India-Russia: News & Analysis

[somnath]

The Russia-India relationship must be turned into a proper economic relationship.

We only need to get the western middle men in terms of MNC and dollar out of the picture and return to rupee-rouble trade.

Both the govts should promise to give their citizens the local currency at predefined levels in exchange for other currency.

And if the RUB crashes against the USD (as it is prone to every time oil prices tumble), who picks up the cost? The Indian taxpayer? Like they did when the rupee debt was renegotiated with Russia in the early '90s...

Relations with Russia are VV important, but there's no logic of harking back to obsolete antediluvian principles of yore...

[Sanku]

We only need to get the western middle men in terms of MNC and dollar out of the picture and return to rupee-rouble trade.

Both the govts should promise to give their citizens the local currency at predefined levels in exchange for other currency.

And if the RUB crashes against the USD (as it is prone to every time oil prices tumble), who picks up the cost? The Indian taxpayer? Like they did when the rupee debt was renegotiated with Russia in the early '90s...

What would it matter in a barter system? The prices are fixed by inherent value of products to the end user and not of the vagaries of market.

And at the rate things are going, probably the only thing to become antediluvian would be the so called liberal market economics of the west.

Wake me up when west actually has liberal market practices -- till then the barter system between Rus and Ind is definitely the way to go.

[somnath]

What would it matter in a barter system? The prices are fixed by inherent value of products to the end user and not of the vagaries of market.

And at the rate things are going, probably the only thing to become antediluvian would be the so called liberal market economics of the west.

Wake me up when west actually has liberal market practices -- till then the barter system between Rus and Ind is definitely the way to go.

Barter (I thought you were referring to a fixed Re-RUB exchange rate regime)? anyways, inherent value to the end user? So what is the "inherent value" of a kg of Indian tea to the Russian housewife? And what is the "inherent value" of a Su30MKI to the IAF? And how do you match the two to come at the acceptabel no of tons of tea required for barter one Su30MKI?

In economic terms, inherent value that you are referring to is described as "utility", and monetisation of utility values has been one of the greatest advancements in human evolution. Regardless of "liberal market economics" of the West, whatever that means (BTW, the technical term used by professionals is neo-liberal)! But waaaay OT here..

BTW, our econiomc relations with Russia are probably destined to remain driven by strategic considerations. On pure economic terms, there is very little complimentarity of the Indian economy with the Russian - either in terms of economic structure or in terms of geographic proximity. We cant supply them any consumer goods that the Chinese cant do cheaper, we cant export them with any major commodities(they are already rich in that), oil from the Middle East and Africa is cheaper (in terms of transport) for us than oil from Russia (and Russia no longer gives Sakhalin I type sweetheart deals anymore), and Russia is not a financial centre that India can use to access any of its core markets (and vice versa), Indians really dont have too much "common" with Russians (the way we do with the Anglo Saxon world)..On the other hand, the strategic imperatives are quite obvious, starting with congruent objecvtives in Central Asia & Afghanistan. Trade in strategic stuff (I would now include nuclear trade in that) and congruence of foreign policy will continue to drive relations..

[Sanku]

quote="Sanku">>
What would it matter in a barter system? The prices are fixed by inherent value of products to the end user and not of the vagaries of market.

Barter (I thought you were referring to a fixed Re-RUB exchange rate regime)?

That is barter in other words isnt it? Yes, I know about monetization etc etc. But a controlled trade with care taken to see that there are no massive money surplus of any one currency on either side (to hedge against collapse) is essentially barter.

I thought it was obvious, what I was trying to say.

BTW, our econiomc relations with Russia are probably destined to remain driven by strategic considerations.

But obviously.

Also economy is ALWAYS been driven by strategy and economic needs will also dictate how strategy evolves -- this is true for the so called liberal economics of the west (which does $-Yuan) under the guise of free market.

The trick is to not confuse short term gains with economic efficiency or nor fall for the dupe that the "western dictated barter system as per their convenience" with the basic market mechanics.

