By: Azhar Azam
A famous diplomat describes Indo-Russian and Indo-US relations as “India is that beautiful fiancée everybody engages with, nobody would marry”. Looks as if pretty much true in the ongoing broad-spectrum geo-political picture!
Not long ago, Conversation Among President Nixon, President’s Assistant for National Security Affairs (Kissinger), and the President’s Assistant (Haldeman); Nixon referred Indra Gandhi a “bitch” and Kissinger described Indians “bastards”.
Also New York Times Book Review of “The Blood Telegram, Nixon, Kissinger, and a Forgotten Genocide” by Gary J. Bass unearths secret tapes recorded in White House where Richard Nixon referred Indra Gandhi “The Old Bitch”. “I don’t know why the hell anybody would reproduce in that damn country (India) but they do”, Henry Kissinger said.
Then after a long diplomatic rift between India and the United States, the world witnessed an unnatural strategic alliance between the two countries in the last few years aimed at containing China’s growing influence in South Asia region. This con Indian act enraged Russia, Indian oldest ally, and led to instinctive Russia-Pakistan unique ties; an alliance that frustrated India.
After a series of trade and strategic initiatives with US, a single “Shut-up” call by Russia to India, turning down its request to cancel military drills with Pakistan, flattens India. So, in fear of losing Russia to Pakistan, India is asserting dire efforts to pull back Moscow and inked 16-Agreements/MOUs on the sidelines of BRICS (a consortium of 05-emerging countries Brazil, Russia, India, China, and South Africa) summit for nearly $24 billion.
Oil Deal - $12.9 billion
In oil sector, PJSC Rosneft-led group (Trafigura Group and United Capital Partners) signed an agreement with Essar Energy Holdings Ltd. to acquire 98% of Essar Oil Limited (EOL) at an enterprise value of $10.9 billion. The transaction also includes the sale of Vadinar Port for $2 billion (total pact value $12.9 billion).
Essar Oil operates India’s second largest oil refinery, has pan-India network of 2,700 retail outlets, and its Vadinar Port with existing throughput capacity of 20 MTA contributes to 9% of Indian refinery output.
Is This Foreign Direct Investment (FDI)?
It is worth noting that India has been claiming that it is one of the biggest foreign direct investments (FDI) in India but factually it is only a sale transaction between the two companies aimed at Essar Group to pay off its huge debt of $17.8 billion and lenders have been pressing Essar hard to repay the money owed.
Former Executive Director SEBA JN Gupta in an interview with CNBC-TV18 rejected such claims saying “No money is coming to India because 90 percent of Essar is owned off-shore by Ruia. So the money will remain out of the company, there will be no money flowing into the country”.
The supposed deal hence allows foreign companies to profit from the largest growing Indian oil market which is expected to make up nearly half of the global oil demand by 2040, according to bloomberg. The Analysts question why this opportunity has not been exploited by the Indian companies?
Strategic Repercussions
Besides the pact faces violation of western sanctions on Kremlin over Crimea annexation, it would have serious strategic repercussions as well. Apart from Russia, Iran and Saudi Arabia have also been pursuing to grab this deal. And now when Rosneft-Trafigura-UCP are likely to refine Venezuelan crude oil at Vadinar refinery, the business interests of both Iran and Saudi Arabia would be carved in India undermining bilateral relations. This may be the reason that Iran has shown intent to join CPEC and now Afghanistan is also following Iran.
Defense Deal - $10.5 billion
In defense cooperation, India has signed three major agreements valued at $10.5 billion with Russia against purchase of (5) S-400 Triumph Missile Systems, (4) Stealth Frigates, and joint venture to produce (200) Kamkov-226T Light Utility Helicopters.
S-400 Triumph (NATO Reporting Name: SA-21 Growler) is Russian advanced deadly anti-missile and anti-aircraft surface-to-air missile (SAM) system capable to destroy targets within the range of 400kms. India is expected to deploy these systems on Pakistan and China front. The cost of (5) S-400 Triumph is estimated at $5.5 billion.
India has been chasing this system since China has contracted Almaz-Antey for (6) S-400 air defense systems at reported value of $3 billion. China would receive first batch of these systems in earlier 2017 after signing the agreement in 2014 as Rostec head said that Russia could only supply it for other countries after meeting its own defense needs.
China has already made an advance payment for S-400 systems but about India, there is always an imprecision to buy such a highly expensive military equipment. If India somehow manages the financial room to buy S-400, the timeframe of delivery and costs are yet to be finalized also. Furthermore, if India poses any threat to China and its closest strategic ally, Pakistan, China would not vacillate to deploy the system to secure its own or its ally’s interests.
Likewise, the purchase of frigates and light utility helicopters is nothing new and both India and Russia have been negotiating many such deals for quite some time, some of which have eventually faltered. Also, these are merely the inter-government agreements (IGAs) and might take years to turn into contracts after settling out various knotty barriers.
Nutshell
Lastly, the analysts see these pacts as a corrective measure to realign Russia after Indian pronounced lean towards the United States but in doing so, India might stall itself by being erratic in building sustainable alliance with either United States or Russia, ultimately falling in pits.
As India tries to get closer to Russia, the heat in India-US relations is expected to cool down and coddle strategic alliance appears to sink into the deepest Pacific Ocean. In the larger global perspective, mystified India fails to gauge its strategic goals once again and is caught up between Russia and United States.
