While Russian belligerence stoked the insecurities of World War II, it was the wake-up call from their biggest trading partner, China, that really worried European powers. What is becoming increasingly clear to the European Union – a fact confirmed by the recent failures of trade negotiations between the EU and China – is that there is a deeper Sino-Russian strategic pact that actively seeks to undermine the pre-eminence of the EU. And in this light, Russian action in Ukraine has only militarized this threat.
Josep Borrell, the EU’s top foreign policy representative, laid bare that concern earlier this month in his blog (bit.ly/3EqW0Bi) after the disastrous talks with China. “Our bilateral economic ties have never been so deep – EU-China trade is €2 billion a day compared to just €300 million a day between China and Russia – but our political prospects are growing. more distant. This ultimately proves that political and ideological factors overshadow economic factors,” he wrote, adding, “One of the takeaways from this summit must be that China, for the time being, will not actively engage in end Russia’s war against Ukraine. . The best we can realistically aim for is for China not to take a more active pro-Russian stance.
In many ways, the reality check in the EU is quite similar to that in India, which has a pre-Ukrainian background. At the start of the reforms in the 1990s, India was “looking east” for good reasons but could not, in the following years and decades, find an economic equilibrium with the West. As a result, India has entered into trade agreements with competitor countries but has not fully benefited from economic complementarities with the United States and the EU, while the trade deficit with China has increased exponentially in favor of Beijing.
During the same period, however, India’s political relations with the West improved, culminating in the 2008 India-US nuclear deal, in which all major European powers backed India. to achieve consensus within the Nuclear Suppliers Group (NSG). Thus, from the 2000s, a divergence took place in the political trajectory of India in relation to its economic relations.
India was expected to make a westward correction, but conversations, especially with the EU, never came to a meaningful conclusion. On the other hand, EU-China economic relations have flourished. Key movers like Germany and Italy have made massive investments in China.
The first reality check in Europe came with political changes in the United States, which saw US-China relations sour. Washington reacted to changes in Asia, crafted an Indo-Pacific strategy, and sewed the Quad together to build alternatives and reduce dependencies on China. EU countries were divided and China pressured the Angela Merkel administration to push for an investment deal with the EU, which has since been blocked by the European Parliament, which has led to China’s imposition of counter-sanctions.
The Fallout of War
The war in Ukraine and its political fallout have, however, removed many ambiguities for Europe. Investments in Russia’s oil and energy sector are literally a waste at the moment, and political assessments indicate that uncertainty is also engulfing investments in China, regardless of Beijing’s so-called neutral line.
The war ensures that the EU, primarily an economic grouping, will emerge as a strategic entity when the dust settles. Military spending, starting with the big change in Germany’s defense policy, is on the rise. Countries will want to maintain larger standing armies, opening doors for collaboration between Europe and the Indo-Pacific. There are also ex-Warsaw Pact countries in the EU that manufacture spare parts of Russian equipment and service them – an option for India as it seeks long-term solutions for the maintenance of its own equipment of Russian origin.
India and the EU are in talks to restart their Free Trade Agreement (FTA) negotiations. The EU has a difficult FTA model. But it must take a strategic call on India while considering exceptions and concessions, just as Delhi must realize that an FTA with the EU is like a gold standard, which, if achieved, will make it easier for it to enter into other non-Chinese trade pacts. such as the Trans-Pacific Partnership (TPP). Moreover, it is important that India looks at Europe through the prism not only of Britain, France and Germany. The Scandinavian countries, the Eastern European bloc, among others, are of equal importance as Europe mobilizes to face new strategic realities.
As with the Quad countries, India must strengthen its defense framework agreements with the European countries concerned. India’s biggest defense relationship in the EU is with France. But while others, like Germany, are investing in defence, the necessary logistical and confidentiality agreements need to be made sooner rather than later.
The latest EU-China trade conversation is a clear political indicator of the strategic direction in which Europe intends to move. The Russia-China combination is its biggest threat. While China’s move away will be more difficult, the EU will actively seek alternatives, and therein lies India’s great opportunity. While India is to make a westward correction in light of Chinese aggression, the EU must also rebalance itself in Asia to ensure its strategic priorities are in line with its economic ties.