Since the signed and Cabinet-approved revision of the long-standing DTAA treaty between India and Mauritius, there has been a lot of comment on the potential downsides, the significant economic impact analysed by Moody’s, the difficulties of a short transition period for operators, the imbalance with other international centres channelling FDI into India and many other aspects.
The MOU signed off in July 2015, and approved by our Cabinet, signalled a major triumph of powerful revenue and finance Indian bureaucrats who, at last, held the upper hand and a signed outcome, publicly praised by our own negotiating team, that even Indian political overlords, had they wished or desired a different outcome, would have found extremely difficult to pitch for. In essence, India could not be “plus royaliste que le roi”.
True it is that the situation of international finance and low-tax jurisdictions has evolved and pressures increased over the last ten years of protracted negotiation. True also that our offshore sector and political nexus may not have done enough to thwart the growing negative perception of Mauritius by entrenched top-notch Indian bureaucrats, while several other competing centres were lying low and were spared the onus. The status-quo ante was probably harder to maintain against such a rising tide but where we may have lost out, through a largely inexperienced negotiating team, are on far better treaty renegotiation terms, being given that the worst case scenario, the internal application of GAAR by India, would have affected every international centre equally and held less ominous implications for us.
But was inexperience of international poker-pressure negotiations the only reason that facilitated the cardinal July 2015 outcome? We understand that the apparently generous tied-in grant of 350 million$ India waved in front of a political team that had been actively scouting the world for international investors in the property deal dubbed Heritage City, could have been judged extremely rewarding and was duly announced as such by Minister Bhadain. A great prize but, as it turned out later, little better than the 200 million offered ten years previously to former Minister Sithanen. Be that as it may, were there still other factors that to this day remain undeciphered at the strategic level of our relationships with India that made the tide-turn inevitable and a hard situation to wriggle out of now?
After all, during his high-level visit as Chief Guest at our National Day celebrations in March 2015, PM Modi made very clear his intent to invite Mauritius and India to embark on a new strategic partnership which revolved around national and regional security cooperation. Issues like DTAA renegotiation, promised the Indian PM, would be looked at in that new cooperative strategic alliance spirit and he even praised past efforts of Mauritius to collaborate fully with Indian Revenue to allay their fears of treaty abuse by round-tripping Indian businessmen.
In the weeks that followed, had our highest political authorities, their minds and attention clearly elsewhere, notably on the BAI imbroglio and parochially petty political vindictiveness, taken sufficient stock of the implications of such a ground-breaking invitation? For few would have predicted the July 2015 outcome on the basis of the March expressions for a new strategic partnership. Had we therefore misjudged or overlooked some critical issues in the intervening three-month period?
Do we even have a professional unit, perhaps lurking away within Foreign Affairs, that has the mandate and analytical abilities to permanently keep tab on the several major league powers and regional players that are transforming the Indian Ocean scenery and where we have to navigate deftly our foreign policies with our long-term national interests at heart? If, as in so many domains, we have neither strategic think-tanks nor nurtured independent analytical abilities designed to survive political change of guards, are we dependent on the next Minister for enunciating off-the-cuff policies in matters of national import, of which he or she may have a limited grasp? At a more mundane level, Statistics Mauritius, for instance, does not change its key staff after every election, nor would we expect it to.
To come back to the DTAA saga, were there then, in the build-up to the July 2015 MOU, local policy decisions that sealed our fate and literally left even PM Modi helpless or unwilling to overrule his bureaucrats so as to extend political patronage to a relation that, behind closed doors, may have already hit unsuspected reefs? In regional geo-politics and security matters, more particularly with respect to the new strategic partnership called for in March by PM Modi, have we been out of our depths, missed our duties for astute foreign policy analysis, failed to rise to the historic occasion, been dismissive of elder brother’s strategic interests and cavalierly ignored major risks pregnant in some key decisions that we embarked upon shortly after March 2015? In short, did we leave the milk unattended on the stove?
Whatever the untold behind-the-scene stories, the milk has well and truly spilt over and it would be naïve to believe in a possible ultimate renegotiation of the DTAA, still less if we have not even conducted any quiet high-level debriefing or retrospective analysis of where Lepep may have run the ship aground, matters thereafter being only compounded by the immaturity of impressionable negotiators.
After the failure of SAJ’s personal plea in India, it would be most presumptuous to entertain beliefs that some other government figure, be he the newly appointed Minister of Finance, could make India Inc. think again. And, were we to further shed aside national dignity or political decorum at this late hour, another ultimate appeal simply based on Mauritian economic impact that India, incidentally, is already fully cognizant with or on emotive grounds of common bondage, would in all probability only yield the same outcome.
The Lepep government is collectively bound to the official storyline of inevitable changes to come, that we got the best deal possible under the circumstances and that it was not undermining a buoyant economic pillar for a few million bucks. Unless it has understood its own strategic missteps, if any, between March and July 2015, Lepep is bound to avert its gaze and soldier on. Unless it has a clearer idea of what could be brought quietly to the post-negotiation table that might carry enough strategic weight as a potential game-changer for India that would justify, even at this late hour, nudging open the door to better renegotiated DTAA terms for the country. There are presently little signs that our top political brass have done the in-depth self-assessment that might trigger such a remote hypothetical possibility. We can only hope to be proved wrong.
* Published in print edition on 17 June 2016