The World is Paying a Terrible Price

The world is undoubtedly suffering due to the ongoing Russia-Ukraine war. India is no exception to this, be it a diplomatic affair or economic issue, the country is facing its consequences on the international stage

By Arun Bhatnagar
  • The OECD has estimated that the conflict will cost the Global Economy some US$ 2.8  trillion
  • Expectations that the way India and the US have been engaging each other was set to change haven’t materialized
  • The rekindling of the old bonhomie has been authored at the highest levels in the CIA and the Pakistan Army
  • a ray of light to halt the  blood-letting in the Ukraine-Russia region may be seen in the Nobel  Peace Prize for 2022

THE ongoing crisis in Ukraine – which has turned into the biggest armed conflict in Europe since the Second World War – carries a horrifying financial price, not to mention the incalculable human suffering and loss of lives. In terms of ‘direct and indirect costs’, Ukraine is believed to have so far been inflicted with ‘somewhere close to US$ 1 trillion’ in damages, according to President Volodymyr Zelensky’s economic advisor; to rebuild the country, following the devastation caused, will cost over US$ 350 billion, a figure which totals 1.5 times the size of the Ukrainian economy.

Said Anna Bjerde, the World Bank’s Vice President for Europe and Central Asia, “The Russian invasion of Ukraine continues to exact a terrible toll, from civilian casualties and the displacement of millions of people to the widespread destruction of homes, businesses, social institutions and economic activity……”.
Due to its active role in support of the invasion, Belarus has faced international boycotts and sanctions. Allies have stepped in to send aid to the war-ravaged country, with the G-7 and the European Union (EU) contributing US$ 39 billion.

The Paris-based club of advanced nations – The Organisation for Economic Co-operation and Development (OECD) – committed to democracy and the market economy, has estimated that the conflict will cost the Global Economy some US$ 2.8 trillion; the loss of output could be larger if Europe faces energy shortages during a severe winter. Russia’s attack has dislocated supply chains, caused shortages of food and other essentials and shaken markets across the globe. The Western Alliance fears that Russia’s order of partial mobilisation and annexation of territories in Ukraine could prolong the war for many months, fueling the uncertainty now weighing on the world economy.

‘We are paying a very hefty price for the war’, observes the OECD’s chief economist. The US and the EU think that President Putin’s nuclear sabre -rattling should be taken seriously and that the nuclear risk, at present, is probably the highest since the 1962 Cuban Missile Crisis.

SHADOW OF CONFLICT OVER INDIA

Citing the impact of the military conflict – which has caused a rise in commodity prices – and the stress of uneven recovery from Covid 19, the Word Bank has trimmed India’s growth forecast for 2023-24 (April – March) by 100 basis points. The Bank has projected growth of the Indian economy at 6.50 percent, compared to its earlier estimate of 7.50 percent, released in June, 2022. The Asian Development Bank (ADB) has lowered its growth forecast for India for 2022-23, because of higher-than-expected inflation and monetary tightening.

Like most Asian currencies, the Indian Rupee has kept sliding against the US Dollar, in the backdrop of heightening geopolitical tensions generated by the conflict. The Russian forces have launched cruise missiles and air attacks on several cities, including the capital, Kyiv, Lviv, Ternopil and Zhytomyr in western Ukraine and Dnipro and Kremenchuk in central Ukraine. Civilian targets have been smashed, leaving many dead and wounded.

President Zelensky said: ‘They are trying to wipe us off the face of the Earth’. In the context of hostilities, India has largely been able to sustain a delicate balancing act with poise and finesse and avoided getting into a ‘tough spot’, so far. It abstained from voting in the UNHRC on a proposal by the Western bloc seeking a debate on human rights abuses in China’s Xinjiang province. The move was defeated and was seen as a setback to the West’s moral authority and the credibility of the UN itself. India was among the 11 countries that abstained, despite the risk of this being ‘misconstrued’ as support for China.

