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Sushanta Mallick and Brigitte Granville show how the Ukriane war is helping India achieve significant - and advantageous - geopolitical autonomy

Public Policy / opinion
Sushanta Mallick and Brigitte Granville show how the Ukriane war is helping India achieve significant - and advantageous - geopolitical autonomy
oil drums

If there was a prize for the most quotable comment on international relations so far in 2022, Indian Foreign Minister Subrahmanyam Jaishankar would be in the running. Responding to criticism of his country’s neutral stance on the Russia-Ukraine war at a security forum in Slovakia in June, Jaishankar said that “Europe has to grow out of the mindset that Europe’s problems are the world’s problems, but the world’s problems are not Europe’s problems.”

Like most major crises, the war is shedding stark light on our era, and India’s response to it is particularly illuminating. India’s current foreign policy does more than just exemplify how the conflict has intensified deglobalisation trends. It also highlights the paradox inherent in the country’s increasing emphasis on “strategic autonomy” as the world fragments into rival power centers: the United States and its alliance system versus China and its major satellite, Russia. The essence of this paradox is that India’s quest for self-reliance – keeping its distance from the principals of Cold War 2.0 and seeking advantage from diverse relationships – entails multidimensional international engagement.

For example, European politicians painfully weaning their countries off imported Russian energy have criticised India for buying more Russian oil – after Western sanctions reduced its price by about a third relative to the world market price. Indian purchases of Russian crude increased to 1.1 million barrels per day (mbpd) by late July and now account for over one-fifth of Indian oil consumption, compared to just 2% last year.

The standard official Indian response is that, despite Europe’s extensive sanctions, the continent’s energy trade with Russia still dwarfs India’s. More tellingly, however, India’s purchases of discounted Russian oil are not only cushioning the blow to itself as a poor energy-importing country, but also helping to prevent even more economic pain for Europe. If the 4.3 mbpd of crude oil that Russia sold to the West last year (or six mbpd including oil products) had no alternative markets like India, the world oil price would be even higher.

Recognising the importance of keeping Russian oil on the market, the G7 has now come up with an alternative sanctions strategy that could present India with its next big test. The West’s Plan A was to combine, by the end of 2022, a partial embargo on direct imports of Russian oil with an attempt to choke off Russian oil exports to third countries by leveraging Western (and especially British) dominance of the global marine insurance market.

Plan B is the so-called price cap” mechanism. This would allow Russia to continue exporting oil but set a maximum price just sufficient to cover its production costs, thereby depriving the Russian state of any war-financing rent.

When the price cap scheme was first officially aired at the G7 summit in June, several leaders, notably German Chancellor Olaf Scholz, publicly questioned its viability – especially regarding compliance by third-party buyers of Russian oil. Even if Russia agreed to the cap, who would get access to its deeply discounted oil, and who would pay the full market rate? Russia would be much more likely simply to reduce output, hoping to offset its losses with the resulting further price surge for whatever residual oil exports evaded the Western insurance net.

Either way, India will be in a pivotal position. While Russia’s opaque oil sales to China will continue regardless, India can look forward to various arbitrage opportunities. It will continue importing substantial quantities of Russian oil at ever cheaper prices. And in the event that such imports weakened Western measures to squeeze Russia’s oil rents, the US would be unlikely to threaten – much less impose – secondary sanctions on India.

After all, successive US administrations – under Presidents Donald Trump and Joe Biden – have refrained from using their legal powers under existing legislation to place secondary sanctions on India for continuing to buy Russian weapons. The reason for this is clear: A closer security partnership with India has become a vital part of America’s China policy. Specifically, the Quad – an informal security grouping comprising the US, Japan, Australia, and India – has emerged as a cornerstone of US Indo-Pacific strategy, and would not survive the US sanctioning one of its members.

Of course, the US-India security relationship is mutual, given the live Chinese threat to Indian territory along the Himalayan Line of Actual Control – as the deadly June 2020 border skirmish showed. But India’s fear of China also implies a strategic dimension to its ties with Russia that goes well beyond opportunistic oil and arms purchases. India has an interest in keeping Russia close and not allowing a monolithic and estranged Russia-China Eurasian axis to loom over the Indian subcontinent.

