Franco-German pressure for Russia-Ukraine thaw
Ukrainian President Zelenskyy’s bold initiative to break the Russia-Ukraine logjam on the Minsk accords (see RR of September 2019) predictably continued to face opposition within Ukraine. Protestors, led by former President Poroshenko and former PM Tymoshenko, demanded that the Ukrainian government should press for the return of Crimea, prevent “federalization” of Ukraine, preserve its European and Euro-Atlantic integration and ensure that Ukrainian troops gain control of the border with Russia before elections are held in Donbas. As elaborated in detail in RR of October 2019, these objectives are not included in the Minsk accords, because of the circumstances in which they were negotiated in 2014-15. However, President Zelenskyy said in media interactions that he would try not to cross these “red lines”. The Ukrainian Foreign Minister is reported to have said the same at a meeting of NATO Foreign Ministers in Brussels (November 19-20), though this did not come out in the official readouts of that meeting.
Meanwhile, progress was made in withdrawal of forces in identified eastern Ukrainian regions, thereby satisfying the conditions agreed upon by the Ukrainian government and rebel groups on October 1 (RR, September 2019). On their part, the Russians released the three Ukrainian naval boats that they had seized when they allegedly encroached into the Kerch straits in November 2018 (see RR 11/18). French President Macron and German Chancellor Merkel were both actively involved in encouraging these developments, through regular contacts with the Russian and Ukrainian leaders. Adding to the positive climate was also telephonic contact between the Russian and Ukrainian Presidents.
Preoccupied with its own Ukraine issue in the impeachment proceedings at home, the Trump Administration did not appear to have involved itself in these developments. Significantly, the New York Times carried an interview with Ukrainian oligarch, Ihor Kolomoisky, in which he called for ending the armed conflict in eastern Ukraine and restoring Ukrainian-Russian relations. He is reported to have said that the Ukrainian people want peace, whereas the US is forcing them into war – fighting Russia “to the last Ukrainian”. He said that Russia would be willing to fund the revival of the Ukrainian economy, whereas the US is unlikely to do so. Kolomoisky’s views are important, since he is widely believed to have been instrumental in helping President Zelenskyy win the elections by promoting his candidature in the many TV channels that he owns. It is equally interesting that the New York Times carried this interview at this juncture.
The next critical stage in this saga would be the summit meeting of the Normandy Four (France, Germany, Russia and Ukraine) to be hosted by President Macron in Paris on December 9. The summit would coincide with the Trump impeachment hearings in the US Congress, where also Ukraine will figure prominently, though in a totally different context. The Paris summit has multiple circles to square.
BRICS summit reaffirms cooperation
BRICS leaders met in Brasilia in mid-November in the backdrop of geopolitical turbulence and economic challenges in every country of the grouping. Moreover, their host espouses a worldview much closer to that of President Trump than those of his guests. In the event, the summit was reasonably successful in holding together the consensus in the grouping on major international economic and political issues.
The Brasilia Declaration reiterates most of the staple BRICS tenets: the primacy of the UN, multi-polarity, sovereignty and non-intervention in internal affairs, sustainable development and democratization of the global economic architecture. Chinese perspectives ensured that the formulations on terrorism and reform of the UN Security Council retained the same boiler-plate texts of earlier years.
As in earlier years, Russia obtained BRICS appreciation of the contribution of the “Astana guarantors” (Russia, Turkey and Iran) to the UN-led efforts for a Syrian political process, as well as support for its appeal to the international community to extend urgent humanitarian aid to all Syrians, as distinct from the US position that international aid should not go to areas under Syrian government control. The leaders reiterated their support for an “Afghan-owned and Afghan-led” reconciliation process in Afghanistan, notwithstanding the fact that the current US-Russia-China consultations on Afghanistan seem to be Pakistan-led and not Afghan-owned. In acknowledgement of the change in the Brazilian government’s perspectives on these issues, the Brasilia declaration does not mention the status of Jerusalem in the formulation on Israel-Palestine, and is silent on the 2015 international nuclear deal with Iran (JCPOA).
