 |
|
| India is a major Russia's investor |
|
May 2006 was actually pretty quiet comparing to the previous months of the year. No top-brass meetings on the highest level, as it was in February, March and April, when the US and Russian leaders visited New Delhi. But still there was some action and, what are even more interesting, some important data publications by the Russian and Indian media.
First of all, according to the Russian Statistics Committee (Rosstat), India became the key investor in Russia. India's investment accounted for $1.5 billion (17 per cent) out of the $8.8 billion foreign investments in the country and over 70 per cent of it's FDI, in the first quarter of 2006, the report of the Rosstat said. France's investment in Russia was 15 times less than India's. Germany, Britain, Luxemburg, Sweden and the US were also left behind. This is for the first time that India has emerged as the major foreign investor in Russia. The report said foreign capital in Russia still showed preferences to traditional spheres, mainly in extraction and processing of minerals as well as for trade. The bulk of Indian investment, $1.4 billion, was made in the energy sector, as ONGC Videsh Limited (OVL) started paying for its share of development costs in the giant Sakhalin-1 oil and gas field on the Russian Pacific coast, where it holds a 20-per cent stake. OVL has pledged to invest a total of $2.77 billion in the project, which makes it India's largest single foreign investment not only in Russia, but in the world.
This information must be seen through the prism of another economical data, released at the very end of May. According to it, despite the Indian stock market's tumble, the economy of the country grew a surprising 9.3 percent in the January-March quarter from a year ago. For the fiscal year through March, the Indian economy grew 8.4 percent, surpassing the government's own expectations for 8.1 percent growth. The better-than-expected growth in the January-March quarter was due to a surge in farm production and manufacturing output, India's Central Statistical Organization said, The Hindu reported. Agriculture grew 5.5 percent in the January-March quarter from a year ago, compared with 1.5 percent the same period last year. Manufacturing output rose 8.9 percent compared with 8.1 percent in the same period a year earlier. The strong momentum in manufacturing output this past year was sustained by buoyant exports and growing demand for housing and consumer goods by urban Indians, whose incomes have risen with the economic boom. Exports grew 25 percent to a record $101 billion in the year ended March 2006, and in April, data released earlier this week showed, exports totaled $8.4 billion, up 27 percent on year. The Indian economy is expected to grow at a healthy rate of 7.6 per cent per year in 2006-7. That brings India's growth closer to China's 10 percent pace.
So, Russia got a really great partner – world's second developing economy, as a key investor - is certainly a gain. And if we consider trite but true theme of the Triple Alliance: Russia-India-China, the picture seems very rosy for Moscow. And talking about the Alliance, a very interesting article was published in The Times of India in May. "Forget Pakistan. Forget even the US. The country that really fascinates India is China. Long before the international community coined the word 'Chindia' to denote the world's fastest and second fastest growing economies, India had cast an envious eye on China", Jug Suraiya wrote in his piece - "Chinese Takeaway". "Why not? Not just 'Hindi-Chini bhai-bhai', but a Sino-Indian Federation, with the Dragon as the senior partner as befits its greater economic muscle. Confederate with our arch adversary of 1962, with the country that has nuclear proliferated to our sworn enemy, Pakistan? The idea is not at all outlandish. In fact it's being held out as an alternative to the Indo-US strategic partnership: a Russia-China-India axis. Leave an increasingly unstable Russia out of the deal and go the whole hog with China. Instead of being Washington's cat's paw to contain China, New Delhi should consolidate with Beijing. A Sino-Indian confederacy based on mutual give-and-take (we keep Kashmir, you keep Tibet, and we divide Nepal half-half) would nullify the Pakistani threat, with the missiles at Lop Nor switching their sights from New Delhi to Islamabad. With their combined economic might, China and India could not just take on but take over the global market".
It's a nice dream, but pretty far from reality. As the Indian media marks, many local economists fear India may not be able to sustain the high growth because of infrastructure problems and even more because of the power supplies' issue. And who holds the keys to the most accessible for New Delhi energy resources? Moscow - of course. To remind, it opened an access for India to Central Asia.
Professor Nirmala Joshi, the head of the India-Central Asia Foundation in New Delhi and fellow of the Centre for Russian, Central Asian and East European Studies in the School of International Studies, Jawaharlal Nehru University, claimed in her May interview to the Russian "Vremya Novostey" that India is not taking sides in the Great Game in this region. She said that as the superpowers clash in Central Asia, New Delhi remain non-involved.
However, she contradicted herself, as she praised the Shanghai Cooperation Organization as a framework for cooperation in the area. It is hard to say that being a part of SCO – a new "Warsaw bloc", even as an observer state may be considered as a "non-aligned position".