The US and the EU think that President Putin’s nuclear sabre -rattling should be taken seriously and that the nuclear risk, at present, is probably the highest since the 1962 Cuban Missile Crisis

In September, 2022, in the presence of the US Secretary of State, Anthony Blinken, the External Affairs Minister, S Jaishankar, declared in Washington DC that he was ‘very bullish about the Indo-US relationship’. The previous day he had remarked that the American decision to provide a US$ 450 million sustenance package for Pakistan’s ageing F-16 fleet was ‘not fooling anybody’. Jaishankar underwent a change of heart within a passage of twenty-four hours. The conflict in Ukraine has tested the Indo-US ties like never before. India’s refusal to criticise the Russian invasion has made her friends in Europe, as also Washington DC, deeply uncomfortable. Hence, on September 16, 2022, when PM Narendra Modi told President Putin that ‘today’s era is not of war’, the US seemed pleased.

They remain unhappy that India is buying more oil from Russia than earlier. Nonetheless, the Indian Minister of Petroleum and Natural Gas reiterated (in Washington DC) that India will continue to buy oil from any nation of its choice and asserted that no country has told New Delhi to stop buying Russian oil. India has become Moscow’s second biggest oil buyer after China; Western clients have stopped trading with Russia, leading to a fall in its oil prices.

POWER STRUGGLE

The US administration riled India again by a visit to Pakistan-occupied Kashmir (PoK) by the American Ambassador at Islamabad, Donald Blome, who repeatedly referred to the area as ‘Azad Jammu & Kashmir’, which was strongly protested by India. In Muzaffarabad, he went to the Quaid-e-Azam Memorial Dak Bungalow, visited by Jinnah in 1944. The US authorities have asked their citizens to exercise ‘increased caution’ while travelling to India due to ‘crime and terror’, advising them not to go to J&K.
The somewhat ‘strained’ relationship between the Central Intelligence Agency (CIA) and the Inter-Services Intelligence (ISI) – which signifies the General Headquarters, Rawalpindi (GHQ) – is on the mend and the two organisations are now working together on ‘mutually beneficial’ issues.

The rekindling of the old bonhomie has been authored at the highest levels in the CIA and the Pakistan Army. The fresh warmth in relations encouraged Islamabad’s Foreign Minister, Bilawal Zardari Bhutto, to say – while commenting on S Jaishankar’s reaction to the military sale package – that ‘obviously Indians are going to be upset, let them be …….’.

One reason for the Biden administration to be going back to the ISI is that it needs GHQ, Rawalpindi to tackle the terrorism emanating from the Afghanistan -Pakistan area. In the view of a section of analysts, the renewal of the US-Pakistan military engagement is also a message to New Delhi for its strategy of ‘issue-based’ alignment. Pakistan scored a diplomatic coup of sorts when, at a joint press conference with Bilawal Bhutto Zardari in Berlin, the German Foreign Minister, Annalena Baerbock, called for a UN role in Kashmir, without mentioning a word on cross-border terrorism.

A major reason contributing to the altered German attitude appears to be India’s refusal to toe the western line on the Ukraine conflict. The Indian position (and the compulsions involved) were conveyed to the United States, France and the UK but Germany apparently wanted New Delhi to be ‘penalised’ for not following the West. While senior US officials have been visiting India, the absence of a full-time Ambassador, more than twenty months after the Biden administration took charge, has had an adverse impact.

Some foreign policy experts are of the opinion that the Kashmir issue could be raised in the Security Council in the future when the Indian side may expect, though not be certain of, Russian assistance. The UK and the USA would desist from casting a negative vote against Pakistan and the Chinese position will remain hostile to India

For its part, India has not been averse to playing diplomatic chess with the US to extract benefits, or to deflect Washington’s policies which are not in New Delhi’s strategic interests. Speculation has grown that certain members of the American establishment, inimical to India, are keen to find ways and means of extending arms support to Pakistan and are delaying US visas to Indian citizens, so as to convey anger over India’s neutral stand on the Ukraine-Russia issue. They have not been able to express opposition openly because of the challenges the US faces against China and the acceptance in Capitol Hill of India’s vital importance in this behalf.

