Russia has been one step ahead of the West in its economic "offensive campaign"

An investigation published by the Financial Times shows that Russia seems to have anticipated the dangers, quietly avoiding Western sanctions with plans to cooperate closely with India as early as 2022.

Is Russia One Step Ahead of the West in Its Economic 'Offensive'? (Source: Interfax)

As the BRICS bloc grows stronger and pushes for de-dollarization, the FT 's investigative report points out that the group's two largest members - Russia and India - have already established secret trading channels as a temporary solution to avoid sanctions from the US and the West.

According to the FT , Russia has been secretly buying sensitive goods from India and has been looking to build facilities in the Asian country to support its military campaign. Documents show that the Russian Ministry of Industry and Trade, which oversees defense production, has been making secret plans since October 2022 to spend about $1 billion on critical electronics, through channels not monitored by Western governments.

Meanwhile, Russian banks have amassed a “significant reserve” of rupees through oil sales to India. The plan details the use of these reserves to finance clandestine trade operations to acquire critical commodities “previously supplied by hostile countries.”

The FT documents show that the focus of the operation is on dual-use technologies – items with both military and civilian applications – that are subject to sanctions. Moscow has also planned to invest in joint Russian-Indian electronics development and production facilities.

It is unclear how much covert activity has been carried out, but detailed data on trade flows suggest that India-Russia trade ties have “deepened” significantly, especially for the categories of goods mentioned above.

On the international stage, India maintains an official neutral status and a non-aligned foreign policy, regarding the conflict in Ukraine. This may explain the close trade relationship with Russia that has been established, even though New Delhi has simultaneously built closer economic ties with the United States and "ignored" the warning from US Under Secretary of the Treasury Wally Adeyemo that - "any foreign financial institution doing business with Russia's military-industrial base risks sanctions".

In fact, Russia supplies more than half of India’s military equipment, including tanks, weapons and fighter jets, at much more reasonable prices than those from Western countries. This is especially relevant to India’s pressing needs, as its relations with several of its neighbors, including BRICS member China, continue to heat up along the disputed border.

India has also been a major buyer of Russian crude oil in recent years despite sanctions, with total trade between the two countries hitting an all-time high of $66 billion in the 2023-24 financial year. This is five times higher than the trade that took place in the year before Russia launched its special military operation in Ukraine. It is through these transactions that Russian banks have built up huge reserves of Rupees.

One Russian official mentioned frequently in the FT documents is Alexander Gaponov, deputy director of the Radio-Electronics Department of the Ministry of Industry and Trade. In October 2022, Gaponov is said to have contacted the Federation of Foreign Economic Activity and Interstate Industrial Cooperation – a Moscow-based organization with ties to Russia’s security services – about plans to buy key components from India. Russia relies on foreign-made electronics for use in missiles, drones and electronic warfare.

Vadim Poida, president of the Indian consortium, said they have developed a joint venture to implement “concrete plans” with the Russian electronics industry. The five-phase plan details how Russia can spend Indian rupees and establish a stable supply of components that can have a dual effect. Poida also said the plan includes Russia establishing a “closed payment system between Russian and Indian companies” outside of Western oversight, including the use of digital financial assets.

Russia could spend up to 100 billion rupees on various components, including parts for “telecommunications equipment, servers and other complex electronics” that were previously sourced from Western countries, according to estimates.

Poida noted that the joint venture members have also started pilot projects to manufacture Russian-designed commodity components in India. He added that additional funds could have been used to fund joint ventures to create electronics factories in India to “meet Russia’s critical information infrastructure needs.”

The plan is for Russia to use rupees to pay for two categories of imports, including electronics and machinery, according to the FT . Russian government data shows that trade in these two categories has increased sharply from the “negligible volumes” reported before 2022.

A customs filing from India-based Innovio Ventures shows that the companies supplied at least $4.9 million worth of electronics, including drones, to Russia, along with $600,000 worth of goods that were transshipped to a third party, Kyrgyzstan, all paid for in rupees. Meanwhile, shipments to Russia allegedly included $568,000 worth of electronics sent to Testkomplekt, a Russian company that is under U.S. and EU sanctions for being a “link” in Moscow’s military procurement system.

Source: https://baoquocte.vn/bao-anh-nga-da-di-truoc-phuong-tay-mot-buoc-trong-chien-dich-tan-cong-kinh-te-285189.html