Thursday, October 20, 2016

Reinventing old links

The India-Russia summit in Goa on October 15 was high on both symbolism and substance. The joint dedication by Prime Minister Narendra Modi and Russian President Vladimir Putin of Unit 2 of the Kudankulam power plant and the “pouring of concrete” for Units 3 and 4 projected a unique partnership in nuclear energy: eight years after India’s foreign collaborations in civil nuclear energy were legitimised, Russia remains the only foreign country involved in nuclear power production in India. Mr. Modi invoked a Russian proverb to reaffirm India-Russia friendship in a changing world: “An old friend is better than two new ones.” The informality of a one-to-one conversation of the leaders over lunch also showcased the intimacy of relations.
Pillars of the partnership
The bilateral agreements and the joint statement contained significant substance. The three defence cooperation projects are notable, not only for their functional importance, but also for the speed of their progress from announcement to agreement. The decision to jointly manufacture Kamov Ka226T helicopters in India was announced in 2014, an Intergovernmental Agreement (IGA) was concluded in 2015, and a shareholders’ agreement was signed in Goa. The S-400 air defence system and building of naval frigates have taken an even shorter time from conception to IGA. This is a refreshing departure from the glacial progress of most defence projects. Two other decisions could have a far-reaching impact on India-Russia defence cooperation: the establishment of a ministerial-level Military Industrial Conference to identify new projects and resolve pending issues, and a Science and Technology Commission to facilitate development and sharing of cutting-edge technologies.
These agreements consolidate Russia’s position as India’s principal defence partner. Over the past 10 years, Russia provided 70 per cent of India’s defence imports; the U.S. was next with 14 per cent. About 70 per cent of our weapons and equipment are of Russian or Soviet origin. Diversification of defence acquisitions will necessarily be an extended process. The Russian partnership has a role even in this process: it can be leveraged to increase benefit from other partnerships. Whether it is technology or other support, the Russian benchmark is what other partnerships will be pressed to match. The more we raise this benchmark, the more we benefit.
The effort to strengthen non-defence pillars of the India-Russia partnership shows progress. Agreements for Units 5 and 6 in Kudankulam are under finalisation and six more units are in the pipeline. There are major developments in hydrocarbons: in the last four months alone, Indian companies have invested about $5.5 billion in the Russian oil and gas industry. Equally significant is the acquisition, by a consortium led by Russian oil major Rosneft, of about 98 per cent of Essar Oil and its Vadinar port in a cash deal worth $13 billion. A joint fund of $1 billion, equally shared by Russian sovereign fund RDIF and our National Investment and Infrastructure Fund (NIIF), is to promote investment in infrastructure and technology projects. The agreement for information security cooperation should enable India to benefit from Russia’s globally acknowledged expertise in cyber technologies. There has been a significant increase in university exchanges and joint science and technology research projects funded by the two governments.
Areas that need improvement
As yet, however, the effort to broad-base the India-Russia economic partnership has not percolated fully to our private sector industry, whose attitudes are shaped by some experiences of the past and unflattering images of Russia in the international media. The popular narrative of a floundering Russian economy distorts reality. International Monetary Fund (IMF) statistics highlight some strong fundamentals of the Russian economy: a healthy current account surplus, low unemployment (under 6 per cent), undervalued corporate stocks and external sovereign debt of only 13 per cent of GDP. The IMF has progressively upgraded its outlook on the Russian economy, now predicting growth of over 1 per cent in 2017.
There is also misinformation about sanctions. The sanctions against Russia bind only a few countries — G7 and the European Union — and are specific in their application. European businesses have found channels to circumvent them. Recent investments in Russia by our hydrocarbons companies have also shown the way. The RDIF-NIIF fund provides an opportunity to cast off misconceptions about the Russian economy and sanctions.
The joint statement declares “zero tolerance for direct or indirect support of terrorism”, stressing the need “to deny safe havens to terrorists”. In Afghanistan too, it calls for eliminating “terror sanctuaries, safe havens and other forms of support to terrorists”. The target of these references is clear.
Russia reaffirmed support for India’s permanent membership of the UN Security Council. India “recognised” Russia’s efforts for a political settlement in Syria. The call for full implementation of the Minsk Agreements of February 2015 echoes Russia’s position on Ukraine.
Diplomatic norms preclude public airing of areas of “concern” in the relationship that were discussed in the closed-door meetings. On the Indian side, these relate to aspects of Russia-China relations and Russia-Pakistan defence links — dramatically highlighted by joint military drills barely a week after the Uri attack. India’s Foreign Secretary confirmed in his press briefing that India received satisfactory assurance that Russia will not take any step detrimental to India’s security interests. The joint military drills have been privately explained by Russians as inspired by elements inimical to India in the Russian establishment. India cannot accept this explanation, even if it is true. As a former Indian Foreign Secretary wrote recently, this action is as provocative as a joint India-Ukraine military exercise near Crimea would be to Russia. Ways have to be found to prevent such crossed wires. On Russia’s arms supplies to Pakistan, the CEO of Rostec, the apex holding company of the Russian defence industry, confirmed publicly that besides four Mi-35 helicopters, no other military equipment supply to Pakistan is in the pipeline. While welcome, this assurance needs a continued reality check.
The pursuit of strategic interests in the global geopolitical environment dictates alignments along multiple axes. Russia pursues a “multi-vector” foreign policy, dealing with countries of widely divergent perspectives. Contacts with Japan, Turkey and Saudi Arabia are examples. The partnership with China and dalliance with Pakistan are part of this mix. Equally, India is broad-basing its international engagement to maximise its room for manoeuvre.
This new dynamic has not diminished the political and strategic relevance of India-Russia relations. India-Russia, India-U.S.-Japan and India-West Asia alignments are not mutually exclusive. Some strands of cooperation from these alignments could intertwine, since there are common interests across them.
A frank and continuous high-level dialogue, reinforced by regular backchannel communications, should ensure that each partner remains sensitive to the core concerns of the other and discordant public messaging is avoided.
P.S. Raghavan is a former diplomat, and was Ambassador of India to Russia (2014-16). The views expressed are personal.

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