BEYOND GUNS & DIAMONDS
A TEMPORARY CHILL IN INDO-ISRAELI TIES IS UNLIKELY TO MAR PM BENJAMIN NETANYAHU’S HISTORIC FIRST VISIT TO INDIA AS THE TWO COUNTRIES EXPLORE WAYS TO EXPAND THEIR STRATEGIC RELATIONSHIP
There’s a reason the body language between Prime Minister Narendra Modi and his Israeli counterpart Benjamin Netanyahu will be closely watched when Israel’s Air Force One lands in New Delhi on January 14. The first ever visit to India by an Israeli prime minister comes just six months after Modi’s visit to Israel, the first by an Indian PM. That visit saw a red carpet welcome in Tel Aviv, personal chemistry with even a photo op of the two PMs walking on Olga beach in Haifa like reunited childhood friends, their trouser cuffs rolled up. This time around, Netanyahu’s visit, equally historic, comes amidst a perceived chill in ties between New Delhi and Tel Aviv. On December 22, India voted with 127 other countries for a UN General Assembly resolution rejecting US President Donald Trump’s decision to recognise Jerusalem as Israel’s capital. Without singling out India, Netanyahu called the vote “preposterous” and “a theatre of the absurd”.
Then, barely a week later, Israel’s stateowned Rafael Advanced Defence Systems Ltd said on January 2 that India’s defence ministry had cancelled a $500 million (Rs 3,186 crore) deal for supplying 1,600 Spike man-portable anti-tank missiles, one of the biggest deals in recent years. The missiles were going to be made in India through transfer of technology at the government-owned Bharat Dynamics Ltd with a private sector partner, Bharat Forge. A Rafael spokesperson expressed “regret” over the collapse of the deal, which the company had pursued for nearly five years. Not even a swift placatory announcement on January 3 by India’s MoD of a Rs 460 crore order for 131 Barak missiles from Rafael could make up for the gloom in Tel Aviv (this deal had been cleared earlier in 2017). The Spike deal has been restarted as a fast-track proposal now, and Rafael will once again be a contender.
Another major deal in the pipeline for five years—for supplying 1,480 155/52 mm towed howitzers worth Rs 15,000 crore—where Israeli gun maker Elbit is competing with France’s Nexter, is also said to be on the chopping block. But it was clearly the UN vote which took Israel by surprise. Most believed India would abstain. A January 3 external affairs ministry (MEA) statement in Parliament reiterated that “India’s position on Palestine is independent and consistent. It is shaped by our views and interests and not determined by any third country”.
‘India wants an affair when it comes to Israel, not a serious relationship’ said the January 4 headline of an opinion piece in the influential Israeli newspaper Haaretz, evidently missing the point of a new pragmatic Indian foreign policy shaped by self-interest, divorced of Cold War binaries. Talmiz Ahmad, India’s former ambassador to Saudi Arabia, calls India’s vote in the UNGA a principled one. “Under international law, no militarily occupied territory can be declared your own and the final status has to be negotiated by the two sides. India is also in the same state as Israel and Palestine because a large portion of Kashmir has been under Pakistani occupation since 1948 and we wouldn’t accept any other country’s suzerainty over it.”
India seems unlikely to shift away from its stance of a two-state policy “in which both Israel and a future Palestinian state coexist peacefully”, as PM Modi said in an interview to Israel Hayom, before his visit to Tel Aviv in July. Soon after Netanyahu’s India visit, PM Modi is set to visit Ramallah, the administrative capital of Palestine, without visiting Israel. The Indian PM’s visit is a reciprocal visit to Palestinian President Mahmoud Abbas’s trip to New Delhi in May 2017, two months before Modi visited Tel Aviv. Significantly, the Indian PM steered clear of visiting Jerusalem (claimed by both Israel and Palestine as their capital).
Palestine has thus been de-hyphenated from the IndiaIsrael relationship as India seeks to boost ties with both Israel and the six Gulf Cooperation Council (GCC) countries— Saudi Arabia, the UAE, Qatar, Oman, Bahrain and Kuwait including a free trade pact. India established full diplomatic relations with Israel only in 1992 fearing an adverse fallout on its ties with the GCC countries, India’s largest energy suppliers and also home to nearly 70 per cent of its diaspora which remits $35 billion in foreign exchange annually.
