Panelists: Amb K Raghunath
Lt Gen RS Nagra
Prof Arun K Mohanty

After the Soviet Union disintegrated in the 1990s, India-Russia relations declined with Moscow turning towards Europe. Relations revived, however, during President Vladimir Putin's tenure, who has visited India several times. His recent visit to India is significant as it highlights the strength of the bilateral relationship. According to Russian estimates, by 2050 the Russian population will be less than that of Nepal, and five years from now it might be less than that of Pakistan. The demographic imbalance in the vast expanse of its Eastern region, particularly Siberia, might be filled by the Chinese. What will be the implications of this scenario for the geopolitics of the world? There are two significant areas of cooperation between India and Russia - defence and economic. Does Russia's orientation, which is still largely inclined towards Europe, have any implications for Indo-Russian defence and economic cooperation? What are the possibilities of reviving their bilateral ties that declined in the 1990s? Does Russia want to engage in a broader cooperation with India or limit its bilateral ties to energy supplies?

Amb. K Raghunath

Any high-level visit is a highpoint in bilateral relations when ties crystallize and are formalized by signing documents and agreements. It is also a parameter for evaluating the progress of the relationship, its prospects and problems. In the Indo-Russian case, the correlation between the visit and its indications is very strong. The recent visit of President Putin was extremely good and confirms that the bilateral relationship is in very good shape. It was his seventh visit to India. What is important is that there has been an annual summit at the highest level between the two countries since 2000, underlining the continuity and stability of the relationship. There is dynamism in the relationship despite areas of concern and slow progress.

On the Iran problem, there has been a joint drive by India and Russia, at the diplomatic level, to advise the US to exercise restraint and suggest other ways to address its concerns. Diplomatic and political negotiations are an alternative route to deal with the Iranian impasse. There is a line of thinking that suggests that India and Russia should not hesitate to give such advice to the United States.

On the Iraq situation, the general thinking is that the US exercise has not been a great success. A regional dispensation is growing between Iran, Syria and the Gulf nations. In that context, India and Russia (individually and/or jointly) will have something to say. This is a pointer towards the future, suggesting the need to exercise caution and employ political and diplomatic means to resolve the Iraq imbroglio. This also applies to the problem of West Asia which is a trouble-spot. India and Russia also need to play a more proactive role in Afghanistan. Central Asia is another potential area for cooperation and development. This is not to signal that India and Russia are going to participate in another "great game," but only that they are trying to help the Central Asian states which are still in their infancy.

On the nuclear question, Russia has reaffirmed its support for India acquiring peaceful nuclear technology. Russia has agreed to provide India four 1000 MW nuclear reactors at the nuclear power plant in Koodankulam and build more reactors at new sites. Nuclear cooperation with Russia permits reprocessing of spent fuel from these reactors and receiving uninterrupted fuel supply.

In the area of space cooperation, possibilities exist in collaboration for mutual benefit. India invests more than Russia in the space programme. The Russians acknowledge that there is a commonality of interests and capabilities. The GLONASS is an extremely important development and the significant aspect here is that Indo-Russian space cooperation, despite having respective military applications, is not competitive in the strategic sense.

The inherent capabilities of Russia by virtue of its geography, size, location, human resources, natural resources and basic affinity to pluralistic societies, makes it a priority for India. The question is how to operationalize this priority. This is what the strategic partnership is all about - to militarily optimize a relationship which is inherently good. India's perception of Russia being important is mirrored by Russia's perception of India being important to it. India has an independent foreign policy, which is reflected in its stance of not letting India's growing relationship with the US overshadow its ties with Russia.

Russia has gone through a radical transformation. It believes that it is a great power and it is important for India to take note of this. Russia projects this belief, however, in a non-confrontational framework, which was reflected during the ABM issue debate - when the Russians disapproved of the Bush administration's decision to abrogate the ABM treaty. At the same time, they knew they had to live with the Americans while making their own decisions, reflected in the START II and other missile-related treaties. Russia also played a proactive and assertive role in the cases of Kosovo, Iran and Iraq.

Lt Gen RS Nagra

Indo-Russian defence cooperation derives from their congruence of views on strategic issues. It translates their strategic relationship into the areas of power, metallurgy, machine building, information technology, bio-technology, pharmaceuticals, space and infrastructure projects. This has led to Indo-Russia defence cooperation extending to repairing and upgrading weapons, joint R&D, provision of spare parts, and joint manufacture of military hardware. This cooperation is coordinated by the Inter-Government Commission or Military Technical Cooperation (IGCMTC) established in 1999. It is doing well in promoting Indo-Russian defence cooperation.