[D Roy]

Such an arrangement if adopted would be one of barter, with the "exchange rates" somewhat arbitrarily fixed.

it has been done before by states in history. The chinese may also be moving to ruble-yuan trade.

That's why the so called "special relationship".

[somnath]

That is barter in other words isnt it? Yes, I know about monetization etc etc. But a controlled trade with care taken to see that there are no massive money surplus of any one currency on either side (to hedge against collapse) is essentially barter.

I thought it was obvious, what I was trying to say.

Also economy is ALWAYS been driven by strategy and economic needs will also dictate how strategy evolves -- this is true for the so called liberal economics of the west (which does $-Yuan) under the guise of free market.

The trick is to not confuse short term gains with economic efficiency or nor fall for the dupe that the "western dictated barter system as per their convenience" with the basic market mechanics.

There is a HUGE amount of difference between a barter arrangement and a fixed exchange rate policy..Th latter is what a lot of countries do vis vis the US dollar (China, UAE etc) - the essential reason for that is USD is prime ccy of global trade, and therefore "pegging" (and thats the strategy really, not a fixed rate necessarily) has some obvious advantages...Obviously it makes no sense for anyone to have a fixed exchange rate policy with soft currencies..Barter is a very different concept..

The bolded portion of the quote is completely incomprehensible.."controlled trade", "no money surplus on either side" are expressions that are just giberish - mean nothing unless you have new economic logic for new expressions...Trade in monetisable terms is as old as Mahenjodaro Harappa..Barter is a distortion of normal economic logic..Basic question which I put to you earlier - how many kilos of tea would be worth the "intrinsic value" of a Su30MKI?

As for CNY, China keeps its xchange rate "PEGGED" against the USD as the US is the largest consumer in the world, and this gives it an advantage over other currencies that are more freely floating when the dollar weaknes in terms of ccy competitveness in exports..

D Roy, China is trying to position CNY as an alternative to the USD as a global ccy, therefore it is "thinking of" trade denomed in CNY for certain goods/countries, incl Russia and Brazil (actually the latter has made some headway) - doesnt mean that the CNYRUB will be "fixed"..It only means that the trade will be settled in CNY, at whatever CNYRUB or CNYBR exchange rates are prevalanet..

Funnily, the biggest opposition for a return to barter trade would be from Russia!

[D Roy]

Hi Somnath,

Your points about intrinsic value and the "exchange rate" etc are of course valid.

However the Chinese are not simply making a play for reserve currency status. also its not just about diversifying their exchange portfolio by denominating trade in a basket of currencies.

They *are* looking at a barter system for russian oil and coal.

[Sanku]

The bolded portion of the quote is completely incomprehensible.."controlled trade", "no money surplus on either side" are expressions that are just giberish - mean nothing unless you have new economic logic for new expressions...!

Somnath heard the phrase "naach na jaane, aangan tedha".

seems like people do understand even if you dont.

[Johann]

What would it matter in a barter system? The prices are fixed by inherent value of products to the end user and not of the vagaries of market.

And at the rate things are going, probably the only thing to become antediluvian would be the so called liberal market economics of the west.

Wake me up when west actually has liberal market practices -- till then the barter system between Rus and Ind is definitely the way to go.

The Russians accepted barter arrangements only under two extreme two conditions;
- their state owned military-industrial complex was well funded enough to cover all R&D and initial production costs, and geopolitical interests overrode the most basic economic common sense.

- the entire economic system was in chaos and collapse, and they were desperately short of commodities that they could not afford to purchase on the global market

Russia is at neither extreme today. Its military industries *desperately* need cash to recapitalise and can not afford the generosity of the Cold War, but the country is not undergoing serious food and foreign exchange shortages as was the case in the late 1980s/early 1990s.

Russian defence industries are likely to see some major restructuring in the coming years, or so the Russian government has hinted. The focus will most likely be improving economic viability, production quality, and its ability to attract disappearing engineering talent. The Russian military wants 21st century weapons (and has been waiting for 20 years now), and that will probably mean licensing arrangements with European companies in many areas.

