Like many global traders, Indian tea growers association boss M. P. Cherian is closely watching the humanitarian and economic fallout from Russia ’s decision to invade Ukraine . Members of his United Planters’ Association of Southern India (UPASI) are bracing for headwinds, as Russia is a big buyer of Indian tea, purchasing 40 million kilograms of tea annually, with nearly half of this coming from India’s south. Russia’s average annual tea import is around 140 million kilograms. India , which has refused to condemn Russia – its biggest supplier of arms – is still keeping trade ties intact, even though pressure is mounting as more Western nations and companies sanction business dealings with Moscow. Why India isn’t joining other US allies in condemning Russia over Ukraine India-Russia bilateral trade – minus defence purchases – was about US$9 billion in the 2020-21 financial year, a fraction of India’s trade with the United States which exceeded US$100 billion. For tea, Russia’s purchases from India has been growing about 1 per cent a year over the past 10 years, save for 2020 when the pandemic hit. “The ongoing Russia-Ukraine crisis is a matter of concern … and if tea exports to these two countries are affected, it will have an impact on the Indian tea sector … especially small tea growers,” said Cherian, the association’s president. Cherian’s comments reflect how Russia’s trading relationships with all corners of Asia have grown in the last decade. The European Union has long been Russia’s largest trading partner, accounting for 40 per cent of its two-way trade before the invasion. But latest available figures from 2019 before the pandemic shows Asia’s trade – including China – with Russia approaching Europe’s, with both regions accounting for about the same proportion of two-way trade with Russia. This is a result of Russia’s efforts – since calling for a pivot to Asia just before the annexation of Crimea in 2014 – to lay down a network of trade deals and channels across the region. For some analysts, these relationships will now be Moscow’s fallback plan for trade as sanctions from the West and its allies in the region such as Japan and South Korea hit it hard. It also depends, however, on how many countries still want to play ball with Moscow – but already, China has said it will maintain normal trade ties with both Russia and Ukraine and some countries like Malaysia have ruled out imposing unilateral sanctions on Moscow. “Russia’s overall trade with Asia reached approximate parity with its EU trade last year and Moscow has been busy preparing for a huge push east,” said Chris Devonshire-Ellis, an investment adviser who puts out the business intelligence report Russian Briefing. Asia faces food shortages as Russia-Ukraine fighting hits shipments “That can now be expected to manifest itself over the course of 2022 and 2023 as free trade agreements currently being negotiated via the Eurasian Economic Union (EAEU) are set to be finalised with a large number of Asian economies,” he said, referring to the Russian-led trading bloc formalised in 2015. The EAEU comprises Russia, Armenia, Belarus , Kazakhstan and Kyrgyzstan, and was formed after the annexation of Crimea as a way to carve out trade pathways into other markets including Asia. Devonshire-Ellis said he believed trade sanctions would increase Russia-Asia trade volumes, and push Russia further east in its trade imports and exports. “It may take some time, especially in certain products, to arrange alternative supplies, but Russia has already evaluated this and appears to me to be a step ahead. This will be to Asia’s benefit.” The depreciation of the Russian rouble too would also make trade between Russia and Asia more attractive, he added. FTAs galore Putin’s economic tilt towards Asia began around 2011 and was re-emphasised when he announced the Greater Eurasian Partnership in 2016. From 2011 to 2019, two-way trade between the Association of Southeast Asian Nations and Russia grew by 40 per cent, while two-way trade between the rest of Asia and Russia grew by 56 per cent. For the latter figure, the biggest growth driver came from China-Russia trade, which almost doubled in that time. India’s trade with Russia grew 82 per cent over the same period. Notably, over those eight years, trade between Russia and all European countries s hrank by 17 per cent. As sanctions began piling up late last month, Russia’s economy ministry announced it was working on measures to minimise the effects of the sanctions and would be stepping up trade and economic ties with Asian countries Oil goes ‘berserk’: Asia braces for fallout of Russia’s Ukraine invasion “We understand that the sanctions pressure we have faced since 2014 will now intensify,” the ministry said in a statement. “The rhetoric of some of our foreign colleagues was such that we have been ready for potential new sanctions for a long time.” Underscoring the ministry’s confidence could be the various