In the event the crisis in Ukraine develops into a full fledged war, it stands to affect India adversely despite the geographical distance. This is mainly due to Globalisation and the fact that India is very close to all the interested parties.
Read: India has a lot to lose
I. Military: Russian arms and equipment has been the mainstay of our forces post-1965. Tensions in Ukraine resulting in sanctions will therefore have a direct impact on the availability of spares and replacements.
II. Threat of CAATSA: As things stand, there is a strong rumour that Biden may decide upon a waiver for India. However, domestic politics can compel him to drop this and sanction India instead. There is a distinct possibility, should war break out, the S400 as well as any future equipment may be subject to CAATSA. This will have a direct bearing on our operational preparedness.
III. Projects involving Russia : Any transaction involving Russia would be strictly out of bounds. This involves the Brahmos project or the one at Kudankulam Nuclear Power Plant
IV. The China factor: Escalation of tensions between the West and Russia will surely push Putin to embrace China more openly.
“At present, certain international forces are arbitrarily interfering in the internal affairs of China and Russia under the guise of democracy and human rights, and brutally trampling on international law and the norms of international relations” - Xi Jinping, President PRC
This has a potential to strengthen China to our detriment.
V. IndoPacific: A weakened US capability in the Indo-Pacific due to greater resource allocation in Europe, doesn’t bode well for the region. A major force surge in Europe, could leave the Indo-Pacific relatively free and this could throw the free world's interests in jeopardy. China of course has historically always believed in seizing the moment as has been demonstrated by their actions in 1962 during the Cuban missile crisis and in 2020 during the pandemic, both defining events globally.
VI. Energy Crisis: In the event of a conflict Russian gas is likely to be turned off and Putin has even hinted at it. Thus Europe may have to enter the open market thus driving prices up.
VII. Equity Market: As Russia is a major energy producer and exporter, a war in Ukraine can have a serious impact on oil and gas markets. In the energy sector, British Petroleum, Shell, Exxon, and ONGC are seriously engaged in Russia and thus open to sanctions like the Citigroup bank which also has a significant exposure in Russia.There are also discussions of disconnecting Russia from the global banking system by cutting it off from the SWIFT. Both of these actions can seriously affect the Indian equity market too.
VIII. Indians in Ukraine: There are many Indians present in Ukraine mostly medical students and business professionals. GoI is concerned about their safety should a war arise.
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