Comment by Riaz Haq on July 13, 2022 at 8:47am

INDIA IS A SWING STATE — COOPERATE WITH IT ACCORDINGLY
SHARINEE L. JAGTIANI AND AMEYA PRATAP SINGH

https://warontherocks.com/2022/07/india-is-a-swing-state-cooperate-...


Befriending a Swing State

Taking India’s position as a “global swing state” seriously requires understanding New Delhi’s deep-rooted commitment to the principle of strategic autonomy. This principle is not specific to the Cold War or simply desire for neutrality. Instead, it is fundamental to the way India understands and manages risk in international politics.

NATO represents a trans-Atlantic approach to collective security that prioritizes clearly signaling commitments and taking firm stances against rivals. Indian policymakers have resisted applying a similar approach to China. They see bloc-like formations as narrowing the strategic options for middle and regional powers like theirs. For these reasons, ambiguity has been an asset for India in managing many of its difficult relationships. While India has been called the “weakest link in the Quad,” its resistance to any form of alliance-like language or commitments that would unsettle Beijing has allowed it to maintain economic ties with China since the 1990s. These have not only contributed to a relative peace between the two rivals for decades but also helped India advance its unique development goals. Even today, India and China continue to maintain strong trade relations despite the border clashes of June 2020.

For the first Indian Prime Minister Jawaharlal Nehru, nonalignment was a moral choice and an opportunity for managing great power conflict and creating conditions for peace. The current Bharatiya Janata Party’s government does not consider strategic autonomy in similar terms, but it still thinks of flexibility in decision-making as crucial to Indian security, especially at a time when the world order is shifting. Modi has not endeavored to use India’s neutral position to broker peace between warring factions, as Nehru did during the Korean crisis in 1950. Instead, he has been trying to manage the negative implications of the War in Ukraine on India’s economy and its global reputation. The Bharatiya Janata Party’s vision of strategic autonomy is inward-looking and unapologetically self-interested. This means that, contrary to some Western expectations, India does not want its rivalry with China to be subsumed into the U.S.-China strategic rivalry, nor does it want to subordinate its relationship with Russia in favor of U.S. interests. But that does not mean there are no opportunities for cooperation.

The Limits of Leaving Moscow

In the short term, Western partners can help lessen India’s defense dependency on Russia, but they should not expect this to lead India to abandon Moscow. With the twin threats of China and Pakistan on its northern frontiers, this would be too risky. The Russian-Indian defense relationship is deep and time-tested. It is reinforced by market forces and mutual trust between policymakers. Moreover, Moscow offers India affordable military equipment and respects its desire for technology sharing and domestic capacity building. Indeed, the affordability of Russian defense supplies, along with Moscow’s willingness to aid Indian manufacturing, has been an important part of the relationship.

Even if Western partners are looking to disrupt Russia’s defense trade, they would have to overcome issues of interoperability with India’s current Russian equipment. Sameer Lalwani of the Stimson Center estimated that the share of Russian-origin weapons and platforms (including conventional and nuclear submarines, aircraft carriers, and fighter jets) across Indian armed forces was as high as 85 percent. As Vasabjit Banerjee and Benjamin Tkach predict, this means India will “[seek] out countries that manufacture spares and upgrades for Russian-origin weapons.” It is unclear how willing Western partners would be to help India modernize its current stock of Russian-origin weapons and platforms.

Comment by Riaz Haq on July 13, 2022 at 8:47am

INDIA IS A SWING STATE — COOPERATE WITH IT ACCORDINGLY
SHARINEE L. JAGTIANI AND AMEYA PRATAP SINGH

https://warontherocks.com/2022/07/india-is-a-swing-state-cooperate-...


