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'More upgrades will hike the Gorshkov's price'

July 31, 2009 09:27 IST
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A consummate Russian diplomat, Vyacheslav Trubnikov is returning home this week after having served as serving as Russia's ambassador to India for nearly five years. The period has seen several highs and lows in the bilateral relationship, including the building of the first civil nuclear power plants by Russia and nagging problems over defence spares and equipment. Edited excerpts from an interview with Jyoti Malhotra

 

In your last incarnation as ambassador of Russia to India you spent about four years, but 17 years altogether in India.

I first came here in 1966 as a graduate student writing a thesis on the Tashkent Declaration. I spent six months here and was amazed by the country  -- it was my first trip abroad. I came back as a journalist in March 1971, working for Novosti press agency, and stayed for seven years. I witnessed many milestones in our history: The Indo-Soviet treaty of friendship, the disappearance of East Pakistan from the map of the world and the birth of Bangladesh. In December 1971, along with some other foreign journalists, I crossed the border with Indian troops. I was fortunate to also serve in Bangladesh as ambassador. Yes, I am chained to the sub-continent !

Many Indians remember the time when the American aircraft-carrier USS Enterprise entered the Bay of Bengal when India and Pakistan were at war in 1971 and the Soviets sent a warning..

Yes, and many in the international community also remembers our veto in the United Nations Security Council. India was assured, as an outcome of the Treaty of Friendship with the Soviet Union, that it will not be a subject to military pressure from a third country.

 So much has changed since then, especially in the Indo-Russian relationship…

Yes, the Soviet Union no longer exists, Russia is a new country. India has changed tremendously too, today's India is a country which claims for itself a proper place in the international community. In fact, the relationship has now become more balanced, more pragmatic and our dependence on each other has grown.

What does that mean? 

In the 1960s, India still needed external support, especially in building its industrial foundation. Today's progress, for example in software, wouldn't be possible without the creation of an industrial basis, in metallurgy, machine-building, etc, where Soviet assistance was a major factor. Independent India did not have enough hard currency to pay for building its economic foundation, and you know the private sector abroad is usually never generous about giving credits. But the Soviet Union gave state credits. Today, the relationship is much more equal. For example, in the military-technical relationship, we are now in the very serious process of changing it from a seller-buyer one to one where there is joint design, joint production and even joint marketing.

And an example of this would be?

The BrahMos missile. Discussions to sell it are on with several countries which have long seashores in South America. In India too, the missile is being integrated into Indian ships as well as on land. Indian submarines are going to be equipped with it as well.

But India is buying defence equipment from other countries, which means Russia's share comes down. Does this worry you?

Yes, the market is becoming more and more competitive as India diversifies its sources of arms and ammunition. This is normal as India cannot be dependent on one source. Even earlier, Russian MIGs flew side by side with British Jaguars and French Mirages. But what is new is that along with the licence to produce the equipment, India wants technology to be transferred as well. For example, in the deal to buy 126 fighter jets that is now on the table, Russia's Mig 35 aircraft is competing. But alongside the licence to produce a certain number of Mig-35s in India, we have also offered to transfer technology. By and large, other countries don't transfer technology, but as a result of our offer other countries who now want to be competitive will have to follow suit. Moreover, offsets are a very significant part of this deal, about 50 per cent (although for deals above $600 million, it is usually 30 per cent). This is not a very easy thing to do, but if India wants, the offsets could also be in the transfer of dual-use technology

 Do you think this 126 fighter jet deal, worth abut $12 billion, is also a political deal? 

Every military-technical deal has undercurrents painted in political shades. The most important point is, however, that the supplier should be 100 per cent reliable. India has had several opportunities to try the reliability of its partners. I believe Russia's cooperation has been the most reliable.

Then why is there so much bitterness, for example, in the purchase of the aircraft carrier, Admiral Gorshkov; even Russian president Dmitry Medvedev has admitted that…

Yes, I accept there has been some bitterness on both sides. But at the same time both sides want to come to consensus because we understand that the Gorshkov or INS Vikramaditya is absolutely essential for India. We could have taken it back to our own Navy and returned the money to India, but we did not do it. I am absolutely sure that some people in our Navy want it back, but we understand that this is the flagship of India's eastern fleet. We are responsible enough to understand that India must get this aircraft carrier. India understands this too. The question is tha of price and timing of delivery.

 So what happened over the years?

