The Gulf Crisis: A Delicate Position for India

On June 5, Saudi Arabia, the United Arabs Emirates (UAE), Bahrain, and Egypt cut diplomatic ties with their neighbour, Qatar, accusing Doha of sponsoring terrorism. These country members of the Gulf Cooperation Council (GCC) closed their borders and denied access to air and maritime space,  implementing a blockade on Qatar. What has been called the Gulf diplomatic crisis has been unfolding for more than a month now and has spread beyond the region. Located on the other side of the Arabian Sea, India has interests at stake in this conflict and must manage its position conscientiously to avoid its own national consequences.

The majority of the crisis stems from the Arab quartet blaming Qatar for supporting terrorist groups like Al-Qaeda and Hamas. However, the feud also assumes other reasons as Doha endorses the Muslim Brotherhood, which the current government in Egypt ousted of power in 2013, and the Houthi rebels, fighting against Saudis forces in Yemen. Qatar is also an ally of Iran, a major rival to Saudi Arabia for regional hegemony. Saudi Arabia and its allies want Qatar to adhere to their foreign policies, and the blockade is a way to pressure Doha into doing so. Until Qatar complies, it is likely that the crisis continues.

From India’s perspective, the blockade could have both short and long-term impacts, putting a strain on its economic and political relations with Qatar.  

In the short run, the consequences for India are nuanced. Qatari officials have reassured their clients that the export of liquified natural gas (LNGs), on which India is reliant, would not be affected by the blockade. Additionally, India has become a new foodstuff exporter, as Qatar has diversified its import sources to prevent food shortages induced by the blockade.

Long term wise, if Qatar’s economy worsens, the situation could become increasingly difficult for the 650,000 Indian citizens living in Qatar and Indian companies established there. The price of plane tickets has already increased for many Indians using the Qatar airport hub to travel to and from India. The airspace ban limits flight routes which causes several diversions and the need to restructure the airport’s flight plans. Furthermore, even though Doha can rely on its major source of wealth, the export of LNGs, to subsidise the country for months, the country remains prey to price inflation. Moody’s, a credit rating agency, downgraded Qatar’s credit outlook to “negative” in the weeks that followed the blockade. As a result, Indian workers rightly fear for their jobs. A major source of employment for Indians comes from construction on the 2022 FIFA World Cup sites. However, delays in raw material imports could result in the termination of hundreds of jobs, impacting remittances sent to India. Although remittances from Qater amount to only 2.9 percent of India’s GDP, they account for 36.3 percent of Kerala’s revenues, a state from where many Qatar-established Indians are from. As unemployment increases, the number of remittances decreases, harming Kerala’s economy. The blockade may also limit Qatar’s capacity to contract with Indian companies involved in major infrastructure projects, weakening yet another source of revenue for India.

India would be wise at first sight to make efforts to end the blockade. Yet, the country does not have interests at stake solely in Qatar. The whole Gulf region, home to India’s energy resources, is strategically important as it is market and a home to a large Indian population. With several relations at stake, India has declined to take a position in the conflict, but data can help figure out which country, or countries, India is more likely to side with.

Apart from company and population ties, India and Qatar also have important trade relations, with bilateral trade amounting to US$15.6 billion in 2015. Their economic relations are mainly based on 7.5 million tonnes of LNG exports to India every year.

However, Qatar’s trade with India pales in comparison to trade with other Gulf nations. Trade with Egypt only amounts to US$3.5 billion, but Saudi Arabia is India’s fourth largest trading partner. In 2015, trade between Riyadh and New Delhi was US$39.3 billion. India mainly imports crude oil from Saudi Arabia, its second most important supplier. The UAE is even a bigger trading partner with bilateral trade amounting to US$50 billion in 2016. Aside from being an oil supplier to India, the UAE accounts for US$30 billion of India’s exports. Bahrain completes the picture with its crude oil exports to India and a bilateral trade figure of US$12 billion.

GCC countries are also important to India for welcoming large Indian populations. Saudi Arabia, the UAE and Bahrain are home to 3 million, 2.6 million and 350,000 Indians respectively, who send back large numbers of remittances that contribute to India’s economy.

Beyond economic reasons, India aligns itself with GCC states for political reasons. New Delhi signed a defense cooperation deal with Riyadh in 2014 and a comprehensive agreement, including a  defense partnership, with Abu Dhabi. Traditionally, Saudi Arabia and the UAE remain allies to Pakistan. Therefore, by forging ties with Saudi Arabia and the UAE, India slowly loosens the two nations’ ties with Pakistan, increasing India’s leverage capacity by isolating its rival.

These strengthening bonds are epitomized by the acceleration of the number of official visits: Indian Prime Minister Narendra Modi went to Saudi Arabia in 2016, during which he was awarded the highest civilian decoration, and Saudi Arabia King Salman will visit India later on this year. Emiratis and Indian officials met three times in the scope of three years and the Crown Prince of Abu Dhabi was honoured as the chief guest of India’s 2017 Republic Day, in a highly symbolic gesture.  

Iran, Qatar’s alleged patron, needs to be considered in this equation. Bilateral trade between Tehran and New Delhi amounts only to US$9 billion, but Iran is India’s third largest supplier of crude oil. Relations between the two countries have long been held, with mutual strategic interests in balancing Pakistan, reassured with the construction of the port of Chabahar in Iran by Indian contractors.

In the end, political advantages presented from the two sides, Saudi Arabia and the UAE and from Qatar and Iran, as well figures would predict that New Delhi needs more to secure a commercial deal with Riyadh and Abu Dhabi than with Tehran and Doha. Although the blockade may harm India, New Delhi will not risk alienating the GCC states by coming to Qatar’s defence.

India has been dealing with these West Asian countries for a long time now and has succeeded in fostering ties with warring parties without jeopardizing its interests. India is likely to continue this delicate policy of engaging with every parties in the Gulf, crisis or not.