Additionally, Western partners are only slowly overcoming their reticence to share sensitive defense technology with a non-NATO ally. For instance, U.S. efforts to co-produce the javelin missile with India under the Defense Technology and Trade Initiative failed in 2010 due to American reservations over intellectual property. However, Lockheed Martin has recently signed a Memorandum of Understanding with an Indian Company Bharat Dynamics to revive this process, indicating a newfound readiness to share technology with India. But whether Lockheed Martin’s agreement with Bharat Dynamics will bear fruit and become a precedent for defense trade more generally remains to be seen. The United States and its allies certainly “can offer India more — diplomatically, financially, and militarily — than can Russia.” But the West will need to match the tenor and nature of India’s defense ties with Russia to do so. In any case, defense exports represent a limited opportunity to positively affect India’s security preferences.

Collective Security in the Indo-Pacific

The West can also engage India while respecting its desire for autonomy by continuing to integrate it into loose or minilateral security arrangements such as the Quad. New Delhi has shown that it is unwilling to declare China an enemy or join a NATO-like security arrangement. However, its participation in a growing number of joint military exercises in the Indian Ocean region shows that India is prepared to join Western countries in protecting its maritime interests.

In this narrower geographical scope, where its interests are more closely affected, New Delhi can help Western partners protect important maritime chokepoints. In case of a war with China, India is unlikely to send ships to the Taiwan strait. However, India and the United States have had a logistics agreement in place since 2017 that has facilitated the refueling of ships and tankers. Partnership with India can also provide Western states access to the Indian Ocean Region, where New Delhi now welcomes involvement from extra-regional powers to offset China. Historically, India has sought to deny great powers access to its neighborhood. However, as New Delhi finally confronts its inability to match China’s maritime strengths and economic heft, this is beginning to change. Japan and India are already collaborating to counter Chinese influence in Sri Lanka — similar models could bring this form of cooperation to other parts of the Indo-Pacific.

Opportunities for strategic collaboration also exist along India’s 2100-mile-long disputed border with China. Any Western strategy of containment should seek to bolster India’s standing here. Not only is stopping the Chinese from changing the status quo on the Sino-Indian border important to upholding the norm of territorial sovereignty generally, but the prospect of a two-front war would also deter Chinese adventurism across the Taiwan Strait. Indo-U.S. forces will carry out joint defense exercises in Alaska later this year to increase “jointness, interoperability, and coalition interoperability.” Similar efforts to help India counter China’s infrastructure upgrades and growing military capacity in the Tibetan plateau would simultaneously enhance the Indo-U.S. partnership and strengthen U.S. containment.

Comment by Riaz Haq on July 13, 2022 at 8:47am

INDIA IS A SWING STATE — COOPERATE WITH IT ACCORDINGLY
SHARINEE L. JAGTIANI AND AMEYA PRATAP SINGH

https://warontherocks.com/2022/07/india-is-a-swing-state-cooperate-...

The program for Indo-Pacific Maritime Domain Awareness announced at the Quad leaders’ May 2022 meeting is an important step toward further cooperation. It seeks to provide a “near-real-time, integrated, and cost-effective maritime domain awareness picture” in order to allow Quad members and partners to “fully monitor the waters on their shores and, in turn, to uphold a free and open Indo-Pacific.” The initiative is likely to support greater transparency in the region and shine a light on illegal Chinese fishing as well as aggressive naval expansion. As Zack Cooper and Gregory Poling wrote for War on the Rocks, the “maritime domain awareness initiative combines public goods provision with the Quad’s natural strengths: security cooperation and capacity building”.

However, New Delhi still worries that the initiative reflects Washington’s Pacific-focused vision of the Indo-Pacific, rather than India’s concern with the Western Indian Ocean. Additionally, while India is prepared to work with the United States, it is hesitant about having this cooperation described in overly securitized or anti-Chinese terms. For instance, Gen. Charles Flynn, Commander of the U.S. Pacific Army, said that India could become a useful military “counterweight” to China in the region. U.S. State Department Secretary for South and Central Asia, Donald Lu, in a recent interview suggested that India becoming a “global security power” was “in the interest of the United States”. He further described his vision of India being “militarily ready … to project that power far beyond India’s borders” in defense of the “common view of the security of Asia.” U.S. National Security Advisor Jake Sullivan has said that the United States is playing the “long game” with India and would judge it “over the fullness of time.” Such comments by American diplomats and military officials continue to suggest an inevitable alignment of Western security interests with India rather than reflecting India’s own desire for autonomy.