The discussions between the two sides started when 'Gorshkov' was only a boat, without any equipment. You have to realise that the final price (of the aircraft-carrier) and the time of its completion, ultimately depend on the character and quality of the order placed by the buyer, which includes the refit, the equipment on board and its necessary upgrades. And usually the appetite changes as you eat.

Are you saying the Indian side kept changing its order? 

Not changing, but the Indian Navy was eager to get the best, the most modern equipment.

 So the Navy's appetite kept increasing, they wanted more and more.. 

Yes.

... But this constant back and forth, officials traveling up and down and the long delays?

The major reason is that the contract was signed when the Russian side, the plant Sevmash, badly needed money and wanted to sign the contract, while the Indian side wanted to buy an absolutely modern aircraft carrier at lower than the cheapest price. After the contract was signed (in 2004), both sides began to understand exactly the enormity of the task they had undertaken to do. But the realisation came a little late.

The Indians complain that the Russians are constantly changing the price.

Yes, we are changing the price, but if the value of the dollar changes, should we stick to the same figure? If the price is in our favour, do you think the Indian side would pay more? I don't think so. It is a serious commercial discussion.

Reports are that it will cost around $2.2 billion?

It would be irresponsible of me to comment. Price negotiations are now entering the final stage. What is important for India is also the time of delivery. But the point is that if India wants additional equipment, the carrier will cost even more. So if both sides stop and decide, okay no request from India and no increase in price from our side, then we can finalise price and delivery.

What do you make of the US Navy which wants to work with the Indian Navy to keep the sea lanes open, from the Straits of Malacca to the Gulf of Hormuz? India's Russian-built aircraft carrier will help in doing this? 

We are not adverse to this, we are ourselves prepared to discuss with NATO joint patrolling of sea lanes to combat against piracy. In this globalised world there are so many challenges which cannot be dealt with individual states no matter how mighty wealthy or influential they are. Everybody has to work together.

 What about the problem of defence spares? This has been going on for nearly two decades since the break-up of the Soviet Union in end-1991? 

Now this problem has almost been solved, but you have to understand why it happened in the first place. You see, when it was the Soviet Union, and India placed an order, the plant in question got an order from above and they produced whatever was ordered. The plant got everything it wanted from the Centre — money, etc. It was not their business to think about who the buyer was, what was the price, etc. But in the new market economy, things have changed totally. Now the question is, why should a plant that was producing a certain model of aircraft keep producing the spares of this aircraft when that aircraft has become outdated? Now the plant has begun producing something else and suddenly, the Indian side decides, oh we need so-and-so spares! So the Indian side writes to Rosoberonexport (Russia's arms export agency), which writes to the plant in question, which writes back asking for guarantees that a certain number of spares will be bought. This was the major difficulty that accompanied our switching from a centralised economy after the break-up of the Soviet Union, to a market economy. In the new economy, if there is no demand, there is no supply. And when the plant doesn't have enough money to produce the (defence) spares, they stop production.

But there has to be a plan or a long-term strategy that will help both sides.

Yes, now we have a long-term plan, because both of us finally understood what is going on.

It took nearly 20 years to understand? 

Well, there's something else too. You see, India is a very different country. Most countries in the world, when something gets outdated, they throw it away and order new equipment. But in India, the defence policy-makers prefer to upgrade and modernize what is still possible to use. For example, you could change the engine of an aircraft, but keep its body, which is still good. But the point is, as things changed in Russia, we stopped producing both the engine and the body of the aircraft altogether. So now what to do? We are not going to produce a handful of engines only for India, so as to satisfy an Indian demand for the next three months only? For example, the IAF is still flying the Mig-23 Bis aircraft, but we forgot about this model a long time ago ! We don't even remember whether it exists or not ! But the Indians are still thinking in terms of flying this plane !

 Having said that, in the last few years, India's relationship with the US has become much stronger, possibly at the expense of Russia?

I don't think so. Not only have relations changed between India and Russia, but India's relations with many other countries have changed in many ways. For eg, I believe it is the US which has changed its direction of cooperation with countries in Asia. I think it is the US which is tilting towards India, not the other way round ! But it is true that the Americans had a comfortable period of ten or more years to improve relations with India, (after the break-up of the Soviet Union) when Russia was busy in its internal transformation, and the US worked much harder (than us) in improving relations.

So Russia lost out, in a sense? 

