Nothing underlines the flux in the global political and economic order and a gradual shift of power balance better Indian Prime Minister Narendra Modi announcing a one billion dollar concessional loan for the development of Russia’s far eastern region during his visit to Vladivostok on September 4-5.
There are three firsts associated with Modi’s Vladivostok visit for the 20thIndia-Russia annual summit with President Vladimir Putin and the fifth meeting of the Eastern Economic Forum: (a) he is the first Indian Prime Minister to trave lto Vladivostok (b) for India, this was the maiden line of credit extended to Russia and (C) this was the first time such soft loan was given to a particular region of a country. India is now the world’s fifth largest economy in terms of GDP while Russia the 12th biggest. It is such a stark contrast to several years during the Cold War era when India was a receiver of aid from Russia to develop its agriculture and industry. Russia has travelled a long way since the collapse of the Soviet Union and its economy has been buffeted by international sanctions following the annexation of Crimea and military intervention in the civil war in Ukraine in 2014.
By deciding to extend the billion dollar Line of Credit to Russia, India has used the same diplomatic tool used to reach out to countries in South Asian neighbourhood barring Pakistan, Africa and Latin America in the past and respond to increasing footprints of China in those regions through a slew of infrastructure projects. The quantum of the line of credit also reflects the quality of New Delhi’s relations with the governments of the day in a country such financial assistance is extended. For instance, India’s line of credit to Bangladesh since Sheikh Hasina assumed power in 2009 stands at eight billion dollars since 2011, the highest given to any country, a clear statement of the unprecedented heights Dhaka-Delhi ties have reached in the last decade. In the case of Nepal, India’s soft loan has remained steadfast but increased for the Maldives following the change of guard in the Indian Ocean island nation.
In the case of Russia, Modi left little doubt that the one billion dollar line of credit serves as the “take-off point” for India’s “Act Far East policy” which will only help bolster the existing Act East policy outreach to South East and East Asia. Modi also indicated India’s readiness for extending such lines of credit for particular regions of other “friendly” countries when he told the plenary meeting of the EEF that “we will actively participate in the development of the regions of our friendly countries according to their priorities.”
Strategic affairs experts opine
that the concept of Indo-Pacific is
seen by Russia and China as way
to contain Beijing while Euroasia
stretching from Russia and
Central Asian countries is viewed
by the United States as an effort
to squeeze it out of the picture
there. So, India has to do a very
delicate balancing act
Modi also pointed to strategic and economic significance India’s ties with the Russian far east by recalling that New Delhi was the first to open its consulate in Vladivostok and how Indians were welcome in Vladivostok at a time when there were restrictions on the visits of people from other countries during the days of Soviet Union. Vladivostok port was used for transporting Russian defence and development equipment to India which has also made substantial investments in the energy sectors and diamond mines in Russia’s far east. A week ahead of Modi’s visit to Vladivostok, Indian Petroleum and Natural Gas Minister Dharmendra Pradhan visited the same place and a key outcome of that visit was an agreement on a five-year roadmap of bilateral cooperation envisaging more Indian investments in exploration and production in Russian energy fields and Russian funds in India’s downstream energy sector. Besides oil and gas, India is also eyeing Russia far east’s forestry, agriculture and diamond sectors and manpower export to that region which faces a shortage of labour. Russia’s far east is twice the size of India and is inhabited by about eight million people.
The economic perspective of India’s engagement with Russia’s far east is, however, just one component of India’s “Act Far East” approach. India is also looking at using the northern Russian sea and the Arctic sea route as an alternative access to Europe and from the perspective of India’s Indo-Pacific and Eurasian policies partly with an eye on China. It is for this reason that India and Russia signed a MoU during Modi’s Vladivostok visit for exploring the possibility of shipping service between Chennai and the Russian port. Strategic affairs experts opine that the concept of Indo-Pacific is seen by Russia and China as way to contain Beijing while Euroasia stretching from Russia and Central Asian countries is viewed by the United States as an effort to squeeze it out of the picture there. So, India has to do a very delicate balancing act.
An important result of Modi’s Vladivostok visit was the signing of an inter-governmental agreement for manufacturing spare parts in India for Russian-origin military equipment. For decades, Soviet Union had been India’s biggest defence armaments supplier although that position has weakened now as New Delhi has moved closer to Washington and Moscow’s ties with Beijing has warmed over the last decade or so. A persistent complaint of India had in the past been delay in getting the spare parts from Russia. This is also in sync with Modi’s repeated calls for transforming the nature of India’s relationship with all major defence partners from buyer-seller to joint production. Indian Foreign Secretary Vijay Gokhale termed the signing of the agreement for co-production of spare parts in India as “an important breakthrough” in India-Russia defence relationship.
Pallab Bhattacharya is a
journalist based in India