INDIA-US RELATIONS

There are several examples of the US and India resorting to games with each other since Indira Gandhi started halting efforts to improve relations with Washington DC, following her meeting with President Ronald Reagan in Cancun in October, 1981. In private conversations, most Americans, who matter on dealings with India, are candid that there is a pervasive lack of maturity in how New Delhi handles Washington, and vice versa. They attribute this to the absence of a durable Indian vision on how its US relationship must evolve over the long term. Indians, on the other hand, insist that in Washington’s actions as a superpower to juggle its needs and priorities — such as periodic appeasement of Pakistan — New Delhi is only handed out sops and little of enduring value. Even China, they say, has got more out of the US than what India has got over an extended period.

This is not the case in India’s dealings with Russia. Nor does India engage France in such a manner; both sides know where they stand with each other, and there is more frankness in mutual interactions, according to those who have dealt with India’s relations with the five permanent members of the UN Security Council.

Expectations that the way India and the US have been engaging each other was set to change haven’t materialised; the war in Ukraine has put paid to such hopes. On the sale of the F-16 support system, Blinken was responding to Jaishankar when he said that the US had a ‘responsibility and an obligation to whoever we provide military equipment to make sure that it is maintained and sustained. That’s our obligation. The F-16 will be used against terror groups’.

Developments like the assassination of Al Qaeda chief, Ayman al-Zawahiri, Pakistan’s removal from the FATF’s grey list and the vocal support expressed by the Biden dispensation indicate that major decisions of the previous Trump government, so far as Pakistan is concerned, are being reversed. In navigating the turbulence in their relationship, India and the US see China as the biggest threat. After America’s exit from Afghanistan, the leverage of Beijing in Pakistan-Afghanistan has increased. Given the ‘no-limits’ ties between Russia and China, irritants in India-US relations present potential ‘weak spots’.

There are issues of importance to India in respect of which the Ukrainian situation is unlikely to leave much of an impression, one such being the long-discussed reform of the United Nations Security Council (UNSC)

According to the Russian Ambassador at New Delhi, Denis Alipov, ‘the border standoff between China and India is a bilateral matter in which Russia does not want to get involved. ….’. Russia’s defence production capabilities may continue to decline, even after the conflict in Ukraine comes to an end.

INTERNATIONAL COERCIVENESS

As regards supplies to India, the delivery of two Talwar-class stealth frigates is believed to have been postponed by at least six months and there are delays in respect of S-400 Triumf missile systems and spares for Kilo-class submarines, MIG-29 fighters and Kamov Mi-17 military transport helicopters. India should, therefore, be ready for a sharp drop in Russia’s commitment to fulfil defence purchase orders.

After America’s exit from Afghanistan, the leverage of Beijing in Pakistan-Afghanistan has increased. Given the ‘no-limits’ ties between Russia and China, irritants in India-US relations present potential ‘weak spots’

Further, the technology is dated and there could also be cost overruns, with financial systems under stress and Russian manufacturers closing shop. Given this reality, India must diversify its weaponry in the short term and focus on local manufacturing over the long term. The Russian capacity to meet India’s defence requirements has taken a hit. The German Ambassador to India, Philipp Ackermann, feels that the conflict in Ukraine is about keeping international borders safe and Russia’s ‘land grab’ is a reason to worry for countries like India that have been suffering border intrusions.

In May, 2022, at Copenhagen airport, in PM Modi’s presence, the Danish Prime Minister, Mette Frederiksen, suggested that India ‘influence’ Russia in discussions to terminate the Ukraine war. She said her message to Vladimir Putin was that he has to ‘stop this war’ and ‘end the killings’. Five months later, the country’s Ambassador to India, Freddy Svane, said, “The biggest expectation that Denmark and others have is that given the size and importance of India, and not to forget the stature of PM Modi, the fact that India has good contacts with Russia, Putin and the West, India should really do everything possible to bring the hostilities to an end ….. India has a moral obligation …… I am sure PM Modi is working on this. If India succeeds, it will be a big gain for her standing. Even if it fails, the world will still appreciate the effort India put in. But doing nothing does not correspond with PM Modi’s image of a global leader”.

