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3 Russia taps India's
opportunities By Zorawar Daulet Singh
interdependent feature stems from
developments in the global energy order, where
suppliers are increasingly striving to establish
bilateral linkages with energy starved states, and
from the associated front-loaded capital
investments that such a linkage (ie, pipelines,
liquefied natural gas) entails. This logic, if
adopted by New Delhi, would significantly enhance
the quality of energy discourse that the Indian
government will soon commence with its Russian
interlocutors.
At a fundamental level,
however, New Delhi must come to
terms
with
the new Russia and accept the commercial realism
that is the driving force behind Russia's foreign
economic and energy policies. Bluntly put, Russia
is neither willing to nor capable of subsidizing
India's economic climb.
Specifically, the
economic rationale behind Russia's energy strategy
as it pertains to the hydrocarbon sector is
becoming clear. A few months ago, Arkady
Dvorkovich, head of the Kremlin's economic staff,
enunciated Russia's long-term goal of using the
energy sector as a driver of growth in the
manufacturing sector. "We want the energy sector
to be the driver of growth in machine building, we
want to process raw materials on Russia's
territory, we want to export not only raw
materials but finished goods as well," he said.
New Delhi would also have to account for the
accompanying leverage that Russia today possesses
in its energy dealings. Flush with funds, Gazprom,
which is now the world's largest hydrocarbon
company, has shown itself capable of acquiring any
technical expertise by subcontracting, thus
avoiding the need to give away stakes in
hydrocarbon projects.
As Jonathan Stern,
Gazprom specialist at the Oxford Institute for
Energy Studies, points out, Gazprom was able to
cobble together $13 billion in a couple of weeks
in 2005 to buy Sibneft, another Russian
oil-and-gas company. "It's taken a lot of people
around the world a long time to get out of the
traditional mindset that Russia is poor. Forget it
- that's a world that passed by several years
ago," he said. Next month, an Indo-Russian forum
on trade and investment will host 200 Russian
companies in New Delhi, which would dispel many
such myths.
A natural corollary to India's
energy dilemma would require identifying the most
efficient option to access Russian hydrocarbons.
Hydrocarbon commerce insofar as it involves
linking mainland Russian oil and gas fields with
India's internal pipeline grids would require
policy initiatives at the geopolitical level. Last
year, M K Bhadrakumar, one of India's leading
diplomatic analysts, outlined some opportunities
that India could avail itself of in the pipeline
diplomacy that has become a parallel feature in
the scramble for hydrocarbons worldwide. [2]
With the backdrop of Putin's major
announcement, during a visit to Beijing last
March, that Russia would build a $10 billion gas
pipeline to China, Bhadrakumar goes on to suggest
that "in the light of the upcoming gas pipelines
from western Siberia (and from eastern Siberia
eventually) into China, Delhi could be expected to
look seriously at the viability of extending these
Russian pipelines to India". In a nutshell, for
almost all the route alternatives, first suggested
four years ago, the envisaged hubs would be
Urumchi and Kashgar in Xinjiang, western China,
after which the pipelines would turn south to
major northern India markets, after traversing the
formidable Karakorum-Himalayan ranges.
Bhadrakumar proceeds to spell out the
benefits to the main stakeholders: "China could
earn considerable income by way of transit fees
from pipelines transiting Xinjiang and western
Tibet. Pipeline activities could stimulate the
economic development of these regions of China,
apart from fostering regional or subregional
cooperation between these regions and neighboring
India."
Recent reports have indicated that
"India is the most active party in the project",
according to Xia Yishan, a senior research fellow
with the think-tank the China Institute of
International Studies (CIIS). However, it should
be obvious that for any of these options to
materialize, India would have first to establish
comprehensive bilateral relations with all the
stakeholders. This was echoed last year by Dr
Zheng Ruixiang, a specialist on South Asia at the
CIIS, in an interview with an Indian journalist,
when he stated: "First you have the bilateral,
then trilateral and finally multilateral."
Finally, nuclear-energy cooperation with
Russia is an area that is also poised for
unprecedented growth, an opportunity that first
arose in 2005, when New Delhi began its seminal
negotiations with Washington to remove obstacles
to India's entry into the global nuclear regime.
While conclusion of the final India-US bilateral
nuclear agreement is pending, India's eligibility
to conduct nuclear commerce is no longer in doubt.
What New Delhi will need to do very soon, however,
is articulate its nuclear-energy strategy and
prepare itself for extracting the best possible
bargain from the major nuclear-technology- and
nuclear-fuel-rich states in its envisaged $100
billion expansion. Suffice it to say, the
prevailing geopolitical pluralism enables such a
strategy to be implemented, while the strategic
imperative for diversification demands it.
In a speech in Los Angeles late last year,
Russian Foreign Minister Sergey Lavrov remarked:
"Russia, with its industrial, technological,
scientific, and educational potential, cannot
stand aloof from the global economic processes."
Indeed, the past few months have seen Russia
immerse itself further into the global economic
system, to the astonishment of most observers who
have been overwhelmed by Russia's extraordinary
economic story.
The Indian elephant has
tentatively begun to sniff the geo-economic trail
of the Russian bear. It would be tragic if India's
economic and security managers and its infamous
bureaucratic obduracy failed to exploit the
opportunity at hand.
Zorawar Daulet Singh, who
holds a master's degree in international relations
from the School of Advanced International Studies,
Johns Hopkins University, is an
international-relations and strategic-affairs
analyst based in New Delhi; e-mail
zorawar.dauletsingh@gmail.com.
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