "strategic dissonance to strategic divorce?” The answer will become clear when the 14th Summit would finally be held.

33. India seeks a pragmatic and real multi polar balance in a world of civilizational and cultural diversity. Even in the actual complexion of existing different regional orders — whether it West Asia, Eurasia, East Asia — the Indian approach prefers a security architecture that is a blend of balance of power, norms and accommodation rather than the Western Westphalian preference for hierarchical security blocs checking each other. The 14th Summit in its joint declaration may address this issue at length. The EU and the Commission are now showing greater sensitivity to India’s perspectives. EU needs to understand that while India may need to be more circumspect in its strategic choices and be more sensitive to changing external conditions India has no other option but to doggedly preserve its strategic independence for the tumultuous years ahead. In this journey, India would appreciate the support from one of its most important strategic partners, the EU. To do so, India too needs to carefully re-craft its relations with the European Union. It represents a new historical narrative in the making.

Bhaswati Mukherjee
06th August 2017