It is highly likely that Russia will make concerted efforts to seek support from India and China for management of its geo-economic security in the post Ukraine-conflict era. Here’s the what and how.

First, it is about connectivity through the International North-South Transport Corridor (INSTC). The Western sanctions have compelled Russia to look for a multi-modal transport corridor that can serve as an alternative to the Suez Canal route. In fact, INSTC will span across major cities like Mumbai, Moscow, Tehran and Baku, among others, and connect India, Russia, West Asia and Central Asia. Recently, Russia also offered to fund the construction of the Rasht-Astara rail link, which will connect the Iranian city of Rasht near the Caspian Sea to Astara in Azerbaijan. The role of India in managing trade, investments and connectivity along the INSTC will be significant for all the beneficiary parties.

Russia, on its part, would like to implement at least two of the Belt and Road Initiative (BRI) projects as well — the New Eurasian Land Bridge, which has suffered due to the war, and the China-Mongolia-Russia Economic Corridor.

Second, in order to revitalise its technology economy in a post-conflict scenario, Russia would potentially co-operate more with China. Russia is still an advanced economy in terms of basic scientific research, and has a large number of science and technology graduates and owns many patents.

Technological applications

However, the drawback is the low rate of technological applications. China has advantages over Russia in capital, technology application and organisation. While China seeks to import from Russia technology developed mostly in the military context, Russia seeks to import Chinese technology for common use such as electronic devices, high speed rail, etc. This tech-trade would continue to benefit both countries. Similarly, with India, Russia would be seeking to explore possibilities in the areas of quantum technologies and AI.

Third, ‘Hong Kong dollarisation’ — that is, converting US dollar reserves to Hong Kong dollars — tactic is likely to boost capital flows between Russia and China. Russia has suffered immensely from financial sanctions, and Hong Kong may help. Before the conflict, some Russian enterprises adopted this tactic . Further, a few Russian banks plan to set up representative offices in Hong Kong.

Hong Kong has served as a transshipment centre to support Russian interests. It has also served as a hub for US companies exporting semiconductors to Russia. Interestingly, Hong Kong is an independent financial centre, making it possible for China to support Russia and still avoid any direct Western criticism. Indian firms in sectors such as steel have also purchased coal from Russia in non-US dollar currencies, including the Hong Kong dollar.

Fourth, Russia would push implementation of a BRICS common currency. Also, in the Global South and precisely within the Shanghai Cooperation Organisation (SCO), Russia would want to substantially boost trade in national currencies. In September last year, SCO adopted a joint declaration to do so.

Hydrocarbons remain a significant strategic good for Russia given the dependence of oil and gas importing economies like India and China. Interestingly, both these countries have been making a large part of such transactions in non-dollar currencies including the Chinese Yuan and Emirati Dirham.

Ahmed is professor, FORE School of Management, New Delhi, and Hei Sing is director of Connectrategy Consulting, Hong Kong SAR