• During EAM S Jaishankar’s visit, the two sides are expected to identify specific projects where Russia can invest those funds parked in India

N Sathiya Moorthy

Uncharitable and heartless, it may sound. But the Ukraine War has not stopped helping India. After the war forced Russia to make a tactical move to sell oil to India, China and many other nations at lower than market prices at the time, India also earned profits by selling refined petroleum products to western Europe, after the latter had sanctioned Russia along with their US leader at a distance.

Now comes the cherry on the top of the ice cream, if it could be called so when people are dying and suffering in Ukraine. India may be the unsolicited recipient of anything up to $ 50 billion in Russian investments. External Affairs Minister S Jaishankar’s long visit to Moscow later this month is aimed at discussing focussed possibilities with his Russian counterpart Sergey Lavrov and Deputy Prime Minister Denis Manturov.

In a way, Jaishankar’s Russia visit, which includes engagements in St Petersburg, is in lieu of the annual summit between the two nations. The summit has been going on for over two decades but could not be held after the Western sanction and more so after the International Criminal Court (ICC) unilaterally declared President Vladimir Putin a ‘war criminal’ who could/should be arrested anywhere by any country.

The last time Putin met with Prime Minister Narendra Modi was in New Delhi in 2023. However, the Russian President has been making what could be termed as double-quick surprise visits to China and more recently the Gulf-Arab region without having to overfly ‘unfriendly’ or ‘unsure’ nations.Presaging Jaishankar’s visit, Russia’s deputy foreign minister Andrey Rudenko met foreign secretary Vinay Kwatra in New Delhi in November.

According to reports quoting the Russian Embassy in New Delhi, they discussed areas of multi-faceted cooperation between the two countries, apart from international and regional matters.The issue is simple to explain but too complex for the two nations to explore. India has loads of Russian funds stocked in the country for imported oil after they initiated the rupee-ruble trade to beat the Western sanctions that barred dollar-trade with Russia, among other things. Tantamount to barter trade, Russia soon found out that it did not have as much to import from India as the latter could do.

In fact, after Indian refineries, both in the public and private sectors, began exporting refined products to western Europe, which had cut off direct trade with Moscow owing to self-inflicted sanctions, India is said to be importing more oil from Russia. It is to meet the new obligations apart from traditional domestic needs. In a way, India can only welcome this circuitous trade but will have to remember that this source of dollar-earning for selling refined oil to western Europe would end suddenly if and when those nations withdraw the sanctions and re-commence direct trade with Russia.

Though there was initial confusion and even some concern in Russian firms exporting oil to India, the two nations have since worked out the guiding principles for balancing the trade-deficit. During Jaishankar’s visit, the two sides are expected to identify specific projects where Russia can invest those funds parked in India.According to August reports, Russia had the equivalent of $ 42 billion in what is euphemistically called balance-of-trade with India. It had also parked $ 12 billion in Indian Treasury Bills (TBs). The current discussions are to find projects in India, where Russia can invest. On paper, it would also show a higher level of foreign investments.

In the Cold War past, too, the two nations had faced problems in balance-of-trade, which India especially needed badly as dollar-reserves were not as promising as they should have been. In fact, Moscow began insisting on dollar-payment, leading to dead-lock in multiple projects that had already been agreed upon.The Indian policy-maker needs to keep pondering over the possibility of Russia wanting to take out the rupee reserves in USD if and when all such sanctions against the country are lifted. In a way, India needs to fast-track Russian-funded projects that the two may identify during Jaishankar’s visit if only to ensure that other possibilities do not become realistic in the coming weeks and months.

Today, many nations procuring Russian oil like India are ready to trade in China’s yuan-renminbi. China has a more advantageous trade and payment position viz Russia, which is unlike India’s. Of course, the Russia-related direct trade and also routing payment for other nations has not made the yuan the world’s alternative currency to USD, as Beijing had hoped for. In the years immediately following the end of the Cold War, Europe had hoped that their newly-minted euro could replace or at least share a large space with the dollar as an international currency.

