India at a Strategic Crossroads

Acres of newsprint are regularly expended on the trajectory of India-US relations and on the ups and downs of our interaction with China. Not much is written about the other big power which has had a long-standing presence in our region. India and Russia continue to be engaged in an intensive relationship, but this often does not get reflected in the public discourse.

Our political dialogue with Russia remains robust, with annual Summits and Ministerial-level joint commissions to oversee civilian and defence cooperation. About 60% of our defence equipment is of Soviet/Russian origin. It gets constantly upgraded, newer generations are introduced, higher-technology equipment is inducted and new systems are developed through joint research. The aircraft carrier INS Vikramaditya, the nuclear-powered submarine INS Chakra and the Brahmos Cruise Missile showcase the scale and sophistication of the collaboration. In December 2015, an India-Russia joint venture agreement was signed to manufacture Russian Kamov helicopters in India – the first Make in India project in the defence sector.

Russia is the only foreign country involved in India’s nuclear power industry. While corporates of other countries continue to agonize about the implications of our CLND Act, Russia’s Rosatom has pressed ahead. An ambitious programme for 12 nuclear power generation units is under implementation, aiming to deliver over 13000 MW by 2025.

Over recent months, with Russian hydrocarbons industry facing financing challenges, ONGC Videsh, Indian Oil and Oil India have been offered (and have taken) stakes in some exciting fields in Eastern Siberia, involving investment of about US$ 5 billion.

Russia is the world’s largest exporter of rough diamonds; India is the largest processor. Over 80% of the rough diamonds from Russia comes to India through third countries. An initiative is underway to streamline our tax rules and customs procedures to facilitate direct diamond trade. The benefits of the estimated potential trade of about US $ 2 billion annually would extend beyond our diamond industry to downstream service industries.

There are other ongoing joint projects in industrial technology transfers, investment in Russian natural resources, education, S&T, tourism and other sectors – too numerous to detail here.

An old friendship rarely generates new excitement. This partially explains why the India-Russia engagement remains largely unnoticed. However, it is also true that the expansion of India’s international linkages has created a public impression that Russia’s importance in India’s world view has diminished. It has been argued that we are not as dependent today on Russian support as in the past. The belief in some media and corporate circles (and perhaps also in some political circles) is that today’s Russia, boxed in by the West and locked in an ever-tightening embrace of China, cannot be a strong partner. Doomsday accounts of the Russian economy have coloured trade and investment decisions.

A brief review of Russia’s recent international engagement would help to apply a reality check to these unhelpful narratives.

Since his accession to office in 2000, the principal goal of President Putin’s domestic and foreign policy has been to restore Russia’s political influence, military strength and economic clout to a level befitting a great power. This inevitably stoked tensions in Russia-West relations, as both sides sought to expand their strategic space.

The accession or annexation (depending on your political orientation) of Crimea in March 2014 raised tensions to cold war-like levels. It triggered a spate of sanctions by USA and EU (joined by G-7 allies), aimed at isolating Russia internationally and punishing its already recession-hit economy by restricting external financing and denying sophisticated technology.

The limitations of an “isolate Russia” campaign soon became evident. Russia remained in BRICS, chairing it in 2015. Attempts to exclude it from G-20 did not get traction. More importantly, Russia’s role in the negotiation and implementation of the Iran nuclear deal could not be ignored (nearly 8.5 tons of low-enriched uranium were transferred from Iran to Russia in implementation of the deal). The military advances by pro-Russian rebels in Eastern Ukraine forced the launch of a peace process for which France and Germany engaged with Russia. Its air strikes in Syria in September 2015 secured for Russia a place at every international table where Syria’s future was being discussed. Russia continues to receive a steady stream of high-level international visitors.

The economic sanctions did increase costs of corporate projects. However, since most of the world did not subscribe to the sanctions, both finance and technology found alternative routes. After the Syrian airstrikes, constraints eased considerably as markets sensed the impending collapse of the sanctions regime.

At worst, sanctions slowed Russia’s recovery from recession. Latest IMF projections are for growth to resume in 2017. Oil prices rising steadily from sub-30 dollar levels should help. IMF reports point to strengths of the Russian economy – healthy current account surplus of 4.5% of GDP, external financial assets of 18% of GDP, adequate domestic reserves to cover government financing, low unemployment (about 6%), low external debt and undervalued corporate stocks. These are not indicators of an economy on its knees.

For all its political and economic problems, therefore, Russia remains a global force to reckon with. It is one of only five permanent members of the UN Security Council – and this number does not look like changing anytime soon. USSR used its veto to help India on Kashmir and the 1971 war. This support has cushioned us against various international pressures in the 2000s.

Freedom from the Cold War straitjacket enabled India to broaden its international engagement. This move from non-alignment to “multi-alignment” expanded our space to form multiple alliances based on shared interests and concerns. But it did not dilute existing bonds of continued relevance.

The India-Russia relationship has a mutually recognized geopolitical logic. We have common concerns and compatible objectives in our shared extended neighbourhood in West and Central Asia. Like India, Russia has had a chequered history of both cooperation and confrontation with China. Russians point out privately that even as current compulsions dictate a more intense engagement, the shadow of past strategic rivalry will always lurk in the background. Such shadows have never darkened India-Russia relations.

India’s programme of diversification of defence acquisitions is obviously in our national security interest. It is natural that the Russian defence industry expresses concern about this – no partner likes dilution of a dominant position. But the volume of our defence cooperation with Russia and its reach across the three Services will always ensure a significant volume of orders for equipment which can only be sourced from Russia because of compatibility with existing platforms, levels of technology transfers or other specific reasons.

At the same time, a valuable strategic partnership needs more than one strong pillar. The recent developments in nuclear energy and hydrocarbons sectors strengthen additional pillars. Additionally, corporate India should seize opportunities in Russia. President Putin recently personally invited our top CEO’s to Russia, offering to resolve obstacles to their business. This invitation merits a response: our banks and industry have to correct their misinformation about the Russian economy and Western sanctions.

Russia’s ambitions for political influence and strategic reach drives its “multi-vector” foreign policy. The recent surge in its relations with Pakistan, which includes a defence cooperation agreement, is part of this effort. Russia expresses apprehensions about Islamic terrorism spilling over into Russia through the porous Afghanistan-Central Asia border and believes Pakistan can help ward off this threat. The supply of Mi-35 helicopters to Pakistan has been explained in this context. Whatever the logic of this explanation or belief, there is little that India can do beyond periodic reminders about the real target of defence equipment supplied to Pakistan. We cannot claim an exclusivity of supply when we do not guarantee exclusivity of demand. In the ultimate analysis, we have to trust that a strategic partner will have the judgement not to jeopardize a significant defence engagement for relatively inconsequential commercial gains. There is no reason to believe that Russia does not understand this.

The Russian connection, therefore, may lack glamour, but delivers substance. It needs to be rescued from the unflattering narratives that one encounters in some circles.

P.S. Raghavan was secretary in the ministry of external affairs and is a former ambassador of India to Russia