The Russian Ukraine Conflict: What it means to India?
This article ‘The Russian Ukraine Conflict: What it means to India?’ by Charvi Devprakash is a critical analysis of the ongoing global crisis. The Russian Ukraine Conflict: What it means to India? The Russian troops are unbridled in Ukraine. A mayhem no one anticipated in the 21st Century with strong institutions like the North Atlantic Treaty Organization and… Read More »
This article ‘The Russian Ukraine Conflict: What it means to India?’ by Charvi Devprakash is a critical analysis of the ongoing global crisis.
The Russian Ukraine Conflict: What it means to India?
The Russian troops are unbridled in Ukraine. A mayhem no one anticipated in the 21st Century with strong institutions like the North Atlantic Treaty Organization and the United Nations. While many have called this conflict the trigger for World War III, none have picked up their weapons. All, one can see is exorbitant economic sanctions imposed on Russia to deter it from attacking Ukraine. However, none seem to stop the Russian President from bulldozing Ukraine—even if it means the loss of innocent lives. The Russian President nonetheless believes that a world without Russia is a world not worth existing, and if he were to lose his life, he would rather lose it as a proud Russian.
The only response of the mighty nations to this hegemony is economic sanctions. Economic sanctions are fines imposed on a country, its authorities, or individual residents as a form of punishment or to offer disincentives for specific policies and acts.
Export restrictions and travel bans, as well as trade embargos and asset seizures, are examples of economic sanctions. Such sanctions, by definition, apply to those who are not easily prosecuted by the sanctioning state.
Economic sanctions are a policy instrument that can be used instead of military force to penalize or deter unwanted behaviour. They’re generally applicable beyond the borders of the sanctioning country, and they can be costly to their targets as global trade and economic interdependence grow.
Economic sanctions can be a brutal and inefficient policy weapon, putting insufficient penalties on targeted countries while imposing disproportionate costs on their most vulnerable citizens. The United States and the European Union, as the world’s largest economy and trade group, have disproportionate sanctions powers.
Economic Sanctions against Russia
Russia is known for its oil refineries, oligarchical power, and military exports. However, what happens when all of this comes to standstill. This is what the world today is witnessing—the Russian Economy coming to a dead stop with the Russian Ruble being valued at less than a cent.
From smaller countries like Taiwan to superpowers like the United States of America, all countries have imposed sanctions on Russia. While the invasion already gave rise to a devastating humanitarian crisis, it has now also become an economic crisis of a never seen before magnitude.
The US imposed fresh export restrictions on Russia’s oil refining sector on Wednesday. The White House has announced a fresh wave of restrictions that prohibit the sale of key refining technologies, making it more difficult for Russia to reindustrialize its oil refineries.
Washington and its allies blocked some Russian banks from using the SWIFT international payments system, according to authorities. The list is still being finalized with EU partners.
“Wide limits on semiconductors, encryption security, lasers, telecommunications, sensors, navigation, avionics, and maritime technologies,” the White House said in a statement. It was also aimed at military end-users, such as Russia’s defense ministry. The US has sanctioned 24 Belarusians, including “two key Belarusian state-owned banks, nine defense companies, firms, and seven regime-connected officials and elites.”
The EU’s 27 member states imposed a slew of penalties on Russia, including a restriction on the sale of specified refining technologies from Europe to Russia. Last Monday, the organization announced that it will limit its airspace to Russian planes, including oligarchs’ private jets.
Russia Today, a state-owned television network, and Sputnik, a Russian news service, were also blacklisted by the bloc. The EU has put a ban on products ranging from tobacco to mineral fuels, timber and wood, iron, cement and steel for Russia’s ally Belarus. The EU has also resolved to freeze Russian President Vladimir Putin’s and his foreign minister Sergey Lavrov’s European assets.
According to Seoul‘s foreign ministry, South Korea has decided to strengthen export controls against Russia by barring the shipment of strategic products and joining Western countries in blocking select Russian banks from the SWIFT international payments system.
The Korean government has also resolved to push the release of additional strategic oil reserves in order to stabilize the world energy market, as well as to review other measures such as LNG resale to Europe, according to a statement released by the ministry on Sunday.
Prime Minister Fumio Kishida indicated that Japan will strengthen sanctions against Russia to encompass financial institutions and military equipment exports, but that an impact on his resource-poor country’s energy supplies is doubtful.
The Swiss government has announced that it will accept all of the European Union’s penalties against Russian individuals and companies, as well as freeze their assets, in a departure from the country’s previous neutrality.
“We are in an unusual situation,” President and Foreign Minister Ignazio Cassis said at a news conference in Bern, surrounded by the finance, defense, and justice ministries. Only time will tell if such an event occurs again, he said. Swiss neutrality was preserved, but he added, “Of course, we stand on the side of Western principles.”
However, what do these sanctions mean to India?
Impact on India
After two years of the pandemic, the world has just begun recuperating. Amidst this, the war comes as a shocker and is completely uncalled for. It all started when the UNSC called to vote on the Russia-Ukraine conflict on January 30th this year, where India abstained from voting. This meant that India neither condoned the actions of Russia nor came to the support of Ukraine, but instead maintained a diplomatic silence and suggested the Presidents of both countries resolve their matter through peaceful dialogue and non-violence upholding India’s morals of respecting sovereignty, democracy, and non-violence.
However, would such a stance prove to be detrimental to India?
India in the past eight years, under the Modi-led government, has established strong diplomatic relations with both Russia and the United States of America. Additionally, European Union is also the third-largest trading partner of India. Therefore, India must tread lightly as this is an extremely sensitive situation and one wrong step might cost us a fortune.