A famous diplomat describes Indo-Russian and Indo-US relations as “India is that beautiful fiancée everybody engages with, nobody would marry”. Looks as if pretty much true in the ongoing broad-spectrum geo-political picture!
Not long ago, Conversation Among President Nixon, President’s Assistant for National Security Affairs (Kissinger), and the President’s Assistant (Haldeman); Nixon referred Indra Gandhi a “bitch” and Kissinger described Indians “bastards”.
Also New York Times Book Review of “The Blood Telegram, Nixon, Kissinger, and a Forgotten Genocide” by Gary J. Bass unearths secret tapes recorded in White House where Richard Nixon referred Indra Gandhi “The Old Bitch”. “I don’t know why the hell anybody would reproduce in that damn country (India) but they do”, Henry Kissinger said.
Then after a long diplomatic rift between India and the United States, the world witnessed an unnatural strategic alliance between the two countries in the last few years aimed at containing China’s growing influence in South Asia region. This con Indian act enraged Russia, Indian oldest ally, and led to instinctive Russia-Pakistan unique ties; an alliance that frustrated India.
After a series of trade and strategic initiatives with US, a single “Shut-up” call by Russia to India, turning down its request to cancel military drills with Pakistan, flattens India. So, in fear of losing Russia to Pakistan, India is asserting dire efforts to pull back Moscow and inked 16-Agreements/MOUs on the sidelines of BRICS (a consortium of 05-emerging countries Brazil, Russia, India, China, and South Africa) summit for nearly $24 billion.
Oil Deal - $12.9 billion
In oil sector, PJSC Rosneft-led group (Trafigura Group and United Capital Partners) signed an agreement with Essar Energy Holdings Ltd. to acquire 98% of Essar Oil Limited (EOL) at an enterprise value of $10.9 billion. The transaction also includes the sale of Vadinar Port for $2 billion (total pact value $12.9 billion).
Essar Oil operates India’s second largest oil refinery, has pan-India network of 2,700 retail outlets, and its Vadinar Port with existing throughput capacity of 20 MTA contributes to 9% of Indian refinery output.
Is This Foreign Direct Investment (FDI)?
It is worth noting that India has been claiming that it is one of the biggest foreign direct investments (FDI) in India but factually it is only a sale transaction between the two companies aimed at Essar Group to pay off its huge debt of $17.8 billion and lenders have been pressing Essar hard to repay the money owed.
Former Executive Director SEBA JN Gupta in an interview with CNBC-TV18 rejected such claims saying “No money is coming to India because 90 percent of Essar is owned off-shore by Ruia. So the money will remain out of the company, there will be no money flowing into the country”.
The supposed deal hence allows foreign companies to profit from the largest growing Indian oil market which is expected to make up nearly half of the global oil demand by 2040, according to bloomberg. The Analysts question why this opportunity has not been exploited by the Indian companies?
Strategic Repercussions
Besides the pact faces violation of western sanctions on Kremlin over Crimea annexation, it would have serious strategic repercussions as well. Apart from Russia, Iran and Saudi Arabia have also been pursuing to grab this deal. And now when Rosneft-Trafigura-UCP are likely to refine Venezuelan crude oil at Vadinar refinery, the business interests of both Iran and Saudi Arabia would be carved in India undermining bilateral relations. This may be the reason that Iran has shown intent to join CPEC and now Afghanistan is also following Iran.
Defense Deal - $10.5 billion
In defense cooperation, India has signed three major agreements valued at $10.5 billion with Russia against purchase of (5) S-400 Triumph Missile Systems, (4) Stealth Frigates, and joint venture to produce (200) Kamkov-226T Light Utility Helicopters.
S-400 Triumph (NATO Reporting Name: SA-21 Growler) is Russian advanced deadly anti-missile and anti-aircraft surface-to-air missile (SAM) system capable to destroy targets within the range of 400kms. India is expected to deploy these systems on Pakistan and China front. The cost of (5) S-400 Triumph is estimated at $5.5 billion.
India has been chasing this system since China has contracted Almaz-Antey for (6) S-400 air defense systems at reported value of $3 billion. China would receive first batch of these systems in earlier 2017 after signing the agreement in 2014 as Rostec head said that Russia could only supply it for other countries after meeting its own defense needs.
China has already made an advance payment for S-400 systems but about India, there is always an imprecision to buy such a highly expensive military equipment. If India somehow manages the financial room to buy S-400, the timeframe of delivery and costs are yet to be finalized also. Furthermore, if India poses any threat to China and its closest strategic ally, Pakistan, China would not vacillate to deploy the system to secure its own or its ally’s interests.
Likewise, the purchase of frigates and light utility helicopters is nothing new and both India and Russia have been negotiating many such deals for quite some time, some of which have eventually faltered. Also, these are merely the inter-government agreements (IGAs) and might take years to turn into contracts after settling out various knotty barriers.
Nutshell
Lastly, the analysts see these pacts as a corrective measure to realign Russia after Indian pronounced lean towards the United States but in doing so, India might stall itself by being erratic in building sustainable alliance with either United States or Russia, ultimately falling in pits.
As India tries to get closer to Russia, the heat in India-US relations is expected to cool down and coddle strategic alliance appears to sink into the deepest Pacific Ocean. In the larger global perspective, mystified India fails to gauge its strategic goals once again and is caught up between Russia and United States.