From January 2020, Russia will assume the BRICS Presidency. President Putin took the opportunity of his speech in Brasilia to outline Russia’s agenda for the year. The “motto” for Russia’s BRICS presidency will be BRICS Partnership for Global Stability, Shared Security and Innovative Growth.
President Putin said Russia would work to expand BRICS foreign policy coordination at the UN, also bringing together “like-minded nations” to “jointly solve key global and regional problems”. This would include developing international standards for preventing terrorism and countering terrorist ideology propagation (including on the internet), as well as close cooperation on money laundering and terrorism financing. In the current geopolitical environment, it is difficult to see the five BRICS countries achieving sufficient congruence, let alone induct more “like-minded” countries, to produce meaningful results in these areas.
A new Russian initiative, for a BRICS energy research platform, appears to have gained some traction in a meeting of experts earlier this year. The idea is to promote joint research on energy efficiency in the use of oil and natural gas.
The New Development Bank (NDB) – known more popularly as the BRICS bank – is BRICS’ most tangible achievement, rescuing it from a reputation of being a mere political talk shop. It finances infrastructure projects as per priorities of recipient countries and can evolve its own lending guidelines. Every BRICS country contributes equally to its capital of US$ 50 billion (to be increased to $ 100 billion) and has equal voting rights. This sets the bank apart from other international financial institutions. In the roughly three years of its existence, NDB has approved 42 projects with a total value of about $12 billion.
In the context of this Review, seven projects have been approved for Russia, with a total outlay of about $1.8 billion. As part of its plan to establish regional offices, a Eurasia office opened in Moscow in November. NDB announced that it would shortly be issuing rouble-denominated bonds to part-finance some of its Russia projects.
As per the Russian Finance Ministry, loans have been issued in Russia for hydropower plants, water supply and sanitation systems, renewable energy, a petrochemical complex and “promoting development of the judiciary”. The Ministry’s wish list for 2020-2021 includes pollution reduction in the Volga basin, modernizing transport infrastructure in different regions and energy efficiency projects.
Annual BRICS summits in different capitals have driven the urge to constantly expand the grouping’s dialogue architecture. The Brasilia Declaration lists 116 meetings, conferences and other events in 2019, at ministerial, official, technical, business, judicial, legislative and people-to-people levels. President Putin has now announced Russia’s intention to hold around 150 events at different levels. Though national pressures to rack up numbers may explain much of this proliferation, it has also generated some promising areas of cooperation, such as platforms for agriculture research and energy research cooperation, partnership in elements of the New Industrial Revolution, and collaborative research on tuberculosis.
The continued relevance of BRICS in the global political and economic discourse will depend on its continued ability to leverage the convergences of perspectives of its members, nuancing differences and side-stepping disagreements.
India-Russia defence and energy engagement
Prime Minister Modi and President Putin met on the margins of the BRICS summit in Brasilia – their fourth meeting this year. Since there have been two major ministerial visits to Russia since the bilateral summit in Vladivostok in September, the two leaders were able to express satisfaction at the progress made on their Vladivostok discussions and agreements. They noted that trade had increased by 7% in 2018 and that the momentum was being sustained.
Petroleum, Natural gas and Steel Minister Dharmendra Pradhan visited Russia in October and had extensive discussions on trade and investment in oil, gas, LNG and coal. He reportedly said that Indian companies would be interested in investing in the Arctic Vostok oilfields, which are reported to have huge oil reserves, if the Russian government extended suitable tax concessions. India’s ONGC Videsh is expected to co-invest (along with its partners in the Sakhalin 1 oilfield – Exxon, Sodeco and Rosneft – in which it invested in the early 2000s) in an LNG plant, with an expected annual capacity of 6.2 million tons. Mr Pradhan’s delegation also discussed the supply of high-quality coking coal from Siberia for the Indian steel industry. This is a known opportunity for a long time, but has not yet been exploited. Both LNG and coal could be imported through Paradip port.
Collectively, these initiatives have been described as the building of a new energy bridge between India and Russia, which could trigger a much bigger bilateral economic interaction. In a press availability on the margins of the BRICS summit, President Putin said that his recent discussions with PM Modi had focussed more on strengthening civilian economic cooperation than defence cooperation.
