This diversification has not only bolstered India’s export sector but also reinforced its role as a dependable trade partner for Russia during tumultuous times.​ However, this burgeoning trade relationship has not been without controversy. Investigative reports by outlets such as the Financial Times and The Insider have highlighted the involvement of Russian intelligence-backed networks in orchestrating sanctions evasion schemes.

These networks allegedly utilise entities from the so called Global South to circumvent the extensive sanctions imposed by the Group of Seven (G7) member nations and others. These revelations have cast a spotlight on the complexities and challenges inherent in India’s balancing act between fostering economic and strategic ties with Russia and the West.​ The geopolitical landscape has further evolved with the inauguration of US President Donald Trump in January 2025.

Departing from his predecessor’s hardline stance, President Trump has adopted a more conciliatory approach toward Russia, actively seeking to mediate a peace deal between Moscow and Kyiv.

This shift was dramatically underscored by a sensationalised exchange in the Oval Office involving Ukrainian President Volodymyr Zelensky, President Trump, and Vice President J.D. Vance, which also followed a brief pause in US support for Kiev against Russia.

Concurrently, the Trump administration’s tariff and economic policies have introduced new variables into the international trade equation that despite the prospects of lifting sanctions on Russia may not bring global trade back to the January 2022 status quo ante.

According to a report by the Economic Times, Russian state owned oil giant Rosneft, for instance, is contemplating an exit from its Indian joint venture, Nayara Energy. The impetus behind this move stems from the challenges Rosneft faces in repatriating revenues due to sanctions that have severed its access to conventional banking networks, leaving only specialised channels willing to navigate the risks associated with US secondary sanctions.​

Rosneft is likely conscious of the Trump administration’s entirely tentative and conditional ability to lift sanctions against it and has decided to cut its losses where things are unsustainable even in ventures in countries which don’t endorse G7 style unilateral sanctions such as India.

Amid these economic and geopolitical shifts, defence cooperation remains a cornerstone of India-Russia relations. During President Putin’s anticipated visit, both nations are expected to finalise the Reciprocal Exchange of Logistics Agreement (RELOS), a pact that has faced repeated delays since 2021.

Once signed, RELOS will facilitate mutual access for India and Russia to each other’s military facilities for purposes such as refueling and maintenance, thereby enhancing operational synergy. This agreement is particularly significant as it would place Russia on strategic parity with the United States, which has already established similar logistics agreements with India, including the Basic Exchange and Cooperation Agreement (BECA). ​

But empires never disappear without a fight, and the Anglo-American one is no exception, overplaying its hand, threatening and bluffing its way, right to the end.

End of an order

It seems no matter how many sanctions the west imposes on Russia, the victims most affected are western civilians. Indeed, the severity of this political blunder is such that the nations of the trans-Atlantic are heading towards the greatest self-induced food and energy crisis in history.

While the representatives of the “liberal rules-based international order” continue on their trajectory to crush all nations that refuse to play by those rules, a much saner paradigm has come to light in recent months that promises to transform the global order entirely.

The multipolar solution

Here we see the alternative security-financial order which has arisen in the form of the Greater Eurasian Partnership. As recently as 30 June at the 10th St Petersburg International Legal Forum, Russian President Vladimir Putin described this emerging new multipolar order as:

“A multipolar system of international relations is now being formed. It is an irreversible process; it is happening before our eyes and is objective in nature. The position of Russia and many other countries is that this democratic, more just world order should be built on the basis of mutual respect and trust, and, of course, on the generally accepted principles of international law and the UN Charter.”

Since the inevitable cancellation of western trade with Russia after the Ukraine conflict erupted in February, Putin has increasingly made clear that the strategic re-orientation of Moscow’s economic ties from east to west had to make a dramatically new emphasis on north to south and north to east relations not only for Russia’s survival, but for the survival of all Eurasia.

Among the top strategic focuses of this re-orientation is the long overdue International North South Transportation Corridor (INSTC).

On this game-changing mega-project, Putin said last month during the plenary session of the 25th St Petersburg International Economic Forum:

“To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, trans-shipment capacity at ports in the Arctic, and in the eastern, southern and other parts of the country, including in the Azov-Black Sea and Caspian basins – they will become the most important section of the North-South Corridor, which will provide stable connectivity with the Middle East and Southern Asia. We expect freight traffic along this route to begin growing steadily in the near future.”

