Raja Menon
Posted online: Monday, December 17, 2007 at 0000 hrs IST
Earlier this month as reported in this newspaper the navy chief had argued that the Government of India must not renegotiate the price of the aircraft carrier, Admiral Gorschkov, which India is acquiring from the Russians. The Russians are seeking $1.2 billion more for it. The issue is obviously a foreign policy matter, but what is often forgotten is the history of this deal, as indeed Indo-Russian naval ties.
Admiral Gorschkov, known as the father of the Soviet navy, was its chief for 21 years. He gave a great deal of his time to meeting the requirements of the growing Indian navy over two decades. On his third visit to India, meeting the third Indian naval chief, he is reported to have quipped, Cant you people find a chief you get on with, and hang on to him? The aircraft carrier named after Gorschkov, to be renamed the Vikramaditya, is now the centre of an unpleasant controversy and a standing disgrace to the memory of both Gorschkov and the great relationship between the two navies. But all the unpleasant clapping now comes from the Russian side, and the arrogance of Putins new government. Clearly, the days of the warmth between the two services and quite possibly between the two countries appear to be fast declining.
When the Soviet government collapsed, the body entrusted with representing Moscow in negotiating foreign sales the General Engineering Department was also wound up, to be replaced by the Rosboron (Russian Defence) Export. Contracts are signed between the GoI (MoD) and Rosboron Export, the holding-cum-trading company which creams off 15 per cent of the contract price between the buyer and the actual seller, otherwise called the Original Equipment Manufacturer (OEM). On a few occasions when Indian officers have met the OEM representatives, tales of exorbitant add-on costs have emerged, as well as the inability of OEMs to give the customer a fair deal without the rapacious intervention of Rosboron. In the murky world of defence deals, the relationship between Rosboron and senior leaders in the Kremlin is discussed as hugely important bits of strategic information to be exploited in deal-making.
Today, the yard where the Vikramaditya/Gorschkov is being refitted the Severomash in Severodvinsk claims that the cost of refitting the Gorschkov has escalated from $700 million agreed price to about $1.3 billion. But that is not the real story. Any flat buyer who has been cheated by a builder will be familiar with this one. After paying 50 per cent of the flat price, the owner goes to see his flat, sees nothing on the ground, and is told that unless he pays 75 per cent of costs and a 50 per cent escalation, the flat construction wont even start. The Gorschkov story is one such episode. The great mystery, of course, is whether the managers of Severomash, normally an inoffensive, hard-working lot in a remote shipyard, are doing this scam entirely on their own, or it is encouraged and abetted from Moscow.
When the Gorschkov refit started, Severodvnsk was on the verge of collapse, with the threat of thousands of workers being laid off. Today, the yard is thriving, outwardly at least. The buildings have been renovated, the employees have new cars, there are spanking new computers and office systems, but practically no work going on, on our aircraft carrier. The yard however is very busy. The new-generation Russian Nuclear Submarine, the Boreii class, languishing under construction for eight long years, has suddenly been completed. Two more Boreii class are being built all to join the Far East Fleet in Kamchatka, to help Russia flex its new-found muscle. The yard is also churning out miles of pipelines to take Siberian gas and oil to new buyers, at $100 a barrel. When the Gorschkov deal was signed, the oil price was $47 and Russias GDP was $300 billion. Now it stands at $1.5 trillion. What has not changed is the camaraderie between the Indian naval officers and their Russian colleagues in the yard.
Truth they say always comes out with vodka. You must be daft, say the Russians, if you thought you were getting a free aircraft carrier.
We Indians have a few grim choices before us. The only aircraft the Gorschkov can accommodate, the Mig-29Ks, have been paid for, so no smart sidestepping is possible to acquire an old American carrier, for instance. But there are many purchases from Russia in the offing, including the armys MBT, the Akula, the power reactors for Kudamkulam and the AWACS. There are many more yet to be negotiated, among them the mother of all deals the Multi Role Combat Aircraft. Russia has much to lose in commercial terms by standing us up, but may make up in sales of high-tech weapons to a cash rich China.
In the final analysis, therefore, these weapons sales on such a large scale are part of the new political rearrangement going on in the world. There are many areas where only the Russians have stood by us, but if a political rearrangement is going on, we must start by looking for other collaborative ventures and why the Russians are getting away with no offsets? Only the old-timers will remember that we went to the Soviets, in the first place, in 1965, when the British Admiralty to whom we looked up for so much turned us down flat on a request for modern submarines. The Gorschkov deal will have to be re-negotiated, but there is little doubt that we must as the navy chief had suggested take a relook at where we are going, in relation to the US , the EU, Russia and Israel.
Lastly, we are repeating history and that is unforgivable. We always knew that the three strategic projects the Indian nuclear submarine, the light combat aircraft and the main battle tank would decide our strategic independence. In all three areas we are displaying an inward-looking, autarchic, failed India image when commercial India is buying up US technological companies and creating multinational giants. Government science occasionally does deliver, like ISRO does. But if we have to dismantle our rent-seeking PSUs and create new JVs that can sell to the world instead of being the worlds largest arms buyer, let the government appoint a commission, like it did the Tata commission for aviation in the sixties, to achieve some semblance of strategic autonomy
