True, there was no big-ticket deals or announcements during Modi’s 36-hour visit to Vladivostok on September 4-5. But it brought out a firm and clear intent on the part of India and Russia to move beyond cooperation on defence hardware and civil nuclear sectors, that have shaped their bilateral relations for long during the Cold War decades and till the early 1990s. In the past, India had had relatively limited economic and commercial contacts with the Russian Far East because New Delhi’s focus has either been Europe, or the European part of Russia, or the area just north of the Central Asian Republics.
For New Delhi, Modi’s visit shows the importance it attaches to the Russian Far East as an area of geo-political importance in the context of the Indo-Pacific. The Russian Far East is an area India has ignored for the last seven decades. But it is an area which has now acquired a much greater salience primarily for two reasons: strategic and economic. Keeping these in mind, India loosened its purse strings as Modi announced a one billion dollar line of credit for the development of Russia’s Far East, making New Delhi aid-giver to Russia for the first time, reversing a long trend in the past when it had to depend on Moscow’s financial assistance between 1956 and early 1990s.
It is for the first time India announced a soft loan for a particular region of a country, a region which is twice the size of India with about a population of six to seven million. The sheer size of Russia’s Far East and its oil, gas and minerals like diamond, farming, timber and coking coal and the sparse population size are being eyed by India, including for manpower export, because the region has a serious shortage of manpower. Many of the mineral and non-mineral resources of the region are something India needs in the near future. Also, India is looking at the opening provided by Russian Far East to the Northern Sea route, the Arctic route, to Europe, because of climate change and global warming, which has made the route now much easily accessed in comparison to three decades ago. There is also the possibility of oil and gas supplies from the Arctic region. If the Northern Sea route opens, shipping will go via Vladivostok to Europe, providing an alternative access to Europe. That is the reason a MoU for a shipping service between Chennai and Vladivostok was signed between India and Russia during Modi’s visit.
One or two Indian companies have invested in Russia’s Far Eastern diamond industry and the idea now is to get into it in a bigger way because India has a large diamond processing industry. India is also exploring the possibility of sending people with some skills in areas wherever there is manpower shortage. India is an attractive manpower source for the Far East and Modi flagged this issue before Putin during his visit and the Russian president has supported the move.
A five-year roadmap was laid out by stating and laying out the potential of cooperation between the two countries in oil and gas sectors, both in terms of exploration and exploitation and in terms of purchase in the five-year timeframe of 2019-2024, as India seeks to diversify its energy supplies beyond complete dependency in the Persian Gulf, where US-Iran tensions have clouded the prospects for ramping up oil and gas from there. Specific letters of intent were inked between Indian public sector companies and Russian entities for development of oil and gas fields. A MoU was also signed between state-owned Coal India and its Russian counterpart for export of coking coal and for cooperation in the mining sector between the Steel Authority of India Limited and the Russian counterpart for import of metallurgical coal.
An oil pipeline between India and Russia was also discussed but it is a project entailing complexity because of other countries and because of the issue of US sanctions on Iran, as well as India’s present relations with Pakistan, as the pipeline traverses both these regions. A MoU was signed between Russian entity Novatek and state-owned Indian company Petronet LNG for joint development of downstream LNG business and supplies. LNG assumes critical importance at a time of turbulence in different parts of the world and risks associated with pipeline, and LNG is a major form of energy supplied by Russia. Clearly, India is scouting for diversifying its sources of oil and gas to power the world’s fifth largest economy to grow at 7-8 percent and to fulfil Modi’s dream of turning the country into a five-trillion-dollar economy.
On the strategic front of India-Russia ties, Modi, in his speech at the plenary session of the Eastern Economic Forum in Vladivostok, pointed to this aspect when he recalled how India has shifted its focus from European part of Russia to the Russian Far East, which he described as a “confluence of Euroasia and the Pacific”. According to Singapore-based Indian strategic affairs expert, C Raja Mohan, Moscow and Beijing “see the Indo-Pacific as an effort to contain China”, while “the Americans believe the promotion of Euroasia is about Sino-Russian design to marginalise the US in the continental space.” It is in this big picture that India has waded into at a time when President Donald Trump has disrupted the long-established status quo in international relations, forcing many of his traditional allies to hedge their bets and diversifying their options. This applies equally to India, Russia, China and Japan, whose Prime Minister Shinzo Abe, too was present in Vladivostok and is keen to make Russia a part of its Indo-Pacific policy.
The economic content of India-Russia relationship as brought out by Modi’s visit to Vladivostok, underlines that both countries have moved away from the tight mutual embrace of the Cold War era when the then Soviet Union was India’s biggest weapon systems and civil nuclear power supplier. That is a status still enjoyed by Russia, although on a reduced scale. India’s purchase of defence hardware in the future could attract American sanctions and affect New Delhi’s growing proximity to Washington, and both India and Russia are aware of this. So, the best option for India and Russia is to go for low-hanging fruits like economic cooperation in energy and connectivity sectors.
Pallab Bhattacharya is a special correspondent for The Daily Star.