In the course of our internal transformation, it is true India did not play as big a role for Russia as it did for the Soviet Union. We had to change a lot of our priorities. We changed our ideology, we changed our economic patterns — from a centralised economy to market economy — we changed our psychology which is a very painful process. We were very busy with this for several years, as we were busy with mending fences with the West, as we wanted to prove that we were not a threat to the West. So the bulk of our attention and efforts was directed towards the West, I don't think India should be jealous about this ! Now that relations between India and the West are much better, we are prepared to participate in honest competition. India is winning new friends, but I don't think it is at the expense of old and tested friends. I think the Indian leadership is very aware of its national interest.

 Do you think the competition may not be honest? 

Yes, it may not be honest. Perhaps in a market economy it is the rule to paint your opponents black, to engage in character assassination, but we don't want to participate in this kind of competition.

 So you agree the priorities of both countries have been different in recent years? 

I would say, independent of the way Russia was changing internally, it was only Russia which began to construct nuclear power plants in India, when India was under sanctions from all over the world, at the initiative of the US. I think the Indian side appreciates what Russia did, rather highly. Not only this, we supplied fuel for Tarapur (nuclear power plant) for which we don't have any connection. But we did it for the safety of the power plant and because India needed it.

So why is Russia now party to a G-8 statement which will deny sensitive enrichment and reprocessing technologies to countries like India which have not signed the Non-Proliferation Treaty? 

I think sometimes you don't pay attention to your own leadership. Finance minister Pranab Mukherjee has explained everything perfectly. The Nuclear Suppliers Group, as it lifted sanctions against India last year, declared openly and loudly that it was making an exception only for India. The G-8 declared its own attitude only recently, and we are of course part and parcel of the G-8. But India is excluded from this. On the basis of the NSG exemption last year, we have an agreement with India…

We don't have the agreement yet…

We do have an agreement. We may not have a contract yet, but the over-arching agreement was signed when President Medvedev came in December 2008. We have an agreement to cooperate in full with India. France was the first and we were the second to sign this agreement.

And this includes ENR technologies? 

Definitely.

But isn't this contradictory?

No, this is our usual policy, which is why we are with the G-8. But the point is that India is excluded by the decision of the NSG and also by its agreement with the IAEA.

So India need not fear from the G-8? 

Of course not.

 But you heard what the Americans have said…

With the Americans it is far more complicated. Unlike the French and Russians, the US administration can say one thing, and the US Congress can say another. Independent of what Madame Hillary Clinton said in India (that full nuclear cooperation would take place), a lot of things will depend on what the US Congress decides.

... irrespective of what the Americans decide?

We have our own approach to this matter…

And you will go ahead with full cooperation in nuclear issues?

We will definitely go ahead.

So Russia is building two reactors in Kudankulam at the moment and how many more? 

Two right now, another four will be built here, and another couple of sites are likely to be offered by India. You know the local population at Kudankulam did not at first want the nuclear plant, there were several demonstrations by the fishermen, but now they are persuaded. They have jobs, they know the reactors are totally safe. The new reactors also will be likely near the sea-shore, because you need a lot of water.

India is committing to buy 10,000 MW from the French, the Americans and the Russians…does this sound like a 'khichri'?  

Not at all, I feel diversification is in India's interest. But India should be cautious choosing its partners and take into consideration, reliability. If something happens suddenly and this particular partner stops its work and freezes construction, then other problems will follow. There are so many examples (of this occurring), in Iran for example, we are assisting with the Bushehr reactor, but it was not the Soviet Union began to build the reactor…but we decided to take over the contract.

I would like to ask you about the business relationship, trade is really low…

Yes, it is really low. One reason is a result of our changing economic system and another is, the changing priorities of both countries. The most important point here is that we cannot limit ourselves to buying tea, textiles, coffee and tobacco from India. If we do, we will stick to today's meagre trade figures. So we have to transform the relationship into a high-tech relationship, where we look at energy and software, for example.

Why is the relationship so bad? 

Because the businessmen on both sides don't know each other. In both countries there are very serious impediments, red tape and the bureaucracy. The process to get a licence in India is awful…you see, business like electricity, will go where it is easier to go, and will not wait for a visa. Mr Mordashov, the owner of Severstal, one of our biggest figures in the steel industry, he fought Mr Lakshmi Mittal for Arcelor, came to India a couple of years back to participate in the metallurgical congress. I told him, why don't you invest in India, there is such good iron ore and you can get a stake in a special economic zone…He told me that he had heard that it would take two years to get a licence and that he cannot afford to wait for so long.

This is true for Russia as well? 

Yes this is true for Russia too.

You have a Joint Business Council, but even that has not been able to do much? 

