The reemergence of grand, ancient world cultures is becoming the hallmark of the twenty-first century. During the 2010s, China and India have outgrown the term ‘emerging market’, establishing themselves as movers and shakers in their own right. The Belt and Road initiative announced by Beijing in 2013 strives to recreate the transcontinental links that have criss-crossed Eurasia since antiquity, connecting the Roman, Persian, and Chinese empires and all the lands in between.
A simultaneous, parallel development is the emergence of new North-South corridors, linking Russia and South Asia and, here as well, all the lands in between. Though present-day India is still unsure as to whether her future lies with the rimlands (the Indo-Pacific) or with the heartlands (Central Asia), there is little doubt that apart from political and historical factors, the final outcome will be determined by the energy and transport infrastructure available at the time.
Celebrating 70 years of Indian-Russian diplomatic relations in 2017, the two big powers to the North and the South of the Eurasian landmass engage in an ambitious infrastructure project that fits perfectly with the new focus on Eurasian integration: the International North-South Transport Corridor (INSTC). The 7,200-kilometer-long transport system, sea-based and multi-modal, was founded by India, Russia, and Iran to connect the Indian Ocean and Persian Gulf to the Caspian Sea, thus facilitating logistics between the three countries.
INSTC was signed in 2000 and came into force in 2002, ten years prior to the announcement of the Chinese Belt and Road initiative, or One Belt, One Road initiative (OBOR), by the Beijing government. By now INSTC has been joined by 13 countries: Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Oman, Syria, Tajikistan, Turkey, and Ukraine beside the three founding nations. EU member Bulgaria enjoys an observer status.
The network will consist of ship, rail, and road routes for freight transport between India, Russia, Iran, Europe, and Central Asia. The backbone of the project consists of the newly established connections between cities like Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali, and others. Its relevance in light of Indian-Russian relations centers around the increasing bilateral trade volumes. The ‘Druzhba-Dosti’ statement, published during the last visit Russian president Vladimir Putin made to New Delhi in 2014, sets a trade target of 30 billion USD for 2020 and a target for mutual direct investment of 15 billion USD in 2025.
The joint Russian-Indian statement issued after the 2016 BRICS summit spells it out: “Recognizing the critical importance of interconnectivity, when it comes to increasing bilateral trade, both sides welcome the growing attention being paid to the implementation of the INSTC, which can become a key factor in the deepening of economic integration in the region”.
Although some commentators described INSTC as a competitor project to the Chinese OBOR initiative, it should be noted that eventually both of them will contribute to the infrastructural integration of Eurasia. While the Chinese project will move along the East-West axis with prongs to Western Europe and Africa, INSTC focuses on North-South integration, linking Russia to the ports of the Indian Ocean: Jawaharlal Nehru and Kandla on the Indian west coast and Bandar Abbas in southern Iran. Goods will be transferred via Bandar Abbas by road to Bandar Anzali on the Caspian Sea, still in Iran, and from there by sea to the Russian port of Astrakhan and onwards into Russia and Europe by rail.
It is estimated that time and cost for shipments via the Caspian Sea will be lower by 30-40 percent compared to the current route through the Suez Canal and the Mediterranean. Presently, a shipment from India to Europe takes 45-60 days. At the completion of INSTC, the same shipment will reach Europe in 25-30 days.
Another important project is the introduction of high-speed railroad technology in India with the help of the Russian Railways. The groundwork for the cooperation was laid in 2015. In October 2016, both sides agreed in a bilateral, ministerial protocol that the first project shall be the 575km Nagpur-Secunderabad connection. A preliminary report was submitted early this year.
Currently, the Gatimaan Express, India’s first semi high speed train, running from Delhi to Agra, is India’s fastest with a speed of up to 160 km per hour. The technical challenges, though, are not to be underestimated. According to the preliminary Nagpur-Secunderabad report, some bridges, stations, and crossings – sometimes even the earthwork as well as switchgear, communication, and other technologies – will have to be upgraded to cope with a top speed of 200 kilometers per hour. In addition, new coaches will have to be developed.
However big the challenge, the potential for development is huge. The Indian railway system is the third largest in the world with a track of over 66,030 kilometers. Freight volumes stand at number four globally. Nearly all of the coal transported – 90 percent – which is equivalent to 50 percent of India’s electrical power, is moved by rail. Therefore, the Indian Railways have decided on a two-pronged strategy: raise the average speed on important tracks using conventional technology and, at the same time, upgrade some major connections by introducing state-of-the-art high speed technologies.
Yet another infrastructure project, albeit far off in the future, is a Russian-Indian oil or gas pipeline. For the time being, both geography and politics are in the way. The possible routes would either cross conflict-ridden Afghanistan and India’s enemy Pakistan, or the vast mountainous tracts of inner China. Though Gazprom already signed a memorandum of understanding with Engineers India to conduct joint studies for a direct pipeline connection, a North-South Eurasian pipeline from Siberia to the Indian subcontinent might take decades to materialise.
Rather than the wholesale construction of such a monstrous project, India and Russia have started to cooperate at both ends of the potential future connection. State-owned Indian Oil Corp (IOC) and its partners are in talks to buy a 49 percent stake in Russia’s Vankor cluster oilfields, consolidating their presence in the oil and gas rich Arctic. The Vankor cluster, not to be mixed up with the Vankor oilfield proper, consists of the Suzunskoye, Tagulskoye, and Lodochnoye fields and is owned by Russia’s national oil company, Rosneft. Through it, the Kremlin intends to retain at least 50 percent plus one share of the Vankor cluster, while a good 49 percent could be split between Indian buyers.