There are several ongoing projects that have been undertaken by Indo-Russian joint cooperation efforts. These include:

Brahmos: This has been undertaken by Brahmos Aerospace Private Limited and is a joint undertaking of the Governments of India and Russia, with the former owning 50.5 percent equity. The Brahmos cruise missile is the only supersonic missile in the world. It travels at a speed of 2.8 Mach, has a range of approximately 290 kilometers, and can carry conventional warheads. The Brahmos has undergone thirteen trials to date, twelve of which have been successful. The accuracy achieved in the successful trials is of the order of 0.93 metres over a distance of 290 km.

T-90: Licensed production of T-90 tanks is another ongoing project. Although progress has been slow, it is ongoing under the joint collaboration of both nations.

Su-30 MKI: The Russians are proceeding fast on this project to ensure production is expedited, so that the India can have 180 Su-30 MKI aircraft by 2012.

MiG-29 K / KUB: This is an Indian Navy aircraft, specifically meant for INS Vikramaditya, the training for which is being handled by the Americans.

In addition, other projects under Indo-Russian collaboration are in the pipeline:
- Joint designing and licensed production of a new 5000 tonne frigate. It is proposed that three frigates will be made in Russia and three in India.
- Modernization of ships with Brahmos missiles. It has been proposed that Brahmos missiles be fitted in all ships made in India and Russia from now onwards.
- Joint designing and production of a medium role helicopter. However, not much progress has been achieved so far.
- Twin-engine, multi-role transport aircraft project has been signed and it will be made in collaboration with Hindustan Aeronautics Limited (HAL) of India. The first 100 aircraft produced will be given to Russia, while India will receive the remaining 40.
- Joint upgradation of Mig-27 M interdiction/strike aircraft fitted with a Russian turbo fan 31-F engine to ensure a life span of another twenty years .
- Upgradation of Mig-29 B-12 fitted with a Russian RD engine to ensure its service life extended to another 35-40 years.
- Joint development of fifth generation stealth fighter jets to revive the F-35 that the Americans are seeking to offer India. Sukhoi and MiG are developing this fighter jet.
- Joint development and production of medium altitude long endurance unmanned aerial vehicle, designed by the Aeronautical Development Establishment. This will now be superimposed with Russian designs.
- Joint production of Amur submarines, fitted with Brahmos missiles, after the Scorpion line is completed.
- GLONASS navigation systems project, an equivalent of NAPSTER and Galileo, in the American and European systems respectively.
- Production of titanium for projects in India with Russian technological assistance.

There are, however, some areas of concern:
- Price escalation/fluctuation: Fluctuation of value of the ruble, rupee and dollar is creating several problems, particularly for projects that have a long gestation period.
- The problem of steady supply of spare parts on a long term basis, which is related to the fluctuation and escalation of prices.
- Russia's refusal to sign an integrity clause with India.

The best way to overcome these problems is to include them in the contract itself, so that pre-emptive measures can be taken before spare parts are sent to India (as several bureaucratic procedures and documentation are involved). Supply of repair and spare parts can be substantially addressed by setting up joint plants.

Prof Arun Mohanty

Trade remains the weakest pillar of the Indo-Russian strategic relationship. The first trade agreement was signed in 1953 (when trade volume was US$13 million). Nehru's visit to Moscow in 1955 was a major milestone in the trade, economic and strategic relationship. Over the next two to three decades, a large industrial base was developed with Russian technological know-how and financial credit. The 1978 Rupee-Ruble Trade Agreement led to a tremendous increase in the volume of trade in the 1980s. By 1990 it reached US$5.5 billion. Following the break-up of the Soviet Union, trade volume nose-dived and by 1992 the volume of trade decreased to barely US$1billion. The two major reasons for this downtrend can be attributed to problems in the Rupee-Ruble Trade Agreement and the abrupt end to the Soviet government's monopoly of foreign trade.

A debt repayment agreement was reached between Moscow and New Delhi in 1993 to boost trade ties. But the unscrupulous practices of Indian businessmen, such as exporting substandard goods inflicted heavy damage to the trade relationship in the long run. Commodity trade still remains miniscule. Out of a total of US$3.5 billion trade between India and Russia at present, over 40 percent is accounted by defence equipment. There are several infrastructural bottlenecks that are responsible for this situation:
1. The transit time between India and Russia is around 50 days via the sea-route, which results in blocking of funds. The proposed North-South corridor, which reduces the transit time by 50 percent, is not working due to security-related problems.
2. There lies a problem in recognizing Russian Letter of Credits (LCs) in India. Though India has, in principle, agreed to recognize LCs from eight Russian banks, this remains to be implemented. Even on the Indian side, loans given by Exim bank remained unutilized.
3. Russia figures as a risky country in the Export Credit Guarantee Corporation list; therefore the insurance cover for goods is not 100 percent.
4. Due to its supply of sub-standard goods, India has lost its credibility and the market.
5. The trade basket is narrow. Eighty percent of goods relate to agriculture, medicine and textiles. Russian exports to India comprise only of metals, fertilizers and newsprint.

