SPMRF Round Table Week (18 November to 25 November)

India – Russia Relations: Arresting the Drift

By Amb. P. Stobdan

There is no doubt that the meeting between Prime Minister Modi and President Putin in St Petersburg in early June was remarkably different from previous meetings they had in the past, not only in terms of what has been achieved for bilateral ties, but mainly for retrieving the kind of drift that had witnessed in the relationship in the recent years.

The drift, even though may have been at the level of perception, was widening critically and unnecessarily which was not in the interest of either Russia or India. The differences if any appeared superficial and unwarranted. The two-day interactions between the two leaders in St Petersburg greatly helped remove those misperceptions for good. For example, the kind of body language exuded by Modi and Putin this time, especially the warm embrace, the hand-in-hand walk in the park in St Petersburg and the kind of personal bond displayed by the two leaders was not visible in the last there years when they met at different places. In fact, the two day Summit meeting reminded people of the older days of Indo-Soviet relations.

There is certainly no need to spell out the reasons that may have caused a sense of confusion between the two old friends, but the changes noticeable now could be a reflection of deep realization on the both sides of the futility of venturing into something which is uncertain and unrealistic.

Needless to say that most Indians were although aware of Russia’s growing closeness with China, but they were unprepared to hear Moscow’s increasing inclinations for supporting Pakistan militarily. In this regard, one can brush aside every other consideration but certainly cannot ignore one particular fact that Pakistan for too long consciously adopted and continues to adopt a policy of strategic denial for a direct physical connect between India and Russia. This reality is not going to change even if we are talking about creating Eurasian regional integration under the Shanghai Cooperation Organisation (SCO).

Misperceptions had arisen among Russians about India’s growing technological cooperation between India and the United States. However, from India’s perspective, closer ties with Washington ought not to prevent it from boosting ties with Russia and China, for which India already has multiple avenues for engagement, such as under the RIC, BRICS, EEU and SCO. It is also a fact that in the changed situation even the Russians are also keen to have better ties with Washington.

Importantly, it needs to be underlined that the core of India-Russia relationship is not actually built on the basis of certain transactional values that most states normally rely on. In this sense, India-Russia ties are actually insignificant, for example, bilateral trade has been stagnant at $7-8 billions. Russia’s investment in India is merely $4 billion and Indian investment in Russia is just $8 billion. Instead, the relationship is intrinsically built on deeply shared trust and conviction not just between the governments but also among the ordinary people in the two countries. It is a real fact that Indians have no tradition of trusting another nation except Russia especially in terms of relying on Moscow when it comes to upholding national sovereignty in times of serious challenges.

Most interestingly, President Putin this time has satisfactorily removed all the doubts on issues that mattered to India, especially allaying all misgivings about Russia’s ties with Pakistan. Russia has also once again stood up in terms of unconditionally supporting India on the issue of cross-border terrorism, supporting India’s earliest entry the UN Security Council, Nuclear Suppliers Group, and the Wassenaar Arrangement, etc. This is the most critical part of the Summit meeting this year.

The meeting this time broadly signified that neither is Moscow simply going by Beijing’s dictum nor has New Delhi shed its long exercised autonomy in its foreign policy conduct and that relationship with Russia still remains a high priority for India. It also signified that left to themselves, without any exterior influence, India and Russia are just a natural ally.

This year (2017) also marked the 70th anniversary of diplomatic relations between India and Russia, which also signified a high degree of convergence on various bilateral and global matters.  The St. Petersburg Declaration has become a new benchmark of India-Russia relations in an era of turbulent and uncertain but also an interdependent and interconnected world. With this, the relationship has been satisfactorily brought back to the track.

However, despite all the good understanding the two countries are bound to have differences at the tactical level such as on the issue of Afghanistan. From India’s perspective, Russia’s evolving bureaucratic approach and the kind of policy thinking pursued on Afghanistan especially to realise a Pakistani-led or the Taliban oriented solution for peace in Afghanistan will be good for neither Russia or for the Central Asian states.

Similarly, Russia’s moving too closer towards China will upset the balance of power against India. This is likely to continue to be a matter of concern to India. Moreover, the Russian economy will finally get sucked into the Chinese economy which will not be a happy situation for India.

However, the new found bonhomie between Modi and Putin will have no meaning unless the two leaders avail fresh opportunities for providing new direction to the ties.

Obviously, it is high time that India-Russia ties have to move beyond the existing buyer-seller relationship in military equipments. For building an endeavouring future ties between the two nations, there is no other way but to enhance the level of energy cooperation. The agreement on Units 5 and 6 of the Kudankulam Nuclear Power Plant is excellent but the key potential for the future lay in realising a long-distance pipeline for supplying gas and oil from Siberia to India. Discussions in this regard has been held earlier, but one wonders why Russia cannot pressurise China for the use of Chinese territory as transit route to reach out to India in the same manner China tries to use Russian territory to reach out to European market.

