By Guy Burton
Both India and China welcomed the outcome of last week’s Gulf Cooperation Council (GCC) summit, where Saudi Arabia, the UAE, and Bahrain promised to end their diplomatic and economic blockade of Qatar and Qatar agreed to drop pending lawsuits against them.
The reopening of borders in the Gulf may result in a resurgence in intra-regional trade, investment, and connectivity. Indian and Chinese business may similarly benefit from that development and prompt political leaders to congratulate themselves for not having taken sides in public when the conflict first erupted back in June 2017.
China’s government may also see the dispute’s resolution as vindication for its approach toward conflict management, in particular that of “peace through development.” For the Chinese this entails political mediation that is linked to economic development and connectivity through infrastructure projects associated with its Belt and Road Initiative.
However, Indian and Chinese leaders would be advised to contain the self-congratulation. Not only has Chinese involvement been largely absent in the deliberations that led to the settlement at Al-Ula, but both sides adopted positions that in practice accommodated Saudi Arabia and the UAE during the past three and a half years.
If there is an achievement, it lies in India’s and China’s ability to ride the waves generated by the crisis. Initially, the dispute looked as if it could not have come at a worse time for both the Indian and Chinese governments. For one, the region was – and remains – a key source of oil and gas for the two countries. For another, the nature of economic exchange and interaction between them and the Gulf had been progressively growing.
During the year before the rupture, the Chinese government had set out a more active strategy in the region. In 2016 it published an Arab policy paper. It had also restarted negotiations on a free trade agreement with the GCC, which Beijing believed it was close to achieving only a month before the dispute began.
Like China, India was also pursuing a more active regional role. After becoming prime minister in 2014, Narendra Modi had begun to recalibrate India’s foreign policy and pursue greater political and economic ties with the Gulf. The dispute not only presented a challenge to that effort, but also raised fears in the government for the 6.5 million strong Indian diaspora in Saudi Arabia, the UAE, and Qatar.
Although both the Indian and Chinese governments expressed concern, those fears outweighed the reality. The Gulf states did not press India or China to pick a side and nor did the Asian powers offer to do so – which demonstrated their importance to each other.
This practical consideration was evident even as the circumstances changed within the region. As established trade routes and ties were closed to Qatar, it searched out alternative partners, including Turkey and Iran, while also investing in domestic production. Meanwhile, Indian and Chinese firms continued to operate on both sides and remittances from Indian workers continued to flow back home.
Yet even as Indian and Chinese political and business leaders adjusted to the changes taking place within the Gulf, there was another implicit shift between the region and the Asian powers: one in which the China and India prioritized Saudi Arabia and the UAE over Qatar.
The reasons for doing so made practical sense. Politically and economically, Saudi Arabia and the UAE were – and are – far more important in the region than Qatar. Economically, the two Gulf states figure among both India’s and China’s largest trading partners. At the same time, the changes imposed on Qatar meant that it could not afford to lose partners like India and China.
Despite this, Qatar fared relatively less well than its rivals. While China’s total trade with Qatar doubled between 2016 and 2019, its investments in the country were more modest in 2017-19. They totaled $900 million compared to $12.55 billion in Saudi Arabia and $20.35 billion in the UAE. Meanwhile, India’s total trade with Qatar fell by 39 percent during the 2014-19, which was more than the 27 percent fall in total trade with Saudi Arabia. Trade with the UAE, meanwhile, increased 12 percent in the same period.
The disparity between the Saudis and the UAE on one side and Qatar on the other was also evident in the nature of the Gulf states’ political cooperation with India and China as well. By 2018 China had established comprehensive strategic partnerships with Saudi Arabia and the UAE – the highest form of engagement it can offer another country. In contrast, China’s relationship with Qatar was only a strategic partnership, which it had agreed in 2014 and showed no interest in upgrading when Sheikh Tamim Al Thani visited Beijing in 2019.
India has similarly expansive arrangements with Saudi Arabia and the UAE. It established a Strategic Partnership Council with Riyadh and has also sought to cultivate closer security ties with the two. In recent years that has been expressed in its efforts to bring Riyadh and Abu Dhabi onboard in India’s rivalry with Pakistan. That has included gaining their acquiescence in 2019 to the constitutional changes made regarding the status of the disputed Jammu and Kashmir region and in last month’s visit by the Indian army chief to both countries.
Looking ahead, the imbalance between the Gulf states in the eyes of Indian and Chinese policymakers will remain. But whereas the conflict exposed them, its resolution should obscure them again. That should therefore enable the growing connectivity between the Gulf states and the Asian powers to continue on its present trajectory. Yet even as this happens, they will likely continue to keep a wary eye on the Gulf, especially the differences between the Saudis and the UAE over how fast to reconcile, with the latter being less enthusiastic.
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