The INSTC’s Phoenix Moment

Until recently, the primary trade route for goods passing from India to Europe has been the maritime shipping corridor passing through the Bab El-Mandeb Strait linking the Gulf of Aden to the Red Sea, via the highly bottlenecked Suez Canal, through the Mediterranean and onward to Europe via ports and rail/road corridors.

Following this western-dominated route, average transit times take about 40 days to reach ports of Northern Europe or Russia. Geopolitical realities of the western technocratic obsession with global governance have made this NATO-controlled route more than a little unreliable.

Despite being far from complete, goods moving across the INSTC from India to Russia have already finished their journey 14 days sooner than their Suez-bound counterparts while also seeing a whopping 30 percent reduction in total shipping costs.

These figures are expected to fall further as the project progresses. Most importantly, the INSTC would also provide a new basis for international win-win cooperation much more in harmony with the spirit of geo-economics unveiled by China’s Belt and Road Initiative (BRI) in 2013.

Cooperation not competition

Originally agreed upon by Russia, Iran and India in September 2000, the INSTC only began moving in earnest in 2002 – albeit much more slowly than its architects had hoped.

This 7,200 km multimodal megaproject involves integrating several Eurasian nations directly or indirectly with rail, roads and shipping corridors into a united and tight-knit web of interdependency. Along each artery, opportunities to build energy projects, mining, and high tech special economic zones (SEZs) will abound giving each participating nation the economic power to lift their people out of poverty, increase their stability and their national power to chart their own destinies.

Beyond the founding three nations, the other 10 states who have signed onto this project over the years include Armenia, Georgia, Turkey, Azerbaijan, Kazakhstan, Belarus, Tajikistan, Kyrgyzstan, Oman, Syria and even Ukraine (although this last member may not remain on board for long). In recent months, India has officially invited Afghanistan and Uzbekistan to join too.

While western think tanks and geopolitical analysts attempt to frame the INSTC as an opponent to China’s BRI, the reality is that both systems are extremely synergistic on multiple levels.

Unlike the west’s speculation-driven bubble economy, both the BRI and INSTC define economic value and self-interest around improving the productivity and living standards of the real economy. While short term thinking predominates in the myopic London-Wall Street paradigm, the BRI and INSTC investment strategies are driven by long-term thinking and mutual self-interest.

It is no small irony that such policies once animated the best traditions of the west before the rot of unipolar thinking took over and the west lost its moral compass.

An integrated alternative

The INSTC’s two major bookends are the productive zone of Mumbai in India’s Southeast region of Gujarat and the northern-most Arctic port of Lavna in Russia’s Kola Peninsula of Murmansk.

This is not only the first port constructed by Russia in decades, but when completed, will be one of the world’s largest commercial ports with an expected capacity to process 80 million tons of goods by 2030.

The Lavna Port is an integral part of Russia’s Arctic and Far East Development vision and is a central piece to Russia’s current Comprehensive Plan for Modernization and Expansion of Main Infrastructure and its Northern Sea Route which is expected to see a five-fold increase of Arctic freight traffic over the coming years. These projects are integrally linked to China’s Polar Silk Road.

Between these bookends, the INSTC moves freight from India into Iran’s Port of Bandar Abbas where it is loaded onto double-tracked rail to the Iranian city of Bafq and then to Tehran before coming to the Anzali Port on the southern Caspian Sea.

‘Be like water’

Because the INSTC is based on a flexible design concept capable of adapting to a changing geopolitical environment (very much like the BRI), there are a multitude of connecting lines that branch off the main North-South artery before goods make it to the Caspian Sea.

These include an eastern and western corridor branching off from the city of Bafq towards Turkey and thence Europe via the Bosporus and also eastward from Tehran to Turkmenistan, Uzbekistan, Kazakhstan and thereafter into Urumqi in China.

Railway is still relevant

From the Anzali Port in the north of Iran, goods may travel by the Caspian Sea towards Russia’s Astrakhan Port where it is then loaded onto trains and trucks for transport to Moscow, St Petersburg and Murmansk. Inversely goods may also travel over land to Azerbaijan where the 35 km Iran Rasht-Caspian railway is currently under construction with 11 km completed as of this writing.