The three likely candidates are IOC, Oil India, and Bharat PetroResources, a unit of Bharat Petroleum Corp (BPCL). Equally interested is ONGC Videsh (OVL), the overseas arm of state-owned Oil and Natural Gas Corp (ONGC). OVL may possibly take 26 percent, with 23.9 percent going to the three other companies.
In this case, the individual stakes in the Vankor cluster would coincide with the existing holdings in the Vankor oilfield proper. After long and fruitless discussions with the Chinese, in 2016 Rosneft decided to award 49.3 percent of Vankor proper to the four Indian investors.
However, the decision to favour Indian partners over Chinese partners should not be read as an about-turn in Russia’s new-found Asian focus. Rather, it reflects Moscow’s strong interest to develop several ties simultaneously in order to avoid becoming over-dependent on the Chinese economic power-house.
Just as Indian companies invest in the Arctic, Russian corporations engage themselves on the South Asian subcontinent. Rosneft now owns the port of Vadinar in Gujarat, North-West India, after its acquisition of the Indian company, Essar Oil. In Pakistan, Russia is about to build a gas pipeline connecting the two biggest cities, Karachi and Lahore. Another Pakistani project became public after a visit, in April 2017, by Russian Deputy Energy Minister Yuri Senyurin and Gazprom Deputy Chairman Vitaly Markelov, to Shahid Khaqan Abbasi, Minister for Petroleum and Natural Resources in Islamabad. Subject was an offshore pipeline project from the port of Gwadar to Gujarat in India.
As was reported, Russian officials said they could supply gas to Pakistan if the Islamabad government showed interest. However, experts were quick to caution. Nobody expects the construction of a Central Asian pipeline linking Russia and Pakistan anytime soon. Therefore, the Gwadar-India gas pipeline proposal is better understood as an extension of the long-discussed Iran-Pakistan-India natural gas pipeline IPI, running 700 kilometers east from Nawabshah and the Sui Southern Gas Co. network and feeding the future Gwadar LNG terminal with Iranian gas. The Iranian section of the line is already built, so all that is needed are 81-kilometer tube from the Iranian-Pakistani border to Gwadar. The CNPC affiliate, China Petroleum Pipelines Bureau, plans to complete the connection by 2018. The new Russian offshore proposal could be meant to replace the overland continuation from Gwadar across Pakistan to India.
The China-backed Gwadar port project forms part of Beijing’s One Belt, One Road (OBOR) transcontinental infrastructure policy, as alternative shipment point for Chinese exports to Europe. But just as China currently experiences, the region’s enmities and sensibilities severely hamper all efforts to implement integrative, inclusive cross-border projects. For example, Pakistan, where there is little interest to advance the Indian involvement in Central Asia, maintains a transit blockade for Indian goods bound to Iran and beyond. In response, Afghanistan has banned Pakistani transit for trucking goods through its territory.
Such blockades lead to an expensive duplication of efforts such as the new Iranian port at Chabahar, vehemently pushed by New Delhi and in spite of all denials, a geopolitical mirror to Gwadar – two state of the art port projects less than 200 kilometers apart both sides of the Pakistani-Iranian border. For Iran, the Chabahar port will be a welcome relief for the facilities at Bandar Abass. For India, Chabahar is a vital stepping stone within the INSTC project described above. At the same time, it will become the back entrance to Afghanistan, unimpeded by Islamabad, and thus the platform for India’s presence in the Central Asian theatre. As such, Chabahar, from New Delhi’s point of view, is a geopolitical counterweight to both arch rival China and arch enemy Pakistan. The two port projects exemplify the successes as well as the limits of China’s effort to spread its influence along the Indian Ocean rim.
The present dynamics of Central Asia and the challenge for New Delhi to engage become manifest in the progress of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline slated to come online in 2022, four years behind schedule. The routing is ambitious: skirting the edges of the Hindu Kush mountains in southern Afghanistan and crossing through Taliban strongholds in Helmand and Kandahar provinces. In late 2015, the China-backed Asian Development Bank, together with Saudi Arabia’s Islamic Development Bank, contributed a total of 1.5 billion USD to the project. Even the Taliban pledged to support the project – without the gas, there is little prospect that Afghanistan will ever be able to raise living standards.
From the point of view of the government in Ashgabat, the pipeline is absolutely vital. Russia no longer transits Turkmen gas, China will not increase its imports, and the Western-backed plans for trans-Caucasian, trans-Caspian pipelines has dissolved into hot air. No wonder the poor country is willing to foot 85 percent of the 10 billion USD pipeline bill.
For Russia, the main challenge ahead is not to be drawn into the political quagmire to the South of Central Asia, while at the same time maintaining and deepening close relations to all parties involved, namely China, India, Pakistan, and Iran. The task is easiest with Iran and India. With Pakistan, a US ally for decades, it is more complicated. Regarding China, the potential for Sino-Russian geopolitical conflict in Central Asia should not be underestimated. In spite of the common front against the Western world, in terms of interests in Eurasia proper, Beijing perceives Russia as a political rival. Thus, Moscow is obliged to tread a careful path.