That did not happen, either.Trilateral implicationsThe forced compulsion for Russia to invest its massive trade surpluses with India in the country itself can have short, medium and long-term implications for two sets of trilateral implications. On the face of it, the possible decision for Russia to invest the parked funds in India’s defence and technology sectors, among others, may not be viewed sympathetically in the US.It is unlike in Europe, where it will remain business as usual though some of the European suppliers of defence equipment and other technologies to India may feel the pinch if Russia were to re-enter the once-captive Indian market in a substantial way. As is the wont, sceptics in Washington cannot escape the temptation of linking India’s compelled contractual obligations to Russia in some way, as the ‘Hindutva nationalist’ government in New Delhi reacting to the ‘Pannun case’ indictment in a US court.

The case, as may be recalled, relates to the alleged involvement of a top Indian security agency official in plotting the elimination of an anti-India Khalistani terror-leader in the US. While the court proceedings in the US can come as an embarrassment for India, it can also strain bilateral relations that much.For instance, the independence of prosecutors in the American context is little understood on the Indian streets and will be conceived as a wanton mischief by the Biden administration to hurt the BJP chances in an election year in India.Irreconcilable differencesOn the other side of the global pendulum is the India-Russia-China trilateral. The truth at present is that Russia leans on China more than India for a variety of reasons.

One, all matters Western, China is as steadfast at being anti-American as Russia. Russia has trade imbalance with China, too, but in the latter’s favour. So doing business in yuan is fine for Russia. In fact, nations like Saudi Arabia, once an unquestioned American ally, have begun trading with Russia in Chinese yuan.India is not a comparison to China in this context. But New Delhi has also reached a politico-economic comfort zone to be able to evaluate individual issues, concerns and circumstances on its own merit and make decisions – without having to lean heavily on one side or the other in the US-Russia equations, where Moscow is not even an equitable competitor to Washington as during the Cold War. China, instead, is.

Russia cannot take India’s support for granted and as eternally as it used to be in the Cold War era. On the contrary, India has also been friends of the US more than ever in the post-Independence era, the early signs beginning with the end of the Cold War and the near-simultaneous advent of economic reforms. The two need not have been linked but there came about an invisible link. It stays.For India, the China differences remain irreconcilable. They will remain so for a substantial length of time, post-Galwan. At a time when memories of the war humiliation of 1962 were beginning to fade in the 21st century India, the sheer brutality of the ‘Galwan massacre’ (2020) and the attendant political hype has made it difficult for New Delhi to patch up with Beijing any time soon.

It is equally so, or even more so, under the ‘nationalist’ Modi-BJP regime to sign off on whatever could be interpreted as a ‘sell-out’ agreement.All of it triggers an international atmosphere in which the US, if not the rest of the West, would hope for non-rapprochement between the two Asian giants even when Washington has been talking trade and detente with Beijing on another track. But the alternative, Russia route to sustaining growth and global political momentum for India is fraught with more pot-holes and hurdles that are deeper at one end, and taller and broader at the other.Strategic autonomyIn a way, all of it may free India to pursue ‘strategic autonomy’, as EAM Jaishankar has been asserting all through since, especially after the commencement of the Ukraine War.

India may be faced with more opportunities, occasions and compulsions to assert it in multiple ways with multiple partners than during the Ukraine War, whose current status the Russian interlocutors would be briefing their Indian visitor.From a Russian angle, it may have opened up greater opportunities and possibilities to be continuously engaged with India at political, technological, defence and commercial levels more than any time in the recent past, raising hopes of returning to the forgotten golden era of bilateral relations in the Cold War past. It’s something that would still be difficult to achieve for Russia, and not necessarily desirable for India.


(The writer is a Chennai-based Policy Analyst and Political Commentator. Email: sathiyam54@nsathiyamoorthy.com)


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