It will be in India's long-term interest to make an effort to ameliorate the suffering of the common Russian
Nations are not their leadership alone. Crises and national failures often bring to the fore the chasm between the rulers and the ruled. Irrespective of the extent of democracy in a polity, people do not often forgive rulers whose actions result in direct hardship to common citizens. If the original decision itself did not have popular support, the negative fallout leads to the hardening of this stance.
The Russia-Ukraine crisis is a case in point.
Russia’s military campaign against Ukraine has received near universal opprobrium. Within Russia, too, there is no overwhelming support for the move. The urban, educated and the rich do not seem have seen large protests. Defying the authorities, TV reporters have held on-air protests, too. Clearly, not every Russian is ready to accept the arguments posited by President Putin. On the other hand, there is a significant base of traditional Soviet loyalists who do not take kindly to Ukraine’s machination to disown its Russian heritage. This group supports the actions against Ukraine enthusiastically.
The common Russian, especially those who can appreciate the implications, are concerned about the economic fallout of this intervention and the retaliatory sanctions by the Western powers. The economic and other sanctions announced by Western powers and their allies can potentially devastate the Russian economy. At present, Russia, by all accounts, is the most sanctioned country. Some of these sanctions are far more rigorous than those applied to Pakistan, the fountainhead of global terrorism. It’s obvious that the everyday hard-working citizens are going to be affected in a big way by these turn of events. The devaluation of the rouble will certainly affect consumer inflation. As the real household incomes shrinks, the average Russian citizen will pay the price for this war. Inflation, as it normally happens, will hit the poor harder.
The scale of sanctions is being applied differently by the US and EU. Raw material exports are currently exempt and there is the possibility of payments in euros. Russia has offered deep discounts to India for the purchase of oil in addition to promising continuation of other commercial transactions.
While India will weigh strategic logic and self-interest to lend a helping hand to Russia through these transactions, it should make an effort to ameliorate the suffering of the common Russian. After all, India contributes to the welfare of the Afghan people even though it doesn’t recognise the Taliban dispensation. Similarly, New Delhi continues to engage with the military government in Myanmar while supporting the people’s movement for democracy in the country.
India could create a special program, say on the lines of the production linked incentive (PLI) scheme of the government, to invite medium and small enterprises as well as start-ups from both Russia and Ukraine to set up shops. A Russia-Ukraine, or maybe Belarusian team of founders, is not uncommon among start-ups. If it means facilitating the relocation of business, India should identify sites and provide the initial handholding to re-set-up the enterprise. The current conflict has not only damaged the Ukrainian economy, but the Belarusian economy is also in terrible shape—partly because of its policy and partly because of the sanctions.
The rupee-rouble trade can help overcome issues that may come with the sanctions. Running an extra mile for the people who are going to become your great supporters should not be difficult for a global power aspirant.
Significant advantages will accrue to India if it chooses to give a helping hand to Russians. Russia’s technology prowess is well known, and its thriving start-up ecosystem could bring innovation to India. As India looks to expand its manufacturing base, besides attracting Russian start-ups, it could also attract medium and small enterprises to set up base. Many Russian technologies will become commercially viable if they cannot be manufactured economically. India could attract technology directly from this region instead of waiting for them to reach maturity in the Silicon Valley before they come to India.
In addition to the improved terms of trade, Russia’s deep discounted prices will positively impact India’s fiscal deficit.
Another, but strategically important gain for India will be its perception in the minds of common citizens of Russia. While some of us continue to look at Russia from a Soviet Union lens, the reality is that over the last decade or so India has lost the goodwill that once existed amongst the people. India needs a proactive strategy to undo this loss. The current crisis presents an apt opportunity.
Russians now believe that Indians are complicated, unreliable, and not very generous. While they might not agree with many things that China does, a large section of the population is confident that China will invest in their economy and will help Russia. India must not underestimate the implications of the vows of friendship and support both Russia and China announced for each other earlier this year.
There are benefits to Russian business beyond the obvious of bypassing the sanctions because for Russia’s youth and small businesses India presents a compelling opportunity in its own right. They can benefit from opportunities of low-cost manufacturing, fast trials, and on-the-ground implementation of new technologies. India undoubtedly provides access to a large market.
The whole situation is a disaster for common Russian, but if New Delhi could extend direct support, it can become a win-win for people of both nations. This could result in exponential benefits once the current difficult times are behind.
Manavendra Prasad is a public policy advisor. Andrei Misura is an ex-diplomat and currently, the Managing Partner (International) at Moscow based HIC Capital Group. He also Heads the Eurasian Office of MSME Chamber of Commerce and Industry of India.