Of course, Russia still remains India’s principal supplier of military weapons. In 2012-16, Russia supplied 68% of our arms imports. USA was only second with 14%. That Russia continues to supply India its most sensitive technologies is a fact. Of course, India and Russia need to expand the scope of defence cooperation. Ideally, the two countries should have already gone ahead for the most prestigious defence deal like the co-development and production of the Sukhoi/HAL Fifth Generation Fighter Aircraft (FGFA).

However, the good news is that India and Russia have seemingly reached an agreement last year for New Delhi to lease a second Project 971 Shchuka-B (NATO: Akula-class) nuclear attack submarine (SSN). Equally important is the decision to sell S-400 battalions probably 4 or 5 of them and also 4 Admiral Grigorovich class naval frigates.

Most significantly, Russia’s formal approval this time for creating a joint venture with India for production of the Kamov-226T light utility helicopter should keep the defence cooperation moving ahead. The decision for the production of Ka-226T helicopters under ‘Make in India’ project was announced in October 2016. The commercial viability of Ka-226T is going to be extremely good because of increasing demand for civil helicopters.

On the economic front, much will depend on how quickly the two countries will solve some of the impediments like the connectivity issue. India, Russia and Iran have been working towards the early implementation of the International North South Transportation Corridor (INSTC), which has moved to fast-track stage after India decided to join international customs convention TIR following cabinet approval.

INSTC that was formalised in 2002 is a 7200-km-long proposed multi-modal (ship, rail and road) transportation system connecting Indian Ocean and Persian Gulf to the Caspian Sea via Iran to Russia and North Europe. Apart from the original members India, Russia and Iran, 11 other countries including Armenia, Azerbaijan, Belarus, Bulgaria (observer status), Kazakhstan, Kyrgyzstan, Oman, Syria, Tajikistan, Turkey and Ukraine are INSTC members.

In the absence of viable surface transport connectivity, Indian goods to Russia and Central Asia move either through the sea route via Rotterdam to St Petersburg or from the Chinese port of Qingdao that take over 50 days with the logistic difficulties.

The recent studies showed that this route can reduce time and cost of container delivery by 30-40 percent and once the flow of goods from two Iranian ports begins the corridors will move 30 to 50 million tons of goods per year. India’s trade volume with Eurasian region is minimal; around $8-9 billion with Russia, less than $1 billion with Central Asian countries and $28 billion with INSTC members. According to a recent Study report suggests that the potential growth of trade between India and Eurasian Economic Union (EEU) is $37-62 billion.

Therefore, India has been exploring different variants of transport connectivity with Eurasia which are realistically attainable. Apart from INSTC, which is inching closer to operational stage, India is also exploring the prospect of enlarging both the operational and practical scope of Chabahar Port to become a vital gateway to Eurasia as the port gives ready access to a number of trade corridors (existing and planned).

Transport connectivity from Chabahar is viable in terms of its competitiveness – distance, cost, delivery, market access, sustainability and safety of goods and cargo to and from Eurasia. Besides, Chabahar transit route would potentially provide the landlocked countries with the shortest land route to conduct their maritime trade with countries in the Indian Ocean region. India is particularly envisaging how the twin INSTC and Chabahar port will complement each other for optimizing India connectivity with Russia and Eurasia. According to some estimate, Chabahar route plus the INSTC could boost trade worth up to $170 billion from India to Eurasia ($60.6 billion export and $107.4 billion import).

Also, the prospect for enhancing economic cooperation will only grow if the private sector from both Russia and India are encouraged to undertake trade and commercial ties between the two countries. Otherwise, the bilateral trade will be stuck around $10 billion and no more.

So far, both India and Russia are unable to attract to each other the best of young talents working in the field of science and technology. Russia doesn’t provide the means such as scholarships for young Indian scientists to work in Russian institutions.

There is also a realisation that even though the Russian people carry lots of warmth for Indians, but Russia’s bureaucratic system is too hard for Indians to understand that actually deters even the private India businessmen to go to Russia for promoting their businesses. Instead, they prefer to do business with China.

On SCO, India has taken a broader view to seriously engage with Eurasian region – the reason why our Government has been keenly pursuing for a formal entry into the organization despite certain criticism even at the domestic level against joining the SCO.

India’s philosophy of joining the SCO has been very simple and clear from the beginning when it joined as one of the Observers of the grouping in 2005.

Firstly, India’s interest in joining the SCO is linked to its traditional and historical affinity with the countries of Eurasia which are of course deeper than the exigencies of contemporary international politics. India always had a non-transactional interest in Central Asia – an emotional connection to the region with deep historical roots that needs no elaboration.

Secondly, India’s own stakes are directly linked to the peace, prosperity and stability of Central Asia. That is why, during the last two and half decades, India followed an extremely calibrated approach of maintaining a close engagement with all the five Central Asia states.