The impact of all of this on India's defence purchasing will not be clear until the dust settles.

[Sanku]

What would it matter in a barter system? The prices are fixed by inherent value of products to the end user and not of the vagaries of market..

The Russians accepted barter arrangements only under two extreme two conditions;
.

As US hegemony decreases, leading to a badly fluctuating $ (as we see now) as well as US ceding space to China visibly in geo-strat dynamics, there will be a move between Russia and India to consolidate.

The consolidation will definitely need a closer economic tie up between the countries, as this time they would rather not be at the mercy of any third party currency.

Finally -- whether any of the above will happen or not depends a lot of US staying recession (in economic and geo-pol terms) and ceding to China simultaneously.

Those will create the new extreme conditions.

[Johann]

Sanku,

Talk to Russians - they're very clear. They want hard currency (not necessarily dollar) cash payments. They have far too many bad experiences with anything else.

For example the latest announced deal with Venezuela - Chavez didnt have the cash at hand, so the Russian govt. is financing the purchase from the manufacturers with a loan. They aren't interested in accepting payments in oil or tapir skins, or any other commodity.

They don't really have much choice any more. You have to look at how the structure of the Russian defence industry has changed from the past - there are (minority) private share holders, and they expect to get paid in cash. There are private suppliers and subcontractors, and they expect to get paid at market rates too. Unless of course, everything breaks down again.

Now the rupee may well reach the point where its considered hard currency, but my suspicion is that by the time that happens Russia will no longer be as critical a supplier of Indian defence needs.

[Sanku]

Sanku,

Talk to Russians - they're very clear. They want hard currency (not necessarily dollar) cash payments. They have far too many bad experiences with anything else.

For example the latest announced deal with Venezuela -

Now the rupee may well reach the point where its considered hard currency, but my suspicion is that by the time that happens Russia will no longer be as critical a supplier of Indian defence needs.

Johann, India is not Venezuela, and there are no hard currencies other than the $ which is not very hard any more either.

If a long term strategic partnership between Russia and India is to exist, it will have to cut out middlemen.

Lastly, Russian and Indian strategic dealing will be needed far more in future even after the conventional thinking of Russia and India only as seller-buyer of defence item relationship ends.

You are making the mistake of looking at current situation and trying to see how barter fits or does not fit. I am talking of changing the game.

As Shyam Saran laid it out for us Indians, the linear thinking is no longer going to suffice, for the caterpillar to become the butterfly the transformation needs to happen.

Unless US steps up a Russia-India block is sorely needed to be the new axis, for Russians as well as for Indians.

[Johann]

Sanku,

- The dollar is currently the world's reserve currency, but I think you will find that it is far from the only hard currency. There are hundreds of billions of dollars in international trade every month in Euros, but also in Swiss Francs, Japanese Yen and Pound Sterling.

- It takes two to tango. Considering future possibilities is great, but its unrealistic to ignore the other party's constraints. However good you may think barter trade would be for India, the Russians must deal with their reality.

India and Russia are already strategic partners. But Russia simply does not have the economic capacity to seriously subsidise arms sales in the long term, not without starving their defence industry of desperately needed capital.

That is why they like selling to countries with a massive balance of payment surplus from exports - energy exporters like Algeria, Venezuela and Iran, or manufactured exports like the PRC.

Despite the cash from all these sales, the Russian arms industry is still having a tough time modernising, retaining and attracting talent, controlling costs, etc.

The only way around this is to understand what the Russians defence sectors specific problems are, and help them solve it.

[Sanku]

India and Russia are already strategic partners. But Russia simply does not have the economic capacity to seriously subsidise arms sales in the long term, not without starving their defence industry of desperately needed capital.
.

Dear Johann can you please help me understand where and how I have asked for the bolded part above?

I would also like to understand, why dollar infusion (or any other hard currency of which Rupee cant not one according to you) is so necessary for the Russians, why cant Russia and India become "preferred trade partners" with the pegging of Rupee-Ruble trade?