As Joshi said, India has an oil-exchange agreement with Kazakhstan and Iran. Kazakh oil goes to
Iran, and the Iranians transfer their own oil to India. Also India did not sound any objection or even a doubt about Iran's
| |
|
| |
 |
| |
SCO logo |
joining the SCO. Obviously the membership of the SCO could offer Iran shelter from the intense US-led international pressure on Tehran to end uranium enrichment. Analyst Jean-Philippe Beja of the Center for International Studies and Research (CERI) in Paris said that formal SCO membership for Iran at this juncture would be a blow for the West, RFE/RL reported.
"Of course, it would be considered a provocation by the West -- by the United States and Europe, which are trying to isolate Iran and which are trying to get Russia and China to join them in a sanctions program [against Iran]," Beja said. "If Iran is part of the SCO, it means it will be considered a legitimate partner both by Russia and China", he wrote. But it seems that New Delhi didn't care about that, or just waited for Moscow to rule out Iran's joining the SCO as a full member.
Besides energy sphere there is also a constant cooperation on the military issue between Moscow and New Delhi, which is also a pretty good tying element between the two partners.
Indian Air Force Commander-in-Chief Shashindra Tyagi arrived at the very end of May on a week-long "inspection of Russian aviation plants". The Indian official was interested in factories that output military hardware for the Indian Air Force as well as in those that are going to start produce aircrafts to execute new orders, Russian daily Kommersant reported.
Marshal Tyagi inspected all major aircraft-building companies based in Moscow, St. Petersburg and Irkutsk that carry out three Indian contracts on the production of Su-30MKI multi-task fighters, MiG-29K seaborne aircrafts and the refurbishing of India’s MiG-29s. The three contracts are worth $5 billion.
| |
|
 |
|
| Shashindra Tyagi |
|
The Indian marshal visited Irkut, the aircraft-construction corporation, and reportedly favored the execution of the contract on the license production of 140 Su-30MKI jets by 2012, two years ahead of schedule. Irkut’s president Oleg Demchenko also told Kommersant that the company will soon sign a contract to deliver ten Su-30 jets to the Indian Air Force. It’s a part of swapping 18 Su-30K and Su-30MK fighters with the latest version of Su-30MKI. The contract is estimated at $600 million. The chief of the Indian Air Force expressed interest in the joint development of the MTS multitask transport aircraft by Russia’s Irkut and the Ilyushin Design Bureau and India’s HAL. The intergovernmental agreement with India has been drawn up and is due to be signed by the end of the year. Marshal Tyagi finished his visit in St. Petersburg where he inspected the Klimov and Krasny Oktyabr plants that produce engines and units for MiG-29 jets. During his Russia tour, first as an air chief, Tyagi also held talks with the Chief of Russian General Staff and other senior defense officials.
The Indian air chief also watched the demonstration flight at Zhukovsky airbase near Moscow of the latest MiG fighter Russia intends to field against US F-16 in the Indian tender. To remind, in February 2005, during the fifth aerospace and defense exposition of Aero India 2005, the Indian Air Forces announced a tender to purchase 126 multi-role fighters to replace its ageing MiG fleet. The minimal estimate of the deal stands at $4.5 billion and may be doubled, if we count the subsequent service and renewal works. Four companies are competing to receive the order: Russian Rosobornexport proposes its MiG-29OVT (improved 29M), US Lockheed Martin its F-16, French Dassault Aviation its Mirage 2005 MkII and Swedish-British SAAB their JAS-39C Grippen. Russia and US are two actual contenders, and the Tyagi's visit may be considered as a certain hint.
These were actually the main events and interesting publications of May 2006. June of this year will obviously be filled with more events, as on June 15, in Shanghai the representatives of SCO countries will meet to celebrate the fifth anniversary of this organization. It is possible that during the summit India may be announced as a new full member of the SCO. We shall discuss this in the next review.
Related items:
The Great Indian Chessboard (Monthly Review – April 2006)
The Great Indian Chessboard (Monthly Review – February 2006)
The Great Indian Chessboard (Monthly Review – January 2006)
The Great Indian Chessboard (Monthly Review - December 2005)
The Great Indian Chessboard (Monthly Review - November 2005)
The Great Indian Chessboard (Monthly Review - October 2005)
The Great Indian Chessboard (Monthly Review - September 2005)
The Great Indian Chessboard (Monthly Review - August 2005)
The Great Indian Chessboard (Monthly Review - July 2005)
India in Eurasian Geopolitics (June 2005)
India in Eurasian Geopolitics (May 2005)
Main Page | News Page | 007 News | Print
|