free trade agreement (FTA) opportunities across Asia, many orchestrated by the EAEU. The EAEU and Asean have shown appetite for a full-blown FTA, having agreed to more economic cooperation and updating their trade and investment cooperation road map just last year. An FTA between Vietnam and the EAEU has been in place for the past five years. Singapore signed an FTA with the EAEU in 2019, but negotiations are continuing over the “Services and Investment Agreement” aspect of the deal, a Singapore trade ministry spokeswoman confirmed with This Week In Asia earlier this week. Singapore to slap unilateral sanctions on Russia in ‘almost unprecedented’ move This, despite Russia putting Singapore on a list of “unfriendly countries” following its imposition of sanctions on Moscow. Russians doing corporate deals with companies and individuals from this list of “unfriendly countries” now require approval by a Russian government commission. The services agreement negotiations between Singapore and the EAEU, specifically Russia, started in 2018, and were close to being completed. Both Russia and Singapore signalled an imminent conclusion when officials met last year, expressing optimism over an “expeditious completion” of the agreement. The two sides also embraced the “positive contribution” of a full-fledged FTA to bilateral economic relations – mainly the reduction of tariff and non‑tariff barriers. India has also expressed interest in an FTA with the EAEU, as has Pakistan , while Bangladesh , a growing Asian economy, lodged a formal application at the start of the year to cut an FTA deal with the EAEU. In 2020, the EAEU announced it had begun joint studies on potential FTAs with Mongolia and Indonesia . China, Russia’s largest trading partner by country, signed off on an FTA with the EAEU in 2018 but has yet to lay out tariff reductions. While it would take time for these deals to be finalised or even come into effect, Russia could, in the event sanctions become “problematic”, fast track some of these free-trade deals to completion and open up new trading routes, Devonshire-Ellis said. China’s role Asian political analyst Richard Heydarian however is less optimistic. The Manila-based professorial chairholder on geopolitics at the Philippines ’ Polytechnic University said Asian countries would be less willing to negotiate FTAs right now. Physical trade between Russia and the region – even if it continued – could be hindered given the boycott of Russian shipments by major shipping companies. “For years, Russia’s Achilles' heel in Asia has been its very marginal economic footprint and Western sanctions. “Imagine with a new set of sanctions now targeting even Russia’s Central Bank … physical merchandise trade is going to be increasingly difficult, not to mention the prohibitive costs of any major financial transactions with Russia.” China, Russia trade surges, but ‘alarm’ as overall export growth slows It may want to “find some love in the East”, Heydarian said, but he believes Russia will probably receive the “cold shoulder”, especially on the economic front. Dylan Loh, an assistant professor in foreign policy at Singapore’s Nanyang Technological University, said that while Singapore had made its position on territorial integrity and international law clear to Russia, it would also assess trade deals and the like independently – though Russia might not reciprocate. “I don’t think this means Singapore will cut off ties with Russia and completely reassess every deal,” he said, adding that Russia’s decision to add Singapore to a list of “unfriendly countries” might well indicate it had little appetite to see the FTA through. Singapore banks halt lending for Russian goods; Japan imposes more sanctions Devonshire-Ellis said he believed negotiations for the EAEU’s FTA would be put on hold “until things become clearer”. Such was the case with New Zealand , which put its direct FTA with Russia on ice after the Crimea invasion in 2014. There is however a twist, said Jayant Menon, a former Asian Development Bank economist. Because Asia’s supply chains are intertwined with those of China, Russia’s trade with Asian markets would be preserved as long as China continues to keep the trading door open with Russia, he said. “It is through Asean’s China-centred supply chains that Asia’s strongest economic link to Russia emerges” said Menon, who is now a senior fellow at Singapore’s Iseas-Yusof Ishak Institute, adding that if China remained open to trade with Russia, then a trade fallback for the latter in Asia could still be possible. “Therefore, it is not what Asean or individual members choose to do with respect to the sanctions that really matters but what China does, because of integrated supply chains,” he said. “As long as China chooses to keep the trade and financial channels open, it will matter little in the aggregate what individual Asean countries do in terms of sanctions.” Additional reporting by Kalpana Sunder