By Monish Gulati
Russian President Vladimir Putin will be in New Delhi on Dec 11 to attend the 15th annual India-Russia Summit. The yearly meeting of the leaders of Russia and India, alternatively hosted by Moscow and New Delhi, was last held in Moscow in October 2013. The current visit will be the first full-fledged summit between India and Russia after the Modi government too9k office in New Delhi.
About 15 important bilateral documents are expected to be signed, including some in the field of military-technical cooperation, in what will be Putin’s fifth visit to India as the Russian president.
To put the visit in perspective, it is important to take stock of certain international developments relating to Russia which have preceded this visit. First and the most overbearing issue is the state of the Russian economy, which is reeling under the triple blow from US-EU sanctions post the Ukraine crisis, falling price of oil, which is Russia’s major source of income, and the impact of fast depreciating Russian currency coupled with the flight of foreign capital from the country.
The Russian finance minister recently disclosed that his country was losing $40 billion a year due to sanctions, around $100 billion on account of falling oil prices, and some $130 billion in capital flight. The Russian economy is entering its second recession since 2005, with inflation expected to be in double digits by the beginning of 2015.
Second is the quantum and direction of Russian energy relations. On Nov 9, Russia signed a memorandum with China to supply natural gas through the western route, which will connect fields in western Siberia with northwest China through the Altai republic. The agreement provides for the export of 30 billion cubic metres (bcm) of Russian gas to China annually for a 30-year period, scalable at a later date to 100 bcm per year.
In May this year, Gazprom and CNPC had signed a purchase and sales contract along an eastern route to China from the Siberian gas fields to supply 38 bcm of natural gas annually from 2018, again for a period of 30 years. With addition of western route, potential Russian gas supplies to China may exceed the current levels of export to Europe in the medium-term perspective.
More recently, after seven years of negotiations, Russia announced its decision to shelve its South Stream pipeline project. South Stream is a $50 billion gas pipeline, which was first announced in June 2007, and was expected to run across the Black Sea to Southern and Central Europe. Moscow now plans to develop a “gas hub” for supply to southern Europe via Turkey. While the official reason was inability to comply with the European Union’s internal market legislation, analysts cite another reason: the falling EU gas demand and availability of alternate sources.
From the year that South Stream was announced until 2014, the International Energy Agency has revised its EU gas demand forecasts for the year 2030 downwards by 18 percent. The net effect is that Russia is looking for fresh markets for its energy in Asia even as China is leveraging its position to negotiate long-term contracts for Russian gas at cheap rates.
Third is the refreshing of Russia-Pakistan relations. The two countries, on Nov 20, signed their first military cooperation agreement and laid out future avenues of cooperation in this domain. Sergei Shoigu, the first Russian defence minister to visit Pakistan since 1969, said joint naval exercises will be a key feature of future cooperation with Pakistan, besides military officer exchanges, arms sales and counter-narcotics and counter-terrorism cooperation. Bilateral military cooperation is expected to have a more practical orientation and enhance the combat capability of the armed forces of the two countries.
Fourth is the impact of retaliatory Russian trade restrictions on Western supply of commodities. In response to the sanctions imposed by the US and EU nations on Russia over its continued support of separatists in Ukraine, Russia banned in August this year import of meat, fish, dairy, fruit and vegetables from the US, the EU, Canada, Australia and Norway for one year. Russia is now looking for partners to bridge this supply gap and India would sense an opportunity here. Recently Russia has allowed import of buffalo meat from four Indian companies to the territory of the Customs Union (of Russia, Belarus and Kazakhstan). There are also plans to certify other Indian agricultural producers to supply poultry, powdered eggs and dairy products.
Defence cooperation remains the lynchpin of Indo-Russian engagement despite the fact that the sector has been constrained by issues of cost overruns, quality of technology transfers and individual shares in joint development of weapon systems.Modi’s ‘Make in India’ initiative, especially in defence and infrastructure, seems to have reinvigorated the defence sector.
Agreements already signed within the prospective framework of joint research, development, designing and production, including Fifth Generation Fighter Aircraft (FGFA) project and Multi-role Transport Aircraft (MTA) have got a relook. Joint production of MC-21 mid-range civilian aircraft and KA-226 helicopters is also under consideration along with a tripartite agreement for the development of “BrahMos mini missile”.
Besides being a crucial source of energy, nuclear technology and armaments, Russia has consistently backed India’s stand on Kashmir and both countries currently share a common perspective on key global issues, including cross-border terrorism, Afghanistan and Iran. The cooperation with Pakistan is best seen as a Russian effort to make its influence effective in Af-Pak region.
It is this strategic commonality that allows India to offer the jointly developed BrahMos missile to Vietnam as it engages China’s power projection, and tp provide assurances to Afghanistan on military aid through Russia, when the need arises. Therefore as Moscow, driven by the economic crises, looks to India to diversify economic ties, India must reciprocate the years of goodwill.
The energy trade between the two countries may overcome geopolitical barriers and move beyond joint explorations for hydrocarbons as they evaluate the possibility of executing swap mechanism deals to obviate the requirement of expensive transnational pipelines and bypassing maritime chokepoints. Also of interest would be the vision document on Indo-Russian relations which is on the anvil.
While US would see a more secure Europe in a hobbled and diminished Russia, Indian strategic interests would not be met by a Russia playing second fiddle to China in Asia. India’s interests are best served by a multi-polar world order with distributed centres of power and influence. India would also like to see Russia as a more responsible member of the global community, upholding democratic and human values. To that end, the visit of the Russian president is not only an occasion to reinforce traditional bonds but for India to engage in some geopolitical power-play.
(Monish Gulati is Associate Director, Society for Policy Studies, New Delhi. He can be contacted at [email protected] )
— Indo-Asian News Service