Trade and Supply Chain Resilience

Since the United States is already one of India’s largest trading partners, strengthening relations on this front is a productive avenue for India-U.S. engagement. India has favored an “Act East Policy” to build closer economic ties with the Association of Southeast Asian Nations and other important Southeast Asian countries. Its withdrawal from Regional Comprehensive Economic Partnership, however, shows that this approach has failed. India has, however, recently abandoned its earlier skepticism toward free trade agreements and begun tilting Westward in its trade ties. India is currently negotiating bilateral free trade agreements with the United Kingdom, the European Union, Australia, Canada, and the United Arab Emirates. Throughout these negotiations, India has also been more willing to align its domestic industry standards to global benchmarks on compliance, transparency, market access, labor, and the environment. The rhetoric of self-sufficiency notwithstanding, economic partnership with the West now has unprecedented support in New Delhi.

Comment by Riaz Haq on July 13, 2022 at 8:48am

INDIA IS A SWING STATE — COOPERATE WITH IT ACCORDINGLY
SHARINEE L. JAGTIANI AND AMEYA PRATAP SINGH

https://warontherocks.com/2022/07/india-is-a-swing-state-cooperate-...


That said, a comprehensive agreement on free trade with Washington has remained elusive. Talks failed in 2020, and since then the United States has made an executive decision not to sign any other new free trade agreements. Claiming that India did not allow sufficient access to the agricultural and dairy sector and also levied prohibitively high tariffs on the import of medical devices, the Trump administration also revoked India’s eligibility for concessions under the Generalized System of Preferences. This is a missed opportunity since trade is one area where India’s “swing” westwards is most apparent. Citing India’s existing Free Trade Agreement with Japan and ongoing talks with Australia, Commerce Minister Piyush Goyal has urged the Biden administration to reflect on the potential value of stronger trade relations between both countries.

The benefit of deeper trade ties with India from a strategic standpoint is clear. This would allow Western democracies, businesses, and their supply chains to diversify and build greater resilience. One of the key lessons of the war in Ukraine is that Western dependence on belligerent actors can be weaponized to blunt the effect of sanctions, as the West has been forced to belatedly scramble to find alternatives for Russian oil. The United States should be more proactive in seeking alternatives to China as the “world’s factory”. Countries like India, which have a young and extensive labor force and large domestic markets, offer many of the advantages that China did in the 1990s. Moreover, if this shift was framed in terms of putting a premium on democracy and transparency, it would allow the West to speak to India more openly about concerns over authoritarianism and protectionism. India may be willing to join such a counter-coalition to reduce dependence on China and prevent the weaponization of economic statecraft in the Indo-Pacific, because, unlike with sanctions on Russia, it would be a direct beneficiary.

The Indo-Pacific Economic Framework launched at the last Quad Summit is another step in the right direction. The framework came about as a strategy to replace the Comprehensive and Progressive Agreement for Trans-Pacific Partnership that the United States withdrew from under President Trump. The Biden Administration hopes the Indo-Pacific Economic Framework will provide flexibility of choice for its 13 members, which constitute 40 percent of the global GDP. Members will launch separate bilateral negotiations with each other based on an “à la carte approach” under the framework. Sullivan clarified that this was “not a traditional free trade agreement” and therefore would not require congressional approval.

At first glance, this may seem to accommodate India’s economic preferences as a developing economy and its general dislike for collective trading agreements. But on closer inspection, there are some evident limitations. Since the Biden administration has promised to protect domestic workers and producers, which requires shielding them from foreign competition, the Indo-Pacific Economic Framework offers no direct market access to the United States. Indeed, Washington could not offer or demand market access without congressional approval. It expects participants “to adjust their economies in lines with a range of new rules on clean energy, taxes, data protection etc. without offering increased market access in return.” As a result, the Indo-Pacific Economic Framework lacks the tangible rewards of a traditional free trade agreement and risks being seen in the region as a tool of U.S. hegemony. India remains enthusiastic about a mutually beneficial economic initiative to counter Chinese influence. But it is unclear how well the Indo-Pacific Economic Framework would serve this goal.

