Arctic: An Emerging Region of India-Russia collaboration

 By Dr. Hriday Sarma
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Opening a new window of cooperation 

A recent Bloomberg news report has claimed that Russia is accumulating up to $1 billion each month in Indian rupee that its companies are having trouble to repatriate.[i] This is due to the currency restrictions that have come about because of the sanctions imposed by the US and the EU since Russia attacked Ukraine in February 2022. India now has a moral and legal compulsion to pay back this accumulating stock of money to Russia in some way or the other.

Here a big question is how India and Russia will work out an innovative bi-lateral money transfer system, which would allow India to evade the West’s ire and enable Russia to get ready access to foreign revenues for its oil and gas? The answer to this all-important question is not simply putting into place a banking arrangement in line with the rupee-rial payment mechanism offered by Indian state-run UCO bank for transactions with Iran, but an arrangement that goes way beyond that. A possible solution could be India becoming a co-partner to Russia in developing its Arctic resources for achieving bilateral business benefits and contributing to scientific advancement for mankind.

On March 28, 2023, Indian Ports Shipping Minister Sarbanda Sonowal tweeted after his meeting with and Alexei Chekunkov, Minister for the Development of the Russian Far East and Arctic, “Discussed furthering India-Russia ties in the maritime sector including cargo transportation along Northern Sea Route, container shipment between ports of Russian Far East & India, operationalising Chennai-Vladivostok corridor and training of Indian seafarers in Arctic waters.”[ii] The meeting happened in the backdrop of Russia’s Far Eastern Shipping Company (FESCO) opening a new direct shipping route between Novorossiysk Sea Port on Russia’s Black Sea Coast and Mumbai Port.

The said development clearly reflects India’s interest and participation in expanding the use of the Northern Sea shipping route. This sea route that runs along Russia’s northern coastline is, in fact, the shortest shipping route between Europe and East Asia. It is likely to reduce the transportation cost of sea cargo from Vladivostok to India by 30 to 40 per cent than from Moscow.[iii] Russia and India are presently negotiating over building of processing facilities and other construction to expand the use of this route.

Right at this moment, Russia and India are rekindling their trade relationship, mainly in energy and defence sectors but not limited to that alone. The latest Western sanctions on Russia has encouraged the country to grab on to new economic opportunities far and near.[iv] Here is a particular window of opportunity for both Russia and India to cooperate on wide-ranging matters and one region where their common interests are starting to converge at the Arctic, once the world’s final frontier but now a gateway to new beginnings.

Aligning global leadership agenda

In recent times, India and Russia have taken advantage of their leadership of multilateral forums to align their national foreign policy goals, whilst also paying obeisance to each other’s global aspirations and stances. Under Russia’s chairmanship of the Arctic Council (2021-2023), it strived to build regional cooperation through environment protection initiatives, attract investment from global actors (both state and companies) and contributed towards improving the condition of indigenous people in Arctic countries until member countries of the Arctic Council (unilaterally) suspended cooperation with Russia on March 3, 2022. However, Russian specialists are cooperating with colleagues from observer members to the Arctic Council, including China, India and Brazil, in setting up the Snezhinka Arctic station, a year-round autonomous complex that will operate using renewable energy sources and hydrogen energy, in the Yamal-Nenets Autonomous Area (YNAA).[v]

This year India has widely celebrated its G-20 presidentship with cultural functions, inter-ministerial conferences and well-publicized think tank talks with participation of international experts. Acting as the chair, India has maintained a balanced approach towards seeing global events. [vi]

Russia’s Arctic strategy- 2020-2035, which was amended on 21 February 2023, emphasizes on the ‘development of relations with foreign states on a bilateral basis … taking into account its national interests in the Arctic’. This indicates Russia’s pursuit for the ‘Easternization’ of the Arctic and opening up new ways for investments coming from Asian countries.[vii] This is in line with the growing potential and trend of increased overseas investments by many Asian countries in the 21st century.

It is seen in recent years India is getting more active on different matters connected to the Arctic. This pro-activeness well exceeds its traditional focus on scientific research works.  India released its new Arctic Policy on 17 March 2022. Jitendra Singh, India’s minister of earth sciences while releasing the policy, said- “India’s Arctic policy will play an essential role in preparing the country for a future where humankind’s biggest challenges, such as climate change, can be addressed through collective will and effort”. The focus of this policy is to strengthen India’s cooperation with the countries in the Arctic and combat climate change. Here ‘strengthening cooperation’ is not exclusively scientific collaboration but also fostering partnerships at the economic and investment fronts.

Starting early 2021, India has been increasingly importing Russian crude oil.[viii] Alongside bulk purchase of Ural grade by India’s refiners, they are importing higher volumes of lighter grades from the Arctic such as ARCO and Novy Port. In September 2021, Mazagon Dock Shipbuilders, an Indian government owned company that manufactures warships and submarines for the Indian Navy, signed an agreement for commercial shipping and building ships with Zvezda, the largest shipyard in Russia.[ix] This cooperation is directed towards enhancing the flow of resources, mainly oil and natural gas, via the Northern Sea Route.

Expert comments

Dr. Sulagna Chattopadhyay, President of SaGHAA – a New Delhi based think tank working on Polar issues, while being interviewed at sidelines of recently concluded “SaGAA 7- The Future of Arctic Ice”,  said :

“India and Russia are looking to build their resource alliances (alluding to coal and            oil) in the Arctic. It is important for Russia to hold a robust bi-partite relationship with           India on this front, as the closest contender to these resources is China with whom   Russia has shared a friendly yet spirited rivalry in the past. India has been looking to       engage the interest of oil companies, but with little success. In Yamal for instance, the  Chinese stakes are 60 per cent of capital investment, while India is expected to make             a deal between GAIL and Novatech in Yamal in 2023.”

