By Anurag Bisen
The Indian Ocean Region, and the Arctic and the Russian Far East hold special significance for India and Russia, respectively, where neither poses a strategic threat to the other and yet provide strategic alternatives to each other. Facilitating greater reciprocal access in these areas will not only benefit the two countries but also bring stability and prosperity to a wider region. This issue brief identifies potential areas of cooperation between India and Russia in the Indian Ocean Region and the Arctic, including the Russian Far East and the Northern Sea Route.
Though India and Russia have maintained a warm and cordial relationship, their full potential has not been realised yet, despite convergence in their world view, and multi-polarity being at the core of the relationship, both as a reality and as an aspiration. Both emphasise independence in pursuit of foreign policy and eschew alliances.2 There is also a political will at the highest level to further enhance India–Russia relations significantly.
However, building stronger ties require identifying areas of convergence and prioritising them over areas of divergence. As the two countries stand on the cusp of commemorating 75 years of diplomatic relations in 2022, there is a need to identify areas of potential cooperation that can propel the bilateral ties to another level.
The Indian Ocean Region (IOR) and the Arctic and the Russian Far East (RFE) hold special significance for India and Russia respectively, where neither poses a strategic threat to the other and yet provide strategic alternatives to each other. Facilitating greater reciprocal access in these areas will not only benefit the two countries but also bring stability and prosperity to a wider region. This issue brief identifies potential areas of cooperation between India and Russia in the Indian Ocean Region and the Arctic, including the Russian Far East and the Northern Sea Route (NSR).
INDIAN OCEAN REGION
India’s central position in the northern IOR bestows upon it a unique role. Several extra-regional nations look up to India as the first responder in a calamity, a net provider of security in the region, and seek collaborative partnerships with India in the maritime domain. The geography of Indian Ocean, its many choke points, oil production and transportation, and huge population centres make IOR a vital strategic region. To secure their interests, almost all the major powers, extra-regional to the IOR, have a permanent presence in the region. Over 120 warships of “extra-regional forces” are currently deployed in the Indian Ocean and a “race” for strategic bases in the region is only going to gain momentum in times to come, in view of rising global interest in the area.
Russia is the only major power without a permanent presence in the IOR. Although few observers consider Russia to be an active player in the Indian Ocean, it has long sought to establish permanent bases in the region. Recently, on 17 November 2021, Russia’s inclusion as a dialogue partner of the Indian Ocean Rim Association (IORA) suggests the implicit acceptance of its important role in the evolving geopolitics of the Indian Ocean.
Russia’s National Security Strategy, updated in July 2021, designated its relations with India and China as one of its foreign policy priorities. Earlier, in its National Maritime Doctrine of 2015, Russia had identified the Atlantic, Arctic, Pacific, Caspian, Indian Ocean and Antarctic areas as key regional priority areas, and had listed “development of friendly relations with India” as the most important objective in the India Ocean Region.
Russia has since gradually expanded its presence in the Indian Ocean and now plays an active role in anti-piracy operations off the coast of Somalia. Russia has also emerged as a major partner for Mozambique and Madagascar. On 11 November 2020, Russia announced the setting up of a naval facility in Sudan, though officially described as a material-technical support facility, it will be the second Russian forward naval base after Tartus in Syria. The geographical centrality of Sudan vis-à-vis the Red Sea and adjacent areas provide Russia with the potential capacity to control several choke points and focal areas like Suez Canal (also from Tartus), Red Sea, Bab al-Mandab Strait, and Gulf of Aden. The setting up of permanent overseas bases can be an expensive proposition and also fraught with political risks. However, the basing requirement can be overcome, to a large extent, through reciprocal logistics agreements with friendly nations in the region.
Reciprocal Military Logistics Agreement: India has signed military logistics agreements with all QUAD countries, as well as with France, Singapore and South Korea. India is currently in the process of finalising such an agreement with the United Kingdom (UK) and is in talks with other partners like Vietnam.
Russia and India are set to sign the Reciprocal Exchange of Logistics Agreement (RELOS). The two countries are also likely to sign a navy-to-navy MoU. According to media reports, the India–Russia RELOS will give India access to Russian military facilities in the Arctic region as well.
White Shipping Information Sharing: Indian Navy is mandated to conclude white shipping information exchange agreements with 36 countries and three multi-national constructs Recently, in September 2021, Oman became the 22nd country to sign the agreement with India. It has been reported that 17 such agreements have been operationalised.
Indian Navy’s Information Fusion Centre—Indian Ocean Region (IFC–IOR), located at Gurugram, was started in December 2018 to facilitate maritime information to the member countries. The IFC–IOR hosts international liaison officers (ILO) from partner countries; at present, it has nine ILOs and three more from IOR countries including Sri Lanka are expected to join very soon. With Russia, India does not have a white shipping agreement, because of which, there is no Russian ILO stationed at IFC–IOR.
Bilateral Naval Exercises in IOR: As part of its foreign cooperation initiatives, the Indian Navy presently carries out bilateral naval exercises with 14 navies and coordinated patrols with four, most of which are in the Indo-Pacific. t may be noted that even though Russia remains India’s primary supplier in the maritime domain, the operational interaction between the navies of the two countries is comparatively on a lower scale. The trend would, in all probability, be similar in the case of engagement between the two armies and the air forces. In comparison, China seems to have greater engagement with Russia in the military domain. Reduced Indian military engagement with Russia over the years seems to have prompted the latter to seek partners elsewhere, in the region.
