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Vasily Shikin

Ph.D. in History, RIAC Expert

The emerging differences in Russia and India’s approaches to some international issues are not enough to overweigh the positive effects of the bilateral partnership. On the contrary, the growing differences give the evidence of widening scope of issues to cooperate on rather than of the diverging national interests. Forging Russia-India strategic partnership at the beginning of the 2000s was a matter of two countries’ political will as in those times both nations shared little in common besides some broad vision of fair international order principles and reminiscence of the erstwhile cooperation in the Soviet era. Although the strategic character of the cooperation between Russia and India has contributed significantly to the bilateral dialogue progress, the inherent problem of such type of partnerships is their sensitiveness to political issues and changing international environment. Hence, the priority goal for both nations’ leaders is to ensure trust between Russia and India via personal contacts at the highest political level such as annual summits and within the multilateral fora such as G20, BRICS, and SCO.

Another instrument to address the risk of growing political gap between Russia and India is to reinvigorate economic ties between the two countries and make both economies more interconnected. It is high time decision makers in both countries re-focused their attention from stand-alone multi-billion strategic projects, which are reaching their limit, on more practical economic activities. From this perspective, simplifying visa proceedings for Indian businessmen visiting Russia, attracting SME investments from India into Russia and vice versa, developing close inter-regional economic ties and eliminating barriers for the exchange of goods and services, for example by developing the North-South transport corridor or a FTA between the Eurasian Economic Union and India, may be crucial to the future of Russia-India bilateral cooperation.

Prepared in the framework of the RIAC and Indian Council of World Affairs (ICWA) Joint Paper

Recent Russia-India partnership history goes back to 1971 when the first Treaty of Friendship and Cooperation between Moscow and Delhi was signed. Although India headed the Non-Alignment Movement during the Cold War era, it was closer to the Soviet Union than some Communist Bloc members, such as China or Yugoslavia. In the turbulent 1990s, when Russia was preoccupied with its internal issues, the cooperation between the two nations almost came to a halt. Only in 2000s, it was revived with signing the Declaration on Strategic Partnership, and ten years later evolved into a “Special and Privileged Strategic Partnership”.

2018 Outcomes in Brief

Since 2000, the leaders of both nations meet each other annually at Russia-India summits to assess the progress in bilateral cooperation and demonstrate the durability of their partnership. The 19th summit held in October 2018 in Delhi was not an exception in a row of high-profile meetings between President Putin and Prime Minister Modi. Both leaders re-claimed their traditional commitment to 'an Enduring Partnership in a Changing World' (as the official Joint Statement was titled). President Putin and Prime Minister Modi confirmed their common approaches to a wide range of global issues ranging from combating climate change and ensuring free trade to struggling terrorism, resolving regional conflicts, and others.

The address of national leaders along with the joint statement to the media at annual summits have become a barometer of Russia-India bilateral relations and an official way to report annually the most remarkable partnership’s achievements. Putin and Modi announced proudly that the bilateral trade turnover had increased by more than 20% in 2017 and that it was going to hit the target of $25 billion by 2025. Among other achievements presented to the world was the official signing of the long-awaited $5.5 billion contract for the S-400 air defense system to be supplied to the Indian Armed Forces. The leaders of both nations also reminded about the first LNG shipment completed from Russia to India in March 2018 under the contract signed between Gazprom and GAIL and informed about the progress in the on-going construction of Kundankulam NPP units — one of the most long-term and ambitious joint projects [1].

Old Partnership under New Circumstances

Every year Russia-India summits follow the same scenario with the parties declaring their commitment to their all-weather strategic partnership and agreeing on new six-digit arms and energy deals. For almost two decades, the essence of the Russia-India strategic cooperation has not changed much, and the coherence of Russia-India partnership is still beyond all questions. What has changed dramatically in the past 20 years is the global strategic environment in which Moscow and Delhi found themselves and in which it will be much harder for their strategic cooperation to keep on claiming a unique role of a 'special and privileged' partnership.

In the beginning of the 2000s, when the dialogue between two nations just emerged as the strategic cooperation, the role of Russia as India’s unique partner in the international arena was beyond any doubt. At that time, India suffered from international sanctions imposed after nuclear tests and lacked the inflow of investments and modern technologies crucial to its economic development, with Pakistan enjoying generous financial and military support from the U.S. and China becoming more and more assertive in its territorial claims towards neighboring countries. Under those circumstances, India needed Russia, which became the invaluable source of state-of-the-art defense supplies, nuclear and space technologies to India. Moreover, being a permanent member of the UN Security Council and a participant of G8, Moscow was willing and capable of supporting India and mediating its relations with the Western world and its regional rivals.