Once completed, the line will connect the Port of Anzali with Azerbaijan’s Baku, offering goods a chance to either continue onwards to Russia or westward toward Europe. A Tehran-Baku rail route already exists.

Additionally, Azerbaijan and Iran are currently collaborating on a vast $2 billion rail line connecting the 175 km Qazvin-Rasht railway which began operations in 2019 with a strategic rail line connecting Iran’s Rasht port on the Caspian to the Bandar Abbas Complex in the south (to be completed in 2025). Iran’s Minister of Roads and Urban Development Rostam Ghasemi described this project in January 2022 saying:

“Iran’s goal is to connect to the Caucasus, Russia, and European countries. For this purpose, the construction of the Rasht-Astara railway is in the spotlight. During the Iranian president’s visit to Russia, discussions were conducted in this regard, and construction of the railway line is expected to begin soon with the allocation of needed funds.”

In recent months, India’s Prime Minister Narendra Modi has lobbied to incorporate the joint Iran-India built Chabahar Port into the INSTC which will likely occur since another 628 km rail line from the port to the Iranian city of Zahedan is currently under construction.

Once completed, goods will easily move onward to the city of Bafq. While some critics have suggested that the Chabahar Port is antagonistic to Pakistan’s Gwadar Port, Iranian officials have constantly referred to it as Chabahar’s twin sister.

Since 2014, a vast rail and transportation complex has grown around the co-signers of the Ashkabat Agreement (launched in 2011 and upgraded several times over the past decade). These rail networks include the 917.5 km Iran-Turkmenistan-Kazakhstan route launched in 2014, and Turkmenistan-Afghanistan-Tajikistan rail/energy project launched in 2016 which is currently seeing extensions that could easily go into Pakistan.

In December 2021, the 6540 km Islamabad to Istanbul rail line (via Iran) recommenced operations after a decade of inaction. This route cuts the conventional sea transit route time of 21 days by half. Discussions are already underway to extend the line from Pakistan into China’s Xinjiang Province linking the INSTC ever more closely into the BRI on yet another front.

Finally, June 2022 saw the long-awaited unveiling of the 6108 km Kazakhstan-Iran-Turkey rail line which provides an alternative route to the under-developed Middle Corridor. Celebrating the inaugural 12 day voyage of cargo, Kazakhstan’s President Kasym-Jomart Tokayev stated: “Today, we welcomed the container train, which left Kazakhstan a week ago. Then it will go to Turkey. This is a significant event, given the difficult geopolitical conditions.”

Despite the fact that the INSTC is over 20 years old, global geopolitical dynamics, regime change wars, and ongoing economic warfare against Iran, Syria and other US target states did much to harm the sort of stable geopolitical climate needed to emit large scale credit requisite for long term projects like this to succeed.

Caspian Summit Security breakthroughs

As proof that necessity truly is the mother of invention, the systemic meltdown of the entire post-WW2 edifice has forced reality to take precedence over the smaller-minded concerns that kept the diverse nations of Sir Halford John Mackinder’s “World Island” from cooperating. Among these points of endless conflict and stagnation which has upset great economic potential over the course of three decades, the Caspian zone stands out.

It is in this oil and natural gas rich hub that the five Caspian littoral states (Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan) have found a power to break through on multi-level security, economic and diplomatic agreements throughout the June 29-30, 2022 Sixth Caspian Summit in Ashgabat, Turkmenistan.

This summit placed a high priority on the INSTC with the region becoming both a north-south and east-west transportation hub. Most importantly, the leaders of the five littoral states made their final communique center around the region’s security since it is obvious that divide-to-conquer tactics will be deployed using every tool in the asymmetrical warfare tool basket going forward.

Chief among the agreed-upon principles were indivisible security, mutual cooperation, military cooperation, respect for national sovereignty, and non-interference. Most importantly, the banning of foreign military from the land and waters of the Caspian states was firmly established.

While no final agreement was reached over the disputed ownership of resources within the base of the Caspian, the stage was set for harmonization of partner states’ security doctrines, a healthy environment was established for the second Caspian Economic Summit which will take place in Autumn of this year and which will hopefully resolve many of the disputes pertaining to Caspian resource ownership.

