Moscow Comes Calling

When Russian President Dmitry Medvedev comes calling on his maiden official visit to India on December 5, expect a changed, more realistic and sober engagement posture devoid of any arrogance coming from the delegation that he will be leading. For the Russia that had been testing India’s patience for the past two years, especially with regard to Russians demands for re-negotiation of the multi-billion contract for supplying the 44,570-tonne aircraft carrier INS Vikramaditya, is not the same Russia that exists today. For the past five months, Russia’s problems in both the domestic and foreign fronts have only increased. Consider the following:

· Russia’s five-day limited border conflict with Georgia last August only served to highlight the block obsolescence of the former’s military might and only accelerated NATO’s determination to push further eastwards via Ukraine and Georgia, thereby completing the strategic encirclement of Russia.

· The aftershocks resulting from the global liquidity crunch has seen several Russian financial institutions crash like a pack of cards. The country’s benchmark RTS stock market index dropped by 70% since last May and the Kremlin is now grappling with its worst financial crisis in a decade, helped no less by the falling global crude oil prices, a massively overheated domestic economy, the steadily falling value of the Rouble, and double-digit inflation (13 per cent).

· The Kremlin’s decision to start an aggressive foreign policy has not been accompanied by a corresponding, aggressive foreign trade policy. Instead, its recent decision to decline joining the World Trade Organisation is widely being seen as a serious blunder.

· Growing fears of government interference in business and perpetuation of the system of unaccountable redistribution of national financial resources among private oligarchic empires close to the Kremlin have resulted in foreign institutional financial investors exiting Russia in droves, thereby raising the prospects of a severe downturn and a long-term crisis in the country’s financial sector.

· The quantum of Russian weapons exports to its traditional customers has been steadily decreasing for the past three years, especially when it comes to China, India, Iran and Malaysia. Though alternate markets have been sought and penetrated in Indonesia and Venezuela, the future outlook for Russian weapons exports remains bleak, especially if Russia is seen as an unreliable military-industrial partner that wants to re-negotiate already signed-and-sealed contracts of the type inked for INS Vikramaditya.

· Lastly, both President Medvedev and Prime Minister Vladimir Putin are widely believed to be advocating solutions from opposite ends and which also seemingly contradict each other. While Medvedev favours widespread economic reforms and feels the need to add more substance to his anti-corruption initiatives, Putin is widely believed to be intolerant of dissent from his junior partner, since any crack in the monolithic system of power could trigger an avalanche of desertions and revelations that would demonstrate that rampant corruption is not a mere defect in his course of expanding state control over the economy, but its core substance. Putin’s approval ratings still remain high, but the social contract of ‘Putinism’, according to which the population enjoys the fruits of petro-prosperity while ignoring the shameless thievery of the ruling elite, is now all set to expire.

The peculiar two-headed form of leadership was designed by the over-confident ‘Tsar Vladimir’ for presiding over a permanent party of distributing tonnes of easy money, but it cannot function anymore in the situation of escalating squabbles between elite clans and gathering social discontent. Cutting President Medvedev down to size may have been easy, but now Putin has to decide how much longer he can postpone the hard tasks of managing rather than explaining away the crisis that has transformed his pet projects into toxic assets.It is against this backdrop that President Medvedev is coming to India and all indications are that a far more realistic appraisal of the future state of bilateral military-industrial cooperation will be visible. While Putin reportedly favours a Euro-centric foreign policy and accords greater priority to re-claiming Russia’s influences in its near-abroad—especially in Central Asia and China (the Kremlin’s recent approval for exporting the Su-35M and Su-33M, both armed with Yakhont supersonic multi-role cruise missiles, has to be seen in this context)—Medvedev, being a technocrat, favours a more broad-based approach that focuses more intensely on South and Southeast Asia, and the African continent. For the Indian Navy, Medvedev is known to favour a mutually beneficial solution to the INS Vikramaditya’s quagmire, under which a far-more amenable and financially viable supplementary contract will be inked between India’s Ministry of Defence (MoD) and Rosoboronexport State Corp to expedite the aircraft carrier’s refit and upgrade. In return, the Russian shipyards will be accorded preferred vendor status for supplying a substantial number of pre-fabricated modules for the two 37,500-tonne Indigenous Aircraft Carriers (IAC), the first of which is now being fabricated at Cochin Shipyard Ltd (CSL). Also up for grabs for the Russian shipbuilding industry are two major projects: one, for the co-design and joint fabrication of five guided-missile destroyers under Project 15B (for which the Project 22350 DDG is being offered); and the co-design and joint fabrication of seven guided-missile frigates under Project 17A, for which Moscow is offering the Project 1167 FFG.-- Prasun K. Sengupta