February 12, 2022
Hello and welcome to All Indians Matter. I am Ashraf Engineer.
You must have heard of the Russia-Ukraine crisis. As I record this, more than 100,000 Russian soldiers have taken up positions along the Ukraine border and 30,000 more are in Belarus. The North Atlantic Treaty Organisation, or NATO, has responded by deploying troops in Eastern European countries like Romania and the US is sending troops too. What does all this mean for India? How does a Russia-Ukraine and, by extension, a Russia-NATO conflict affect you and me? Stay tuned to find out.
Before we examine the implications for India, let’s understand what the conflict is all about. When the Soviet Union disintegrated in 1991, Russia felt the West took advantage of it by bringing its immediate neighbours into NATO, a military alliance forged as a counter-balance to Russian military might. Within six years, NATO added 16 countries in the region, including states that were part of the erstwhile Soviet Union and sharing borders with Russia – such as Estonia, Latvia and Lithuania.
Russia saw this as a threat but couldn’t do much about it in its weakened state. Even today, this NATO expansion is cited as the primary cause of the conflict. Russia wants to ensure that no more countries on its border become part of NATO, the troops of which could be a constant worry.
It was only after Vladimir Putin came to power in 1999 that Russia was strong enough to flex its muscles again. In 2014, Russia annexed the Crimea, a southern region of Ukraine, after the Russia-favouring Ukrainian President was overthrown – allegedly with western support. What followed was almost a year of barbaric violence in which thousands are thought to have died.
So, how is India affected by all this? Believe it or not, India has a lot at stake – ranging from fuel price stability and energy security to prices of certain products and defence procurement.
Let’s start with what affects you and me directly – fuel prices. If Russia does invade Ukraine, NATO would respond militarily and various countries, such as the US, would impose crippling sanctions. Russia would respond by turning off its gas supplies, which Europe is so dependent on. As a result, demand for crude oil would rise – pushing up prices significantly. India, already reeling under cripplingly high petrol and diesel prices, can ill afford that. It would drive up prices of essentials even further at a time when inflation is soaring already.
Russia-Ukraine tensions had already raised crude oil by 14%, past $90 a barrel, in recent times. Experts say they could touch $125 a barrel if the standoff doesn’t end soon.
The conflict could also affect India’s plans for liquefied natural gas, or LNG. India is trying to shift to cleaner alternatives in order to reduce its dependence on crude oil and to reduce carbon emissions. The hope is to increase the share of LNG in the energy mix from the current 6.3% to 15%.
India imports around half of its LNG requirement. If sanctions are imposed on Russia, Europe would have to buy LNG from the open market, thus driving up LNG prices too.
India needs LNG for various industries, from power generation to the manufacture of medicines and fertilisers. If its price rises, you would pay more for these products too.
Let’s now look at our defence needs. India is in the midst of purchasing the Russian S-400 missile system. India is hoping that US sanctions on Russia will be waived for this; a war would complicate the purchase. It’s not just the S-400; India buys 60%-70% of its defence equipment from Russia – a relationship that stretches back several decades.
There are other defence worries. The war and inevitable sanctions would bring Russia closer to China, which has annexed a large tract of Indian territory and seems in no hurry to give it back. China has also laid claim to parts of Arunachal Pradesh and has made several aggressive moves on our borders. If Russia and China do get closer, India would lose much-needed diplomatic leverage over its neighbour.
Also, the West sees India as a key part of its strategy to counter China through groupings like Quad – which include the US, India, Japan and Australia. A war would shift its focus away from such initiatives.
Let’s not forget either that more than 20,000 Indians are living in Ukraine at the moment. Most of them are medical students, and there are also business executives with pharmaceutical, IT and engineering firms. Their safety is a real worry.
There is one last concern – the impact on stock markets. Indian stock markets have been volatile in recent times and war clouds over Russia, Ukraine and Eastern Europe would spook investors.
It’s a worrying geopolitical situation that India will watch closely. It’s not as remote as you may think it is; if war breaks out, it will affect you too.
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