‘Sweet spot’: Mutual fear of China drives Australia-India partnership

Among the countries this week raising their voices against Australia’s plan for nuclear-propelled submarines, you will not hear India, the world’s most populous nation and fastest-growing major economy.

Why? It’s not because of cricket camaraderie, although there was plenty of that. In a touch of Bollywood, Prime Minister Narendra Modi last week invited Anthony Albanese to step into a colourful mechanised “chariot” to circle the Ahmedabad cricket field with him. Together, they received the adulation of the crowd before the opening day of the fourth Test.

Anthony Albanese and Narendra Modi wave to the crowd before the fourth Test in Ahmedabad.

Alex Ellinghausen

And it’s not because Albanese took the opportunity of his visit to India last week to brief Modi in person before the public announcement of AUKUS details on Tuesday (Australian time).

“India did not object to AUKUS when it was announced,” explains a leading Indian strategic analyst, C. Raja Mohan, because “it had no reason to. Stronger deterrence against China on the east is welcome for India,” says the senior fellow of the Asia Society Policy Institute in Delhi.

If you wondered why Australia’s relations with India are suddenly booming – beyond the stale comforts of curry, cricket and the Commonwealth – the shared imperative of deterring the Chinese Communist Party’s adventurism is key. That is the only reason Australia is arming itself with nuclear-propelled submarines.

If the India-Australia relationship were a horse-drawn chariot, it would be pulled by a powerful pair of horses. One marked “China threat”, the other “economic growth”. After decades of stagnation, Mohan says that India’s relationship with Australia is flourishing more significantly than its relations with any other nation.

Illustration: Dionne

The former secretary of Australia’s Department of Foreign Affairs and Trade, Peter Varghese, says the relationship is in “a sweet spot”. “For a long time, it was a one-sided relationship,” says the author of a landmark strategy blueprint for Australian economic ties with India, the 2018 Varghese Report. Since the time of John Howard, Australian prime ministers courted Delhi. India looked the other way, yawning.

“We have now seen seriousness on the part of India to build the relationship,” says Varghese, now chancellor of Queensland University. “Look at the pattern of ministerial visits, look at the Australia economic strategy India put out, something it has not done for any other country, look at the trade agreement last year and the commitment, at least at a notional level, of an even fuller one. These are all things that have been on our agenda for a very long time, and they’re now happening in rapid succession.”

Acknowledging the first horse, Varghese says that this transformation “is driven by the geopolitical relationship, and that is by and large a China story, but not exclusively so.”

Delhi did not want to enter a confrontation with Beijing; it was hoping to avoid tensions with the giant next door. But the lethal aggravation of border friction high in the Himalayas in 2020 gave Modi no choice.

“India is saying to China, ‘until you sort out the border, we are not going to resume normal relations’,” explains Mohan. “The border situation is grim. And Xi Jinping is showing no sign of playing nice with India.”

The symbolism of the Albanese visit was stark. Modi invited the Australian leader to become the first foreign leader to inspect the flagship of the Indian Navy, the INS Vikrant, the embodiment of India’s strategic ambition to project force well beyond its shores.

“Albanese on the deck of the aircraft carrier sums it up,” says Mohan. Speaking on the Vikrant, Albanese went so far as to dub India a “top-tier security partner” for Australia.

Why is this extraordinary? With Indonesia, India was a leader of the Non-Aligned Movement during the Cold War. Yet now it’s an increasingly close security partner of a US treaty ally.

As Albanese said: “There has never been a point in both of our countries’ histories where we’ve had such a strong strategic alignment.”

India long refused to allow Australia to take part in its signature annual naval manoeuvres, the Malabar exercises. This year, India has agreed to Australia not only participating but hosting. Similarly, Australia has invited India into its large-scale Talisman Sabre drills.

The second horse is economic growth. Mohan explains: “India is a developing economy with huge growth potential and with huge complementarity with Australia. It took a long time while China moved into the Indian economy, but there’s now a sense that we can work together with Australia on the economy.”

China’s economic dominance is now a source of unhappiness, says Mohan: “Like Australia, we are trying to diversify away from China. Unlike Australia, we have a massive and growing trade deficit with China. Australia makes money by selling dirt to China; China sells us cheap manufactures and has hollowed out our own manufacturing.”

For trade and investment between India and Australia, “things have come together in a rather nice way.” India’s Trade Minister, Piyush Goyal, last April told me: “In the past, when we talked to business people about going to Australia, there would be a lot of ifs and buts, there would be a lot of excuses,” so they could avoid the trip.

At the time, he was leading a delegation of nearly 60 Indian business people: “This is the biggest delegation from India to Australia and we put it together in 36 hours. Excitement about growing relations with Australia is palpable.” Then, two-way trade was $24 billion annually, and Goyal said he wanted to double this to $50 billion in five years.

But last week, Albanese led a delegation of nearly 60 Australian executives to India. Varghese described the group as being “as high-powered as any delegation any prime minister has taken anywhere.”

Since the initial trade agreement was signed last year, trade has boomed and ambition with it. Now Goyal and his Australian counterpart, Don Farrell, are aiming for $100 billion worth in five years.

“Because the relationship has been so untapped for all these decades, there’s a long way to reach any limit in what may be possible,” says Mohan. “I don’t see that changing for a generation, till China calms down.”

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