Persian Gulf 2021–22

The chapter sets the larger framework of the book and examines the strategic, political and economic situation in the Persian Gulf during 2020 and 2021, followed by key bilateral issues and developments. It provides a comprehensive account of important trends and developments and underlines the region’s significance for India from both economic and foreign policy perspectives. Finally, it offers the template for a comprehensive examination of political, economic, security, foreign policy and social developments in each of the nine countries in the Persian Gulf and India’s relations with them.

The Kingdom of Bahrain, though a tiny island nation, is important due to its crucial geographical location and strong ties with the US. It is closely aligned with Saudi Arabia in regional politics due to its economic and political vulnerabilities. During 2020 and 2021, Bahrain was seriously affected by the Covid-19 but has begun recovery due to effective management and widespread vaccination drive. The traditional friendly ties that India maintained with Bahrain gathered momentum despite the disruptions caused by the Covid-19.

A host of domestic, regional and international factors have been tumultuous for Iran. The election of a new parliament (2020) and the president (2021) reiterated the domination of the conservative elements. The election of Joe Biden as president of the US did not materially change Iran’s political and diplomatic fortunes. While the Taliban takeover of Afghanistan enhanced Iran’s regional significance, the Vienna talks for the revival of the nuclear deal remained fruitless. Domestically, Iran also faced a massive spread of the pandemic and growing protests over shortages of basic amenities. These factors, in turn, shaped India’s relations with the Islamic Republic.

The deep divisions between the ruling Al-Sabah family and the political class have caused serious political challenges, compounded by the leadership change. Kuwait has played a significant, though less successful, role in keeping the GCC intact, especially over the prolonged Qatar crisis. Falling oil prices brought some economic challenges to Kuwait, aggravated by Covid-19 pandemic. Kuwait remains marginal in India’s engagements with the Gulf as New Delhi has focused on strengthening ties with its more imaginative neighbours in the Gulf.

Oman faces serious financial and economic challenges due to declining oil production and exports. In 2020 and 2021, the pandemic and related economic disruptions aggravated the economic challenges. A change of guard in 2020 upon the passing of Sultan Qaboos means that Oman is at the crossroads in shaping its priorities and maintaining its regional autonomy and independence. India and Oman remained engaged through the pandemic and cooperated in dealing with the challenges emanating from it. Oman, which faces some internal and external challenges due to power transition and regional politics, will continue to be an important partner for India in the Gulf.

Endowed with an abundance of gas resources and a dynamic and independent foreign policy outlook, Qatar has redefined the role of small states in regional and international politics in recent years. The 42-month blockade by the quartet of Saudi Arabia, UAE, Bahrain and Egypt since June 2017 proved ineffective in curtailing Qatar’s economic or political interests and the boycott ended in January 2021 through the Al-Ula Declaration. The Covid-19 outbreak impacted its economy, but the rich Emirate could withstand the fallouts and manage its health security effectively. In 2020 and 2021, Indo-Qatari relations continued to expand, and Qatar remained India’s largest supplier of LNG, while India was among the top destinations for Qatar’s gas exports.

Geopolitical influence, religious significance, energy resources and economic clout make the Kingdom of Saudi Arabia a vital country in the Persian Gulf region. This is reflected in Saudi Arabia increasingly playing a leading role in regional affairs through its bilateral ties and leadership position in multilateral organisations such as GCC, Arab League, OIC, OPEC and G20. The country effectively managed the domestic fallouts of the Covid-19 pandemic in terms of health security and economic impacts and contributed to the global response to the pandemic as it chaired the G20. The Indo-Saudi bilateral relations have expanded exponentially, and the Kingdom has emerged as one of India’s most important regional partners. Political bonhomie, economic relations and diplomatic camaraderie have translated into a comprehensive strategic partnership with trade and investments and security and defence as the major focus areas. The proactive cooperation during the Covid-19 pandemic and its aftermath is a testimony of strong relations between the two.

Being a small country, the UAE faces numerous dilemmas, and these reflect in the economic, political, social and foreign policy choices made by its leadership. Despite the disruptions caused by Covid-19, the UAE continued on its economic and political leadership path in 2020 and 2021 and set an example in managing the pandemic through fast response and effective administration. The India-UAE relations thrive on strong trade and commercial relations propelled by frequent political, diplomatic and strategic exchanges. The Emirati dynamism in regional affairs and its strong economic performance are attractive for India. Simultaneously, India’s global rise, market potential and leadership make it alluring for the UAE. In 2020 and 2021, the political leadership in both countries have remained closely engaged in discussing and managing the fallouts of the pandemic.

Yemen is the poorest Arab country and has been termed the largest humanitarian crisis in the world in 2021. Nearly 80 percent of its population needs humanitarian assistance as three key factions are fighting for dominance and power. The internationally-recognised Hadi government, Iran-backed Houthi militias, and the secessionist Southern Transition Council (STC) are unable to work for a political solution. The Saudi-led intervention, which began in March 2015, only aggravated the problem and contributed to the humanitarian crisis. The Covid-19 pandemic further deteriorated the situation in 2020 and 2021. Yemen is not a priority area for India, and its economic engagements have dwindled in recent years.

The Gulf Cooperation of Council (GCC), the only effective organisation in the wider Middle East, faced with 42-months of intra-GCC squabbling and infighting over Qatar. In 2020 and 2021, the forum’s ability to expand its activities was further limited due to the outbreak of Covid-19. The major positive development was the end of the Qatar crisis in January 2021. However, India’s engagement with the GCC as a regional body has not been institutionalised, and the intra-bloc rift undermined its minimal efforts in this direction. The resolution of the Qatar crisis in January 2021 offers an opportunity for India to revive the FTA talks with the GCC and enhance institutional cooperation with the body.

This chapter offers policy recommendations based on the strategic developments in the Persian Gulf and the current state of bilateral relations. As the culmination of the discussions in the previous chapters, it presents pointed and specific recommendations that would be of interest to the Government of India, government functionaries, foreign policy establishment and analysts and industries and businesses interested in the Persian Gulf region.