Comment by Riaz Haq on July 13, 2022 at 8:48am

INDIA IS A SWING STATE — COOPERATE WITH IT ACCORDINGLY
SHARINEE L. JAGTIANI AND AMEYA PRATAP SINGH

https://warontherocks.com/2022/07/india-is-a-swing-state-cooperate-...


Conclusion

The war in Ukraine has shown that, when it comes to India’s ties with the West, a revision of expectations is overdue. India’s importance for maintaining the balance of power in the Indo-Pacific makes it impossible to overlook as a partner. Additionally, despite underperforming over the last decade due to global headwinds, India is expected to be the world’s fastest-growing big economy this year. As a result, Western partners should focus on those aspects of trade and continental and maritime security where shared interests offer a strong foundation for cooperation, rather than hope India will continue on a mythical, teleological journey toward becoming Japan. India can be expected to tacitly help balance China’s rise. But it is likely to collaborate with its Western partners as a global swing state, in ways that align with its own geographic and security concerns.

Comment by Riaz Haq on July 14, 2022 at 6:28pm

#India under spotlight for 'laundering' Russian #oil. #US officials believe #Russian crude is being refined in #India and then exported to US & #Europe, circumventing #sanctions that have been imposed on Russia for its invasion of #Ukraine.- Nikkei Asia
https://asia.nikkei.com/Business/Energy/India-under-spotlight-for-l...

U.S. State Department Senior Adviser for energy security Amos Hochstein said in a Senate hearing on June 9 that he advised Indian officials to refrain from buying Russian oil. "I would ask two things. One, don't go too far. Don't look like you're taking advantage of the pain that is being felt in European households and the United States. Second, make sure you negotiate well, because if you don't buy [the oil], nobody else [will]," he said.

While it is difficult to identify the source of crude once it has been processed, the numbers tell their own story. According to financial information provider Refinitiv, nearly 24 million barrels of Russian crude oil arrived in India in May, more than eight times the amount a year earlier. In June, the number remained high at more than 20 million barrels.

Imports of Russian oil have surged since Moscow launched its invasion of Ukraine in February. Sales in India are estimated at close to $1.9 billion in May alone, making it an important source of income for Putin's government.

Around 26 million barrels of Russian oil are believed to have arrived in Sikka alone between April and June, 5.3 times more than the level a year earlier. Russian oil comprises 20% of the total delivered to Sikka via sea.

India processes crude oil into exports such as gasoline, diesel fuel and jet fuel. Oil products exported from the port in Sikka totaled around 75 million barrels in the April-June period, with 20% going to Europe or the U.S.



"Oil is not separated and stored in different tanks by source," said an employee at a major Japanese oil wholesaler. "It's almost impossible to precisely locate where imported oil is from."

Reliance Industries declined to comment on the allegations that Russian crude oil might be getting mixed in with raw materials for petroleum products exported to the West.

Indian External Affairs Minister Subrahmanyam Jaishankar was more dismissive, saying, "Not even heard about anybody in India thinking along the lines of [buying Russian oil and selling it to somebody else]" at the GLOBSEC 2022 Forum in Bratislava on June 3.

Urals crude is $30 to $40 cheaper per barrel than benchmark Brent crude oil, which is particularly attractive to India, given its concerns over its trade deficit.

China, too, has increased imports of Russian crude by a significant 55% in May from a year ago, according to Reuters. It appears that China is buying undervalued Russian crude oil and gas for its own consumption and to add to what it has been buying from Europe and other countries.

While Russian crude exports are expected to decrease over the long term, purchases by China and India will support its prices.

Furthermore, the shift toward decarbonization has made it hard to invest in oil refineries, which in the short term is putting a squeeze on supplies and prices. Fatih Birol, executive director of the International Energy Agency, told German weekly Der Spiegel that a bottleneck may emerge for products including diesel oil, gasoline and paraffin in Europe.