The Indian and Russian Defence Ministers met for the India-Russia Inter-Governmental Commission on Military and Military-Technical Cooperation (IRIGC-M&MTC) in Moscow in November. India’s Defence Ministry highlighted, as achievements of the meeting, an India-Russia Defence Industry Cooperation Conference, which the Indian Minister co-inaugurated with the Russian Minister of Industry and Trade; decisions to activate cooperation in joint manufacturing in India of spares, components and aggregates of Russian-origin weapons systems; and the constitution of specific working groups for after-sales support of key defence platforms. The ministers also directed the respective teams to work towards early conclusion of the India-Russia Inter-Governmental Agreement on Reciprocal Logistics Support.
A tri-services joint military exercises Indra 2019 (the second after one in 2017) will be conducted simultaneously in Jhansi, Pune and Goa in December. Company sized mechanised contingents, fighter and transport aircraft, as well as naval ships, will participate in this 10-day exercise, which will include tactical operations and drills such as cordon house intervention, handling and neutralisation of Improvised Explosive Devices (IED), prevention of arms smuggling by sea and anti-piracy measures.
President Putin invited PM Modi to the celebrations of the 75th Anniversary of victory in World War II in May 2020; the latter accepted the invitation. The Russian Defence Minister invited his Indian counterpart to depute a contingent from the Indian Armed Forces to participate in the parade on the occasion; going by past precedent, this is likely to be accepted. President Pranab Mukherjee attended the celebrations of the 70th anniversary of Victory Day (May 9, 2015) and an Indian Grenadiers contingent participated in the parade.
Power of Siberia gas pipeline inaugurated: Presidents Putin and Xi Jinping jointly inaugurated (by video-conference) the Power of Siberia gas pipeline, which, at full capacity, will pipe 38 bcm of natural gas annually over 3000 km from Siberia to China for the next 30 years. The agreement for this ambitious project was signed in May 2014, when Russia was under the greatest political and economic pressure from the West after its “annexation” of Crimea. At that time, there was considerable scepticism about the economic and engineering viability of the project, given the length of the pipeline, cost of its construction and volatility of gas prices. In the event, the bilateral agreement has held and the pipeline completed on schedule. This first eastward gas supply arrangement will be at least a partial insurance for Russia against disruption of its gas supplies to Europe, which the Americans and some Central European countries have been working for.
Russia reduces dollar component of NWF: The Russian Finance Ministry announced it will reduce the dollar’s share in the National Wealth Fund (NWF), in view of “geopolitical risks”. This follows the Russian Central bank’s policy of the last few years of diversifying Russian foreign exchange reserves away from the dollar, in the wake of the US sanctions. The Central Bank has instead been aggressively buying gold. According to the World Gold Council, about 20% of Russia’s foreign exchange reserves of about $525 billion is in gold. Dollars now reportedly represent only 22% of Russian reserves, down from 46% in mid-2017, according to a Bloomberg report.
Reactions to President Trump’s remarks on arms control: As the current strategic arms control treaty, new START, ends its validity in 2021, President Trump has been talking of including China “and maybe somebody else” in a fresh arms control treaty. The Chinese Foreign Ministry immediately reacted that China would not join negotiations for such a treaty, pointing out that China’s nuclear arsenal is tiny compared to that of the other two. The spokesperson asked whether the US expected China to raise its arsenal to US levels or the US will shrink its arsenal to Chinese levels. The Russian Deputy Foreign Minister said if other countries are to be engaged, then the US’ nuclear allies UK and France should also join negotiations. President Putin went one step further and said that they should invite, in addition, “several other countries not actually officially recognised as nuclear powers, while everyone in the world knows, and they don’t hide it, that they are”.
US-China Trade War benefits Russia: Russia-China trade is reported to have recorded sharp increase this year, with Russian exports contributing mainly to this increase. Reports, sourced from Chinese Customs, claim that Russian exports have grown by about $500 million per month in the last three months and, if this pace continues, the annual trade turnover may cross $110 billion, a year-on-year growth of about 10%. The increase has been attributed mainly to increased Chinese imports of grain and soya, as well as industrial and IT products from Russia.