I think you still stuck in 71 Soviet-Indian relationship metrics and seem to assume I am asking for the same?

[Johann]

Sanku,

- Commodities fluctuate substantially more in value than hard currency. If the price in wheat or tea or whatever erred in the Russian's favour, India might make a considerable loss depending on where the market went, and India ends up overpaying. If they estimate under, Russia gets underpaid. Its a level of risk that neither party finds attractive. Its the kind of arrangement you rely on when there's no alternative, for example when the Soviets traded SU-27s for grain with China in 1990. The Russians staved off hunger, but they didnt come out ahead on that one.

- Its not exactly my solo opinion that the rupee is not a hard currency at this time. That's just the way the global market is. How much trade not involving India is done in INR? One of the definitions of a hard currency is that its a form of payment acceptable to two different third parties. If you pay the Russian government in rupees they are restricted in where they can use that currency - for the most part they will be forced to use it to buy Indian goods. Good for India, but not necessarily what the Russians want.

[Sanku]

Johann I see you have not answered my questions but raised other points which are correct but do not impinge on my statements.

[svinayak]

Russia has a higher need for its western neighbors right now than it has for India (to put it bluntly). and the days are gone when India depended exclusively on Russia for its defense equipment

Geopolitical need by India for Russia's help has increased.
With PRC US trying to control Asia, India needs to get support so that it does not get cornered.

[Johann]

Sanku,

When I said subsidy, I mean anything that makes economic sense to one country's defence industry but not the other.

- As Prad pointed out, and as you have agreed rupees are far less useful to the Russians than hard currency
- Similarly, barter trade either denies Russia of hard currency, or if they trade the goods on the international market for hard currency it exposes them to serious risk.

These options only make sense for the Russians if they either don't care about economics (Cold War era), or are desperate (Soviet collapse/ post collapse)

I am sure there is huge potential for the Indian and Russian defence industries to cooperate, but they will have to take in to account the Russian's pressing need for capital and technology.

Rather than a crude barter of commodities for technology, perhaps trade in licensed intellectual property. For example, the Russians are very much behind in battlefield communications and Indian systems are far more modern. On the other hand, Russia has far deeper expertise in turbine technology. The development costs or market purchase price of the two items, are far from equal of course, which is problematic in the longer term. However, while this solves some Russian problems, it still leaves them with the much larger set of technology deficits that they must turn to Europe and/or Israel for.

[RayC]

the Russians are very much behind in battlefield communications and Indian systems are far more modern.

Could you amplify as to how?

[Johann]

Hi Ray,

Its an outsiders perspective of course, but there were numerous reports of Russian frustrations with C3 during the Georgia war, to the extent that unsecured mobile phones were being heavily used. In a recent exercise Ladoga-2009, problems with data transfer from say newly inducted UAVs to artillery batteries have not been resolved. The Russian General Staff has repeatedly called for such capabilities since Marshal Ogarkov in the 1970s, but Russian industry is still struggling to deliver.

BEL's various 'network centric warfare' projects such as Tactical Communication System , Artillery Command, Control and Communications System, Battlefield Management System, etc appear to be far closer to large scale implementation than their Russian equivalents, which is perhaps not surprising given India's significant lead over Russia in IT.

[Karan Dixit]

Russia should consider adding Indian Rupee as well to its Forex reserve.

---

Nov. 25 (Bloomberg) -- The Canadian currency rose against its U.S. counterpart as RIA Novosti reported that Russia’s central bank plans to add Canadian dollars to its international reserves.

http://www.bloomberg.com/apps/news?pid= ... d5wIWyZyoE

[D Roy]

Medvedev is Reinventing the Red Army


For more on what Johann is saying.