Although geopolitical storms continue to intensify, it is increasingly clear that only the multipolar ship of state has demonstrated the competence to navigate the hostile seas, while the sinking unipolar ship of fools has a ruptured hull held together by little more than chewing gum and heavy doses of delusion.

Britain and Russia spent most of the 19^th century contending in the “Great Game” over India. Britain built the navy with which Japan beat Russia in the 1905 war. But Britain and Russiafought on the same side in the world wars of the 20^th century.

Russia and China fought one war in 1929 and an undeclared border war in 1969, but share common interests against the United States and its allies.

The next strategic alignment among past enemies may bring together two of today’s strategic antagonists, namely India and China. At first glance, this seems improbable in the extreme. India and China have a longstanding border dispute that caused several hundred casualties in a clash in 1967 and claimed the lives of several dozen soldiers in another last year.

But there are three reasons why a diplomatic revolution may occur sometime in the next several years, and two of them are evident from the chart below.

India will have far more working-age people than China as the present century progresses. And the population of poorly educated people in Muslim Asia will equal India and China combined if present trends continue. That presents both an economic opportunity and an existential challenge. This is not a religious issue, but a matter of cultural and educational levels, as I will explain.

The rest of East Asia, meanwhile, will shrink to insignificance. Japan now has 50 million citizens aged 15 to 49 years, but will have only 20 million at the end of the century at current fertility rates. South Korea will have only 6.8 million people in that age group, compared with 25 million today. And Taiwan will fall from 12  million 15-to-49-year-olds today to only 3.8 million at the century’s end.

India surprised the United States by refusing to abandon its long-term ally Russia over the Ukraine crisis. Far from supporting American sanctions, India has worked out local-currency swap and investment mechanisms to conduct trade with Russia in rubles and rupees and invest Russia’s surplus proceeds in the Indian corporate bond market.

In retaliation, US Secretary of State Anthony Blinken waved the bloody shirt of human rights abuse at India, the world’s largest democracy. “We regularly engage with our Indian partners on these shared values” of human rights, Blinken declared, “and, to that end, we are monitoring some recent concerning developments in India including a rise in human rights abuses by some government, police and prison officials.”

India’s Foreign Minister S Jaishankar drily responded that India also has a view about the human rights situation in the United States.

For the first time, India has found itself on the receiving end of the same sort of opprobrium that Washington has directed at China for its treatment of the Uighur minority, and against Russia for its actions in Chechnya and Ukraine. This exchange of unpleasantries stemmed from America’s dudgeon over India’s stance on Russian sanctions, to be sure, but it points to trends in the region that will push Russia, China and India closer together.

America’s humiliating abandonment of Afghanistan left a sink of instability in central Asia. The American invasion sought to destroy the Taliban but ended by restoring it to power, providing at least potentially a base for Islamist radicals in bordering countries including China and Pakistan, as well as Turkmenistan and Uzbekistan.

Russia’s January intervention in Kazakhstan with the firm support of China highlighted the importance of Central Asian security to Moscow, as well as Beijing’s concerns about Xinjiang province. In December 2021, Beijing and New Delhi held virtual summits with the foreign ministers of Central Asian nations during the same week.

If present fertility rates continue, the UN Population program calculates, China’s population aged 15 to 49 years will fall by almost half during the present century, while India’s will grow slightly.

Demographic projections, to be sure, are notoriously unstable, and the UN forecast at best provides a general indication of underlying trends. Nonetheless, the trends are so pronounced and divergent that they will figure into strategic planning by the countries concerned.

Aging populations save for their retirement, and countries with aging populations export capital to countries with younger populations.

China’s main destination for savings is the United States, which for the past thirty years has absorbed most of the world’s free savings, and accumulated a negative $18 trillion net foreign investment position as a result. America can’t absorb the bulk of the world’s savings indefinitely.

China sought alternative outlets for its savings in the Belt and Road Initiative, with mixed results. It has invested heavily in countries with deficient governance and inadequate education.

India is the only country in the world with enough people and adequate governance to absorb China’s savings. China, moreover, better than any other country does the sort of things India needs to be done – namely, digital and physical infrastructure.

