Walking a tightrope: India’s decision to buy Russian crude has a rational explanation
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Taking advantage of the cheaper rates at which Russia is selling its oil following its invasion of Ukraine and the resultant sanctions, India recently bought 3 million barrels of crude oil from Russia at a deep discount of $20-25 on international rates. It may import 15 million barrels in total from Russia in 2022. However, though India’s decision to purchase discounted Russian oil is a strategically sound one, perhaps it may not be so sound when looked at through the lens of morality.
Indian Oil Corporation (IOC), the country’s largest oil manufacturing company, recently bought 3 million barrels of crude oil from Russia. The purchase was made at a deep discount of $20-25 on international rates, reported the Indian Express. This is the first purchase of oil from Russia since the country invaded Ukraine on February 24. Taking advantage of the cheaper rates, India may import 15 million barrels in total from Russia in 2022, reported Business Standard.
Since the invasion began, Russia has started to offer crude and other commodities at a deep discount to importers like India that have not yet blanket sanctioned Russian goods. Talking about the reports, White House Press Secretary Jen Psaki stated that India “should think about where” it stands on the matter of the current conflict.
The statement has drawn criticism from many who criticised the West for keeping mum on European nations still buying Russian gas and crude.
What did Psaki say?
Psaki, who has been holding daily press briefings since the invasion began, was asked by a reporter what her message would be “to India or any other country tempted by” the offer of discounted crude from Russia.
Psaki responded that nations should “think 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,” she said.
What was she criticised for?
Psaki’s comments were criticised by Indians who maintain that important national decisions like the securing of oil should not be politicised. Many also highlighted the hypocrisy of the White House which has not yet criticised many European nations that continue to pump Russian gas and buy Russian crude.
Russia still supplies over 40 percent of Europe’s gas demands and the Netherlands and Germany together make up for over a quarter of Russia’s oil export market. OECD countries in Europe (Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, the United Kingdom) make up 49 percent of the Russian crude market. The rest of the share is dominated by China.
Ministry of External Affairs spokesperson Arindam Bagchi said that “a number of countries are doing so (importing Russian oil), especially in Europe, and for the moment, I will leave it at that”.
“Countries with oil self-sufficiency or those importing themselves from Russia cannot credibly advocate restrictive trading,” sources from India said on the matter, reported the Wire. The sources added that legitimate energy transactions should not be pushed through the political spectrum.
As Russia is the second-largest exporter of crude in the world, the war and the following sanctions have driven up the prices of crude oil over speculation of future shortages. After hitting $140 a barrel, crude came down to hover around the $100 mark before shooting up to $110 again. The ongoing conflict is only expected to present further volatility for crude prices.
Read Also | Russia seeks Indian investment in its oil and gas sector
For India, which imports 85 percent of its crude requirements, rising crude prices are a huge burden on the exchequer. The country also relies on Russian military hardware to be a counterweight against Chinese aggression in the Indo-Pacific. Spurning Russia by taking a stake in the conflict could push it further towards China, risking India’s security in the region.
Psaki did say that the US understood why some governments continued to purchase Russian energy.
“While we made a decision about banning the Russian import of oil, every country has not made that decision, and we recognise that. And they have different economic reasoning as to why different countries do, including some in Europe,” Psaki said in another press briefing on Friday.
“But what we would project or convey to any leader around the world is that the world — the rest of the world is watching where you’re going to stand as it relates to this conflict, whether it’s support for Russia in any form as they are illegally invading Ukraine,” she added.
Realism vs idealism
The complicated decisions being taken by nations like India’s decision to purchase discounted oil from a warmongering nation that is also its critical military partner highlights the growing complexities in international relations.
While India’s decision to remain neutral and purchase discounted crude is a sound strategic choice, it’s not necessarily the most moral one. The same also holds true for the European countries that haven’t shut their taps to Russian gas and oil. The decision to criticise “legitimate energy transactions” is not through the lens of an economic perspective or a strategic one, but a moral one.
The continued energy transactions between India, China, Europe and Russia highlights the fact that despite advances in international law, international morality remains a tertiary factor for decision-making for nations. In future, the world will accuse these nations of supporting the aggressor and picking the wrong side even if it is for the right reasons.
Read Also | Ukraine war: India’s efforts to procure oil from Russia legitimate and should not be politicised, say govt sources
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