India’s renewed GCC outreach comes amidst the turbulence and fast-changing geopolitics of West Asia. A covert alliance between Saudi Arabia, Israel and the United States is currently under way to counter a rising Iran and a Shia block extending from the Mediterranean Sea to the Arabian Sea.
India enjoys good relations with all these countries, especially Iran which it needs for access into Afghanistan and Central Asia bypassing Pakistan and for a shorter north-south transport corridor via Bandar Abbas which will shorten the land route to Russia.
Netanyahu’s visit will be hectic and heavily loaded with symbolism—a picture postcard moment with wife Sara at the Taj Mahal, a stopover at the Sabarmati waterfront in Gujarat and a visit to Mumbai where he will tour the Chabad House with Moshe Holtzberg, 11, whose parents were killed by Pakistani terrorists during the 26/11 terror attacks, an indication
PALESTINE HAS BEEN DE-HYPHENATED FROM THE INDIA-ISRAEL RELATIONSHIP AS INDIA SEEKS TO BOOST TIES WITH BOTH ISRAEL AND THE SIX GCC COUNTRIES
of the shared concerns the two countries have over terrorism.
Both India and Israel are looking for ways to jumpstart their economic relationship beyond diamonds and defence. Bilateral trade stood at over $5.02 billion in 2016-17 not including the defence trade (estimated at over $600 million per year). Raw, non-industrial diamonds account for more than a billion dollars in both imports and exports. Netanyahu’s 100-member delegation includes representatives of firms in homeland security, agriculture, water management, defence and technology. Last June, his cabinet agreed to increase non-diamond exports to India by 25 per cent and establish a $40 million joint innovation R&D fund. Resolutions also included incentives to Bollywood to shoot in Israel and boosting the number of Indian firms doing business there.
But that’s easier said than done. Sectors like agriculture, water and desalination technologies where Israel wants to become a major player will pose a challenge for various reasons like cost and the small size of Indian farm holdings. Technologies like desalination and micro-irrigation are expensive for an Indian farmer but water and power are cheap because they are heavily subsidised.
Which is why the Indo-Israeli defence relationship where the state is the sole customer, is a far more lucrative growth sector. Israel is India’s third largest defence hardware supplier, accounting for 7.2 per cent of the country’s arms imports between 2012 and 2016 (a remarkable feat considering Israeli defence industries do not make platforms like warships and fighter jets which cost more), built on sub-systems like radars, missiles, electronic warfare systems and bombs. Arms to India make up over 40 per cent of Israel’s defence exports, earning it close to $1 billion a year in foreign exchange.
In 2017, Israeli firms recorded arms contracts worth over $1 billion for smart bombs, radios, laser designation pods and missiles even as South Block struggled to slash arms imports to shore up its flagging Make in India programme. Israel has succeeded in creating monopolies in several key areas: Israel Aerospace Industries (IAI) completely dominates the market for surveillance drones in India—the three armed forces use nearly 176 Heron and Searcher-2 drones, more than those used by Israel itself. IAI and Rafael also control the market for medium range surface-to-air missiles (range 70 km) for the Indian navy and the air force. These are off-the-shelf imports where Israel has been reluctant to share technology. The ‘joint-development’ contracts for medium range surface-to-air missiles (MRSAM) worth $350 million (Rs 2,230 crore) in 2006 and $1.1 billion (Rs 7,014 crore) in 2009 were to have been made in India with transferred technology over the years, but DRDO scientists complain the missiles still mostly feature Israeli components.
Last April, the Indian army became the third user of the MRSAM when the MoD signed a $2 billion (Rs 12,749 crore) deal with IAI for one regiment of (MRSAM) missile systems—16 launchers and 560 missiles—one of the largest deals in Israel’s history. IAI and Rafael are prime contenders for another $1.5 billion (Rs 9,562 crore) project for the Indian navy’s 10 short range surface-to-air missile systems (SRSAM) and 600 missiles. Lurking ahead is a still bigger deal—a $3 billion (Rs 19,131 crore) contract for two Phalcon Airborne Early Warning and Control (AEW&C) mounted on IL-76 aircraft which can detect enemy aircraft, missiles and drones 800 km away. A metaphor for the India-Israeli relationship where, clearly, the sky is the limit.