In contrast to China, India’s economic takeoff failed at launch. In 1990 the two countries had the same per capita GDP. Today China’s per capita GDP is triple that of India.

India still relies on a railway system built by the British at the turn of the 20^th century. Its rural population is 69% of the total, compared with China’s 38%. It requires railroads, highways, ports, power stations and broadband, all of which China has learned to build more efficiently than anyone else in the world.

Despite the natural commonality of interests, trade between India and China remains minimal. China’s exports to India in March 2022 were at the same level as exports to Thailand, and half the level of those to Vietnam or South Korea. That is the cost of Sino-Indian animosity.

Countries that have made the great leap out of traditional society into modernity almost all have fertility rates at or below replacement. Muslim countries with high levels of literacy such as Turkey and Iran will see modest declines in prime working-age population, according to UN forecasts – while countries like Pakistan with low levels of literacy continue to have children at the high rates associated with traditional society.

The UN projections show that the largest growth in prime working-age Asian populations will come from Pakistan and Afghanistan, which exhibit the lowest literacy rates in Asia. Only 58% of adult men and 43% of women in Pakistan can read, according to government data, and the actual level probably is lower than the government reports.

Afghan data are unreliable, but the now-defunct government estimated that 55% of men and fewer than 30% of women could read.

India’s literacy rate, by contrast, is 77% (72% for men and 65% for women), up from only 41% in 1981.

In the Muslim world, female literacy is the best predictor of fertility (the r² of regression of total fertility rate against the adult female literacy rate is about 72%, and is significant at the 99.9% confidence level). As noted, the issue is not Islam as a religion but, rather, literate modernity versus illiterate backwardness.

The position of the central Asian republics of the former Soviet Union is somewhere in between the pre-modern world of Pakistan and the relative modernity of Iran and Turkey, whose fertility rates have fallen to European levels.

For China, Russia and India, this represents a strategic challenge of the first order. All three countries have significant Muslim minorities, but each country’s circumstances are different.

Muslims comprise only 23 to 40 million of the Chinese population, depending on which estimate one accepts, or less than 3% of the total. Nonetheless, the security threat that radicalized Uighur Muslims presented to the Chinese state was great enough to prompt Beijing to incarcerate more than a million Uighurs for what the government called re-education.

By contrast, some 30% of Russia’s population will be Muslim by 2030, according to several estimates, although data are hard to verify. Russia’s total fertility rate had risen to 1.8 children per female, close to replacement, in 2018, before falling back to about 1.5 after the Covid-19 epidemic, and it is hard to separate Muslim from non-Muslim fertility rates.

Muslims comprise about 15% of India’s population. Their fertility rate has fallen from 4.4 children per female in 1992 to only 2.6 in 2015, still higher than the 2.1 fertility rate among Hindus, but converging.

Twice in the past year, American foreign policy has pushed China, India and Russia into the same strategic corner: America’s humiliating abandonment of Afghanistan, and America’s failure to defuse the Ukraine crisis. The first left the three Asian powers with an intractable mess to clean up. The second persuaded New Delhi that the price of American friendship was to carry baggage that might explode in the not-too-distant future.

For two generations China has cultivated ties with Pakistan, including a $62 billion, 15-year commitment to the China-Pakistan Economic Corridor, a flagship investment of the Belt and Road Initiative. Pakistan’s military flies Chinese J-10 and J-17 fighters as well as American F-16s. Chinese scientists aided Pakistan’s nuclear weapons program, and both countries provided help to North Korea.

But Pakistan may be more trouble than it’s worth to Beijing. As FM Shakil reported in February, the then prime minister of Pakistan Imran Kahn asked China for a $9 billion bailout to prevent a default on loans that mature in June. Pakistan owes China $18.4 billion, according to the International Monetary Fund.

Pakistan is intractably backward, politically erratic and unreliable as an economic partner. China may conclude that a diplomatic revolution is in order – a turn away from Pakistan toward its southern neighbor, which can boast of far greater human capital resources and a strong political system.

Of Pakistan’s 29 prime ministers since its founding in 1947, not one has completed a full term in office. India has its issues, but it has had an unbroken succession of democratically elected governments for 75 years.

At some point, China may decide to write off its investment in Pakistan and upgrade its relationship with India. And that would turn all strategic calculations inside-out.

