Russian President Vladimir Putin seems to be having a good time in India on what is turning into an annual state visit to talk shop. There is a lot on the agenda. The short-term stuff involves security, oil and the ruble-rupee exchange problems.

I won’t go into detail, but Modi badly wants Russia’s S-400 air defence system which was so effective against Pakistan’s fighter jets and missiles in this summer’s short war.

India is also running a $60bn trade deficit – up from $40bn last year – with Russia which is almost all oil imports. India doesn’t make anything Russia wants so this is turning into a big problem.

And to make it worse, India doesn’t earn many dollars, and the rupee is not fully convertible, so the Kremlin has amassed a massive pile of rupees it can’t use.

The longer-term stuff is the big CEO meeting today which is the bit that will make the difference. Putin is in New Delhi to find some workable solutions to all these problems. It seems the proposal is to set up Russian JVs and supercharge India’s industrial and manufacturing prowess.

As we have been arguing for several years now, Putin has broken with the West completely and taken a big bet on the Global South Century. And here is that bet in action. Putin brought a planeload of big Russian businessmen with him. What was interesting is that the Russian press is reporting that the Kremlin was inundated with requests to join this trip, but in the end limited the numbers and only brought those businesses that the Indian side wanted to see.

Expect a ton of agreements from the CEO summit and the beauty of this arrangement is that you can use that pile of rupees to finance this investment. Both Sberbank and VTB have already set up shop in New Delhi.

This will create a very different relationship to the short-term trade and weapons deals. This is about long-term co-investment and helping your friend, India, get an economic leg up that is in your national interests too.

The geopolitical dividend is that Russia will become India’s key partner amongst the BRICS and this will also help offset Russia’s dependence on China as India and China are not good friends; some of those S-400 missiles will go to the Indo-Chinese border where military tensions remain high. The problem was highlighted by China's bizarre refusal to acknowledge the validity of an Indian passport held by a resident of Arunachal Pradesh very close to Tibet. She looked too Chinese and the border guards refused to believe she was Indian.

Putin is setting himself up to be the “honest broker” in this prickly relationship, making himself indispensable to both sides. And he is very good at this as he has done the same thing in the Middle East where Russia is friendly with almost all the countries, many of which hate each other’s guts: Egypt, Israel, Iran, the Kingdom of Saudi Arabia (KSA), Syria and so on. In Africa too, all but five of Africa’s 54 countries showed up to the last Russo-Africa summit in St Petersburg on July 27–28, 2023. Read our deep dive into Russia in Africa  for more details.

Putin’s India visit is packed with symbolism. Putin arrived after a Moscow meeting on December 3 with the US delegation to haggle over terms for Ukraine’s surrender. It also coincides with French President Emmanuel Macron’s three-day visit to Beijing, which is going a lot less well. And it’s just ahead of a crucial vote by the EU who are trying to get a decision through on the Reparation Loan (that is on the cusp of failing completely).

Macron has many of the same problems Modi does: China is France’s third biggest trade partner, but like India, it runs the same massive $50bn trade deficit that is only getting bigger. Like Putin, Macron brought a planeload of top businessmen with him and is asking for both better access to China’s ginormous market as well as to get China to invest in France and build green energy factories.

This is very ironic. It shows on the one hand that Europe can no longer compete with Chinese manufacturing. But it should be even more worrying as this is the classic chasing after foreign direct investment (FDI) – but in reverse.

In the old world where the West was on top, all Emerging Markets (EMs) chased FDI as it was a way to make money through better products that you can export. But also FDI comes with technology transfers that allow you to go up the value chain. This is how it started in Central and Eastern Europe (CEE) where the first foreign investors were into light industry simply because wages are low. Then they move on to middle weight before finally moving into things like plasma TVs and cars. Interestingly, the Balkans are booming and only now making the transition from the light industry to the middle-weight phase as the first car plants open. Albania is on fire.

Now amazingly the tables have been reversed: Macron is chasing Chinese green tech FDI investment because he needs to learn the superior tech China has in pretty much everything related to green energy, EVs, and a whole bunch of other stuff. (Follow the China robot story for example.) It’s streaking ahead on multiple fronts.

In Russia's case, one of the things that Russia is offering is to go into joint production with India to make the next generation S-500 missiles. That is an extremely generous offer of transferring some of Russia most sought-after technology to India. Modi will be very excited about this one.

In France old habits die hard. Macron also poignantly arrived in Beijing from a meeting with Ukrainian President Volodymyr Zelenskiy in Paris. He is trying to pressure Chinese President Xi Jinping into pulling his support for Russia. Fat chance of that happening. Apart from anything else Xi hates being lectured to. China has a strict policy of not interfering into partners' domestic affairs and he was very cool in his comments to Macron. He laid out his vision for international relations in a joint 8,000 word essay, co-written by Putin, last year.

Putin is going to have a business deal bonanza in New Delhi. I doubt that Macron is going to come home with anything very significant.

The contrast of Macron and Putin’s road trips only highlights once again – as the SCO summit in China in September – how well the BRICS are working together. Modi surprised everyone by turning up to that meeting too. The leading Emerging Markets (EMs) are building up their Global Emerging Markets Institutions (GEMIs) and the EU is looking increasingly irrelevant.

And they don’t like it. Separately, Der Spiegel ran a story yesterday where it got hold of notes from an EU meeting where Marcon, German Chancellor Friedrich Merz and others were warning Zelenskiy not to trust Trump in the peace talks. They promised to support Ukraine instead, but the whole story only underlines for me how increasingly delusional they are becoming. Neither the White House nor the Kremlin is even listening to them any more – let alone negotiating. Like 1913, Europe is locked into its own sense of grandeur, based on past glories, and blind to the rapid changes going on around them. The US will succumb to this too, but it will take longer as it has a bigger head start.

Finally, in a touch of colour Modi gave Putin a Russian-language copy of the Bhagavad Gita, the Hindu holy text. I'm wondering if Modi was trying to send a message. It is set on a battlefield — the Kurukshetra — where Prince Arjuna is paralysed by moral doubt about fighting in a war that will pit him against his own relatives, teachers, and friends.

Lord Krishna, his charioteer and guide, urges him to act according to his dharma (righteous duty) as a warrior: to fight, but without attachment to the outcome.

So, it’s not as if he gave Putin a Bible preaching peace and love. You can even argue that it justifies war. In any case, on balance Putin will probably take the gift as a sign that India is not going to judge Russia for going to war in Ukraine. It emphases the ethics of leadership and duty calling on truth, detachment, and moral clarity and Modi himself often positions himself as a strong nationalist leader. A subtle sort of endorsement perhaps?

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