Electronic transfers

Why Putin’s war in Ukraine is bad news for Modi in India

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Russia’s invasion of Ukraine changed Indian foreign policy. Forced to choose between two friends, the United States and Russia, New Delhi leaned towards Putin. He has so far staunchly abstained from any United Nations vote criticizing the invasion.

To a large extent, the foreign policy stance of the Modi government is driven by pragmatic factors regarding India’s self-interest. He is valued that up to 80% of the country’s military equipment comes from Russia, a legacy of the Cold War. Given India’s precarious security situation (the country is in an armed standoff on its borders with not one, but two nuclear powers), it is absolutely essential that its arms supply chains remain operational.

However, even if Modi succeeded in preventing any immediate damage to India’s arms supply, the global dislocation caused by Putin’s invasion has the potential to hurt him domestically.

The most immediate result of the Modi government’s tilt towards Russia was, naturally, the anger of the United States. The US government and even many academics are outraged by India’s refusal to explicitly condemn Russian aggression.

Thursday, the American news site Axios reported that Washington had sent (and then called back) a cable to American diplomats asking them to inform New Delhi that its stance on the war had placed it on “Russia’s side”. Another American site, Thehill.com even reported something more alarming: the United States was considering sanctioning India.

Derek Grossman of the Rand Corporation think tank warned: “India’s close ties to Russia also risk becoming a liability for the United States, which has become New Delhi’s main counterweight to China.

A column in an American economic newspaper, the “Wall Street Journal”.

Furthermore, while India could have secured its military supply chain in the short term, overall the Russian-Ukrainian war is bad news for national security. The main beneficiary of the conflict will almost certainly be India’s enemy across the Himalayas, given that unprecedented economic sanctions against Moscow would mean Russia tying itself to China as a junior partner.

Even on Sunday, several Russian banks announced they would switch to a Chinese electronic funds transfer system after US companies Visa and Mastercard announced they were ceasing business in Russia in protest against the war. As financial columnist Andy Mukherjee explained, cutting Russia off from SWIFT, a global messaging system that allows bank transfers, is a golden opportunity for China’s digital currency.

Member of a think tank on international relations in China.

Added to this is the fact that Islamabad itself is getting closer to Russia. Like India, Pakistan has given up condemning Russia. In fact, in a bizarre turn of events, Pakistani Prime Minister Imran Khan had a meeting with Putin in Moscow on the day Russian armed forces stormed into Ukraine. Pakistan also became the first country to sign an agreement with Russia after the start of the war.

These global permutations surrounding India are bad news for the Bharatiya Janata Party, given that the party has, over the past seven years, used foreign policy to inflate Modi’s image domestically. Under Modi, foreign policy has become a mass, popular and, above all, electoral tool. Examples include a joint appearance with US President Donald Trump in a stadium full of supporters to use the 2019 airstrikes in Pakistan as a key part of the campaign trail for the Lok Sabha elections.

Given that India’s maneuvering space is tight at the moment, Modi is unlikely to be able to repeat the big foreign policy moves of the past. In fact, right now in Uttar Pradesh, the Prime Minister insists that the evacuation of students from Ukraine was due to India’s increased stature across the world under his leadership. It’s a rather tense point compared to, say, the passions the 2019 showdown with Pakistan engendered.

In fact, last week the BJP even spread the spurious impression that Modi single-handedly convinced Russia to halt his campaign for six hours to allow Indians to be evacuated from besieged cities in Ukraine – an idea publicly denied by even the Ministry of Foreign Affairs.

US President Donald Trump and Prime Minister Narendra Modi during the ‘Namaste Trump’ event at Sardar Patel Gujarat Stadium, Ahmedabad on February 24, 2020. Credit: Alexander Drago/Reuters

Constant criticism of the BJP-led government from foreign commentators will also hurt Modi – who has been careful to project the image of himself as a statesman admired by the world. As an opinion piece says First post, “India’s abstention was interpreted as a provincial response from an incapable Third World country.” It’s a troubling trend, given the BJP’s claims that Modi has turned India into a “vishwaguru” or a country the whole world seeks as a guide.

Added to this is the economic dislocation the war will bring to global supply chains of crude oil, cooking oil and fertilizer.

JP Morgan predicts that crude oil could reach $185 a barrel by the end of the year, a nice doubling since the start of the war. The increase is driven by fears that Western sanctions could affect supplies from Russia, the world’s second-largest oil producer. This is bad news for India, which imports around 85% of its oil supply. It’s double bad news for Modi, who has long been attacked for failing to control high petrol and diesel prices. Rising oil prices will further push up inflation, which has already been quite high for some years.

Opposition leader Rahul Gandhi mocks the Modi government for an expected increase in fuel prices once the UP elections are over.

Two specific products that will be directly affected by the war are cooking oil and fertilizers. Ukraine and Russia are the two largest producers of sunflower, a major source of cooking oil. Similarly, India imports large quantities of essential fertilizers from the region. Fertilizer shortage, in fact, is already a problem in Uttar Pradesh’s elections. If this is not corrected quickly, it will add to the growing anger of farmers against the BJP.

Media victory

While Ukraine may be struggling in the shooting war, it handily beats Russia in the media war.

All of this goes to show that this could be the first world war of social media.

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Hindi-Chini goodbye