While Russia and China expectedly cast no votes, India (along with Kenya and Gabon) did not support the U.S.-led push for the meeting by abstaining. Since nine positive votes were needed in the 15-member Council to approve the meeting, India’s abstention was effectively a rejection of the U.S.-led argument. Far from being an isolated instance, this incident is part of a larger pattern in India’s actions that presents challenges to American neo-primacy.

India has just begun a two-year innings as a non-permanent member at the UNSC, where it was widely expected to work closely with the U.S.-led coalition and take on China. But matters have turned out rather differently. The latest UNSC vote comes on the heels of another, on climate security, in which India openly voted with Russia and against the United States. During that debate, New Delhi, Moscow, and Beijing collaborated closely on strategy, including offering an alternative resolution that challenged the core premises of the U.S.-led one.

Much has been written and said about the U.S.-India bonhomie by establishment-oriented analysts in Washington. But the uncomfortable fact remains that Washington’s arch-rival Moscow is also New Delhi’s age-old partner and friend, with deep interdependence and common interests in defense and energy trade and investment.

And Indo-Russian ties are, if anything, growing stronger. Vladimir Putin was received with open arms during his recent visit to New Delhi and important agreements were signed despite U.S. pressure. Prioritizing the Russian leader’s visit, India even put off a key U.S.-India dialogue between their respective foreign and defense ministers. In September, India also went ahead and took delivery from Russia of the cutting edge S-400 air defense system, disregarding veiled threats by U.S. officials of sanctions under the 2017 CAATSA law.

The Quincy Institute Brief on U.S.-India relations in March 2021 advocated that the United States minimize its risks to the broader relationship with India by, among other things, refraining from imposing counterproductive secondary sanctions under the CAATSA law. Other Washington-based analysts have since cautiously added their voice. But the Biden administration has not yet announced a decision on the matter.

President Biden has departed from Trump’s strategies in one important respect — his stress on alliances and partnerships, of which the deep links forged with India have been touted as a lynchpin. White House’s Asia Czar Kurt Cambell has been in rapture recently on what he sees as a “bullish” future with India. The Biden team, not without some justification, is banking on India as a key component of its strategy of neo-primacy with respect to China. India-China tensions have worsened greatly since their armed clash in 2020. India’s increased strategic ties with the United States, including its activities in and outside the Quad, have seen a qualitative shift from its historic stance of non-alignment.

But the Ukraine crisis is not the only sign of the new limits of the U.S.-India convergence. When Washington, Canberra, and London announced the formation of the explicitly military pact AUKUS, India sharply distanced itself from the move. India-China tensions continue to simmer, as evidenced most recently through their spat over the Olympics. While being strongly critical of China in bilateral settings, New Delhi has however also simultaneously limited the Quad’s anti-China push, stressing that the compact is for something and not against someone.

U.S.-India ties will and should remain strong and grow much stronger in non-military spheres, with their many common interests in energy, climate action, technology, and trade. But when the chips are down, Washington may discover that India will not only decidedly stay away from its coalition against Russia, but may not even be as hawkish on China as is widely assumed. There are part-parallels here with Southeast Asia, which similarly does not wish to pick sides when it comes to great power rivalries. Of course, bearing down hard on India on its strategic ties with Russia will only push New Delhi further away from Washington.

India’s domestic challenges show few signs of easing and its sharp rivalries with China and Pakistan pose an increasing threat on its land borders, far from the conflict-prone waters of the South China Sea. As I wrote in the immediate wake of the India-China Galwan clash in June 2020, it makes sense for India to tilt more towards Eurasia than the U.S. — and the Japan-constructed primacist geography called the “Indo-Pacific.” This remains true today, even if the United States decides to waive CAATSA sanctions against India.

In sum, India’s differentiated interests and the rapidly evolving geopolitics of the international system combine to not only end all the wishful speculation by Nikki Haley and others on an U.S.-India alliance, but may also increasingly limit the trajectory of their current strong partnership. Kurt Campbell and other neo-primacists should take note.

