The Americans have failed to get India to accede to sanctions against Russia and, in particular, to accede to the West’s imposition of a “price ceiling” on Russian oil
US Treasury Secretary Janet Yellen, who was in New Delhi last week for a one-day visit during which she co-chaired the ninth meeting of the India-US Economic and Financial Partnership Dialogue, attempted to do so.
But as a result, she had to backtrack. “The US is not opposed to India buying Russian Federation oil at a cost above the price ceiling”, the minister was forced to declare at the end of the talks in New Delhi. Though she did make a caveat, adding that the government and private Indian companies could “buy oil at any price as long as they do not use Western services and have found alternatives to them”.
By services, they mean insurance, transportation and financial services. The US expects that if Europe refuses to buy Russian fuel, finding alternative buyers will not be easy, Yellen told Reuters. “Many buyers depend on Western services,” she pointed out.
But the subject of the US visitor’s talks was not just about oil (as we know, India is now the second largest buyer of it from Russia after China), but also about Washington’s attempts to strengthen its overall ties with New Delhi amid growing tensions with China and Russia.
“The United States,” the New York Times candidly admitted, commenting on Yellen’s visit, “is putting India at the centre of its efforts to wrest global supply chains from the clutches of American adversaries, seeking to strengthen ties with one of the world’s fastest growing economies as tensions with China remain high and Russia’s war in Ukraine is turning international trade around.
As the New York Times notes, that was the purpose of Yellen’s visit to India, where she visited Microsoft’s offices on the outskirts of New Delhi. During that visit, the US treasury secretary said, “The United States is taking an approach called ‘friend-shoring’ to diversify away from countries that pose geopolitical and security risks to our supply chain. To that end, we are actively deepening economic integration with trusted trading partners such as India,” the minister said.
In doing so, Yellen notably pledged $500 million to a solar energy producer to build a facility in the southern Indian state of Tamil Nadu, which she said represents “part of the administration’s efforts to help the global solar industry move away from China, which Yellen said is producing solar panels using forced labour in its Xinjiang region.” The minister also drew attention to Apple’s recent move to shift iPhone production from China to India.
“In recent months,” the New York Times divulged, “America’s ties with India have grown in importance. The country is a rare ally that maintains strong diplomatic relations with Russia, which has become its main oil supplier, and has influence over President Vladimir Putin. At the same time, India’s large English-speaking population could make it an international manufacturing hub for US companies. The United States is India’s largest trading partner overall.”
As the Swiss broadcaster SRF points out, “India’s relations with the United States have never been as close as they are now. More than 4.5 million Indians live in the US, and the two countries have also grown closer strategically – in the defence fight against China.
And judging by publications in the Indian press, such advances from Washington have been met with obvious interest in Delhi’s economic circles. For instance, India’s leading business publication, the Economic Times noted that the recently published new US national security strategy, which aims to confront China and Russia, opens up new opportunities for India, according to the publication. “There are many opportunities for a closer partnership between the US and India. The message for India is clearer than ever: geopolitics is playing into its hands. So now India must seize the moment for the sake of itself, the region and all open societies,” notes this Indian newspaper.
Such pragmatic interest is understandable because, as we know, India’s relations with Russia are not as multifaceted as its relations with the US, Europe or even Japan. For example, bilateral trade between India and Russia is only $11 billion, while India’s trade with the United States is $146 billion and with the European Union, $71 billion a year.
However, all of this does not cancel India’s declared policy of strengthening ties with Russia in recent years. For example, India’s purchases of Russian military equipment, which New Delhi acknowledges to be the most important element of trade relations between the two countries, has a greater impact on India’s security.
Current bilateral projects between Russia and India include the BrahMos multi-purpose system, licensed production of Su-30 aircraft and T-90 tanks. A factory for the production of Kalashnikov rifles has been opened in the Indian city of Korwa. A contract has been signed for the supply of five regimental sets of S-400 air defense missile systems worth more than five billion dollars. This deal has already been called the largest ever by Rosoboronexport. Russia is also building frigates for India, has supplied a large batch of Igla man-portable air defence systems, and has also received a request from the Indian Defence Ministry to supply 200 Ka-226T helicopters. Besides, India is now the biggest buyer of Russian oil after China, which is extremely profitable for it. In mid-September, the Times of India, citing sources in the Indian Ministry of Commerce, wrote that India had saved $439.7 million since February 2022 because it was buying Russian oil at a discount.
“Russia is our stable and long-term partner,” Indian External Affairs Minister Subramanyama Jaishankar said at a joint press conference with External Affairs Minister Sergei Lavrov during his visit to Moscow on November 7-9. Regarding the US plans to curb prices of Russian oil, the Indian minister said the following in this context even before Yellen’s visit: “India is the world’s third-largest consumer of oil and natural gas and has a low income level and will therefore be guided solely by its own interests. In light of this, the Indian government believes that our relations with Russia work to India’s advantage. And if they work to India’s advantage, we would like to continue them.”
As former Indian foreign minister and ambassador to Russia Kanwal Sibal wrote in India Narrative on Friday, his country will continue to develop and expand its economic ties with Russia. There is no use pressuring India to join sanctions against Russia.
India abstains in UN votes on anti-Russian resolutions. That is why the West fails to engage New Delhi in a deal to impose a ceiling on Russian oil.
Therefore, even in the US there are already those who doubt that Washington will succeed in making India its partner in the fight against Russia. According to the American edition of Hill, the latest “high-profile visit of Russian President Vladimir Putin to Delhi confirms India’s desire for strategic autonomy, despite the fact that it, too, is building a solid strategic partnership with the United States. From the Indian perspective, the Americans are not always entirely reliable. Given India’s security threats from Pakistan and China, India wants to assure itself that it has partners beyond the US, especially as a source of arms and military technology.”
“Delhi believes,” Hill admits, “that it is better off with Moscow on its side than with Moscow purely in the Chinese camp. Russia is also less aligned with Pakistan, which used its Cold War alliance with the US to develop its military capabilities against India.”
The failure of Yellen’s mission is also evident from the fact that already after her departure from New Delhi, the Indian Express newspaper announced that India expects to double its trade with Russia. “Based on feedback from various exporters and commercial organisations,” the paper wrote, “the Commerce Ministry is confident of doubling trade between India and Russia in the near foreseeable future and this will be further encouraged by the use of Indian rupee for trade payments,” it said in the minutes of talks.
The Indian government this week allowed the rupee to be used in international trade settlements. This was done to simplify and facilitate international transactions in rupee, given the growing interest in the internationalisation of the Indian currency, the Commerce Ministry said.
As noted, the volume of Russian-Indian trade has increased substantially recently, mainly due to a surge in Russian oil supplies to India.
While previously raw materials from Russia accounted for less than 1% of total Indian consumption, the figure has now risen to 22%. In October Russia became India’s largest oil supplier, overtaking Saudi Arabia and Iraq.
So, there is no doubt that by betting on India in an attempt to isolate Russia and hurt China, Washington is clearly miscalculating.
Igor Veremeev, Centenary