Column : Strong-arm tactics

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: the old ship.

Round after round of talks followed, with India trying hard to trim the new price down. Delhi conjured the age-old trick of fanning rumours of an alternative aircraft carrier from the US to convince Russia to crop a few inches. Moscow knew much better than to cave in because American spokespersons denied any move to transfer advanced naval carriers to another country. Moreover, the revised price of $3.4 billion was still the best India could get by world market rates. New Delhi bit the bullet in December 2008 and had to agree to purchase the warship on Russian terms.

As in the case of Ukrainian gas, Russia shrewdly studied the vulnerabilities of India as a long-time consumer of defence products and went for the jugular by striking when the iron was hot. Knowing how desperate Delhi was to acquire an aircraft carrier for its naval expansion plans, Moscow played hardball, just as it harried European governments when their publics were freezing in the peak of winter.

Behind the haggling over gas and battle ships are deeper Russian grudges against Western encroachment of markets and spheres of influence that it currently dominates. Price disputes at the inter-governmental level invariably have political elephants in the room. The lesson from the gas and ship imbroglios is not only that monopolies can be obdurate price hikers but also that strategic political calculations tail international commercial exchanges.