By Dina Khrennikova, Laura Millan Lombrana, and Ilya Arkhipov via

Much of Russia’s Far East is so vast and remote that it’s mostly been left to the bears, wolves and rare breed of tiger that live there. Now the Kremlin wants to use it to convince the world that the country is doing its part to fight climate change.
Russia, the world’s biggest energy exporter and one of its largest polluters, is creating a digital platform to collect satellite and drone data about the CO₂ absorption capacity of the region’s forests. The aim ostensibly is to monetize an area nearly twice the size of India by turning it into a marketplace for companies to offset their carbon footprint.
The hope is that the plan will also deflect some of the criticism Moscow is getting over its unambitious climate efforts ahead of United Nations talks later this year. Russia has long argued that it should be granted more slack in climate talks for the sequestration potential of its forests, which hold an estimated 640 billion trees. But until now the huge taiga has been poorly managed, leading to record forest fires in the past two years as global warming has made summers hotter and dryer.
“Russia has 20% of global forests, so the international community must be fair in that respect,” Alexey Chekunkov, minister for the development of the Russian Far East and Arctic said in an interview. “We have the potential to turn them into a massive carbon capture hub.”
Vast and Remote
The Far East is the largest and least populated of Russia’s eight federal districts
Under the system, companies would be able to lease sections of forest from the Russian government in order to invest in planting new trees and protecting what’s already there. If the data confirms that the investment has improved CO₂ absorption, the company could then create a carbon credit, which would be traded on a digital platform.
Russia’s managed forests are estimated to have absorbed nearly 620 million tons of CO₂ equivalent in 2018, according to the nation’s latest data, enough to offset around 38% of national emissions. But carbon offsetting schemes have faced criticism from scientists who warn that, to avoid catastrophic global warming, greenhouse gas emissions need to be cut in half globally by the end of this decade, and to zero by 2050. Fern, a campaign group based in Brussels and the U.K., likened offsetting to “moving deckchairs while the Titanic sinks.”
It took Russia four years to ratify the 2015 Paris Climate Agreement in which countries agreed to cut emissions to limit global warming to 1.5 degrees Celsius or below 2 degrees.
It may be a particularly hard sell from Russia, which has the weakest climate target of any major economy and is planning a slight increase in emissions by 2030. Canada, which has the world’s third-largest forest area and an economy largely based on fossil fuel extraction, is also setting up a marketplace to trade carbon credits, but the system will run alongside efforts to achieve carbon neutrality by mid-century.
“The lion’s share of Russia’s plan to cut emissions should be renewable energy, new technology and energy efficiency,” said Alexey Kokorin, director of the Climate and Energy Program at WWF Russia. “Additionally, and with very strict criteria, would come forestry development.”
Russia’s climate goals, which are rated “critically insufficient” by Climate Action Tracker, mean it wouldn’t qualify to use carbon offsets as part of its Paris Agreement target, according to Anna Romanovskaya, director of the Moscow-based Yu. A. Izrael Institute of Global Climate and Ecology. But companies could in theory still sell credits internationally if they can prove they’ve added to the forest’s absorption capacity, she said.
State-controlled oil and gas giant Gazprom Neft PJSC, petrochemical producer Sibur Holding PAO, and machine manufacturer Sinara Group have expressed interest in investing in future pilot projects for measuring forest carbon absorption, Valery Falkov, minister for science and higher education, told President Vladimir Putin at a meeting earlier this month.
The Far East project may mitigate losses from a European Union plan to impose a levy on some emissions-intensive goods, according to Maxim Khudalov, head of sustainable development risk assessment at Moscow-based Acra Ratings. Exporters of Russian raw materials forecast annual additional costs of as much as $8 billion from the so-called Carbon Border Adjustment Mechanism, due to come into force in 2023.
Obtaining accurate data on carbon sequestration from forests is difficult, though, because trees are vulnerable to unpredictable events like forest fires and disease outbreaks. It also requires detailed inventory data, which on average hasn’t been updated in Russia in 25 years, Romanovskaya said. Offset programs based on planting trees have come under criticism after many were found to have no contribution to reducing the amount of CO₂ in the atmosphere.
“We will need to demonstrate to the international community that calculation of CO₂ absorption in our offset projects is precise, reliable and not a single unit is miscalculated,” Romanovskaya said. “One mistake, let alone an intentional falsification, and the credibility of our projects may be lost.”
— With assistance by Sharon Chen