Comment by Riaz Haq on July 16, 2022 at 6:32pm

#SaudiArabia doubles #Russian oil imports at discounted prices for #power generation for #summer cooling demand and free up the kingdoms own crude for #export. Rising #oil sales to Saudi Arabia show #Biden's challenge in isolating Russia for #UkraineWar https://www.reuters.com/business/energy/exclusive-saudi-arabia-doub...

Saudi Arabia, the world’s largest oil exporter, more than doubled the amount of Russian fuel oil it imported in the second quarter to feed power stations to meet summer cooling demand and free up the kingdoms own crude for export, data showed and traders said.

Russia has been selling fuel at discounted prices after international sanctions over its invasion of Ukraine left it with fewer buyers. Moscow calls the war in Ukraine a “special military operation”.

The increased sales of fuel oil, used in power generation, to Saudi Arabia show the challenge that US President Joe Biden faces as his administration seeks to isolate Russia and cut its energy export revenues.

While many countries have banned or discouraged purchases from Russia, China, India and several African and Middle Eastern nations have increased imports.

Biden was on Friday visiting Saudi Arabia and was expected to seek an increase in oil supply to global markets from the kingdom to help to lower oil prices that have aggravated inflation worldwide.

There is little spare capacity for Saudi and others to increase production in the short term. Saudi Arabia has also maintained its cooperation with Russia in the alliance of global producers known as Opec+. The two are the de facto leaders of respectively Opec and non-Opec producers in that group.

Data obtained by Reuters through Refinitiv Eikon ship tracking showed Saudi Arabia imported 647,000 tonnes (48,000 barrels per day) of fuel oil from Russia via Russian and Estonian ports in April-June this year. That was up from 320,000 tonnes in the same period a year ago.

For the full year 2021, Saudi Arabia imported 1.05 million tonnes of Russian fuel oil.

Saudi Arabian and Russian energy ministries declined to comment on the increased imports.

Comment by Riaz Haq on July 18, 2022 at 11:09am

#Russia seeking #oil payments from #India in #UAE dirhams as #Moscow moves away from the #US #dollar to insulate itself from the effects of Western #sanctions. #Ukraine #energy #EU
https://www.reuters.com/business/energy/exclusive-russia-seeking-oi...

Russia is seeking payment in United Arab Emirates dirhams for oil exports to some Indian customers, three sources said and a document showed, as Moscow moves away from the U.S. dollar to insulate itself from the effects of Western sanctions.

Russia has been hit by a slew of sanctions from the United States and its allies over its invasion of Ukraine in late February, which it terms a "special military operation".

An invoice seen by Reuters shows the bill for supplying oil to one refiner is calculated in dollars while payment is requested in dirhams.

Russian oil major Rosneft is pushing crude through trading firms including Everest Energy and Coral Energy into India, now its second biggest oil buyer after China.

Western sanctions have prompted many oil importers to shun Moscow, pushing spot prices for Russian crude to record discounts against other grades.

That provided Indian refiners, which rarely bought Russian oil due to high freight costs, an opportunity to snap up exports at hefty discounts to Brent and Middle East staples.

Moscow replaced Saudi Arabia as the second biggest oil supplier to India after Iraq for the second month in a row in June.

At least two Indian refiners have already settled some payments in dirhams, the sources said, adding more would make such payments in coming days.

The invoice showed payments to be made to Gazprombank via Mashreq Bank, its correspondent bank in Dubai.

The United Arab Emirates, seeking to maintain what it says is a neutral position, has not imposed sanctions on Moscow, and the payments could add to the frustration of some in the West, who privately say the UAE's position is untenable and siding with Russia..

The trading firms used by Rosneft have started asking for the dollar equivalent payment in dirhams from this month, the sources said.

Rosneft, Coral Energy and Everest Energy did not respond to Reuters emails seeking comment.