The diamond trade has a potential of around US$800 million to US$1 billion, but has not been picking up. Infrastructure bottlenecks have to be tackled to realize this potential. Putin's visit did not provide a bright picture for trade. But military-economic cooperation has now become important. 75 percent of the hardware in the Indian armed forces is Russian, procured through a buyer-seller relationship. It is now switching over to joint development, joint-designing and joint-marketing.

The orientation of Russian foreign policy is showing a change, which has been visible since September 2004. Europe has become significant to Russia on account of oil and natural gas exports. At present, 90 percent of oil and natural gas is exported to Europe. But Russia realizes that by 2020, around 20 percent of Russian energy resources would go to Asia-Pacific and Asian countries. Therefore, energy could be a core area for cooperation between the two countries. However, this is yet to gain any momentum. Indian companies have to show greater interest and participate in competitive bidding for energy resources in Russia.

Russia still thinks that India is its most important strategic partner. The linkages and sentiments at the top political levels and among the common citizens remain strong. The bureaucracy and the business elite in both countries, however, are not showing much interest in each other and are more interested in Europe. Therefore it is imperative to cultivate people at the middle-level. India is the only country with whom Russia is ready to share high technology. Russia can play a major role in addressing India's energy security. Therefore, energy and hi-tech remain of strategic interest, but the future of commodity trade is bleak until infrastructural bottlenecks are addressed.

Comments

• Visas have always been a problem, especially in the last decade. The Russian and Indian governments could relax checks and controls.

• There has been no push from India to enter the Russian market, which is relatively new and emerging. The basket of trade is also limited. India could tap the market by raising its indigenous industrial and agricultural production and not rely too much on BPOs.

• Unless the private sector of both countries show interest and come together, bilateral trade will not pick up. The diamond trade has huge potential; the automobile and pharmaceutical markets could also be tapped. However, this would only be possible if serious steps are taken to address infrastructural constraints. Of late, there has been a positive trend as large business houses in India have started taking an interest in Russia.

• The problem related to sale of the Brahmos Missile has been settled. A list of countries to which the missile can be exported has been mutually agreed upon. It has also been agreed that the sale of this missile would be conducted through the Brahmos headquarters.

• Analyses need to be undertaken, and new opportunities identified for cooperation and trade in order to work out trade-energy synergies. In this age of globalization, Russia is diversifying and opening its economy and new capacities are being created. As market information is important and critical, it needs to flow to and from both sides. It is only then that market potential could be identified and realized. It is up to India to tap the potential markets that exist around the world, including that of Russia. The pharmaceutical market in Russia offers a huge potential for investment.

• Russia has an understanding of India's nuclear program and has promised to help India at the NSG level on the Indo-US nuclear deal.

• The recovery of Russia is imminent and certain. In all probability Russia will regain lost ground and find a way that is unique to itself and not be guided by external prescriptions.

• India and Russia are genuine strategic partners. The Indo-Russian relationship will become more relevant in the future. There is no reason to be either overoptimistic or pessimistic. Russia will remain a power and an important country in the future. Like other Western countries, Russia also faces a demographic problem and might be looking towards India to fill its demographic gaps.

Questions

• Visa related problems surface time and again. Putin did not address the issue during his vist this year. Why is Russia so reluctant to solve this issue?

• Other countries (and not just Russia) will never export critical technological knowhow. Regarding the purchase of fifth generation aircrafts there has been no concrete agreement. Will this remain just talk?

• Terrorism affect India, Russia and Central Asia. Is anything being done on the ground?

• Is there any coordination between Russia and India on the Iran nuclear issue? How can the Indian External Affairs Minister's visit to Iran be seen in this light?

• Can any kind of pressure be created on Pakistan to open up transit routes?

Responses

Russia is facing a problem of illegal migrants from South Asia as it acts as a spring board for Europe. Russia has to incur travel expenses to deport illegal migrants back to their countries and this is why, despite various efforts, visa problems still persist.

There have been instances of Indo-Russian cooperation with regards to crucial technology in the past. It would not have been possible to make Cryogenic engines without Russian assistance. GLONASS cooperation will allow India greater access to other systems like GPS. The proposed Indian man-mission to the moon may seek Russian assistance at the sub-systems level. Brahmos is another example of technology cooperation.

Russia shares India's concern about terrorism and like it does with the US, India has joint working groups in place also with Russia.

India shares the view that Iran's nuclear program would have a domino effect. India is part of that consensus. So is Russia. But Iran's sovereign right to enrich uranium has to be accepted.

For strengthening Indo-Russian trade, connectivity is of prime importance. The demand for a transit route is gaining strength in the region, which could be a link to the European market as well. This would probably be realized in the near future.