The US and EU’s sanctions on Russia for its military action in Ukraine have made India assert its strategic autonomy. As the world decisively leaves behind three decades of Washington DC-led unipolarity, New Delhi’s calculus takes into consideration defence and commercial interests in both national and regional domains.
These interests are intrinsically linked to the Quad’s resilience and ability to mitigate long-term threats to a rules-based order. Ensuring the Quad’s strength is greater than the sum of its parts requires a broad appreciation for each member’s growth trajectory and expected contribution to the Indo-Pacific economic and security architecture. The challenges posed by the Ukraine crisis affect each country differently, so any attempt to implement one-size-fits-all sanctions risks damaging the group’s capabilities and rupturing India’s bilateral relations.
From Criticism to Acceptance
India’s abstention at the UN Security Council on the Russia-Ukraine conflict was followed by an expansion in purchases of Russian oil. Given India’s dependence on Russian military hardware and the two-front threat from China and Pakistan, maintaining defence ties with Moscow was expected. These moves fall in the eyeline of US’ short-term objective of curtailing Russia’s capabilities and have drawn criticism. The most hawkish sections of the press went so far as to call for a reset in the Indo-US relationship while an apparent breakdown in “shared values” around democracy and the respect for international law featured prominently in media reports. President Biden touched on the topic, claiming India’s response to the sanctions has been “shaky.” Despite this, India continued to work towards its energy security by engaging with Russia while it also held multilateral and bilateral meetings with Quad members.
The international pushback has largely been limited to media report and two statements from the White House. Deft diplomacy helped India convey the rationale behind its position, which has now been understood by partner nations. At the same time, Europe’s hesitancy to impose an embargo on Russian gas and oil imports citing systemic inflationary and political risks has given the US a much-needed reality check on the limits of sanctions. Ahead of the second India-Australia bilateral, Australia’s ambassador to India confirmed that the Quad “accepts India’s stand on Ukraine.” The March 19 India-Japan joint statement emphasised the converging interests of the two countries in the Indo-Pacific and beyond. A day after President Biden’s comments, the US State Department came out stating the US is a “partner of choice” for India, which is “an essential partner for us realising our shared vision of a free and open Indo-Pacific that is really at the heart of the Quad’s policy.”
The Indo-Pacific Challenge
The West’s strategic realignment towards the Indo-Pacific was in the making when the Ukraine conflict broke out. India has taken the lead in ensuring focus on the region is not lost or merely confined to risks around China’s plans for Taiwan. Sanctions on Russia have resulted in a bifurcated global commodity market, which, amidst a push for energy security, has lent tailwinds to a risky power competition between China and the West. Critically, this has pushed up inflation, which was already ticking higher even before the conflict began. Sanctions have further disrupted supply chains, creating costly inefficiencies in trade.
A structural decoupling of the US and Europe from China will involve India taking a key role as a major manufacturing alternative which also provides security cover to large parts of the Indian Ocean Region (IOR). To those ends, India’s industries must compete with China’s which will procure Russian oil, gas, coal, and metals at below-free market rates. If India follows US sanctions on Russia, China’s marginal cost of production will drop relative to India’s. This will not only deindustrialise parts of India but also deny incentives globally to shift supply chains out of China.
Securing commodity imports through Rupee-Rouble trade may prove vital to achieving economic stability. For India to comfortably pursue its large government-led infrastructure push, narrowing the fiscal deficit can be achieved by importing Russian natural resources. The move also prevents sustained high inflation which could otherwise send the economy into recession and millions into poverty, ultimately destabilising the government. Meanwhile, India is ensuring continuity in defence supplies to safeguard its territory and secure its periphery in the IOR.
Conversely, an economically, politically and militarily weakened India would leave the Quad incapable of comprehensively dealing with threats in the Indo-Pacific. It is therefore in the US’ interest to appreciate India’s independent manoeuvres designed to ring-fence itself from the fallout of the current crisis.
Sanctions have pushed Russia deeper into the Chinese orbit, much to the concern of the West. The extent of engagement between the two countries could be gleaned from their February 22 joint statement in which they ostensibly called for a new world order. The bilateral relationship between one of the largest suppliers and end users of commodities has not only deepened but also widened in scope to cover several areas including defence. Dependency on a single relationship, however, is not ideal for Moscow. The Kremlin’s policy planners are keen to engage nations in the Middle East, Africa, South and Southeast Asia where possible, to diversify trade and hedge geopolitical risks.
India plays an important role in this by purchasing and leasing military hardware, working on joint weapons development and exports, and opening its markets for commodity imports. While India’s influence may be less than China’s, the value it brings to Russia’s geopolitical and strategic risk mitigation outdoes the nominal value of trade which currently stands at $8.1 billion. Deeper Indo-Russian interdependencies developing alongside Indian military indigenisation means that a Russia-China axis will not enjoy unlimited manoeuvrability. This works in the Quad’s interests.
Dangerous Precedents and Course Corrections
The US and Europe have some ground to cover in allaying concerns arising in Asia from the punitive measures taken against Russian government entities and individuals. The far-reaching nature of the sanctions and asset seizures fit into a major power play to counter China and Russia’s efforts to reorder the world. The freezing of central bank reserves and wealth held by individuals is meant to signal that no foreign asset held in the US sphere of influence is necessarily safe. Even Switzerland had to depart from over two centuries of neutrality to accommodate the sanctions. Even if temporary, the UK’s nationalisation of Gazprom Marketing & Trading’s local unit also sets a dangerous precedent by breaking a pillar of the rules-based order and ignoring due process.
As confidence in a globalised world diminishes, countries like India which adopt a policy of strategic autonomy may well exercise caution when investing abroad. China no doubt would be more concerned and is likely to recalibrate its Belt and Road Initiative (BRI) expansion plans. The US and its allies have in effect sacrificed a core principle of market globalism for retaining geopolitical dominance. Given the situation, the Quad requires confidence building measures to re-energise multilateral economic engagement, and India is showing the way. Japan’s recent five-year $42 billion investment commitment in India and a push to sign an Indo-Australian Free Trade Agreement are steps in the right direction. What is missing are big-ticket US investments in India’s manufacturing sector. They would go a long way to align the Quad’s economic incentives with India’s own interests amidst a broader push to achieve stability in the Indo-Pacific.
In a rapidly changing geopolitical environment, the focus of bilateral and multilateral engagements is best placed on areas of converging interests and mutual benefit. Realpolitik carries more substantive deliverables, incentives and costs than shared values, which are both nebulous and contextual. Underpinning this pragmatism are elements of a common vision of which shared values form a part. The acceleration towards a multipolar world is fraught with risks which means partners cannot be held hostage to the ghosts of the “with us or against us” era.
Surya Kanegaonkar is a commodities trader and columnist based in Switzerland. For over a decade, he has held key roles in the natural resources sector, working for an investment bank, miner and utility. He earned an MSc in Metals & Energy Finance from Imperial College London. The views expressed in this article are those of the author and do not represent the stand of this publication.
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