India has maintained strategic neutrality on the Russia Ukraine conflict, while urging for de-escalation of military operations. Prime minister Narendra Modi spoke to Vladimir Putin within 24 hours of the beginning of the Russian invasion. While emphasizing that the dispute should be solved through diplomacy and negotiations, he expressed concern about the thousands of Indians in Ukraine—most of whom are students, and the need to make sure that they can safely return to India.
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This is absolutely the right response. There is no need for India to take sides on this matter, even if there were a chance—very low—that Putin would pay any attention. It is not even much use debating about which side is right—even since the break-up of the Soviet Union, Ukraine, the buffer zone between Russia and the rest of Europe, has been a theatre of intrigue for the US and Russia. For Putin, control over Ukraine is non-negotiable.
Of course, the Russian army attacking Ukraine took much of the world by surprise, even though US President Joe Biden had been warning about this for some time. Only last week, I had written that it was unlikely that Putin would go to war, since that could be very costly, and if Russia can achieve its objectives through scare tactics, why start a military conflict? Obviously I was wrong—I was making a common error, by assuming that Putin would follow what I believed was “rational thinking”. Though, in my defence, I also wrote: “No one has ever been able to predict with any consistent accuracy what Putin would do next.”
Putin has certainly calculated all the costs of war, and decided to tell the world that he does much more than merely bark, he bites hard. In fact, he may have even preparing for the inevitable sanctions for years now.
Russia has built up strong current reserves of $631 billion, equivalent to a third of its GDP. Overall debt is around 60% of this stockpile, which also shields the ruble significantly from further sanctions. He has also aggressively pursued a “de-dollarization” strategy, so only 16% of Russia’s foreign currency reserves are in dollars, and the rest in euros, China’s renminbi, and gold.
Meanwhile, Europe remains heavily dependent on Russia’s oil and gas. If Russian supplies are cut off, the European Union could face a severe energy crisis within a few months. In any case, the hostilities have taken oil prices through the roof and economies across the world, from the US to India, are deeply vulnerable to oil shocks.
However, strong Western sanctions, including freezing operations of Russian banks in the West, and stopping exports of tech products to Russia, could hit Moscow hard. Obviously, Putin is betting that the West will blink first. And after a series of misadventures in Iraq, Syria and Afghanistan, there is zero appetite in the US or NATO to put any boots on the ground in Ukraine.
Even the response of Israel, one of the US’ closest allies, has been quite tempered. On Thursday morning, Israeli Foreign Minister Yair Lapid condemned the invasion, calling it “a grave violation of the international order.” But hours later, Prime Minister Naftali Bennett balanced the statement by saying: “These are difficult, tragic times… Our hearts are with the civilians of eastern Ukraine who are caught up in this situation.” He did not even mention Russia by name.
As for India, there is absolutely nothing to be gained by taking sides. At the recently held Munich Security Conference, External Affairs Minister S. Jaishankar, when pressed by a journalist on why India abstained on a vote on Ukraine in the United Nations while being vociferous about China's claims on the Indo-China border, replied that the two issues were not comparable at all. Immediately, he was criticised for holding double standards—that India has different principles for different parts of the world. But that’s what geopolitics is about—look after one’s own interests rather than stick to some grand immutable principles. The US, for instance, was clear that China’s attempted encroachment into Ladakh was a bilateral issue. It has been equally clear that Ukraine is a matter of global concern.
India buys state-of-the-art defence equipment from Russia, such as the S-400 missile system and nuclear-powered attack submarines—technology that the West denies us. The US gets upset over this but refuses to offer comparable weapons. Why on earth should India line up behind the US on the Ukraine issue which does not directly concern it? Naturally, in the coming days, depending upon the situation on the ground in Ukraine, India can step up as a mediator, but the time has not come for taking any decision on that.
Of course, the Indian economy will be impacted by the war in Ukraine. Rising oil and gas prices are a serious concern, and could have a cascading effect across sectors. And this comes at a time when the economy seems to be on the verge of a strong turnaround. Exports to Russia—the main items are tea and engineering and pharmaceutical products—will be affected. Russian weapons are a mainstay of India’s defence forces and a prolonged war is not good news for the uninterrupted supply of spare parts and technology transfer.
Most importantly, with all of the US’ attention and energies focused on Russia, China, which has openly backed Putin on Ukraine, can merrily go ahead with its plans in Asia. The Quad—the strategic grouping of India, Japan, Australia and the US to counter China in the Indo-Pacific region—may well go off the global priority list for the near to medium term. With the world’s focus on Ukraine, China could get bolder at the Line of Actual Control with India. These are testing times, and the Modi government needs to act with clarity of vision and purpose.