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Economic Mess Starts To Hurt Indian Diplomacy

NEW DELHI – The 2G telecom crisis is not just a story of corruption in India’s showpiece infrastructure sector. Neither is the Vodafone issue. As these crises drag on, they are beginning to have a diplomatic fallout on India’s relations with these nations with implications ranging from the minor to the significant.

With the high pitch over the Indian children in Norway now a thing of the past, its time for India to face the heat from the other direction. Telenor, which is also caught in the toils of the 2G scam, is more than a telecom company. The Norway government’s pension fund, which is the world’s largest sovereign fund, and provides pensions to all Norwegians is deeply invested in Telenor. If Telenor is forced to exit India under a cloud, the effect on bilateral ties can only be imagined. This is no longer a telecom problem, its fast becoming a diplomatic one.

Sheikh Abdullah bin Zayed Al Nahyan, foreign minister of the United Arab Emirates is a worried man and his frequent interactions with the Indian leadership is proof of that. The 2G crisis has put Etisalat on the mat, and as investigations and case against them continue, it might begin to impact bilateral ties. The UAE is India’s largest trading partner, with over 1.75 million Indians living and working there. Although India is increasing its oil offtake from the UAE, taking business away from Iran to the UAE, the India-UAE relationship could end up bruised. For an Indian government hoping to attract billions of dollars in investment from their sovereign wealth fund, the prospect of worsening bilateral ties is a nightmare waiting to happen.

Foreign office mandarins are now expected to practise economic diplomacy with their interlocutors. But, sources said, this will become progressively difficult because India’s economic decisions are being taken without keeping foreign policy goals in mind. But the foreign office, which is the first point of contact between these countries and India, doesn’t have a seat at the high table. The MEA, or the foreign policy angle, rarely gets a hearing. In the numerous GOMs created to solve economic policy problems, the foreign ministry is not represented in anything more than the ones on Nalanda university and perhaps the UID system.

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