[Philip]

The Russian ambassador has said it right,that people-to-people relationships are as important,if not more than govt-to-govt. realtions,agreements,whatever.This point MMS has well understood (Indo-US thread) according to one scribe.While Indo-Russian relations and understanding are broadly on the same or parallell tracks on most world issues,there is a deficiency when it comes of the above mentioned contacts.This is where Indo-US relations are excellent,aided by a huge Indian disapora in the US and west.The reason for this is language.How many Indians know Russian? Traders in Janpath and Khan market might be quite at home bargaining with their Russian buyers,but it is a language truly a " riddle,wrapped in a mystery,inside an enigma" to almost all Indians.European languages and Arabic are more easily understood by Indians who travel or work overseas,especially in the Middle East and Gulf.It is not however as if there is no knowledge of Russia and its people and culture in India,there is a long history of excellent Indo-Russian cultural exchanges ,and on the odd occassion when one meets a Russian when travelling,many of them immediately start singing Hindi songs from old Raj Kapoor films! Russian literature giants like Tolstoy and Dostoyevsky are old friends in debates in the Calcutta coffee houses as much as Marx and Lenin.The history and spread of Communism in India after the October Revolution and the heady days of the Soviet Union,brought with it much Indo-Russian contact,if mostly officially sponsored.The French ambassador to India has also spoken about Indo-French relations in similar manner and the absence of knowledge of Indians about France (sacre bleu!).Here to language and travel is the key.

If Indo-Russian relations at the personal level are to grow further,then the "key" to opening up Russia to Indians in this day and age,is for Russia to start increasing the number of their cultural centres across the country.The new generation of young Indians belong to the IT and internet generation,where the west and western influences rule supreme. I do know of a few people of the older generation who studied in Russia,doing medicine,etc.Russia has excellent universities,here our students could go to instead of Oz to be beaten up(!),but knowledge of Russian is absolutely neccessary.Allied to this is the need is for promoting affordable tourism to Russia.Good well organised tours with English speaking guides.For culture vultures,what else can equal the Kirov,Bolshoi,the Hermitage and many other gems of Russian heritage and culture?

[Sanku]

Sanku,

When I said subsidy, I mean anything that makes economic sense to one country's defence industry but not the other.

Ok but thats not been my point at all.

- As Prad pointed out, and as you have agreed rupees are far less useful to the Russians than hard currency

No I dont agree. I think Russia and India should get the middlemen out and trade in their own currency. Of course it is predicated on
1) Large volumes of trade across the board
2) A good mechanism of exchange and valuation

- Similarly, barter trade either denies Russia of hard currency, or if they trade the goods on the international market for hard currency it exposes them to serious risk.

As I said I am still waiting to understand why Russians need hard currency, that WAS my question. The answer you have given is circular, you say Russia needs hard currency, and then go on to say no trade without hard currency is not possible hence hard currency is needed.

Basic question. Why does Russia need hard currency and why is Ruppee-Rouble not good enough (or can not be made good enough under a strat umbrella)

I am sure there is huge potential for the Indian and Russian defence industries to cooperate, but they will have to take in to account the Russian's pressing need for capital and technology.

In the world I envisage India will be the supplier of capital and technology, captial India already has and will have a lot more in short term.

Technology India can be a hub where goods and technology manufactured under the umbrella of even MNCs are routed through India because of the preferred trade partner status India and Russia have.

So Russia would buy its Hundai cars (say) directly from Indian operations and Hundai would like it because it makes it easier for them to sell.

It can be done, all that is needed is strong leadership from Indian side and giving up this one sided focus with US and look for broader platforms.

[somnath]

^^^ Even Sovplan (the ex Soviet eco planning body) couldnt have come out with something as bizarre!

I think Russia and India should get the middlemen out and trade in their own currency. Of course it is predicated on
1) Large volumes of trade across the board
2) A good mechanism of exchange and valuation

And how exactly would a fair INRRUB level be determined? In normal economics, its determined by markets with liberal doses of intervention by central banks "pegging the fair value" of the domestic ccy to a basket of hard currencies. What does a "good mechanism of exchange" mean in brasstacks terms? Subbarao garu waking up one fine morning and deciding that 1 RUB is equal to 3 INR, thats it?

