Paradoxes of Russia-India cooperation

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Against a backdrop of excellent diplomatic relations, it seems paradoxical that the economic cooperation of the two countries differs noticeably from the level of political trust.

Indian Prime Minister Manmohan Singh’s two-day visit to Moscow again demonstrated the highest level of political trust between our countries. The Indian premier and Russian president Vladimir Putin discussed a wide array of issues related to mutual cooperation in all areas, along with a range of topics concerning global politics, on which Russia’s positions coincided closely with India’s. At the same time, it must be noted yet again that our countries are in no way close to being able to reach a level of economic cooperation that would completely realize the vast potential.

A new term was coined to characterize Russia-India relations: it is not merely a “strategic partnership,” but a “special and privileged strategic partnership.” Manmohan Singh’s visit to Russia once again confirmed the harmony or maximum closeness in the two countries’ positions on a wide range of bilateral and global issues, including the most acute ones, such as the situation surrounding Syria and a peaceful resolution in Afghanistan after the withdrawal of foreign troops in 2014. Russia and India are also productively working in formats such as BRICS and the Group of Twenty.

In the near future, we can expect India’s accession to the Shanghai Cooperation Organization (SCO) as a full-fledged member.

The Indian premier also stressed the special nature of the relationship, saying that “no country has had closer relations with India and no country inspires more admiration, trust and confidence among the people of India than Russia.”

Against such a backdrop, it seems paradoxical that the economic cooperation of the two countries differs noticeably from the level of political trust. On the one hand, trade volume is rising: in 2012 alone, it increased by nearly 25 percent and exceeded $11 billion. However, India is number 18 among Russia’s foreign trading partners. And if one compares the trade figures with Russia-China trade or India-China trade (around $100 billion and over $60 billion, respectively), one can see that this number is somewhat modest. And this is even when from a political viewpoint, both countries (especially India) have much larger problems with China.

If we consider the structure of the bilateral trade and economic relations, an imbalance is obvious. On the one hand, it is not bad: as the Russian president noted, the fact that Russia supplies India with high value-added goods, and not only raw materials, as often occurs in trade with other countries, is positive.

Yet on the other hand, when it comes to energy, Russia’s potential as a major supplier of hydrocarbon and India’s potential as a top consumer are not being fully exploited. Steps in this direction are being taken, but for the time being not as quickly as one would like.

One should hope that the energy cooperation, particularly in the joint development of the subarctic fields, will be promoted by India’s recent joining of the Arctic Council as a permanent observer, its future accession to the SCO, and the initiative that was announced at the summit regarding integrated economic cooperation in the Customs Union of Russia, Kazakhstan and Belarus.

However, these are all potential plans, and in reality a completely objective item hinders a robust development of cooperation with regard to energy: the lack of a shared border and the passage of overland routes through problematic territories—above all, Afghanistan, but also Pakistan and Iran. Therefore, this issue transcends the scope of bilateral relations and requires an integrated approach to resolving numerous problems in a massive region.

Speaking of energy cooperation, it is impossible to avoid one issue, which perfectly illustrates the paradoxical nature of the Russia-India cooperation: atomic energy. It is symbolic that the first power-generating unit, the Kudankulam Nuclear Power Plant, started producing electrical power during Manmohan Singh’s visit to Moscow. The second is due to start working in early 2014. And this is undoubtedly a positive signal: it appears that the problems plaguing the nuclear power plant for nearly two years have finally been resolved.

However, cooperation in the area of atomic energy—and this is currently the cleanest and most economical type of energy—does not stop at the two power plants. The long-term plans refer to another series of projects (according to some information, they number 14–16). The most immediate are the third and fourth Kudankulam Nuclear Power Plant power-generating units. Before the summit, the media speculated on whether or not a contract for their construction would be signed during the visit. However, this did not happen—the sides only expressed the wish to agree as soon as possible on all the details and to follow through on the scheduled work.

Here the stumbling block remains the Nuclear Liability Act, which India adopted in 2010. According to this law, liability for any breakdowns in nuclear power plants must be assumed by the suppliers of the equipment and not the people who are operating it. Moreover, India would like to expand the provisions of this law retroactively and to new units of the Kudankulam Nuclear Power Plant even though agreements on them were reached previously.

Thus, as we can see, the successful development of political relations between Russia and India, the personal “chemistry” between Prime Minister Manmohan Singh and President Vladimir Putin, which were noted by many observers during the visit, in and of themselves do not yet guarantee a total absence of problems.