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India Suddenly Announced!
On October 14, according to the Indian Ministry of Foreign Affairs, Mongolia, India, and Russia are discussing: importing coal from Mongolia through the Russian route, and it is expected that the Mongolian oil refinery funded by India will be operational in 2028.
The traditional route from Mongolia's Tavan Tolgoi coal mine to Indian ports goes through Inner Mongolia and Gansu in China, then exits via Tianjin Port, a total of about 2,200 kilometers. The new plan aims to bypass China and go through Russia: via the Trans-Siberian Railway to Vladivostok, then seaborne to India, a total of 5,800 kilometers, with freight costs 2.3 times higher. This "choosing the longer route" reflects that India's strategic doubts about China have overshadowed economic rationality.
More intriguing is the time cost. The Chinese route takes 18 days, while the Russian route takes 42 days. India is willing to accept efficiency losses to avoid dependence on China, reflecting that "supply chain security" has risen to a core issue of national security. This mindset is similar to the "friend-shoring" strategy promoted by the US and Japan.
As an inland country between China and Russia, Mongolia has long pursued a "Third Neighbour" strategy to balance the influence of both major neighbours. This cooperation with India represents a new breakthrough in its strategy. Mongolian President Ukhnaa Khurelsukh once said, "Don't put all your eggs in one basket." In 2024, Mongolia's coal exports to China accounted for 86%, this excessive reliance has constrained its diplomacy.
The $1.5 billion oil refinery project by India has greater strategic significance. Mongolia currently completely depends on Russian imports for fuel. Once completed, it can achieve self-sufficiency in refined oil and even export to Central Asian countries. This energy self-reliance process will significantly enhance Mongolia's geopolitical leverage.
Russia plays a key role in this collaboration. Its Eastern Port coal terminal expansion project received financing from the Indian Export-Import Bank, highlighting the intertwined interests of the three parties. More deeply, Russia aims to promote its "Look North" strategy, turning the Far East into a new hub connecting Eurasia.
However, Russia faces a dilemma: on one hand, it needs India to counterbalance China's influence in the Far East, but on the other, it worries about damaging Sino-Russian relations. This balancing act tests the Kremlin's diplomatic wisdom and explains why Russia has taken a cautious attitude toward the project, only committing to a "feasibility study."
India's coal imports rank second globally, reaching 280 million tons in 2024. Occasional border frictions with China make India worry about supply interruptions. This "strategic insecurity" has prompted the Modi government to build a diversified supply system at any cost.
Deeper still are strategic considerations. A report by the Indian think tank "Observer Research Foundation" points out that controlling energy corridors is a necessary condition for becoming a great power. By intervening in Mongolian energy development, India can enhance its voice in Central Asian affairs, which is a critical move in its "Extended Neighbourhood" strategy.
The Chinese Ministry of Commerce responded with "respecting the right of cooperation of all countries," appearing calm. This confidence stems from reality: transporting Mongolian coal through China is the most economical choice, and the detour route is unlikely to be sustainable. Customs data show that in 2024, Sino-Mongolian trade volume was 37 times that of India-Mongolia trade, a significant disparity that gives China a natural advantage.
More crucially, infrastructure. There are already five border crossings between China and Mongolia, such as Cekel and Ganqimadai, with a railway capacity of 50 million tons. However, there is only one railway line between Russia and Mongolia with a capacity of 2 million tons, and upgrading it would take more than five years. This hardware gap cannot be overcome in the short term.
Similar detour attempts have had precedents. In 2011, Japan invested in the Oyu Tolgoi copper mine in Mongolia, trying to transport it through Russia, but eventually had to switch to the Chinese route due to high costs. The current project may face the same fate unless the three sides are willing to subsidize the price difference for a long time.
Even more worrying is the risk of "strategic overextension." India is simultaneously pushing forward the Chabahar Port in Iran and the Kaladan project in Myanmar, and resource dispersion could lead to each project lacking sufficient investment. This "spread-out" expansion has led to many Japanese overseas infrastructure projects being abandoned.
Mongolian coal transportation routes are near the China-Russia border, having military sensitivity. The Indian intelligence department may use this to set up listening stations in Mongolia, monitoring military dynamics between China and Russia. This potential use makes the project transcend purely economic aspects.
Russia, on the other hand, is worried about Indian influence penetrating its traditional sphere of influence. According to Russian Security Council documents, the Russian side requires India to commit not to use the project for intelligence activities as a prerequisite for granting transit rights. This mutual suspicion may affect the depth of cooperation.
The project faces multiple obstacles: the Trans-Siberian Railway's capacity is nearly saturated, requiring investment for upgrades; the Russian Far East ports freeze in winter, requiring icebreakers for escort; and the Indian oil refinery construction requires importing equipment from China. These practical issues cannot be easily overcome by political will alone.
More fundamentally, changes in market demand. The acceleration of global energy transition may bring forward the peak of coal demand. Investing hundreds of billions of dollars in building traditional energy infrastructure carries the risk of becoming "stranded assets."
A more likely outcome is a "limited cooperation" model: implementing parts of the project symbolically, but not reaching the planned scale. This result is acceptable to all parties: India demonstrates strategic presence, Mongolia gains actual benefits, and Russia increases its negotiation leverage.
There may also be a "strategic substitution": China may make concessions in other areas to gain Indian cooperation, such as supporting India's permanent membership in the UN Security Council. Such big-power deals, though realistic, may sacrifice the interests of small countries.
The most pessimistic scenario is "project failure": the cooperation ends due to financial, technical, or geopolitical conflicts. This outcome would intensify regional division, putting all parties into zero-sum games.
India's energy cooperation via Mongolia is a physical route that appears winding and circuitous, but actually reflects a psychological projection of geopolitical rivalry. When economic rationality yields to strategic anxiety, and when win-win cooperation retreats into zero-sum thinking, this "detour strategy" may ultimately lead everyone into a dead end.
The true wisdom does not lie in how to avoid someone, but in how to move forward together with everyone. In an era of interdependence, any effort to build an exclusionary small circle will eventually be proven to be an expensive detour.
What do you all think? Let's discuss:
Source of Information: Indian Ministry of Foreign Affairs: Discussing importing Mongolian coal through the Russian trade route with Russia and Mongolia.
October 14, 20:49, Sina Finance
Original article: www.toutiao.com/article/1846015892565064/
Statement: The article represents the views of the author.