India-Australia Relations: Off Again, On Again?

November 16, 2009

After postponing his visit twice for compelling reasons, the Australian Prime Minister Kevin Rudd finally visited India. Rudd’s two-day visit held immense importance and it was expected that decision makers from both sides will leave no stone unturned in bringing India-Australia relations back on track. The reasons for the downward spiral in bilateral relations are not unheard of: Australia’s decision to deny Uranium to India, Kevin Rudd’s inclination towards China, and repeated incidents of attacks on Indian students in Australia. During his visit these issues loomed large and almost eclipsed other possibilities of cooperation which should have been explored.

Australia’s damage control attempts on the issue of racial attacks on Indian students led to high profile visits of its leaders Julia Gillard, Stephen Smith and John Brumby in the last six months. The objective was to convince Indian policy makers and the public that Australia is a multicultural country and a safe educational destination for Indian students. However, according to online surveys conducted by UMR Research (Australia) and Blackbox (Singapore), Australia’s image has suffered in India with 61 per cent (on a sample size of 400 Indians from higher socio-economic class) saying that they have a poorer opinion of Australia because of the attacks.

As expected, Kevin Rudd devoted attention to repairing the colossal damage done by the racial attacks to Australia’s soft power in India. He made several statements to the effect that his government will do its best to protect Indian students, while adding that it is very difficult for any government to stop the attacks completely and within a timeframe. In fact, the Rudd government in partnership with Rotary Australia is planning to encourage Australian families to host Indian students to deepen and broaden mutual linkages. Though the number of assaults on Indians has gone down, it will certainly take time to fade away.

Energy cooperation is another issue of vital importance, though it is not without hiccups. On the ‘Yellowcake’ front, Australia is still in ‘denial mode’, despite earlier support for the India-US Nuclear Deal and India Specific Safeguards at the International Atomic Energy Agency and at the Nuclear Suppliers Group. The decision to deny Uranium to India actually radiates from Rudd’s domestic political compulsions and the fact that he has to face federal elections in 2010. The devised alternative route to energy cooperation is trade in coal and Liquefied Natural Gas. Australia recently signed the first long-term LNG supply deal with Petronet India Limited. This 20 year agreement will enable India to take gas from the Gorgon oil field which could just be the beginning of a big partnership in the energy sector.

A welcome outcome of Rudd’s visit was the decision to upgrade bilateral relations to that of a ‘strategic partnership’; something which has been conspicuous by its absence considering that both India and Australia have inked similar pacts with Japan, and are strategically close to South Korea and the US (Australia is in strategic partnership with both of them while India has common views with them on economic, political and regional security matters including possible regional security architecture). This decision would strengthen partnership in the areas of political, economic and security interaction, energy and natural resources, science and technology and people-to-people contacts. India and Australia agreed to create a comprehensive framework for enhancement of security cooperation. This is important in the context of securing sea lanes of communication in the Indian Ocean, and fighting common problems such as maritime piracy, gunrunning, drug trafficking, etc.

Australia also wants India to be a part of the Asia Pacific Community, Kevin Rudd’s brainchild, which intends to involve the US, China, Australia, Japan and India. The proposed grouping, if realized, will be the only regional organization involving India, China and the US and would thereby help start a dialogue among them on many contentious issues of the Asia- Pacific.

Rudd offered to invest Australian $50 million for the bilateral strategic fund; $1 million for an innovative Australian-India solar cooling research project and another $20 million for research into dry land farming in India (the Australian Centre for International Agricultural Research would share expertise with India). The solar cooling research project, a joint project between the Australian agency Commonwealth Scientific and Industrial Research Organisation (CSIRO) and TERI, is aimed at developing a zero emission solar cooling system for use in un-electrified rural areas.

It is widely believed that Australia’s decision to invest AUD 50 million on Green Technology in India is an attempt to bridge the gap on issues of climate change. Australia intends to indicate that it is taking up its responsibility sincerely and that mutual cooperation is the only way out to deal with climate change and global warming. It is interesting to note here that in Australia, an inquiry is on to look into the 10-week oil and gas leak off the West Australian coast, and India and Australia are planning together to clean up oil spills in the sea and fresh water.

Both the Indian and Australian economies have weathered the global economic meltdown more effectively than many other countries and hence it makes sense for them to come closer in terms of economic cooperation. Considering the deadlock at WTO it was expected that India and Australia would push for a bilateral Free Trade Agreement to give a fillip to bilateral trade, similar to what they are engaged in with other economies of the region. India has bilateral Trade Agreements with Thailand, Singapore, ASEAN, and South Korea; and it is looking forward to ink such agreements with Japan and China in coming years. In such a situation, it does not make sense for India to hold back Free Trade with Australia. According to sources in the Ministry of Trade and Commerce, a feasibility study is yet to be concluded and an agreement can follow only afterwards. But it is not clear why such a study has not been carried out for nearly two years now.

In the overall analysis, it can be argued that India-Australia relations have become an intricate set of positives and negatives, with the former definitely outweighing the latter. In the course of his visit, Kevin Rudd made an honest attempt to redress Indian grievances but he has to walk the talk to improve bilateral ties.