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France’s Diplomatic Courtship with India

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Written by Rajeev Sharma, Contributor

The Indian diplomatic establishment has ample reasons to feel happy and satisfied with French President Nicolas Sarkozy’s just concluded visit to India this week.

Sarkozy deftly used diplomatic symbolism by choosing India as his first foreign destination after France recently assumed the rotational Presidency of the G20 for one year. After a long hiatus, India is starting on January 1, 2011 a two-year tenure as one of the 12 non-permanent members of the United Nations Security Council. This means that India can now expect to wield better clout at the G20 as well as the UNSC. France has been one of the staunchest India supporters in the world for quite some time as the two countries have entered into the 12th year of their strategic partnership.

Sarkozy said what the Indians wanted to hear by reiterating his support to India’s candidacy for permanent seat of the to-be-reformed UNSC—something that Obama also did during his India visit last month. Sarkozy posed a rhetorical question: “It is not just an important matter for India but for the equilibrium of the world that after its two-year term, are we going to ask India to simply stand down?”

Sarkozy also enthralled the Indians by taking Pakistan to task on the terror front. He slammed Pakistan for allowing safe havens to terrorists in its tribal border areas. He reserved his fierce attack on Pakistan for the last leg of his trip in Mumbai on December 7, some three hours before the terror attack in Varanasi. He was unsparing, unambiguous and unrelenting when he remarked: “It is unacceptable for the world that terrorist acts should be masterminded and carried out by terrorist groups in Pakistan.” His advice to Pakistani authorities was to “step up their efforts and show that they are resolute in combating these criminals.” As for India, he pledged unlimited counterterrorist cooperation. Significantly, like Obama, Sarkozy did not visit Pakistan.

Though Sarkozy’s India visit was not historic, just as Obama’s trip wasn’t, such visits are essential for taking bilateral ties from strength to strength. Seven agreements were signed during Sarkozy’s visit, the most important of these a “general framework agreement” for constructing two nuclear reactors in Jaitapur (Maharashtra). Jaitapur is an ambitious project that will have six reactors which together will generate 10,000 MW power after completion in 2018. Generation of 10,000 MW from one single plant is indeed impressive considering that India currently produces just about 4000 MW, or less than three percent of total power generation.

India will have to tread carefully on the Jaitapur plant and will have to ensure that the cost of power per unit is not too high or else India will be breeding another Enron, this time again in Maharashtra. For the state of Maharashtra, Jaitapur means happy tidings as it will generate substantial employment for the locals. But it is the long-term risk that has to be guarded against because the Government of India will be spending a hefty $9.3 billion on the Jaitapur plant. Another important area of concern in context of the Jaitapur plant is that it is going to have European Pressurized Reactors (EPRs), the first of which is yet to be built, and therefore, the technology remains untested. The twin risks—pricing of power produced which is yet to be worked out and the very high capital investment—makes Jaitapur a high-stakes gamble for the government.

Sarkozy pledged a more robust, intense and wide-ranging cooperation with India, especially in such key areas as defense, space, nuclear energy, education and trade. It is a happy development for India, especially as it comes from a P5 power and the world’s fifth largest economy that is a powerhouse of advanced technology. The seven agreements that were signed during Sarkozy’s visit and the coming together of France and India in as diverse fields as satellite launches and construction of two nuclear reactors in Jaitapur signify that the Indo-French strategic partnership is ready for the next phase of growth.

Another rosy picture for Indo-French bilateral relations is the French announcement that its companies will invest $12 billion in India by 2012. Paris has dangled a carrot before New Delhi saying that the French FDI investments in India could be even dramatically higher if India opened up sectors like insurance and retail, particularly multi-brand retail. This is a contentious and sensitive political issue in India, considering the Left parties’ strident opposition.

India for its part has been treading cautiously on this issue. India maintains that the liberalization of insurance and retail sectors is “very much” on the government’s agenda but the policy has to be calibrated. “…(Relaxation of) FDI cap on insurance and multi-brand retail is very much on the agenda,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said in the presence of French Minister of Economy and Finance Christine Lagarde who was part of the delegation accompanying Sarkozy.

Sarkozy’s visit is a demonstration of India’s growing influence, which is projected to be the world’s third largest economy by 2030 after the U.S. and China. Sarkozy is the third P5 leader to have visited India this year after British Prime Minister David Cameron in July and U.S. President Barack Obama in November. Chinese Premier Wen Jiabao and Russian President Dmitry Medvedev are scheduled to visit later this month, the former from December 15 to 17, and the latter a week later. This means that before 2010 rings out India would have received all five heads of the permanent members of the UNSC.