India is playing this multifaceted game adroitly. In defense procurement, it has acquired advanced Russian S-400 air-defense systems and agreed to extend until 2031 the licensed local production of Russian weapons. But it has also increased arms purchases from NATO members, notably France.

Moreover, India has ample options for managing broader US sensitivities vis-à-vis Russia. For example, Russia urgently needs to replace industrial inputs that it previously imported from the West. This could provide further opportunities for Indian exports, which are already a third higher than their pre-pandemic level, owing in part to the government’s Atmanirbhar Bharat (“self-reliant India”) stimulus program for manufacturing. Increased Indian pharmaceutical and automotive exports to Russia need not involve military support of the kind that has already led the US to sanction various Chinese electronics manufacturers, as announced on June 28.

India’s relations with Russia are part of its nuanced and multidimensional foreign policy. This approach means that the upcoming 75th anniversary of Indian independence will coincide with the country achieving significant – and advantageous – geopolitical autonomy.


*Sushanta Mallick is Professor of International Finance at Queen Mary University of London. Brigitte Granville is Professor of International Economics and Economic Policy at Queen Mary University of London and the author of What Ails France? (McGill-Queen’s University Press, 2021). Copyright: Project Syndicate, 2022, and published here with permission.

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12 Comments

What India does not want

Chinese spy ship docking in Sri Lanka or Chinese Navy in the Indian Ocean

Aligned with US, Europe or China

Interference in the affairs of other countries, economic or military.

 

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... I don't think India could care less about China's threats & childish antics .... China's peak power as a financial & military entity is now ... it's all downhill , as demographics pull the rug out from under them ....

The new world order will be America & India .

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Yep GBH re China and the new world order - and that is not meant in a conspiratorial sense.

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... China's " one child policy  " is coming back to haunt them ...

India has a better demographic of a younger population  , of highly educated English speaking people , and it's a democracy ... 1400 million of them : there's phenomenal potential ...

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Old fashioned thinking.  In the past the more children the more peasants working in fields and the wealthier the country. Now the opposite is true with the developed countries the ones with least labour per output of food.  The average Chinese is roughly twice as wealthy as the average Indian - if India had a better water supply and half the population then you would be correct about their future.  Just too many people to ever reach their potential.  Very sad - I really wish you were right.

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Dream on! America is in decline and it will take down Europe with it.

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... please explain why you believe " America is in decline " ... I strongly disagree with that comment ...

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Drive around Oakland California.

The homeless is incredible, and its not just lower social strata, middle class is really under the pump.

Utilities, health care , rents ,pension plans .

 

 

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A good piece dealing wth very important points rarely dealt with by NZ academics let alone the brain dead, paid for NZ MSM. As a former spook whose bailiwick included energy and geopolitics, I think their conclusions are spot on, especially about the Europeans having to grow up.

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A telling statement "“Europe has to grow out of the mindset that Europe’s problems are the world’s problems, but the world’s problems are not Europe’s problems.”

NZ still sees itself as part of Europe, over seen by the US.

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 .. says who ? ... do you still feel that you're a part of Europe ,  'cos  I sure as hell fire do not ... never did   ...

If anything  , we're a part of Australia , and the Asia/Pacific  ... 14000 km separated from Europe ...

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Gosh, there was i thinking we were a de facto US colony with a strictly regulated autonomy. Just look at our currency, the dollar bit is the giveaway.

Of course it is not politic to mention the enforced genetic modification programme with NotaVax, cos that's a conspiracy theory, despite the transfer of enough money to Fizzer to make our stuggling health system world class. As is climate change being the excuse for a power grab. As is our silly house prices being a result of capital inflows mandated by our masters. As is full implementation of total surveillance via banking "reforms", social media, search engine and operating systems. All conveniently US monopolies.

It's called Full Spectrum Dominance, ie US Dollar, Pharmaceuticals, Computing hegemony.  It is the modern world as we know it, that is why it is so disturbing seeing the US hurrying down the path to ruin ala Argentina, once one of the richest countries in the world.

https://tradingeconomics.com/argentina/inflation-cpi

The Indians are keen to avoid being a colony again. As are the Russians and the Chinese, for that matter.

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