Russia wants to increase its use of non-Western currencies for trade with countries such as India, its foreign minister Sergi Lavrov said in April.

The country's finance minister last month also said Moscow may start buying currencies of "friendly" countries, using such holdings to influence the exchange rate of the dollar and euro as a means of countering sharp gains in the rouble.

The Moscow currency exchange is preparing to launch trading in the Uzbek sum and the dirham.

Dubai, the Gulf's financial and business centre, has emerged as a refuge for Russian wealth.

India, also maintaining a neutral position, recongnises insurance cover by Russian companies and has offered classification to ships managed by a Dubai-based subsidiary of Moscow's top shipping group to enable trade.

India's central bank last week introduced a new mechanism for international trade settlements in rupees, which many experts see as a way to promote trade with countries that are under Western sanctions, such as Russia and Iran.

Comment by Riaz Haq on July 23, 2022 at 6:36pm

India is importing almost 3x as much fertilizer from Russia as it did pre-invasion. “Russia has emerged as the largest supplier of fertilisers to India during April-June this year… [I]mports from Russia were ‘10% cheaper’ than the prevailing prices.”

https://twitter.com/clary_co/status/1550995317864144896?s=20&t=...

In development that holds diplomatic significance and brings fiscal savings, Russia has emerged as the largest supplier of fertilisers to India during April-June (Q1, FY23) this year. India imported 7.74 lakh metric tonnes of fertilisers from Russia in the first quarter and this is more than a fifth of the total 36.4 lakh metric tonnes imported from across the globe, according to data shared by Chemicals and Fertilisers Minister Mansukh Mandaviya in a written reply to a question in Lok Sabha on Friday.

https://indianexpress.com/article/india/fertiliser-imports-from-rus...

Comment by Riaz Haq on July 30, 2022 at 6:28pm

JPMorgan says #Russia has had no problem rerouting its #oil #exports from #Europe. Expects Russian production in Q3 to be higher than a year ago. Better-than-expected global production amid signs of a drop in #demand pushing oil #prices lower. #Ukraine https://africa.businessinsider.com/markets/jpmorgan-says-russia-has...

Russia has been able to reroute its oil exports away from Europe without serious disruptions, JPMorgan has said, adding that the expected drop in output "never happened."

Better-than-expected Russian production, along with the release of oil from global strategic reserves, helps explain the recent drop in crude prices, the bank's head of commodities research Natasha Kaneva said in a note to clients.

Russia's oil exports to Europe its biggest market have fallen relatively sharply in 2022, as companies have "self-sanctioned" in the wake of Vladimir Putin's invasion of Ukraine in late February.

However, Russia has been able to shift its exports towards Asia, with India and China in particular stepping up their purchases. More recently, a jump in domestic demand has caused Russian oil production to rise back to prewar levels.

"The market consensus was too pessimistic about Russia's capability to re-route volumes to other buyers," Kaneva and her colleagues said in the note Wednesday. "Russia's exports adjusted towards other buyers without a serious disruption to its production."


"At its peak, the oil market was pricing in the worst-case scenario a 3 million barrel a day loss of Russian production combined with record-high summer demand while, in reality, it never happened."

JPMorgan expects Russia production to produce 9.95 million barrels a day of oil in the third quarter, above the 9.76 million barrels a day produced in the same quarter a year earlier.

It thinks production will slip to 9.5 million barrels a day in 2023, staying relatively strong despite the European Union's ban on most oil imports from the country.

Oil prices have fallen in recent weeks, with global supply stronger than expected and demand likely to weaken in the coming months as the world economy slows. WTI crude, the US benchmark price, was down around 10% over the last month to trade at $98 a barrel Friday.

Russia's oil and gas revenues have helped Putin's government prop up the local currency, the ruble, alleviating some of the pressure on the economy.

However, the economy is still expected to shrink sharply this year. Imports have cratered in a sign of domestic stress.

Yale academics, led by Jeffrey Sonnenfeld, said in a study this week that Western sanctions are "catastrophically crippling" the economy, with domestic production slowing dramatically.

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