As I said I am still waiting to understand why Russians need hard currency, that WAS my question. The answer you have given is circular, you say Russia needs hard currency, and then go on to say no trade without hard currency is not possible hence hard currency is needed.

Russians need hard currency because they will need to trade with a rest of the workld a lot more than they would ever do in "strategic terms" with us. So if they sell us a Su30MKI, unless there is a defined amount of the no of kgs of tea that is fair value for a Su30, and Russia would "need" that many kgs of tea, they would need a currency from us that they can use to buy toys and keychains and clothes from China..Because China is not about to start trading in INR..

Why does Russia need hard currency and why is Ruppee-Rouble not good enough (or can not be made good enough under a strat umbrella)

simple, the total volume of Indo-Russian trade is <5 billion, compared to its total trade volume of >500 billion..

In the world I envisage India will be the supplier of capital and technology, captial India already has and will have a lot more in short term

Really? Last I checked, we ran a current account deficit and a capital account surplus, which means we are net importers of capital from the world, not the other way round..

Technology India can be a hub where goods and technology manufactured under the umbrella of even MNCs are routed through India because of the preferred trade partner status India and Russia have.

Beats me why Intel would start maufacturing in India just because Russia has a preferred "trade partner" status..Russia is hardly the biggest market for Intel chips, and India is hardly the most propitious location for chip manufacturing, or vice versa...About "preferred trade partner", last I knew India was not even willing to give market economy status to Russia under WTO, an FTA (I presume thats what you meant) is a bit far away..

So Russia would buy its Hundai cars (say) directly from Indian operations and Hundai would like it because it makes it easier for them to sell.

A typical Hyundai sedan would have 30-40% imported compenents (by value). So India sells a Hyundai car to Russia for (say) 20k RUB, but we have to pay SoKo for the components in USD terms, given that SK is hardly likely to accept RUB..Where does that USD come from? The same "dirty" middlemen?

[Philip]

The sick Russian auto manufacturer should be considered by Indian auto majors ,as it would offer someone like Mahindra's an excellent opportunity to sell their entire range of rugged vehicles apart from brands like Renault,etc.,which they are making in India.The rupee-rouble routeis supposedly being reconsidered and was a success aeons ago,no reason why oil and gas rich Russia and human resource/consumer godds rich India should not be able to work out a deal for both.

[Sanku]

And how exactly would a fair INRRUB level be determined? In normal economics, its determined by markets with liberal doses of intervention by central banks "pegging the fair value" of the domestic ccy to a basket of hard currencies. What does a "good mechanism of exchange" mean in brasstacks terms? Subbarao garu waking up one fine morning and deciding that 1 RUB is equal to 3 INR, thats it?

Whats the difference between hard currencies and soft one? Who decides, is the free market really free, or is it a euphemism for freely controlled by Fed and cronies? Whats magical about the hard currencies, why cant a joint effort between Russia and India make both their currencies hard for each other.

Its obviously a reflection of strategic importance (not economic) of certain players -- the whole goal is to break out of the strait jacket imposed by others.

This can be determined jointly be RBI-Central Russian bank on a daily basis based on certain metrics they deem fit.

After all this is what China and US mutually do, but one example really.

People need to break out of this shackle of one reality is the Fed reality.

Russians need hard currency because they will need to trade with a rest of the workld a lot more than they would ever do in "strategic terms" with us.

Hmm so you are sure that you have seen the future and it can be only one way that you outline? And since you missed the basic premise, the whole idea of a strategic trade is to create a world of ourselves with large enough trade volumes.

Secondly what is a good reason that Russia cant trade with us on a different basis and still do different trade with other countries for the rest of the need? Any problem they cant coexist?

Of course the standard crib will be the balance of payment -- but hey thats why I have asked for a yearly settling of accounts to ensure no extra left over balance. This could be gold trade too, whatever, the point is such a structure can be built.

So if they sell us a Su30MKI, unless there is a defined amount of the no of kgs of tea that is fair value for a Su30, and Russia would "need" that many kgs of tea, they would need a currency from us that they can use to buy toys and keychains and clothes from China..Because China is not about to start trading in INR..

already answered above.