Yes, it is headed by Mukesh Ambani, head of Reliance Industries from the Indian side, and Mr Yevtushenko from the Russian side. It was created when President Dmitry Medvedev visited last December.

They have met only once.

Yes, but they are expected to meet again this year. But the business relationship is not only about two men… When I came to India five years ago, trade was only $1.7 billion, but last year it grew to nearly $7 billion. The upswing is there. Of course, the global financial meltdown has affected the relationship. We have now decided to consolidate the rupee debt and invest it in India or third countries. But a lot of apprehensions remain on the Indian side. You still talk about the influence of the Russian mafia, but you know that other countries are not afraid. German companies, for example, they are doing so well in Russia. But some people here in India are so attentive to what the newspapers say that they prefer not to look at the reality on the ground.

So why has the visa agreement which will promote business between the two countries not been signed? 

Because the Indian side is not inclined to an agreement which was firmed up 2-3 years back, which includes 5-year visas for Indian businessmen, which includes a clause for "readmission" of illegal migrants who use Russia as a transit country to go to Europe. What we want is that illegal migrants, if they are caught in Russia or sent back by the European Union into Russia (from where they enter EU countries) should be taken back or re-admitted, by India. But India says it doesn't have such agreements with other countries with such clauses. That's fine, but we can't facilitate easier procedures for India because we have our own agreement with the EU which has India on a list of 14 countries, with high illegal emigration. Russia must abide by its commitments to the EU because it is supposed to be a major transit country for these illegal migrants.

 So what are the problems on the economic side? 

Like I said, we have to get to know each other better, including at the decision-making level. In Russia, people think, India is a country which needs help. Some of your people think, Russia is the same as the Soviet Union, Russia is going to assist us. Some other Indians say, Russia is not the Soviet Union, the Soviet Union was a huge superpower and Russia is nothing compared to the Soviet Union, it is just another country with a very weak economy, etc. A third set of Indians try to assess Russia objectively, but to do this it is essential to know Russia today.

You think not enough Indians know Russia? 

Of course! And not enough Russians know today's India. We are both developing so rapidly that we cannot imagine even the extent of this change.

So we take each other for granted? 

Yes! And this is very bad. We must take each other as strategic partners and try and find out what is important to each of us in the coming years. Our strategic partnership is based on very serious parameters, such as energy. India is a huge consumer of energy, Russia is a supplier. We are natural allies in this. Then, in our military-technical relationship, a high percentage of Indian arms equipment still has a high Russian content. I watched the launch of India's first nuclear submarine at Vishakapatnam on July 26, and do you know about the design of this submarine? It is the Akula (the Russian submarine).

So where was the Indian submarine designed and built? 

Here in India !

Ambassador, you spoke of the changing relationship with India, but it also seems that Russia's relationship with Pakistan is also changing rapidly. The Pakistan army chief, Gen. Ashfaq Kayani was in Moscow recently…

Just because someone, even if he has a high stature, visits another country, doesn't make the visit substantial. The most important factor in the improvement of Russia's relations with Pakistan is internal stability, which is not there. That's why I cannot say we are developing active relations with Pakistan. Of course we don't want Pakistan to be excluded from the international community, we want it to participate in globalisation and other processes, but I cannot say that there is something remarkable about our relationship with Pakistan.

 Your country knows Afghanistan well. Do you feel that Pakistan is still involved with the Afghan Taliban? 

Under military rule (in Pakistan), we knew that the ISI was a state within a state. But even today, it seems to me, that the ISI is playing its own game, because it continues to keep very close ties with the Taliban.

So Russia's decision to allow American planes carrying lethal arms to overfly Russian territory, to Afghanistan for the first time since 9/11, is significant?

NATO countries have been doing this for some time. Yes, this is the first time that the Americans have been allowed. But I cannot say that the Russian-US joint cooperation in Afghanistan is a unique feature because Afghanistan is a problem that affects the whole world. In fact, the problem of drugs is much, much greater for us than it is for the US. The Americans, I believe, have a higher tolerance of the drug problem because it doesn't affect them directly. But it affects Afghanistan's neighbours, including Iran. The Iranians fight like hell with narco-couriers on the border. The same with Tajikistan and other Central Asian republics. And because Russia is their neighbour, we are affected enormously by this menace, by this evil of the 21st century. But I believe we can effectively deal with this menace only when the international community is united, because drug dealers are always a step ahead, they are very inventive with taking the drug to new places. And over the last decades we have seen in front of our eyes how a transit country, like Russia, has become a consumer nation.

 

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