India’s Russian Oil Conundrum
The rise of India as a major importer of Russian oil since the onset of the Ukraine war in February 2022 has generated discussions and debates that delve into a multi-dimensional conundrum. In a world increasingly shaped by geopolitics and economic self-interest, India’s burgeoning trade with Russia reveals a pragmatic, albeit delicate, balancing act in international diplomacy.
The Economic Imperative
India’s consumption of Russian oil has seen a tenfold increase in 2022, reaping a saving of roughly $5 billion, according to the Bank of Baroda. Additionally, trade between India and Russia reached an all-time high of $18.2 billion within just five months from April to August 2023, propelled mainly by oil and fertilizer imports. India’s stance is as much an economic decision as it is a diplomatic one. In a country where millions still live below the poverty line, saving $5 billion is not a trivial accomplishment; it’s a significant cushion against inflation and energy price volatility.
The Diplomatic Tightrope
India’s External Affairs Minister S. Jaishankar robustly defended the country’s oil purchases, asserting that India has not breached any Western sanctions and cannot afford to pay inflated prices for essential energy supplies. To put things into perspective, Europe imported six times more energy from Russia than India since the Ukraine war began.
Russia’s Geopolitical Game
Some analysts perceive Russia’s discounted oil strategy as a mechanism to expand its geopolitical influence in Asia and to undermine the dominance of the US dollar in oil trade. Amid the expansion of the BRICS group to include six more nations such as Saudi Arabia, alarms are being sounded in the US over the potential erosion of the petrodollar system.
The Sustainability Question
Experts like Vandana Hari of Vanda Insights argue that Russia’s deep discounts may not be sustainable in the long run. There’s a consensus that if the geopolitical situation stabilizes or sanctions are lifted, India will pivot back to its traditional suppliers. In this context, India’s current strategy can be seen as opportunistic rather than a seismic shift in long-term policy.
A Policy of Realpolitik
India’s decision to continue oil imports from Russia serves as an illustrative example of realpolitik in action. Despite the ethical questions it raises, India’s approach is far from unique in the global arena where self-interest often trumps ideological affinity. India is not openly endorsing Russia’s actions in Ukraine; instead, it’s walking a diplomatic tightrope, balancing its economic vulnerabilities with its geopolitical relationships.