Why does Russia need hard currency and why is Ruppee-Rouble not good enough (or can not be made good enough under a strat umbrella)

simple, the total volume of Indo-Russian trade is <5 billion, compared to its total trade volume of >500 billion..

Dont look now, but thats a good reason why it can afford to not care about 5 billion $ of "hard cash" since it anyway has a lot.

In the world I envisage India will be the supplier of capital and technology, captial India already has and will have a lot more in short term

Really? Last I checked, we ran a current account deficit and a capital account surplus, which means we are net importers of capital from the world, not the other way round..

Umm aren't you supposed to be economics guy? Are you saying a person who imports captial from one source WILL NEVER also simultaneously export it to others?

How is it for other countries pray tell, others who invest capital outside their borders are they all necessarily net capital exporters as well? Always?

Technology India can be a hub where goods and technology manufactured under the umbrella of even MNCs are routed through India because of the preferred trade partner status India and Russia have.

Beats me why Intel would start maufacturing in India just because Russia has a preferred "trade partner" status.

Why the obsession with Intel bhai? Does Intel define the entire world of options? What does intel example show anyway? If Intel does not does that mean no one else will? Is that a good example to consider?

Well may be Intel wont, but the question is not about Intel is it. The question is can others chose to make India a Industrial hub for exports to Russia since that will be easier?
ious

So Russia would buy its Hundai cars (say) directly from Indian operations and Hundai would like it because it makes it easier for them to sell.

A typical Hyundai sedan would have 30-40% imported compenents (by value). So India sells a Hyundai car to Russia for (say) 20k RUB, but we have to pay SoKo for the components in USD terms, given that SK is hardly likely to accept RUB..Where does that USD come from? The same "dirty" middlemen?

[/quote]

Well India can make $ from other sources too right. So it pays $ from those sources. As far a Russia is concerned nether of us would need to care about net loss or gain of $ from the trade.

[somnath]

The rupee-rouble routeis supposedly being reconsidered and was a success aeons ago,no reason why oil and gas rich Russia and human resource/consumer godds rich India should not be able to work out a deal for both.

The tupee ruble trade ultimately caused the Indian taxpayer to pay up a lot more than what we would have otherwise paid if the trade was fully in hard currency. of course it was necessary at that time, dont know anyone, Idnia or Russian, pining to go back to those days today.

Russia is rich in oil, but India imports oil much cheaper (in transport cost terms) from ME/Africa. And there is virtually nothing on the consumer goods front that India can offer Russia that they cant get cheaper/better from China..Biggest problem, how many kgs of Indian tea is "worth" a Su30? That question is moot when you talk of barter trade..

The only person seriously doing barter trades is Hugo Chavez (with Cuba - oil for doctors and teachers!)....Hardly an exemplar of sensible econmics, or even sensible strategic thinking!

[Sanku]

The rupee-rouble routeis supposedly being reconsidered and was a success aeons ago,no reason why oil and gas rich Russia and human resource/consumer godds rich India should not be able to work out a deal for both.

The tupee ruble trade ultimately caused the Indian taxpayer to pay up a lot more than what we would have otherwise paid if the trade was fully in hard currency. of course it was necessary at that time, dont know anyone, Idnia or Russian, pining to go back to those days today.

Err only because Soviet Union broke up. You dont plan around black swan events.

And to preclude such a event for either party have I proposed a yearly settlement option.

[Johann]

Whats the difference between hard currencies and soft one? Who decides, is the free market really free, or is it a euphemism for freely controlled by Fed and cronies? Whats magical about the hard currencies, why cant a joint effort between Russia and India make both their currencies hard for each other.

Its obviously a reflection of strategic importance (not economic) of certain players -- the whole goal is to break out of the strait jacket imposed by others.

This can be determined jointly be RBI-Central Russian bank on a daily basis based on certain metrics they deem fit.

After all this is what China and US mutually do, but one example really.

