How Ukraine imbroglio can impact India

Former Ambassador

THE standoff between Russia and US-Europe over Ukraine has come at an inopportune time for India. As a UN Security Council (UNSC) member, India is contributing to ensuring peace, security and stability in the world. This role has opportunities for enhancement due to the inability of the permanent five (P5) to act in unison.

In the case of Ukraine, the P5 are threatening to go to war with each other, with the UK, US, France on one side, and Russia supported by China on the other. This takes matters totally out of the hands of the UNSC, making it redundant.

The Ukraine crisis is curtailing Indian role in the UNSC. New Delhi is doing its best to remain relevant. India is developing relations with the EU and other European countries. This initiative leads India to support the Normandy process and the Minsk agreement, which are European efforts to engage Russia on Ukraine. India would prefer the European way of dealing with Russia than the tough posture which the US wants NATO to adopt. European countries will toe the US line if war erupts. That reduces the efficacy of India’s European initiative presently. India is calling for diplomacy as that will defuse the tension and also give India more leeway.

The Russian posture on Ukraine and the reaction to it, strengthened the Sino-Russian partnership. The Xi-Putin summit at the Beijing Winter Olympics lent firmness and robustness to that relationship. China is challenging India, has overthrown extant agreements and increased its military threat. This does not augur well. For long, India depended on Russia for strategic partnership. It still largely depends on Russia for military hardware. While the defence relationship is mutually beneficial, the Sino-Russian axis curtails the Russian ability and intent to support India as in the past.

Russia’s confrontation with NATO will lead to rigorously imposed sanctions. India has delicately negotiated to stay out of CAATSA (Countering America’s Adversaries Through Sanctions Act) with the purchase of S-400 Triumf missile systems which may not work when a war-like situation prevails. Countries like Germany have stark choices on economic issues, and India will be faced with similar choices on defence supplies from Russia with tougher sanctions that the US is ready to impose.

India-Russia trade of about $9 billion annually is about 1% of India’s global trade. The significance is the impact on defence, energy, grain delivery and prices.

Curtailing of defence supplies will impact India’s ability to respond to China. The diversification of defence purchases that India achieved would come into play but without the competitive pricing and transfer of technology of Russian equipment.

Strategically, Russia will not attempt to restrain China. In exchange for Chinese support for Russian intent in Ukraine, they would concur with Chinese initiatives in the Indo-Pacific. Russia’s nuanced divergence on India could melt away if the Ukraine crises blows up as both NATO and Russia seek clear Indian support which India hesitates to provide.

The Ukraine crisis brings Russia and China closer and diverts the attention of Western powers towards Ukraine. The Europeans would have a lesser appetite for the Indo-Pacific once they are embroiled in European matters. France held its Indo-Pacific conference right after the Munich Security Conference this month. They wish to continue to deal with the region while engaged with Russia as well. However, the EU member countries do not have diverse abilities and their Indo-Pacific polices are likely to be on hold till the Russian challenge is settled.

At present, US naval forces are at strength in the South China Sea and the broader Indo-Pacific as Taiwan is at stake. They will need allies Japan and AUKUS to play a role. They could well call upon India to act in the Indo-Pacific even if India is not directly involved in an operation around Taiwan.

This is not different from what India is doing in the Indo-Pacific at present, but India expects support for its position with China on the border issue, as was discussed at the Quad foreign ministers’ meeting in Australia recently. Indian activity, in the midst of the Ukraine crisis, may not be ignored by China and Russia.

India’s energy security is a matter of worry as there is already a $20 per barrel increase in the price of oil over the estimates used by the Economic Survey 2022. This impacts India’s growth story. Russia is a significant oil producer and the Ukraine crisis and sanctions on Russia would destabilise the oil market. This would gravely impact India’s development plans.

In 2021, India imported merely 1% of its oil and 0.2% of its gas from Russia. GAIL has a 20-year contract to import 2.5 million tonnes of LNG from Russia annually. It’s not the direct supply but the prices that will be impacted negatively. Thus, India’s repeated calls for peaceful resolution. The diversification of Indian energy supplies over time will perhaps protect supplies but not control prices.

Similarly, if the Ukraine crisis leads to Europe, particularly Germany, curtailing gas imports from Russia, it will bring other gas providers to strategically shift supplies to Europe impacting Asian economies. The gas prices nevertheless will rise. The pandemic has slowed down India’s investment in Mozambique in gas offtake and this needs to be hastened to diversify gas imports and stabilise gas pricing in India.

There are nearly 25,000 Indians in Ukraine, mostly students. They have been advised to leave Ukraine as flights are still available. Indian mission families too are leaving. This is the correct advisory planned well ahead of a full-scale crisis. Students remain averse to depart when it is feasible, to avoid spending on high-priced tickets. They believe that the government will always step in to rescue them once a crisis unfolds. This attitude needs to change.

This is an inflection point for India as the Ukraine crisis challenges its ability to influence events in its favour, avoid an impact on its economy, without taking sides in a crisis of indirect interest to it. Such impacts of globalisation need careful handling.