Today, there is no such thing as purely business, or purely politics or purely economics. You cannot divorce one from the other particularly when you are dealing with sensitive geo-political factors
In today’s world when global perspectives are becoming increasingly energy-centric, the Indian Ministry of Foreign Affairs deals with the subject of energy from the widest possible angles. We view energy not only as oil and gas and hydropower but, importantly, also, as nuclear. Our points of view include the potential of a whole gamut of new technologies ranging from renewable sources of energies, to fusion energy, and fuel cell technology. And the objective of diplomacy is to create an environment in which all these diverse sources and emerging technologies—in which we should also play a role in pioneering cutting-edge R&D –become available to India. To achieve these goals diplomacy has to become increasingly versatile. When we look, for example, at a substantial increase in nuclear energy because we want to reduce our dependences upon fossil fuels, we have to adapt ourselves for much greater interaction with a country like United States.
The current focus of our energy diplomacy is the United States of America. It is a key country in terms of our nuclear energy needs. We are also engaging the European Union which played a critical role in dismantling the technology restraint regime. We are also working with them with regard to the future. We are today a full partner in the international thermonuclear energy research project that is known as ITEL. India is one of just a handful of countries participating in this tremendously significant project. In the coming decade, if fusion energy becomes a reliable commercial source of energy it will completely transform the entire energy scene. It would have a major impact on oil and gas companies all over the world including in India.
India is also being invited by the US to become part of the nuclear aspect of what is known as the Generation 4 Project. This endeavour is designed to create and produce more compact nuclear reactors that are far more economical than the ones in operation today. For the US these would have a double advantage. The reactors would be proliferation resistant –the technology cannot easily be used for weapons purposes. Nuclear diplomacy has become, therefore, a major aspect of India’s foreign policy thrust.
To make energy gains through a more traditional source – hydropower—India’s diplomacy is aimed at countries with which it can take mutually beneficial initiatives. Mayanmar is a case in point. India is already collaborating with this country in the areas of natural gas and oil production and exploration. What is not as well known is that India is also focusing on the development of hydropower resources in Myanmar. One current project is on the Chindwin basin. The first phase of the project is expected to generate about 1200 megawatts of power that would be available virtually about 80 kms from the India-Myanmar border. Neighbouring Bhutan is a notable example of a success story in this field. Once the Tala project, now under construction, comes on stream by the middle of 2007, another 1000 megwatts of power will become available for Indian consumption.
Neighbouring Nepal, because of its fast flowing Himalayan rivers, is another source of huge hydropower generation. Its estimated potential is about 83000 megawatts. The current utilization is around 600 megawatts. But because of political difficulties we have not been able to tap into this resource and here, too, lies a major challenge for Indian diplomacy.
In the area of the natural gas sector where PSU’s like GAIL have chalked up some of the most remarkable achievements in the world, the role of the Foreign Affairs Ministry should be that of a service provider. In today’s world of user-friendly relationships, companies like GAIL should look on us as a service agency to help out in areas such as identifying opportunities. The ministry has the largest network of officers and embassies all over the world. There is no other agency in the government of India, which is as widely spread and as globally networked.
In addition, there is no other agency in the Government of India that is as familiar with the ways of doing business in countries as diverse as Venezuela, Latin America, and Korea. Doing business is fine, but unless you know the culture of doing business you may not get very far.
Every country has its own business culture. Unless you understand those nuances, the psychological frame of mind of your negotiators, your success would be limited or you would need to go through that learning process yourself before you come to a point where you are able to succeed. But you don’t have to go through that learning process, you don’t have to go through that hit and miss process, if you are willing to work together with the Ministry of External Affairs because we can provide you the winning context.
There is another important reason why I believe we can be an important partner in business development. Today, there is no such thing as purely business, or purely politics or purely economics. You cannot divorce one from the other particularly when you are dealing with sensitive geo-political factors.
In the area of the natural gas sector where PSUs like GAIL have chalked up some of the most remarkable achievements in the world, the role of the External Affairs Ministry should be that of a service provider.
So unless you put your business in the proper political context, unless you understand the geo-politics of doing business you may not get very far. We can be a very useful partner in giving you that sense of geo-politics, in showing you what is politically possible and opening political doors for economic engagement. To some extent, this is already in evidence. We’ve had good experience of working with Indian PSU’s, particularly GAIL, in places like Sudan, Russia, Central Asia, and Myanmar.
And in this context we must learn, also, from our failures to act with speed and grab opportunities. For example, when the 1997 Asian economic crisis occurred, the contracts that countries like Thailand and Malaysia had with Mayanmar could not be fully used. Demand for natural gas had suddenly gone down. India was suddenly in a strong bargaining position and could have virtually picked up whatever it wanted at throwaway prices. The Indian ambassador was pleading endlessly with his government to take advantage of the crisis. It was a window of opportunity India failed to open for itself. And today, India has to pick up anything from wherever it is available. The lesson from this is that opportunities are perishable commodities.
In the context of today’s globalization we have to look at markets not just as consumers but also as producers. This means that wherever we can join as producers we should. This should become a fundamental article of our energy diplomacy. Unless we are ready to become part and parcel of global production networks as well as global consumption networks, the ability to ensure energy security in the future would be limited.
Oil and gas still remain a preferred source of energy. For this resource Indian diplomacy has homed in on countries and regions like Russia, and the Gulf. Because the Gulf is next door and contains the largest reservoirs, it will continue to be India’s major source of oil and gas for the foreseeable future. Major gas and oil sources in the east include Mayanmar and Indonesia. Sumatra, Papua in New Guinea are also a potential sources for natural gas. Sumatra is geographically closer to India but its resources are already committed. Japan and Korea have already tied up some of the available gas from these countries. For India, the cost of tapping sources in the eastern part of Indonesia would be prohibitive because of transportation distances.
When I was the ambassador to Indonesia we discussed a swap deal. Since Sumatra is closer to India, we would participate in developing Sumatra’s gas for the Japanese and Korean. Japan and Korea gain from this because they already have a longer transport route. And India would gain from it because we would get gas at cheaper prices from nearer the Indian mainland. There are endless such possibilities waiting to be explored.
The aim of energy diplomacy is not only to identify opportunities but also to devise unique win-win strategies with other countries that will help meet India’s energy needs.
(The writer is a former Foreign Secretary)
