May 20, 2022

Great Indian Mutiny

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Russia is turning to India to sell oil and weapons as sanctions on Ukraine increase

When those sanctions begin to take effect, Moscow returns to India (REUTERS / Adnan Abidi)

Russia has faced international condemnation and sanctions since President Vladimir Putin launched an invasion of Ukraine on February 24. India was aloof from diplomacy.

Now, when those sanctions come into force, Moscow turned to India again.

India, the world’s second-largest oil importer after China and the United States, has agreed to buy Russian oil at a deep discount of 3 million barrels.An Indian official said on Thursday. Purchase, first reported The Wall Street Journal, Russian production and relatively small in terms of Indian demand. But It may increase in size in the coming months and reinforce the growing perception that India is committed to safeguarding comprehensive trade and military ties with Moscow.The United States and its allies are urging governments around the world to isolate Russia.

The Indian government is exploring not only the oil deal, but also ways to maintain trade with Russia Revival of the so-called Cold War agreement on the rupee-ruble tradeAccording to two other Indian officials who knew about the matter. The mechanism is similar to a trade book between two countries. Allows Indian and Russian companies to do business without the use of US dollarsThe main currency of international trade and mitigating the risk of potential US sanctions.

The three Indian officials spoke anonymously to discuss an important matter. “Eighty-five per cent of India’s oil comes from imports, so we are always looking for good options,” an official said. “It includes a good package from the Russian side, and if there is no impediment to buying from Russia, we will accept it.”

India, the world's second-largest oil importer after China and the United States, has agreed to buy 3 million barrels of Russian oil at a deep discount (REUTERS / Francis Mascarenhas / File Photo)
India, the world’s second-largest oil importer after China and the United States, has agreed to buy 3 million barrels of Russian oil at a deep discount (REUTERS / Francis Mascarenhas / File Photo)

Indian authorities have classified rubles and rupee ledgers, which can be set up in Russian and Indian banks that are not exposed to the US financial system. A solution that will help the Indian economy and its exporters instead of avoiding potential US sanctions. India trades with IranAnother country under US sanctions, Using a similar trading arrangement between the rial and the rupee.

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In the last few weeks, India has been repeatedly criticized by some US lawmakers for withdrawing from criticizing Russia at the United Nations. But Biden executives have often stopped criticizing an Asian giant who is seen as a key part of their strategy to oppose China.

On Tuesday, the White House press secretary, Zhen Zhao told reporters that he did not believe Russia’s oil purchases would violate existing U.S. sanctions.

“But also think about where you want to be when history books are being written about this moment.” Zaki added without explicitly mentioning the name of India. “Supporting the Russian leadership is tantamount to supporting an invasion, which is obviously having a catastrophic impact.”

India’s special relationship with Russia was highlighted during this month From the besieged Ukrainian city of Kharkiv, the Russian military provided India with “special information” on when and where stranded civilians should flee.When Russian military officials offered to remove the Indians, especially from the war zone.

India is not the only country with trade relations with Russia. Many European countries, including US allies in NATO, continue to buy Russian energy despite US and British sanctions.. And India’s oil purchases will not replace Putin’s war effort.. Russia’s most important customers are Europe and China; According to S&P Global Commodity Intelligence, India accounted for 3% of Russia’s exports by 2021 and receives most of its oil from the Persian Gulf.

Many European countries, including US allies in NATO, continue to buy Russian energy despite US and British sanctions (Natalia Sumakova / file photo)
Many European countries, including US allies in NATO, continue to buy Russian energy despite US and British sanctions (Natalia Sumakova / file photo)

But cooperation between the two countries in the field of energy has been deep in recent years. In 2016, Indian Prime Minister Narendra Modi and Putin oversaw a $ 13 billion deal between Rosneft and a refinery in Modi’s home state of Gujarat, which represented the largest foreign investment in India’s history and the largest outflow from Russia. Meanwhile, Indian energy companies have invested $ 16 billion in Siberian oil fields.

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As talks over oil purchases intensified last weekend, Russia’s Deputy Prime Minister, Alexander Novak summoned Indian Oil Minister Hardeep Singh Puri and expressed Russia’s interest in “attracting more Indian investment in Russia’s oil and gas sector.” And expand the sales network of Russian companies in India. , According to a report released by the Kremlin.

Puri told the Indian parliament this week that the Modi administration was working hard to bring down petrol prices and was negotiating an agreement with the Russian government “at all levels”. Otherwise, The Indian Ministry of Oil did not comment publicly.

Many Indian industry executives and observers argue that it is unreasonable for Western nations to pressure Russia to extract oil from Russia. The European Union (EU) has said it will abandon Russian power “as soon as possible” this month Large countries that depend on Russia, such as Germany, do not immediately reduce imports.

“Have Europe or any other major consumer of Russian oil and gas already reduced their consumption?” Subhash Kumar, former chairman of the State-owned Petroleum and Natural Gas Corporation, the largest crude oil company in the country, said. If India, which is not involved in the Ukraine conflict, does not buy Russian oil at a discount, there will be other buyers in the market.Said.

A refinery in Omsk, Russia (REUTERS / Alexey Malgavko)
A refinery in Omsk, Russia (REUTERS / Alexey Malgavko)

Other leading commentators have warned against pursuing purchases, mainly because of its optics. “From a moral point of view, the decision to buy Russian oil and gas at lower prices may be questionable due to the crisis in Ukraine.Vikram Singh Mehta, former CEO of Shell India and former head of Brookings’ India division, told local media this week.

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In the coming months, India’s trade with Russia is likely to continue in another important area besides oil: security. In the tradition of the Cold War, the Soviet Union provided India with everything from setting up steel mills to maps for MiG warplanes. According to a 2021 study by the Stimson Center, today 85% of Indian weapons come from the Soviet Union or Russia.An impartial think tank in Washington.

Amit Kaushish, a retired Indian defense ministry official who previously oversaw India’s military procurement, said. If India fails to trade with Russia, the armed forces will be severely paralyzed within a year.

“There is ammunition, subgroups, important licenses, all of which will be exhausted, and the US will not be interested in seeing it disabled or alienated by Indo-Pacific partner sanctions,” he said.

Until now, Biden executives refrained from criticizing India’s continued ties with Russia. During a House Armed Services Committee hearing last week, lawmakers asked Eli Ratner, assistant secretary of defense for Indo-Pacific defense affairs, who argued a tough US stance against Beijing, why India was not on the side of the West in Russia. Invasion of Ukraine.

“We recognize that India has a complex history and relationship with Russia.”Ratner replied.

India is trying to get away from Russia, but it will take time, Ratner added. “From America’s point of view,” he said.India is an absolutely essential partner when we think about our Indo-Pacific strategy.

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