Biden’s spox Jen Psaki worries: Buying cheap Russian oil could put India on the “wrong side of the history.”
As Russia faces mounting U.S. and Western sanctions over its invasion of Ukraine, India appears to be stepping up to bail out its Cold War ally.
New Delhi plans to purchase Russian crude oil and other commodities at ‘discounted rates,’ a move that could help Moscow shield its economy from the effect of international sanctions, news reports say.
“India may take up a Russian offer to buy crude oil and other commodities at a discount,” Reuters reported this week. On Wednesday, the Indian newspaper Times of India confirmed that New Delhi was close to “clinching” a colossal oil deal with Moscow.
What does President Joe Biden plan to do about a significant economy rendering his much-publicized sanctions useless? Nothing actually.
The Biden White House appears cool with Indians buying cheap Russian oil but worries that the lucrative deal could put New Delhi on the “wrong side of the history.”
“I don’t believe this would be violating that, but also think about where you want to stand,” White House press secretary Jen Psaki blurted out on Tuesday. “When the history books are written at this moment in time, support for Russia – the Russian leadership – is support for an invasion that obviously is having a devastating impact.”
India is the world’s third-largest oil consumer, after the U.S. and China. Currently, India gets only 2 percent of its oil supplies from Russia. But this may be about to change.
New Delhi-based newspaper The Times of India reported the Russian-Indian deal in the pipeline:
India is close to clinching a deal with Russia for buying 3.5 million barrels of its crude at “deep discounts”, people aware of the development told [The Times of India].
The broad contours of the deal indicate Russia will take care of shipping and insurance for delivering the crude to India. This will overcome a major hurdle for Indian refiners in buying Russian crude. (…)
The quantity, which is close to a day’s consumption of 4.5 million barrels by India, will be delivered over a few months, sources said without identifying the type of crude to be imported or ports of loading.
India Plans Setting Up “Alternative Payment System” To Bypass Biden’s Russia Sanctions
President Biden’s efforts to put an early end to the Russian offensive in Ukraine by placing ‘crippling’ sanctions won’t help if major economies like China and India decide to bypass them.
According to Indian media reports, New Delhi is establishing an alternative payments system to bust U.S. sanctions. This financial mechanism could shield Indian banks and corporations from secondary U.S. sanctions trading with Russia.
Indian newspaper The Hindustan Times reported the details of the payment mechanism:
India is stepping closer to setting up an alternative payments system to maintain its trade with Russia, identifying a potential bank, as a top panel examining the issue recommended prioritising edible oil and fertiliser imports as well as payments owed to India, an official aware of the development has said.
The top interministerial panel has been tasked with scrutinizing the impact of a barrage of economic sanctions imposed by the West on Russia on India’s economy. It is led by economic affairs secretary Ajay Seth and includes the ministries of food and consumer affairs, fertilizers, commerce, external affairs and petroleum.
China has already declared that it won’t recognize any of the U.S. sanctions imposed in the wake of the Ukrainian invasion. “China won’t join such sanctions” and “will continue to maintain normal economic, trade and financial exchanges with” Russia, the top Chinese banking regulator announced last Wednesday.
It is also worth noting that President Biden has also lost his credibility in this matter. On Tuesday, the White House gave “written guarantees” allowing Russia to use the nuclear deal framework to trade with Iran — thereby bypassing the U.S. and international sanctions.
Oil, Defense: India’s Fatal Dependence on Russia
India is already heavily reliant on Russia for its military procurement. According to estimates, 60 percent of Indian military equipment is of Russian origin, making New Delhi dependent on Moscow for spare parts and upgrades.
On Monday, Reuters reported the extent of India’s dependence on Russian military supplies:
Indian officials said they could not suddenly replace Russia with other suppliers, particularly in the defence sector.
India’s dependence on Russia for its military hardware still runs as high as 60%, despite a significant reduction over the last decade.
U.S. officials have declined to say if India would be sanctioned should Russia send S-400 missile systems as part of a $5.5 billion deal signed in 2018 for five of them.
Initial supplies of the system started late last year despite a U.S. law aimed at deterring countries from buying Russian military hardware.
India’s growing dependence on Russia for oil and energy calls into question India’s place as a key U.S. ally in the Indo-Pacific. In 2017, the Trump administration revived the Quad strategic alliance. India is part of this U.S.-led four-nation coalition seen as a counterweight to China’s growing military clout in the region.
“India firmly on Putin’s side despite international pressure”
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