Now Russia is facing international sanctions and suffering from the deficit of support in the international arena while India is a legitimate player in the global politics with Indian Prime Minister Modi being welcomed as a headliner at global governance fora such as the World Economic Forum in Davos or G20 summits. No wonder, the new circumstances have affected critical spheres of the bilateral partnership.

Unlike two decades ago, now it is Russia who has to face an intense competition for a 'privileged partner' status, while India is supposed to be a chooser. Delhi's new approach is mostly evident in the crucial areas of bilateral cooperation, such as defense and energy cooperation.

From Privileged Partnership to a Privilege to Be a Partner

In October 2018, India signed the $5.5 billion contract for purchasing Russian most advanced air-defense system S-400 Triumph which is expected to be one of the biggest arms deals between the two countries. The deal turned out to be an ultimate breakthrough. For Russia, it is the biggest arms deal in recent years and the first arms export contract after the Soviet era nominated in Russian rubles. At the same time, Indian Armed Forces succeeded in adopting one of the most sophisticated air defense systems and circumventing the Countering America’s Adversaries Through Sanctions Act (CAATSA) that Trump’s Administration had threatened to trigger against India in case the deal came into force. Just a few months before the deal was inked, the U.S. imposed sanctions on the China People’s Liberation Army’s (PLA) Equipment Development Department (EDD), which was the first foreign buyer of the S-400 [2]. Among other arms deals recently announced there are a $1.9 billion contract for 4 Project 11356 missile frigates [3] and a $3.3 billion contract for Russian Akula-1 class nuclear submarine that will be taken on a 10-year lease since 2025 by the Indian Navy [4].

Notwithstanding the recent multi-billion arms deals, the figures show that Russia is losing ground in the Indian arms market. In the 2000s, the purchases of arms from Russia used to account for up to 75% of the total Indian weapons import. By 2018, Russian share has plunged to 58%, which still allows retaining the role of the major supplier but raises concern in Moscow [5]. Within the last decade the defense cooperation between Russia and India was marred by a number of issues including Russia’s failure to execute the contract on Admiral Gorshkov (INS Vikramaditya) refurbishment on time, disagreements over the protracted joint project of the Fifth Generation Fighter Aircraft (FGFA), as well as transfer of defense technologies, and India’s dissatisfaction with servicing of Russian defense equipment. Thus, the Indian Armed Forces are diversifying their arms supplies.

As a result, Russian companies fell behind the competitors from the U.S., France, and Israel in a row of large defense tenders. In 2011, the IAF preferred to purchase 22 AH-64D Apache attack helicopters for $2.5 billion from Boeing over Russian Mi-28Ns. The same year the Russian United Aircraft Corporation’s (UAC) bidding with MiG-35 lost the $8 billion contest to supply 126 multirole combat aircrafts to the French Dassault Aviation, which became the largest single defense deal in India and one of the most controversial ones. In 2012, Airbus A-330 Multirole Tanker Transport came out on top of the Russian Il-78 MKI in the contest for securing a $2 billion contract to supply 6 aircraft (later the results of the tender were canceled).

The landmark event for Russia-India partnership in energy sphere was the first shipment of LNG from Russia to India in June 2018. Moscow has finally entered Indian gas market and offered more attractive terms than LNG suppliers from the U.S. From Moscow’s perspective, this deal is a great opportunity to show that the international blockade imposed by Washington against Russian oil & gas companies will not work, and to offset the losses caused by some EU states’ politically motivated decisions to switch from the Russian conventional gas to the U.S. LNG supplies.

However, for Delhi again it was a matter of diversification. The deal between Gazprom and GAIL was first announced in 2012. Since then, the Russian state-owned gas champion faced a shortage of LNG capacity to execute its obligations under the contract, competition from other suppliers and India’s pressure to renegotiate the contract. Finally, Gazprom agreed on far less attractive terms with the contracted volume and prices reduced.

Being the fourth largest LNG market in the world, India uses its bargaining power to renegotiate contracts with its major suppliers. Earlier Indian importers re-negotiated the long-term LNG supply contracts with the Qatari RasGas and ExxonMobil. Prices that seemed reasonable at the time of signing contracts have gone down significantly since the recent increase of LNG supply. India is trying to diversify energy partners and make different suppliers compete for the Indian market offering the best possible terms and even giving concessions after signing the contracts. That is why Gazprom would not be able to replace the U.S. LNG but would be used by Indian importers to leverage the U.S. and other foreign companies.

Strategic Challenges for Strategic Partnership

However, the growing competition for the Indian arms and energy market are unlikely to pose a detrimental threat to the cooperation between Russia and India. The greatest challenge that Russia-India partnership is facing now is a growing gap between both nations’ vision of strategic issues such as security and political order in Eurasia. The potential differences became evident after 2014, when Moscow geo-strategic vision turned to the confrontation against the United States and its Western allies, and Kremlin started to drift rapidly towards Beijing in its attempts to overcome the potential isolation and ally with a major power capable of challenging the U.S. dominance in the international arena. Although Russia and China cooperation lacks the features of a formal political or military alliance, India, which has unresolved territorial disputes with China and faces Beijing’s assertive foreign policy in South Asia, is following Sino-Russian rapprochement with great concern.