She added “Apart from LNG, India can collaborate on exploiting offshore                               hydrocarbons, rare earth, and marine manpower.”

History redefining future

Russia and India have been “civilization-states” and have evolved in different pathways in modern times. However, both countries have national ethos that are distinct of the West, and they have continuingly held on to them till at present. Russia’s military assertion to reclaim its historic national identity is fueling a clash of interests with the West in an era where the global power balance is gradually shifting towards the developing world, and especially towards Asia.

Under this emerging world order, here is a situational opportunity for Russia and India to join hands and fill in the emerging power vacuum at the global level. The two countries need to work in a planned manner for conceptualizing and execution of joint projects. They need to establish greater synergies towards building a regional and global order where trade flows in an unhindered manner and the rules of the game are the same for all participating countries, whether small or powerful.

At this juncture, there is a mutually complimenting opportunity for Russia and India to cooperate in the Arctic. India needs Russia to make economic inroads in the Arctic, which owns nearly 80% of the oil and gas under the Arctic shelf,[x] to meet the energy and resource need of its growing young population. On the other hand Russia needs a strategic (geo-political)-partnership with India in the Arctic to benefit from India’s close political and business relationship with the Western countries that would contribute towards offsetting the effects of the sanctions imposed against it.

[i] Tan, Huileng  “Russia doesn’t know what to do with the $1 billion in rupees it is amassing in India each month” Business Insider, June 1. 2023, https://www.businessinsider.in/policy/economy/news/russia-doesnt-know-what-to-do-with-the-1-billion-in-rupees-it-is-amassing-in-india-each-month/articleshow/100676904.cms

[ii] Chandan Prakash, “India, Russia consider Arctic shipping line to link Southeast Asia with Europe in lesser time than Suez, Panama canals” March 29. 2023, FirstPost

https://www.firstpost.com/world/india-russia-consider-arctic-shipping-line-to-link-southeast-asia-with-europe-in-lesser-time-than-suez-panama-canals-12372862.html

[iii] Prakash Nanda, ”Northern Sea Route: Can Russia’s Arctic Game-Plan Outdo US’ Strategy In The Indo-Pacific?,” The Eurasian Times, April 15. 2023, https://eurasiantimes.com/northern-sea-route-can-russias-arctic-game-plan-outdo-us-strategy-in-the-indo-pacific/

[iv] Tom Wilson, “Russia’s growing trade in arms, oil and African politics.” Financial Times, February 14, 2023, https://www.ft.com/content/cb0f2fe7-5555-497d-806c-5c4c2be15e7f

Also see : Jamestown Foundation, “Russia’s Growing Influence In Latin America,” OilPrice.com, April 15. 2023, https://oilprice.com/Geopolitics/International/Russias-Growing-Influence-In-Latin-America.html

[v] “The Arctic project “Snezhinka” is being implemented in any case,” RIA Novosti, June 15, 2022, https://ria.ru/20220615/arktika-1795372600.html?in=t

Also see: “Ministry of Foreign Affairs of the Russian Federation says Moscow is ready to develop cooperation with China and India in the Arctic” Investment Portal of the Arctic Zone of the Russian Federation, June 17, 2023, https://arctic-russia.ru/en/news/ministry-of-foreign-affairs-of-the-russian-federation-says-moscow-is-ready-to-develop-cooperation-wi/

[vi] Newsmen News Desk, “Russia praises India for ‘constructive role’ as G20 President, accuses ‘collective West’ of trying to isolate Moscow,” Newsmen, February 27, 2023, https://thenewsmen.co.in/world/russia-praises-india-for-%27constructive-role%27-as-g20-president,-accuses-%27collective-west%27-of-trying-to-isolate-moscow/100576

[vii] “Ob Osnovakh gosudarstvennoi politiki Rossiiskoi federatsii v Arktike na period do 2035”  (English title: ”On the Principles of Russian Federation State Policy in the Arctic in the years towards”), March 5, 2020,   2035,” http://static.kremlin.ru/media/events/files/ru/f8ZpjhpAaQ0WB1zjywN04OgKiI1mAvaM.pdf

[viii] Russian oil export to India was less than 1 per cent in February 2022 and it steadfastly grew over the next 15 months. In June 2023, India’s import of Russian oil reached a record high of 2.2 million barrels per day, which surpassed the combined shipments of from its traditional oil suppliers-Saudi Arabia and Iraq.

Alka Jain, “India’s June oil imports from Russia hit another record high as limit nears: Report.” Livemint, July 03, 2023, https://www.livemint.com/news/india/indias-june-oil-imports-from-russia-hit-another-record-high-as-limit-nears-report-11688354468737.html

[ix] Capital Market, “Mazagon Dock soars after partnership with Russia’s Zvezda for commercial ships,” Business Standard, September 03, 2021, https://www.business-standard.com/article/news-cm/mazagon-dock-soars-after-partnership-with-russia-s-zvezda-for-commercial-ships-121090300803_1.html

[x] Anna Kireeva, “For all of Russia’s talk about oil drilling in the Arctic, most Arctic oil will likely go untouched,” Bellona, April 24, 2019,

https://bellona.org/news/arctic/2019-04-for-all-of-russias-talk-about-oil-drilling-in-the-arctic-most-arctic-oil-will-likely-go-untouched#:~:text=Indeed%2C%20among%20Arctic%20nations%2C%20Russia%27s,remaining%2010%20percent%20among%20them