Two senior Biden administration officials have said that the United States (US) has “no objection” to India purchasing oil from Russia, so long as it is at a discount, but warned that while “some increase is allowed,” Washington may impose “consequences” on countries who circumvent its sanctions.
Upon his arrival in New Delhi on Thursday, US Deputy National Security Advisor (NSA) for Economics Daleep Singh said that the US is resolutely against a “rapid acceleration” in Indian imports of Russian energy or any other products that have been sanctioned. He noted that he is visiting “in a spirit of friendship” but underscored that purpose of his trip is to “explain the mechanisms of our sanctions” and “the importance of joining us,” before warning that the US will exact “consequences” on countries who “actively attempt to circumvent or backfill the sanctions.”
Foreign Secretary @harshvshringla met US Deputy National Security Advisor for International Economics & G20 Sherpa Daleep Singh.
— Arindam Bagchi (@MEAIndia) March 31, 2022
Discussed 🇮🇳🇺🇸 economic cooperation & strategic partnership. Look forward to working together on global issues of mutual interest, including in G20. pic.twitter.com/6NkYnteuxe
Union Minister Piyush Goyal met with US Deputy NSA for International Economics Daleep Singh, in Delhi. pic.twitter.com/OQazZX1iKs
— ANI (@ANI) March 30, 2022
He went on to say that the US is “very keen” to impress upon its allies that “create mechanisms that prop up the ruble, and those that attempt to undermine the dollar-based financial system,” referring to India and Russia’s prospective rupee-ruble oil trade mechanism.
In this regard, Singh also recommended a shift in India’s high dependency on Russia for defence equipment, warning that this could pose a “material risk” to its ability to protect itself. The US official pushed India to avoid relying on Russia for help in defending its borders from any military aggression by China, with which Moscow has a “no limits partnership.” In a press conference, he remarked that Russia had declared China as its “most important strategic partner.”
Nevertheless, Singh clarified that the US and India are close partners and American authorities would continue to rely on “honest dialogue,” and not set “red lines.” To this end, he stressed, “It is critical that we move in as broad a coalition as possible because this is not a unilateral exercise in brute American force. That’s not what this is.”
Singh is currently on an official visit to New Delhi, wherein he is scheduled to meet with Foreign Secretary Harsh Vardhan Shringla, Minister of Commerce and Industry Piyush Goyal, and other officials from the Prime Minister’s (PM) Office, the National Security Council, and the External Affairs Ministry. The White House, has welcomed the “productive” discussions between New Delhi and Washington.
#WATCH I don’t have any additional specifics to readout beyond the fact that there were productive conversations. He had really good discussions with his counterparts&that the conversation was productive:WH communications director on US Dy NSA for IE Daleep Singh's visit to India pic.twitter.com/6nAAGf226N
— ANI (@ANI) April 1, 2022
Building on Singh’s apparent warnings to India, in an exclusive interview with Reuters, an unnamed senior US official said, “U.S. has no objection to India buying Russian oil provided it buys it at discount, without significantly increasing from previous years.” He added that only “some increase is allowed,” possibly hinting at sanctions or other punitive measures. In fact, he said that the proposed rupee-ruble trade must be “in compliance with sanctions,” adding, “If not, they are exposing themselves to a great risk.”
Meanwhile, the Reuters report also quoted a spokesperson from the US State Department who said that American officials are aware of India and Russia’s continuing discussions on energy trade. He said that the US continues to “engage [its] partners in India” and underscore the “importance of a strong collective action, including strong sanctions, to press the Kremlin to end its devastating war of choice against Ukraine as soon as possible.”
Russia’s energy industry has been heavily sanctioned by the West. For instance, Germany has suspended the Nord Stream 2 pipeline while the US issued a total ban on Russian oil, liquefied natural gas, and coal earlier this month, resulting in Russia losing up to 700,000 barrels in oil exports each day. Western countries have also restricted Moscow from accessing the SWIFT global bank messaging system and limited financial dealings with its Central Bank. Therefore, India has been struggling to conduct transactions with Russian companies over fears of being banned from the global financial system.
Joe Biden's Deputy NSA Daleep Singh’s remarks that, “if China breaches LAC, Russia wouldn't come running to India's defence”, is ill-founded and hypocritical. China has breached the LAC several times in last two years but Biden has never opened his mouth against China.
— Aditya Raj Kaul (@AdityaRajKaul) April 1, 2022
Therefore, during a meeting between Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri spoke with Russian Deputy Prime Minister Alexander Novak two weeks ago, the two sides spoke of the possibility of “rupee-ruble-based” trade, wherein Indian exporters can pay in rupees instead of dollars or euros. The system would be put in place via a “floating exchange rate system” through a third currency, perhaps the yuan, as a point of reference. This could also facilitate the payment for goods worth about $500 million that have already been shipped to Russia.
India, which is the third-largest importer and consumer of energy, has purchased 13 million barrels from Russia since Moscow’s invasion of Ukraine began on February 24. In fact, the Financial Times recently reported that India has imported 360,000 barrels per day in March, a fourfold increase from 2021.
Apart from continuing its trade relations with Russia, India has also refrained from making any direct references to its long-time ally and refused to condemn its invasion of Ukraine beyond calling for diplomacy and respect for international law and the sovereignty and territorial integrity of all countries. In addition, it has abstained from voting in United Nations General Assembly (UNGA) and United Nations Security Council (UNSC) resolutions that sought to condemn Russia’s military operations in Ukraine. As a result, US President Joe Biden criticised India for its “somewhat shaky” position on the Ukrainian crisis.
Nevertheless, White House Press Secretary Jen Psaki has said that the US understands the reasoning behind India’s decision to purchase discounted oil from Russia but warned that although the Biden administration will not be placing secondary sanctions against its key ally, India must avoid falling on the “wrong side of history.” In response, India has dismissed these criticisms, and said that its “legitimate energy transactions should not be politicised.”
Jen Psaki on if India accepts Russian oil at a reduced costs: "[T]hink about where you want to stand when the history books are written in this moment in time, and support for the Russian leadership is support for an invasion that obviously is having a devastating impact." pic.twitter.com/M8AqWaEjol
— Curtis Houck (@CurtisHouck) March 15, 2022
Meanwhile, United Kingdom (UK) Secretary of State for Foreign Affairs Liz Truss is also on an official visit to India in an effort to change New Delhi’s neutral stance on the Ukraine war and “deepen [the] economic and security relationship” between the two countries. Crucially, her trip overlaps with that of Russian Foreign Minister Sergey Lavrov, who is set to meet with Indian PM Narendra Modi today.