Russia pressures India for help to avert global financial isolation

The Kremlin is exerting pressure on various governments, including India, in a covert manner, issuing threats to disrupt defense and energy agreements unless they assist in blocking efforts to isolate Russia financially due to its invasion of Ukraine, a Bloomberg report cited. This comes at a time when FATF decided to blacklist Putin’s government.

Many countries in the so-called Global South including India have stayed mostly neutral over Russia’s aggression against Ukraine. 

However, at the G7 summit in Japan, Indian Prime Minister Narendra Modi and Ukrainian President Volodymyr Zelenskiy had their first in-person meeting since the alleged war between Russia and Ukraine began. 

Despite India's neutral stance on Russia's aggression, the meeting may have created discomfort for Russian President Vladimir Putin, who faces travel restrictions and an arrest warrant for alleged war crimes issued by the International Criminal Court in March. 

While no immediate change in India's position was indicated, the encounter showcased the delicate balancing act it has adopted regarding the conflict.

A Russian state agency earlier this month warned counterparts in India of a cascade of unpredictable and negative consequences for cooperation in defense, energy and transportation if the Financial Action Task Force (FATF) adopts new measures against Russia, officials, who asked not be identified because the issue is sensitive, told Bloomberg.

The agency urged India in May to “vocally” oppose any moves by Ukraine to add Russia to the “black list” of high-risk countries at the meeting, and said even being placed on the lesser “gray list” would cause difficulties.

Bloomberg is unable to verify whether India responded to the warnings. The Russian and Indian governments didn’t respond to requests to comment.

Among projects with India that Russia warned would be under threat if more measures are passed were:

• Cooperation between oil giant Rosneft and Nayara Energy Limited
• Exports of Russian weapons and military equipment to India as well as defense sector technical cooperation
• Russian proposals for new joint aviation projects presented at the Aero India 2023 exhibition in February
• Technology and energy cooperation at India’s Kudankulam nuclear power plant
• An agreement between Russian Railways’ RZD Logistics and the Container Corporation of India on cargo transportation services linked to development of a North-South trading corridor

Despite facing extensive sanctions from the US and its allies due to the ongoing conflict, Russia has managed to soften the economic blow by enhancing its relations with neutral countries like China and India. 

However, if Russia were to be blacklisted by the FATF, it would pose significant challenges for these countries in continuing their business dealings with Russia. Consequently, this would further exacerbate the economic difficulties faced by the Kremlin.

The sectors Russia identified as at risk are particularly sensitive in the strategic partnership with India. Russia is India’s largest provider of weapons though defense supplies have stalled for lack of a payment mechanism that doesn’t violate US sanctions.

India has also scooped up cheap Russian oil after the US and its allies imposed a price cap and Europe rejected supplies.

(With inputs from agencies)