A strategic fit is emerging between India & Russia

For many people, Russia is merely a former communist state which is still trying hard to become a democracy. But there is another side to Russia, especially when it comes to India’s interests. And it goes beyond Russia’s conventional role of being a major arms supplier to this country. Russia is fast becoming the dark horse in a world where the US has begun losing clout, and China remains a state few are comfortable with.

To appreciate how Russia is important to India, one has to view the collapse and bounce-back of this country. Its rapid decline began in the 1980s during the Mikhail Gorbachov era. What hit it badly was the blight that devastated its wheat crop in the 1980s, which resulted in long bread queues. It led to the reintroduction of the war-time system of food quotas using ration cards that limited each citizen to a certain amount of product per month. Other reasons added fuel to the fire, and street riots began.

The dissolution of the former Soviet Union in the early 1990s and the Boris Yeltsin years made Russia a much-diminished superpower. Matters changed only with the emergence of Vladimir Putin. Whatever else may be said of him, he brought back Russia to its feet. He consolidated food production, without which Russia could not match the wheat diplomacy of the US and also feed its own population. He focused on regaining control of Russia’s strategic oil and gold reserves which he believed were acquired at ridiculous prices by ‘oligarchs’ who had shortchanged the government. 

Over the past decade, Russia has become the largest producer of gas, and the second largest producer of oil and gold in the world.

Even after repaying all its debts, Russia today has foreign exchange reserves of over $400 billion. As of 2008 it had bought back 48.5 tonnes of gold from other central banks, and had augmented its own gold reserves to 519.6 tonnes.

So what has this to do with India? Two critical factors make Russia critical for India, inasmuch as India will turn out to be significant for Russia, too. First, Russia has a landmass (17 million sqkm), which is almost six times that of India, twice as large as China or the US. It has at least 25% more water than India does, four times more than China and twice more than the US. 

Russia has also consolidated its wheat production — notwithstanding the fires and the heat that damaged much of the crop this year. Over the past seven years, Russia’s wheat production has swelled from 34 million tonnes in 2003 to 55 million tonnes in 2009. This is still less than the 77 million tonnes India produced in 2009, but it was grown on a fraction of Russia’s lands. It now wants to give out at least 20 million hectares of its land (approximately 200,000 sq km) for joint-venture wheat farming but is believed to be willing to scale this up to 400 million hectares (four million sq km). India should try to grab this opportunity as a means to increasing its own acreage of wheat production.

Russia is also willing to work with India to build proper storage units for creating strategic reserves of wheat supply. That also makes immense sense. It protects Russia’s wheat prices and counterbalances the wheat diplomacy that the US is known for.

But most critical of all is that for further exploiting its mines, and its economy, it needs people. Russia has a population density of just 8.3 people per squarekm compared to 359 for India or 139 for China. It will need people to get this done. And it knows that there are only two countries capable of exporting manpower in great numbers — India and China. But fear of China may not allow Russia to allow Chinese to work within its borders for extended periods.

That leaves the way open for India if only it knows how to use this advantage carefully, without upsetting Russia’s own demographic preferences.  One way would be for Indian workers to work there the same way they do in most West Asian countries, without the right to citizenship. Work permits can also be self-limiting, so that no permanent settlers are created. Other ways could be found as well.

India will need to ease the employment pressures it faces. And it will need to create competent skills that permit this labour to be exported in large numbers to Russia. It will also allow India to secure its own mineral and oil needs for the future. Instead of competing with China in areas where India can be outmanoeuvred and outpriced, India could work out deals with
Russia instead. One country that has done this very well is Germany. It may make sense for India to work out such relationships in partnership with Germany as well.

What this will do is allow India to maintain good relations with the US and (possibly) with China, yet balance its strategies by having
Russia as a friend and business partner. When business interests grow, friendly ties become stronger. India could do that with Russia to the mutual advantage of both countries.