In the years ahead, India will be keen to contribute to SCO’s development and add value to the grouping in a meaningful way. India seeks opportunities to get constructively engaged in addressing the shared regional security concerns, especially for combating terrorism and containing threats posed by ISIS, al Qaida and the Taliban.

As stated above, India’s aspiration in the SCO is linked to realisation of its long cherished aim of increasing trade and connectivity ties with the landlocked belt of Central Asia. India is currently operating at a competitive disadvantage because of the extra costs and time spent in transit for tradable goods. Besides, recurring geopolitical issues too have inhibited proper flow of goods between the SCO countries and India.

India does recognize that a set of connectivity projects envisaged for the region are highly significant for regional integration, and here, the SCO could play an intersecting role between South and Central Asia – especially for implementing trans-regional economic projects. Therefore, India has undertaken connectivity policy measures primarily to elaborate the imperatives of reengaging with Central Asia.  And here, apart from availing trade and investment facilitation, India sees the wider benefit of creating opportunities for productivity enhancement of goods and services, to increase ICT networks; energy networks; people-to-people networks; and promotion of knowledge-based economies.

India considers its membership in the SCO highly significant. It will ensure that India plays a useful role in developing Central Asia as a zone of peace, stability and prosperity.

India is keen to raise its standing in the SCO while entering into the Eurasia integration path firstly by seeking an early stitching of its FTA with the Eurasian Economic Union (EEU) which has a combined GDP of more than $2.2 trillion. In fact, India and Russia has just begun formal negotiation in this regard and once it comes into force, it could open up unhindered flow of raw-materials, inflow of capital and technology from India to the vast Eurasian market and its growth centres. The new connectivity would pave the way for Russia and Belorussia joining the manufacturing sector in India so that they can also access the markets in SAARC, ASEAN and Africa.

Importantly, against this backdrop, India and Russia agreed in St Petersburg that “connectivity projects should be based on dialogue and consent of all parties concerned with due respect to sovereignty.” Both India and Russia appreciated the compelling logic of regional connectivity for peace, progress and prosperity, but it must be “guided by the principles of transparency, sustainability and responsibility.”

Certainly, Central Asians privately consider China as a threat. In the past, China used SCO to dilute Russian opposition for its slow penetration into the region. Today, Chinese interests in Central Asia have become more entrenched. In fact, China is taking every opportunity to exploit the rift between the West and Russia. The sanctions and fall in oil prices actually helped suck Russian economy towards China. The BRI is going to further weaken Russia’s strategic hold in the region.

At the same time, I think that despite all the rhetoric of Sino-Russian bonhomie, Moscow seems far from happy about losing pre-eminence in Central Asia. For now, Russia, due to its recent economic woes, is unable to make large-scale commitments, but Russians privately resent Chinese exploiting their economic Achilles’ heel and outright tendency of Chinese companies to steal projects from them.

Even though, Russia and China tends to invoke the façade of their “mutual understanding” for the sake of limiting US presence in the region, but the undercurrents of their rivalry is glaring even in the security domain.

Russia still remains the main security guarantor, but Beijing has been forging its own security cooperation with Central Asian states including on counter-terrorism. China’s initiative to form QCCM in 2016 with the involvement of Tajikistan, Afghanistan and Pakistan demonstrated its intension to assert own security agenda in the region, albeit in the garb of protecting its interests.

Against all these, Moscow should try to protect its interests by encouraging more countries in Central Asia to join the EEU. In fact, some of the EEU’s measures to limit the flow of Chinese goods by imposing import restrictions into Central Asian markets may have badly hurt Chinese trade in the recent years.

And here, in spite of the symbiotic synergy formalized between OBOR and the Russia-driven Eurasian Economic Union (EEU) in 2015, President Putin is fervently seen enlarging the scope of EEU to bring over 50 European, Asian and Latin American states under its ambit.

Let us not forget, in Beijing, President Putin talked about building a “Greater Eurasia” partnership through integration of EEU, OBOR, the SCO, and ASEAN. Instead, he used China’s BRI forum to spell out his own vision of building “Greater to build transport corridors by expanding the capacity of the Baikal-Amur Mainline (BAM), the Trans-Siberian Railway, and the Northeast Passage.” These kind of thinking are certainly good signs and India should be happy to join the Russian Greater Eurasian integration  process once the EEU-India FTA becomes operational.

To be sure, India would like use the SCO atmosphere for building better convergences with China and Russia and also to ensure that the forum is used for minimizing the intensity of China-Pakistan alignment that actually undercut India’s direct access to Eurasia.

If nothing else, the limited immediate benefits for India of joining SCO will be more than compensated for by improved diplomatic access to Russia and Central Asia.

The Modi-Putin summit in St. Petersburg announces a new calibration in India-Russia relationship, it has imparted it a new dynamism and a long term momentum.

 

(The author is a Senior Fellow, Institute for Defence Studies & Analysis (IDSA), New Delhi and is an expert on Central Asia and Russia. The views expressed are his own)

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