Russia and Sri Lanka have increased their cooperation in defence and military spheres over the past few years. There are also reports that Russia aims to acquire a naval base in Myanmar. In 2019, Russia and China conducted their first tri-lateral naval exercises in the Indian Ocean with South Africa and Iran. Similarly, the Russian Navy (RuN) has lately increased its engagement with Pakistan Navy (PN). Russia also held its first-ever military exercise with ASEAN (Association of Southeast Asian Nations) in Indonesia’s territorial waters off North Sumatra during 1–3 December 2021. All of these engagements reflect Russia’s desire for greater engagement in the IOR.
RUSSIAN ARCTIC AND FAR EAST
In many ways, the Arctic is to Russia, what the Indian Ocean is to India. Russia could be said to have the most at stake in the Arctic, in absolute terms. Since Vladimir Putin first became president, the Arctic has evolved into an increasingly important arena of Russian foreign, military and economic policy. Approximately half (more in some cases) of the Arctic in terms of its area, coastline, population, mineral wealth and hydrocarbons lies in Russia. India has scientific, environmental, commercial and strategic interests in the Arctic region, and Russian Arctic can potentially address India’s energy security objectives.
Hydrocarbons: Russia has the largest proven natural gas reserves in the world, enough to last for about 80 years at current production rates. Oil and gas make up almost 60 per cent of Russian exports generating about 36 per cent of its federal budget revenues in 2016. The Russian Arctic is the source for about 80 per cent of this oil and virtually all of the natural gas. By 2050, the deposits in the Arctic shelf are expected to provide between 20 and 30 per cent of Russia’s total oil production, thus becoming the country’s most important source for hydrocarbons.
However, since 2014, the US-led Western sanctions have put pressure on the Russian economy, making it difficult for Moscow to finance new energy and infrastructure projects in the Arctic. China, the largest energy importer, has stepped in and this has resulted in an energy-based strategic interdependence between the two countries. China has become Russia’s primary alternative to trade and cooperation, despite past adversarial relationships and residual mistrust.
Strategic Minerals: The Russian Arctic also has vast deposits of cobalt, copper, diamonds, gold, iron, nickel, platinum, high-value rare earth elements, titanium, vanadium and zirconium. The Arctic accounts for 90 per cent of Russia’s nickel and cobalt production, 60 per cent of copper, and over 96 per cent of platinum metals. Indian rare earth reserves are richer in lighter fractions and deficient in heavier ones. Most of the rare earth products used in strategic industries viz. defence, fibre optic communications, space and nuclear energy are also critical to various clean energy technologies, including wind turbines and electric vehicles. The Russian Arctic, therefore, has the potential to mitigate India’s critical deficiencies in rare earth and strategic minerals.
India–Russia joint statements have repeatedly alluded to cooperation in the Arctic.The fact that India sent its Minister of Petroleum and Natural Gas to Russia, ahead of the Eastern Economic Forum in 2019 and 2021, shows that India is serious about its hydrocarbon engagement with Russia. According to the Indian Petroleum Minister visiting Russia in 2019, “India has invested $15 billion in oil and gas projects in Russia” and has “started importing liquefied natural gas (LNG) from Russia”. He added that India also intends to “purchase small quantities of coking coal from Russian companies”.
It could be argued that the supply of LNG from Russia is likely to be more expensive on account of higher transportation costs as compared to alternate supplies from Qatar, Australia and Mozambique. It is worth noting that the competitiveness of an LNG project is defined by the capital costs of the liquefaction plant, upstream gas supply and LNG shipping costs. For Russia, the upstream costs are very low, below $1/mmBtu including taxes. Factoring the tax concessions from the Russian Government, it has been assessed that Sakhalin can supply LNG to Indian markets at competitive prices. If India leverages its vast consumption and promise of an assured long-term purchase, there is a possibility for long-term LNG supplies from Russia.
Northern Sea Route: For Indian ports, the Northern Sea Route or NSR does not offer any benefits and is longer than the current route, for Rotterdam. However, there are other avenues for cooperation on the NSR. To develop infrastructure in its Arctic areas, Russia has announced its intention, inter alia, to ensure year-round, safe, uninterrupted and cost-effective navigation in the waters of the NSR, and increase its cargo traffic up to 80 million tonnes. By 2022, President Putin is considering the possibility of opening the first regular service for carrying goods, including containers, between Vladivostok and St Petersburg that will utilise the NSR.
Prime Minister Modi has indicated India’s willingness to partner with Russia, stating that “India and Russia will also be partner in opening of the Northern Sea Route for international trade and commerce”. In response, President Putin has stated that Russia welcomes India’s interests in the NSR.
Russian Far East: The Russian Far East or RFE is rich in natural resources, producing 98 per cent of Russian diamonds, 90 per cent of borax materials, 50 per cent of gold, 14 per cent of tungsten, and 40 per cent of fish and seafood. About one-third of all coal reserves and hydro-engineering resources of the country are available here. Forests of the region comprise about 30 per cent of Russia’s total forest area.
Russia is paying special attention to the development of its Far Eastern region. Since 2015, the volume of accumulated FDI in RFE has almost doubled, reaching US$ 80 billion. Industrial growth in the region has exceeded the national average and industrial production has grown at twice the national rate. Russia is also creating free custom zones in the RFE. Additionally, it is providing a tax holiday in respect of profit, property, and land and transport taxes for 10 years to the investors.
As stated earlier, India’s cooperation in the development of RFE including NSR has been endorsed by the leaders of the two countries. Addressing the Eastern Economic Forum (EEF) in 2019, Prime Minister Modi announced a US$ 1 billion line of credit to further contribute to the development of RFE. Recently, in his virtual address to the EEF in September this year, Prime Minister Modi announced that India’s Mazagon Docks Limited will partner with the Russian Zvezda Shipyard in Vladivostok, for construction of some of the most important commercial ships in the world. He also stated that the Chennai–Vladivostok Maritime Corridor along with the International North–South Transport Corridor (INSTC) will bring India and Russia closer to each other.
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