INCENTIVE UNSC REFORM

There are issues of importance to India in respect of which the Ukrainian situation is unlikely to leave much of an impression, one such being the long-discussed reform of the United Nations Security Council (UNSC). An informed comment has been offered by Chinmaya R Gharekhan (born 1934), distinguished Indian diplomat, who was Permanent Representative to the UN in the 1990s and, later, a Special Envoy to the Middle East peace process in the capacity of Under-Secretary General of the UN.

His opinion arrived at a time when the External Affairs Minister (EAM) was on a ten-day visit to New York and Washington DC in September, 2022. Gharekhan, inter alia, wrote: “… The five permanent members of the UNSC – China, France, the Russian Federation, the United Kingdom and the United States – constitute what is the last, most exclusive Club in international relations. All other Clubs have been breached… The P-5 could do nothing to stop countries viz. India, Pakistan, North Korea and Israel from forcing themselves into membership of the Nuclear Club. But the permanent membership of the Security Council is another story……” “The inescapable fact is that none of the P-5 wants the UNSC’s ranks to be increased. One or the other of them might make some noise about supporting one or more of the aspirants – India, Japan, Brazil and Germany are the declared candidates, as of now. Each of the P-5 are confident that someone among them will torpedo the enlargement of the Club …

Declarations of support for India’s candidature need to be taken with a fistful of salt. Some foreign policy experts are of the opinion that the Kashmir issue could be raised in the Security Council in the future when the Indian side may expect, though not be certain of, Russian assistance. The UK and the USA would desist from casting a negative vote against Pakistan and the Chinese position will remain hostile to India.
There is no ambiguity about the stance of the P-5. Each one of them is opposed to any dilution of their privileged status and to conferring the veto power to any ‘prospective’ new permanent member.

Another group of experts subscribes to the view that India should not accept permanent membership without the right of veto, which amounts to second class status. The real question is that permanent membership is not within India’s grasp and membership, with veto power, can be firmly ruled out. As such, if India does manage to be offered a permanent membership without veto, it should consider going for it as this would be helpful in safeguarding the national interests. In addition to the P-5, a majority of countries do not want more veto-wielding members in the Council. A via-media (which could be explored) was suggested a few years back that a new category of semi-permanent members (without veto power) may be created to which countries would be elected for a period of 8-10 years and would be eligible for re-election.

RAY OF HOPE

A ray of hope, a ray of light, to halt the blood-letting in the Ukraine-Russia region may be seen in the Nobel Peace Prize for 2022. The Prize has been awarded to a jailed Belarus civil rights activist Ales Byalyatski and a rights organisation each in Russia and Ukraine – Memorial and Ukraine’s Center for Civil Liberties, putting the focus on the War that is crossing its eighth month. The common thread among the winners of the Prize is that they stand against all forms of unwarranted oppression by the invading forces.

Like most Asian currencies, the Indian Rupee has kept sliding against the US Dollar, in the backdrop of heightening geopolitical tensions generated by the conflict

The Norwegian Nobel Committee’s choice of the winners was a ‘statement’ which came on the seventieth birthday of President Vladimir Putin. The Committee said that ‘through their consistent efforts in favour of humanist values, anti-militarism and principles of law, this year’s laureates have revitalised and honoured Alfred Nobel’s vision of peace and fraternity between nations – a vision most needed in the world today’.Their Nobel citation stated, in part : ‘The Peace Prize laureates represent civil society in their home countries …… They have made an outstanding effort to document war crimes, human rights abuses and the abuse of power. Together they demonstrate the significance of civil society for peace and democracy’.
May their work grow from strength to strength!

Arun Bhatnagar

Arun Bhatnagar was formerly in the IAS and retired as Secretary, GOI. He attended St. Stephen’s College, Delhi in the early sixties. After retiring as Secretary (Personnel & Training) in the Union Government in 2004, he worked with the National Advisory Council (NAC) and, later, as Chairman, Prasar Bharati, New Delhi. He has had postings in the President of India’s Secretariat and in the Indian High Commission,
London. Bhatnagar’s earlier Book, ‘India: Shedding the Past, Embracing the Future, 1906-2017’, was well received as a historical narrative.

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