The Hindu Business Line : Australia-India Relations

The Prime Minister, Dr Manmohan Singh, with his Australian counterpart, Mr Kevin Rudd, during the lalter’s recent visit to India… While Australia sees China as a strategic partner, it perceives India merely as a trading partner.

Vidya S. Sharma

The Australian Prime Minister Mr Kevin Rudd’s recent visit to India was, unfortunately, truncated to less than 24 hours by the threat of a coastal storm in Mumbai. In fact, unfortunate timing and ill-judged or miscalculated responses have characterised India-Australia relations. This unfortunate pattern started at the time of India’s Independence when India wished to remain in the Commonwealth provided it could choose its head of state.

The UK agreed but the then Australian Prime Minister, Robert Menzies, opposed it. The Australian foreign policy establishment has since classed India a difficult country. This impression was reinforced when India co-founded the non-aligned movement.

Following in Mr Menzies’ footsteps, the John Howard government opposed India’s admission to the Asia-Pacific Economic Cooperation (APEC) Forum. Prior to that, when the Vajpayee government tested nuclear weapons, Mr Howard’s response was far shriller than that of the US or the UK.

Even today Australia does not consider India a country of strategic regional importance. This is evident from the fact that Mr Rudd visited India after being in power for two years, during which time he visited China, Indonesia, Singapore, Japan, the US, the UK, and many other European and South-East Asian countries, some of them twice.

Trade ties

While Australia sees China as a strategic partner, it perceives India merely as a trading partner. India-Australia trade was worth barely a few million dollars in the 1970s. Today, India is Australia’s fastest growing export market.

Until recently, Australia’s exports to India primarily comprised mining and agricultural products. Now its service exports alone (mainly Indian students there) exceed India’s total exports to that country. The trade balance will tilt further towards Australia when the $20-billion Gorgon gas supply contract becomes operational.

Australia has also pursued a more pragmatic policy in exploiting available trade opportunities. India has largely missed out on Australian opportunities for three reasons: First, until very recently India’s foreign policy efforts were aimed at Europe and the US. Second, Indian politicians concentrated on shoring up unproductive relationships with largely failed or struggling nations in the non-aligned movement.

Third, the intrinsic inability to shake off lethargy and a lack of imagination of the Indian foreign affairs mandarins is also partly to blame: while India had a tiny footprint in the 1970s in the Australian marketplace, China had none at all.

Yet, Australia’s exports to China in 2008-09 touched A$32.5 billion (mainly raw materials) and it imported Chinese goods worth A$35.3 billion, comprising mainly of household goods and their parts.

Indian diplomats completely failed to notice the removal of trade barriers in Australia and the consequent arrival of a new player, namely China. They failed to alert Indian manufacturing industry.

Though Mr Rudd’s visit was showcased as the start of a ‘strategic partnership’, in reality it had the same purpose as those of the ministers who preceded him: Restoring the Indian full-fee paying student market to normalcy.

In this context, the Indian government must have been disappointed at the absence of concrete efforts by the Australian Government to identify and close down unethical and sub-standard private education institutions (four more entered receivership last month) in that country. Mr Rudd also failed to announce any new steps to enhance the safety of Indian students.

The Indian Government must insist that Indian students receive education of the same standard available to Australian peers.

Uranium supply

While Dr Manmohan Singh explored the possibility of uranium supply, there was no positive movement on the issue. Mr Rudd’s response was both misleading and contradictory when he asserted that there was bipartisan consensus in Australia to not sell uranium to India. After India had negotiated the civil nuclear cooperation agreement with the US, Mr Rudd’s predecessor, Mr Howard, had decided to sell uranium to India. It remains the policy of coalition parties in Opposition as well.

It is worth recalling two facts here: it was under Chinese pressure effected through the left wing ruling Labour party that Mr Rudd reversed the previous government’s policy; further, his position is inherently contradictory because the Rudd Government had voted for the ratification of the US-India civil nuclear cooperation agreement at the International Atomic Energy Agency meeting. It is not only in trade that China has left India way behind.

China — elephant in the room

China has been busy grooming Australian politicians of differing persuasions. The grooming starts well before they enter parliament, as was recently shown in the case of the former defence minister Mr Joel Fitzgibbons.

He had directly or indirectly accepted so many favours from Beijing that he could not list all of them even after being given two opportunities to set the record straight. Even Mr Rudd’s trips to China, when in Opposition, were paid for by Chinese entities.

Suffice it to say that China is in the process of snatching Australia away from the US or Western orbit. Having acquired an almost vice-like grip on Australian consumer spending, China is now actively pursuing Australian mining companies and real estate. Knowing that China has been actively impeding India’s strategic aims (for instance, blocking Indian attempt to gain a permanent seat on the UN Security Council, preventing the listing of certain Pakistan-based outfits as terrorist organisations at the UN, and so on), India must pay more attention to its relationship with Australia if it needs a stable source of raw material for its economic growth.

The attempted takeover of Australian mining assets by China is causing unease both within the Australian community and its corporate world. India and its companies are not viewed with such disquiet. This opens window of opportunity for Indian companies.

(The author is Melbourne-based and specialises in organising joint ventures between companies in Australia and Asia.)

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