Sanku,

A hard currency is one that most people around the world will accept as suitable payment.

India and Russia would need to be able to use each others currencies to pay all of their other trading partners.

That means essential trade with China, Japan, Korea, Iran, the GCC, Eurozone, UK, US, Canada, Brazil, Mexico, Argentina, Singapore, Malaysia, Australia, South Africa, Angola, Nigeria, etc, etc.

It is not the 'Fed and its Cronies', nor is it any RBI-Russian agreement that decides whether say, Brazilian companies will accept payment in INR from Russian companies for beef, or an ethanol plant.

Despite the US-Chinese relationship, the Yuan is not yet really a hard currency. However, the sheer volume of exports from China to Russia has gotten to the point that Russia is willing to consider Yuan payments - but that's only because they wouldn't be stuck with a lot of extra Yuan they couldnt use anywhere else.

Indian export and investment volumes to Russia would have to increase very dramatically for Russia to be able to recycle rupee payments for defence equipment. Once again, that trade would have to make economic sense to all of the private Indian and Russian entities involved. It is not something that can be decided by government fiat.

[Sanku]

......

Johann you are just taking one line of my post out of context, that too in my reply to Somnath.

As you can see, I have already talked about managing exchange surpluses so that the issue of what to do with the currency does not arise at all.

This would be needed in the first phase. Going forward the Ind-Ru trade as it solidifies will give both the currencies elements of acceptability outside these countries.

In any case the whole idea is to create a corridor of extremely smooth trade between the two countries. The Govts stepping in and removing the $ issues with all its fluctuations and uncertainties is one element of this.

Of course that is not the only element of it. The strategic trade and relationship will not fly only on this one plank.

This is a instrument adding to a overall joint mechanism the countries will develop to preferentially nurture trade between each other in a directed manner and not get pushed by market forces which are controlled by external sources.

[vipins]

Russia train crash investigation examines bomb theory

The authorities in Russia are treating the crash of an express train in which at least 25 people were killed as a possible act of terrorism.

A crater has been found near the track, raising suspicions that a bomb may have been used to derail the train.

[Sriman]

Russia train crash 'caused by bomb'

http://news.bbc.co.uk/2/hi/europe/8383960.stm

A bomb blast caused the Russian train crash in which at least 26 people were killed, intelligence officials say.

The Nevsky Express derailed with nearly 700 on board as it ran through remote countryside between the capital Moscow and the second city, St Petersburg.

[Sanjay M]

Russian Orthodox Patriarch Calls for a Strong Reply to Bombing

A claim of responsibility by Islamist rebels could heighten tensions between Russia's Christian majority and its Muslim minority weeks after an Orthodox priest who was critical of Islam was shot dead in his church.

...

Television stations canceled entertainment shows Sunday and football matches observed a minute of silence.

If it were India, we would not even have observed a moment of silence. That's the kind of lesser society we are.

[tejas]

Why is it everywhere in the world there is tension between two religions, Islam is one of them (just a rhetorical question).

Just remember terrorism has no religion

[Igorr]

My two words about Mr.Manmohan Singh visit in Moscow and a good video about Russian fleet in Bengal Bay, 1971.

[sanjaykumar]

Amazing stuff, never knew there were Soviet atomic subs ready to intercept the Enterprise in the Indian Ocean.

[Neshant]

Definately fake news.

There is no way Soviet anything would intercept an American warship over some third world country's strife.

If Enterprise had attacked India, all the Soviets would have done is made a protest at the UN, supplied India with some arms hoping to draw US into another Vietnam situation and that's about it.

[Jarita]

This may actually be true. It happened another time in the 80's

[rsingh]

The way he explain the day to day happenings make me belive that it true. On first day of war Bakistanis lost submarine and next day India sunk 10 enemy ships using Russian arms. Guy is giving complete detail about how he contacted US command. His orders were to stop US from attacking any Indian base. He talks about P35 rockets. In the end of clip talks about some telegram sent by commnder of Enterprise to HQ saying that "we are late .......Russians are here"