To elaborate on India’s trade relations with Russia and Ukraine, India imports 2.05 billion dollars’ worth of oil and minerals, 832 million dollars’ worth of precious stones and metals and 609 million dollars’ worth of fertilizers from these countries which aids in the agriculture sector of India, which again is the backbone of India economy.
India is also Russia’s largest market for weapon exports. What began as a buyer-seller relationship, has now bloomed into a robust partnership of joint research and design which has led to the development of Brahmos Cruise Missile, Multi-role Transport Aircraft and 5th Generation Fighter Aircraft. Approximately 70% of edible oil, in specific- Sunflower oil has been exported to India from Ukraine.
On average, monthly, 2 to 3 lakh tons of Sunflower oil is being imported by India. However, post the invasion, India is exploring Brazil and Indonesia as alternative suppliers in order to avoid huge inflation. Ukraine additionally is dependent on Indian pharma companies like Ranbaxy, Dr. Reddy and Sun Pharma for pharmaceuticals. These companies have also been unpropitiously affected.
Furthermore, war is not favourable to any economy. The Indo-Russia trade is valued at 8 billion dollars. Recently India also signed a 25-billion-dollar deal to buy natural gas from Russia. Therefore, the economic sanctions imposed on Russia by the West will have a huge bearing on the Indo-Russian trade leading to inflation. Post the declaration of this ‘military operation’, Sensex fell 2700 points which led to panic selling among investors, further deteriorating the position of the market.
Overall, a loss of 2.5 lakh crore was accrued in the market. This unforeseeable event has affected the course of the rest of the year. This would also call for adjustments in the Budget. It would affect India’s Economic Interest by hampering the Global Supply Chains across the world due to today’s globalized and multipolar world.
Globally, Russia exports 86% of its weapons, to countries including the European Union. Russia is also the world’s third-largest crude oil producer. 1/3rd of crude oil in Europe is imported from Russia. EU has now imposed a sanction on the export of oil, which has led to a 7-year-high. The major indicators of fluctuations in the market are the prices of Gold and Oil. As one can witness, the price of crude oil has reached an all-time high of almost 90 dollars per barrel and is expected to hit 125 dollars in the coming days.
A rise in the price of oil would severely impact the cost of transportation in industries heavily reliant on transportation. This added expense would lead to inflation. Therefore, the economic sanctions, although imposed on Russia, will also impact the European economy adversely. International flights are predicted to become 45% more expensive after this predicament.
However, there are a few unintended positive consequences because of this invasion. Due to importing becoming an expensive affair, the domestic producers will get an impetus to produce quality products in India thereby empowering and actualizing to the greatest extent India’s goal of ‘aatmanirbharta’. Additionally, Ukraine and Russia are some of the largest grain suppliers of the world. This trade vacuum is now being bridged by India. Currently, wheat exports from India have reached a 9-year high price and are expected to experience a record grain harvest.
Historically, India has found itself in a tiff when it comes to taking a stance on a global footing. The same was the situation even during the Cold War where India had to choose a side between US and USSR. India, similar to now, even then opted for the Non-Aligned Movement along with a few other newly independent countries. However, the non-aligned movement is out of the question in today’s time and age, where India has established very strong and reliable foreign relations and a non-aligned policy, which might prove to India’s foreign policy narrative.
India’s abstinence this time did not come as a surprise to most diplomatic experts and to those who are ardent followers of geopolitics as India had also abstained in 2014 when Russia invaded Crimea.
While Russia called it a Pro-Russia stance and thanked India, India merely abstained. Another example in this light is India’s boycott of the Winter Olympics in China where Russia would publicly express its stance on Ukraine being called a Pro-US stance. However, this move again was neither Anti-Russia nor Pro US. In a recent QUAD meeting held in Melbourne, Indian Foreign Minister, Dr. S Jai Shankar refused to discuss the ongoing conflict, thereby maintained a balanced and diplomatic stance. This indeed is a political test for India and its diplomatic relations.
Along with the historical reference, India at this juncture cannot afford to have conflicts because 18,000 Indian students study medicine in Ukraine and their lives would be at stake if India took a stance. However, with the successful completion of Operation Ganga, India has averted this risk. In the past 8 years, the country has also improved its relations with the United States of America by forming strategic allies to tackle China’s expansionist strategies. Therefore, choosing Russia would mean instigating a conflict with the USA.
For India, this isn’t a Russia-Ukraine conflict, it is a Russia v. West conflict. Russia on the other hand, despite having one of the most powerful militaries in the world, it is not economically sound to afford a war. The only way Russia can justify this war financially is through the support of China which now aims to be a superpower in Asia. However, as stated above, Russia’s Ruble is now worth less than a cent and it is almost impossible to recover from this economic crisis.
Nonetheless, considering Russia is a time-tested and reliable partner of India, abstinence proves to be the only and great strategy. Additionally, Russia is also a permanent member of the United Nations Security Council and has supported India during the Kashmir issue and in Chinese dominated platforms like the BRICS and SCO. Therefore, having Russia’s support in such international forums will prove beneficial to India.
While one may choose to see a ray of hope in all this, it is a known fact that there are no winners in a war. Even though India continues to maintain a neutral stance in this regard, it is highly likely that it might invite the US economic sanctions through Countering America’s Adversaries Through Sanctions Act (CAATSA) considering India’s ongoing projects with Russia such as the production of S400 and AK203 weaponries. To sum it up, this is a lose-lose situation. In a globalized, multipolar world, a strong Russia is important and so is the need for India to be a stable global power promoting peaceful dialogue and resolution mechanisms.