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China as a Factor in India-EU Relations

Introduction

The engagements between the EU and India have sped up in the last few years, especially after the Covid-19 pandemic. European Union views India as one of its ten economic and political strategic partners. EU is India’s third largest trading partner and in turn, India is the EU’s tenth largest trading partner. To enhance this partnership, a negotiation on Bilateral Trade and Investment Agreement (BTIA) was held between 2007-2013 but could not progress due to multiple issues. But both parties decided to resume negotiations on a free trade agreement at the India-EU summit in May 2021.

The two sides also adopted ‘India-EU Partnership: A Roadmap to 2025’ in 2020 at the 15th EU-India Summit, which consisted of five critical domains- Foreign Policy and Security Cooperation; Trade and Economy; Sustainable Modernisation Partnership; Global governance; and people-to-people relations. And before the 16th summit in 2021, the EU announced its Indo-Pacific Strategy highlighting the EU’s growing interest in the region.

In this increasing congruency of interest, China has become a common threat.

Why the Transition?

Amidst the highly entangled trade relations between the EU and China, various recent occurrences have forced Europe to look beyond China. The concern was most highlighted during the Covid-19 pandemic, which brought significant concerns regarding the supply chain disruption, in the light that China is the major global manufacturer and all the trade has to pass through it. Along with it, Europe has had many other tense scenarios like security, human rights violation and the cycle of sanctions and counter-sanctions.

China is unabashedly showing its ambitions to become a global power and the foundation of the Belt and Roads Initiative was a significant step toward it. Although Europe attended the 2016 Belt and Road Forum, it did not ratify the final document due to China’s lack of reciprocity in terms of market access. Moreover, Europe also did not like the idea of China’s growing influence in the Balkans and countries like Greece, as it is taking away business from European countries and influencing European politics.

In December 2020, the EU and China developed a Comprehensive Agreement on Investment (CAI) to create a level playing field for investors in both markets. But the European Parliament refused to ratify the deal in May 2021 because of a dispute which had led to a series of sanctions imposed by countries on each other’s officials. Moreover, the deal benefited China more than the EU and was criticised by the USA for not considering China’s human rights violations. Today, the deal faces an uncertain future as the relations between the two are not likely to improve.

China is having ever-growing footprints in Europe. The largest external trading partner of Germany is China, which used to be seen as a threat to European unity. China has major investments in Europe, including in the nuclear domain in the UK. And its investments in Greece, Balkans and Eastern European countries are a cause of concern to Europe.

China’s relations with Central and Eastern Europe are also dwindling. In 2012, 16+1 (now 17+1) was formed to facilitate Chinese infrastructure investment in less-developed Central and Eastern Europe. But in 2021, Lithuania quit, reasoning that China was creating divisions within the EU using the group. Many other countries were also dissatisfied with the group as despite this initiative, Western Europe continues to receive more Chinese FDI. Moreover, they are also concerned with China not supporting Ukraine in the Russian-Ukraine War, as it is an existential issue for many central and Eastern European countries.

Developments with India

During this confusion, India emerged as the most suitable alternative to China for Europe. India itself is a fast-growing Economy and a big market. Moreover, India’s democratic ethos does not contradict the idea of the international order that Europe perceives. In fact, in a joint statement at the 14th India-EU summit in 2017, the EU questioned the BRI. Both countries emphasised that connectivity projects should be based on international norms and financial viability.

EU is now being more proactive on the issue of the security of the Indian Ocean as it holds all the major sea lanes of communication. Additionally, European countries are willing to become more involved in the naval sphere in the South China Sea to assert the principle of freedom of navigation.

European countries have started showing efforts to strengthen their relationship with India. During a visit by the President of the European Commission, Ursula von der Leyen, both the entities agreed to launch India-EU Trade and Technology Council, which would look into significant trade, economic, and technological challenges. In fact, individual countries like France, Germany, the Netherlands and the U.K. have come up with their own policies on the Indo-Pacific. All these development shows that Europe is eager to register its stakes in the Indian Ocean and is watching China’s movement to ensure a rules-based order and freedom of navigation. In this light, India and the EU also hosted their first Maritime Security Dialogue in January 2021 to discuss maritime domain awareness, capacity-building, and joint naval activities.

Like America, Europe’s economy is intertwined with the Chinese economy, with China being its biggest trade partner. Still, Europe is simultaneously reaching out to India, like the USA, to counter China’s maritime ambitions.

Conclusion

India and Europe are moving towards a natural partnership, given their values, geopolitical and geoeconomic considerations. But the reality is that Europe will continue to have an extensive relationship with China. At the same time, Europe is reaching out to India to counter Chinese excesses. Moreover, China is one factor among many issues impacting India-EU relations. India is facing its own list of security issues extending from terrorism, China’s territorial claims, China-Pakistan Nexus, CPEC and the security in the Indian Ocean. India is expanding into an economic giant and so are its interests and concerns. India is no more interested in being Europe’s alternative market. We already have flourishing relations with various countries in the east and the west covering our concerns from energy to infrastructure. So, India will definitely test what Europe has in its box for India’s security and economic concerns.

References:

https://www.euronews.com/my-europe/2022/04/25/eu-india-relations-enter-new-chapter-under-the-shadow-of-the-ukraine-war
https://www.orfonline.org/expert-speak/india-and-the-european-union/
https://thediplomat.com/2022/08/the-war-in-ukraine-is-not-a-watershed-in-china-eu-relations-yet/
https://thediplomat.com/2022/04/the-china-factor-in-indias-engagements-with-europe/#:~:text=The%20China%20Factor%20in%20India%E2%80%99s%20Engagements%20With%20Europe,and%20China.%20By%20Niranjan%20Marjani%20April%2030%2C%202022
https://www.orfonline.org/expert-speak/india-and-the-european-union/
Posted in PSIR CURRENT AFFAIRS 2022 - IR

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