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Modi's India Busting Western Sanctions, Funding Russia's War On Ukraine
India, a western ally, is openly buying Russian coal, oil and weapons worth tens of billions of dollars at deep discounts. These actions amount to busting western sanctions and financing President Vladimir Putin's war on Ukraine. Many smaller developing countries, including Bangladesh and Pakistan, are abiding by these sanctions and suffering from the consequences in terms of high prices of fuel and food. Why these double standards? Do these policy contractions serve the broader US interests in the Asia region?
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| India's Russian Imports Soaring Since the Start of Ukraine War. Source: Reuters |
India's Russian coal imports are up 6-fold from May 27 to June 15, 2022, according to Reuters. Delhi's Russian oil buying has jumped 31-fold in this period. Bulk shipments of Russian thermal coal to India began in the third week of May, 2022.
India is defying western sanctions to buy millions of barrels of discounted Russian crude oil, hiding their origin and exporting refined petroleum products with a big markup to make a huge profit. China has yet to increase its oil imports from Russia, according to news reports. Meanwhile, India's neighbors Bangladesh and Pakistan are abiding by western sanctions and paying much higher market prices to buy oil for their domestic needs, and hurting their people. Such double standards are not going unnoticed.
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| India's Refined Petroleum Exports.Source: MarketWatch |
India is importing large amounts of deeply discounted Russian crude, running its refiners well above capacity, and capturing the economic rent of sky-high crack spreads and exporting gasoline and diesel to Europe, according to MarketWatch. “As the EU weans from Russian refined products, we have a growing suspicion that India is becoming the de facto refining hub for Europe,” said Michael Tran, global energy strategist at RBC Capital Markets, in a Tuesday note. Here’s how the puzzle pieces fit together, according to Tran:
"India is buying record amounts of severely discounted Russian crude, running its refiners above nameplate capacity, and capturing the economic rent of sky-high crack spreads and exporting gasoline and diesel to Europe. In short, the EU policy of tightening the screws on Russia is a policy win, but the unintended consequence is that Europe is effectively importing inflation to its own citizens. This is not only an economic boon for India, but it also serves as an accelerator for India’s place in the new geopolitically rewritten oil trade map. What we mean is that the EU policy effectively makes India an increasingly vital energy source for Europe. This was historically never the case, and it is why Indian product exports have been clocking in at all-time-high levels over recent months".
Bangladesh and Pakistan are afraid to buy Russian oil for fear of western sanctions while American ally India feels free to do so. Pakistan's Imran Khan sought to buy Russian oil and gas before he was removed from power in early April. Pakistani Finance Minister Miftah Ismail told CNN's Becky Anderson in a recent interview, “It is very difficult for me to imagine buying Russian oil. At this point I think that it would not be possible for Pakistani banks to open LCs or arrange to buy Russian oil". Similarly, Bangladeshi foreign minister AK Abdul Momen said, “Russia has offered to sell oil and wheat to us, but we can’t do it out of fears of sanctions. We asked [India] how they did it [import oil from Russia]. They [India] said they have found some tricks,” Momen added.
The West, particularly the United States, is turning a blind eye to India's actions when it comes to busting sanctions on Russia. Indian Prime Minister Narendra Modi is openly funding the war in Ukraine by buying weapons and energy from Russia. At the same time, India's smaller neighbors feel intimidated by the threat of western sanctions if they follow Modi's example. Such double standards are not going unnoticed.
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Riaz Haq
#Europe, #US, #G7 court #India to join efforts to punish #Russia. #Biden views India as too essential a partner to contain #China to seriously consider sanctioning India for increasing its trade with Russia. #ModiInGermany #Modi #Ukraine https://www.nytimes.com/2022/06/27/world/europe/europe-and-the-us-c...
As Ukraine’s allies seek to broaden the coalition of nations against Russia, the United States and Europe are working to persuade India to abandon its neutral stance in the war in Ukraine.
Prime Minister Narendra Modi on Monday will join the Group of 7 summit in Germany, where Ukraine has been the focus. So far, U.S. overtures to persuade Mr. Modi to stop buying Russian oil have failed. Its purchases of Russian crude have doubled since the conflict’s start.
Four other nations with close relations to Russia — Argentina, Indonesia, Senegal and South Africa — were also invited to the summit.
Mr. Modi has maintained a neutral stance on the war, calling for a resolution through diplomacy and dialogue. But India’s increasing trade with Russia has undercut U.S.-led efforts to starve the Kremlin of oil revenue.
Political observers say that the Biden administration probably views India as too essential a partner in its plans to contain China for it to seriously consider sanctioning India for increasing its trade with Russia.
Mr. Modi is scheduled to participate in sessions on climate, energy, health, food security and gender equality. During the summit, President Biden announced plans for an infrastructure fund, with G7 countries putting up billions of dollars for development projects in India and elsewhere as a counterweight to China’s expansive Belt and Road Initiative.
The meeting at Schloss Elmau, a retreat in the Bavarian Alps, comes amid a worsening situation in Ukraine that has not only set off a geopolitical crisis, but also challenged energy and food security, particularly in developing countries.
While the U.S. and Europe are working to reduce their dependence on Russian energy, India and China have drastically increased their purchases, taking advantage of crude discounts of $30 per barrel.
When he was re-elected in 2019, Mr. Modi promised to double the size of India’s economy by 2024. His government said India’s growth depends upon reliable and affordable fuel supplies, and that sanctions on Iranian oil have left India with few other options.
As India increases its purchases of Russian oil, Europe has continued to buy the majority of Russian natural gas exported in recent months. Indian officials have criticized what they characterize as the hypocrisy of the West.
“Punishing India for getting a good deal, and doing it legally, is not on their immediate agenda,” said Samir N. Kapadia of the Vogel Group consultancy in Washington.
“However,” he added, “I don’t believe these record import levels will go unnoticed.”
Jun 27, 2022
Riaz Haq
Dr. Audrey Truschke
@AudreyTruschke
I understand the diplomatic reasons for saying this. But the unvarnished reality is that India is a weak partner for the US, and it’s becoming weaker by the day. #USIndia
Quote Tweet
Secretary Antony Blinken
@SecBlinken
United States government official
· 10h
Met with India’s @DrSJaishankar at the @G7 Summit to underscore the importance of #USIndia cooperation. As strong partners, we’ll continue working closely to address global economic challenges and strengthen security, prosperity and clean energy in the Indo-Pacific.
https://twitter.com/AudreyTruschke/status/1541804842011738113?s=20&...
Jun 28, 2022