Down to the wire

Prolonged Russia-Ukraine conflict will pressure India

Hopes that the Russia-Ukraine conflict would draw to a close anytime soon have been frustrated by Russian President Vladimir Putin’s latest statement that he is ready for negotiations but Kyiv and its Western backers have refused to engage in talks. The statement is disingenuous, given the maximalist position he has adopted vis-à-vis Ukraine with his February 24 invasion of the former Soviet republic. The fact that backroom talks between Kyiv and Moscow have come to nothing suggests that the two countries have no meeting point at the negotiating table. Taken together with Europe’s brisk arrangements to source oil and gas from non-Russian suppliers and the massive expansion of Nato’s armaments supply to Ukraine, mainly underwritten by the US, all point to a continuation of the slugfest. India, accordingly, needs to prepare for the collateral damage from a prolonged conflict.

So far, New Delhi has managed a skilful balance between its economic interest and geopolitical realities. India’s primary need was to ensure that the Russian pipeline for defence equipment and spares for everything from tanks to assault rifles and submarines remained open. India also exploited an unexpected collateral benefit of cheap oil, and lately fertiliser, from Russia, with crude supplies briefly overtaking traditional suppliers from the Gulf. At the same time, while frequently abstaining on anti-Russia resolutions at the United Nations, it also exhorted dialogue, with the prime minister even advising Mr Putin to seek peace, on the sidelines of a Shanghai Cooperation Organisation meet. This careful diplomatic hedging brought some measure of understanding from India’s Western allies but on a strictly limited basis. The $450-million package to maintain and upgrade Pakistan’s F16 fighters, the largest such deal since 2018, was interpreted as a message of sorts to New Delhi.

Going forward, the pressures are likely to grow, especially given that India imports 86 per cent of its crude oil and most of its natural gas requirements. For one, the oil price cap imposed on Russian supplies from the first week of December is likely to put pressure on India’s access to cheap Russian oil on mainly Western tankers insured by Western companies. That apart, Europe’s energetic purchases of Gulf oil is expected to put pressure on global prices even further, with Opec plus (a grouping that includes Russia) deciding to curtail production by two million barrels a day. As for gas, while the price cap may not have any immediate effect, soaring prices on the back of European demand puts in jeopardy India’s plans to boost the usage of gas — considered a “clean” fuel — to 15 per cent of the energy mix from 6 per cent currently. Some Rs 2 trillion worth of investments to facilitate this transition also hangs in the balance.

The known unknown in all this is China. Russia is now unequivocally a Chinese ally and has become Beijing’s third-largest crude supplier. India’s relations with China have deteriorated to the point that border skirmishes have become a permanent fixture. New Delhi’s imperative to balance relations between the US and Russia will inevitably provoke a reaction from China, especially while it holds the G20 presidency, suggesting that the longer the conflict lasts, India’s balancing act will go down to the wire.