Gillard’s visit to India Injecting New Dynamism Into Bilateral Ties

The Australian Prime Minister Julia Gillard made a state visit to India from 15 to 17 October. This was Gillard’s first visit to India as Prime Minister; she visited India in 2009 as Deputy Prime Minister. As expected, her visit kick-started negotiations between the two countries on the issue of Australia selling uranium to India. It is expected that the two countries will conclude a pact that effectively reverses Australia’s policy of not entering into nuclear commerce with countries that are not signatories to the nuclear non-proliferation treaty (NPT).

Why India is important for Australia? There are several reasons. Australia takes cognizance of the fact that India is the world’s largest democracy and one of the fastest-growing major economies. It also notes that India’s sustained but tempestuous democracy is continuously strengthened despite all the trials and tribulations that the country has been experiencing in recent times. The institutional foundation provides the bedrock to a system that is envy of the outside world. Understandably, therefore, India stands in the front rank of Australia’s international partnership and will be a key part of Australia’s future in the Asian Century.

The strategic partnership sculpted between the two countries is based on shared values and mutual interests. India is Australia’s fourth largest export market and a key strategic and economic partner in the region. There has been strong recent growth in the bilateral relationship spanning economic, education, scientific and strategic ties. Indian investment in Australia in 2011 alone was over $11 billion.

Gillard’s visit and interactions with Prime Minister Manmohan Singh will help further expand and deepen bilateral and regional cooperation, boost trade and investment ties, and strengthen political and strategic dialogue. Her interactions with members of the Australia India CEOs Forum and business chambers will help facilitate bilateral collaboration on community and science and research projects.

The cultural component of the bilateral relationship is equally strong. The sizeable flourishing Indian community in Australia has made a significant social and economic contribution, the attacks on the Indian student community in recent years notwithstanding. During her visit, Gillard launched Australia’s largest ever cultural festival in India Oz Fest at a concert in New Delhi. The Fest will run until February 2013 and involve over 100 events across 18 Indian cities.

The rise of China and India economically has propelled Australia to integrating its economy with the Asian region. It is remarkable that Asia has doubled its share of global economic production, as largely agrarian societies have industrialized and urbanised. In the last few decades alone Asia’s share of world merchandise trade has risen from one-fifth in 1975 to almost one-half in 2010. In the first decade of the 21st century, while China’s economy grew at an average of 10 per cent a year and India’s at 7 per cent, that of the US and Europe’s grew at 1.6 per cent and 1.5 per cent only respectively.

However, the major highlight of Gillard’s visit centred on uranium sales to India. Gillard played down concerns by anti-nuclear campaigners that selling uranium to India would lead to a build up of weapons in Asia. The Howard government had favoured uranium sales to India but former Prime Minister Keven Rudd cancelled talks on selling uranium. Gillard now decided to correct this mistake. In fact, the White Paper of Australia prepared by Ken Henry includes a focus on India.

It may be recalled that in 2011, Gillard halted talks to sell uranium to India after the Australian Labour Party conference voted to overturn the ban on uranium sales to New Delhi, with safeguards in place. India is excluded from the 22 countries that Australia has agreements to sell uranium due to India’s not being a signatory to the NPT.

Australia has the world’s largest uranium reserves and exports over 7,000 tonnes a year. It has now dawned on Australia that in view of India’s increasing global profile and sound economic foundation in a democratic set up, ignoring India from its uranium export markets would remain unsustainable. Besides economic imperatives, strategic considerations also heavily weigh in the Australian calculus to rethink its India strategy.

Gillard’s visit and her decision to enter into civil nuclear cooperation by negotiating a safeguard agreement that would facilitate uranium sales to India has opened a new frontier in Indo-Australian relations. A safeguard agreement would ensure Australia that its uranium would only be used for peaceful purposes and it was in India’s interests to have a robust and safe nuclear industry. When this happens, a major irritant in the bilateral ties would have been removed.

The actual supply of uranium would take some time as negotiations for the safeguards agreement are expected to be complex and lengthy. Though it may be essential for Australia to ink such an agreement before actually start exporting uranium, India does not want to put all its eggs in one basket by depending on the Australian source. In view of its long term policy of expanding its energy base of which nuclear is a priority sector, it has already in place to diversify sources of uranium supplies.

At present nuclear as source of total energy meets less than three per cent but there are plans to increase this percentage share. Thus, there is a large market in India for uranium sales. Australia knows that if it sticks to its policy of denial to India, it would have lost its credibility as a dependable partner. The strategic considerations also would have faced casualty. In view of Australia dependence on maritime commerce and India’s naval capability to secure maritime trade in the critical Indian Ocean region, Australia could ill afford to deny uranium to India that would promote naval cooperation too. This also could have one of the considerations in Australia’s policy reversal.

India had expressed its displeasure in the past on Australia’s policy of uranium denial. An affable Prime Minister Manmahion Singh did not hesitate to snub Australia in 2011 when he pulled out of the Commonwealth Heads of Government Meeting in Perth. The last Indian Prime Minister to have visited Australia was Rajiv Gandhi in 1986. This fact must have been working in the minds of Australian policy makers. One hopes that a pact that would facilitate nuclear trade would help correct this aberration.

 By Rajaram Panda