Moreover, Russia has also reviewed its approach towards Pakistan after Islamabad’s break-up with Washington. In 2014, Russian Minister of Defense paid an official visit to the country for the first time since 1969. The primary outcome of this landmark visit was signing of the bilateral defense cooperation agreement followed by supplying 4 Mi-35M attack helicopters to the Pakistani Army, negotiating further lethal arms supplies (the T-90 tanks and the Sukhoi Su-35 fighters), and participating in joint military exercise Druzhba (Friendship) [6].

Moscow and Delhi’s diverging approaches to strategic security issues in Eurasia were revealed with Russia-led initiative to engage the Taliban in the Afghanistan reconciliation process, which India regards as a terrorist group and a Pakistani proxy. Another case is Moscow’s support of China’s Belt and Road Initiative regardless of Delhi’s strong opposition against China-Pakistan Economic Corridor (CPEC), which is supposed to go through the disputed territory of Kashmir. India’s participation in the Quad, and its close defense ties with its members (USA, Japan, and Australia), viewed by many as aimed at containing China in the Asia Pacific region, also do not contribute to mutual understanding between Moscow and Delhi on strategic issues.

Policymakers in Delhi believe that Moscow’s foreign policy rebalancing towards China and Pakistan may have repercussions for Indian security and balance of powers in South Asia. However, Moscow still publicly demonstrates its support for Delhi on the issues constituting Indian core national interests. For instance, in August 2019, Russia was the first Permanent-5 nation that backed India after revoking Article 370 and scrapping Jammu and Kashmir autonomy. Russia blocked Pakistan’s call supported by China for the UNSC to address the crisis in Kashmir at the open session and insisted that it should be resolved through bilateral talks between Delhi and Islamabad.

***

Still, the emerging differences in Russia and India’s approaches to some international issues are not enough to overweigh the positive effects of the bilateral partnership. On the contrary, the growing differences give the evidence of widening scope of issues to cooperate on rather than of the diverging national interests. Forging Russia-India strategic partnership at the beginning of the 2000s was a matter of two countries’ political will as in those times both nations shared little in common besides some broad vision of fair international order principles and reminiscence of the erstwhile cooperation in the Soviet era. Although the strategic character of the cooperation between Russia and India has contributed significantly to the bilateral dialogue progress, the inherent problem of such type of partnerships is their sensitiveness to political issues and changing international environment. Hence, the priority goal for both nations’ leaders is to ensure trust between Russia and India via personal contacts at the highest political level such as annual summits and within the multilateral fora such as G20, BRICS, and SCO.

Another instrument to address the risk of growing political gap between Russia and India is to reinvigorate economic ties between the two countries and make both economies more interconnected. It is high time decision makers in both countries re-focused their attention from stand-alone multi-billion strategic projects, which are reaching their limit, on more practical economic activities. From this perspective, simplifying visa proceedings for Indian businessmen visiting Russia, attracting SME investments from India into Russia and vice versa, developing close inter-regional economic ties and eliminating barriers for the exchange of goods and services, for example by developing the North-South transport corridor or a FTA between the Eurasian Economic Union and India, may be crucial to the future of Russia-India bilateral cooperation.

1. India-Russia Joint Statement during the visit of President of Russia to India (October 5, 2018), Press Information Bureau, Government of India, Prime Minister’s Office.

2. Mattis on $5.5.Billion India-Russia S-400 Deal: 'We will Work Everything Out,' // The Diplomat. December 6, 2018 URL: https://thediplomat.com/2018/12/mattis-on-5-5-billion-india-russia-s-400-deal-well-work-everything-out/

3. The Construction of Frigates for Indian Navy to be finished by 2023 // TASS. April 23, 2019. URL: https://tass.ru/armiya-i-opk/6381736

4. India inks over $3 billion deal with Russia for nuclear submarine despite the treatment of U.S. sanctions // The Times of India. March 8, 2019. URL: https://timesofindia.indiatimes.com/india/india-inks-over-3-billion-deal-with-russia-for-nuclear-submarine-despite-the-threat-of-us-sanctions/articleshow/68308925.cms

5. Trends in International Arms Transfers (2018). SIPRI. March 2019.

6. Pakistan, Russia sign landmark defence cooperation agreement // Dawn. November 21, 2014. URL: https://www.dawn.com/news/1145875

Pay Attention to Russia's South Asia Strategy // The Diplomat. June 7, 2018. URL: https://thediplomat.com/2018/06/pay-attention-to-russias-south-asia-strategy/


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