Amid Ukraine Crisis And Pandemic, India Stands Tall On The Global Stage In Tough Times
This is Modi’s finest hour in recent times. To balance India’s energy needs between two warring superpowers, both strategically important to India in its long-term contention with China, is remarkable.
In the last two years, as nations were forced to look inwards to manage the unprecedented consequences of the Covid-19 pandemic, moments of exceptional diplomacy have been rare.
While the Chinese have engaged in wolf-warrior diplomacy, attempting to suppress the interests of smaller economic powers, including those in Europe, Americans have been on the defensive, unable to cope with the assistance demanded by several countries that have been forced to subsequently look towards Beijing.
The Russian invasion of Ukraine has also brought to surface the weakness of the North Atlantic Treaty Organization (NATO) arrangement. Barring a few photo-ops and PR stunts, the people of Ukraine have been left to suffer with all the destruction and the consequent disruption in critical exports, especially that of sunflower oil and wheat.
In the international markets, there has been a steep increase in the price of several commodities like wheat, corn, barley, sunflower oil, palm oil crude, and rapeseed oil. However, the most visible effect of the Russian invasion and subsequent inflation has been in oil markets. As of today, Brent Oil trades at $113.
The surge in oil prices has sent Finance Minister Nirmala Sitharaman’s third consecutive budget for a toss. While her first budget was disrupted by the pandemic-induced national lockdown, her second budget, presented in 2021, was disrupted by the Delta variant, even though it had a limited economic impact in the larger calculus.
The budget for this year, however, has been threatened by the spike in oil prices, going as far as $125 a barrel. During the early weeks of the invasion in March, many analysts predicted that oil prices would touch $150, double that which the Economic Survey 2022 had budgeted for.
For commentators and politicians in the West, the Russian invasion has divided the world in two camps, much like the days of the Cold War. For the White House, encouraging the departure of businesses from Russia, sanctions have been the first reaction.
Citing the same morality that was used as a justification for the invasion of Iraq and Afghanistan in the early 2000s, the United States (US) has demanded a boycott of energy imports from Russia.
The fact is, Americans rely on Russia for 8 per cent of their energy needs while some European countries need Russia for as much as 80 per cent of theirs.
Together, the European nations, importing close to 4.5 million barrels of oil every day, compared to India, which was merely importing 150,000 barrels of oil (assumed for argument at 3 per cent of its energy needs, not actual figure) before the invasion. Thus, the US, under the Democrats still living in the hangover of the Cold War, wanted Europe to discard their energy security and India to discard its economic interests to be able to send out a message to Vladimir Putin.
Across 2021, India’s oil imports from Russia did not exceed three million in any month. For almost three months in 2021, and the first two months of 2022, crude import from Russia was almost zero. However, the invasion changed everything, and unapologetically, as evident from the statements of both the Foreign and Finance Ministers, India began importing from Russia.
From almost zero in February, India’s oil exports breached seven million barrels in April, and 15 million barrels in May. Another report states that India’s oil imports from Russia exceeded 300,000 barrels per day in March, and 700,000 barrels per day in April.
Compare this with 33,000-odd barrels India from Russia in 2021, on average per day.
Refiners in India have bought 40 million barrels of crude from Russia since the beginning of the invasion. This number is 20 per cent higher than the total imports from Russia for the year 2021. However, India is not willing to stop here.
Given that India imports more than 80 per cent of its crude needs, and is aiming for a strong economic recovery after the pandemic, it now wants to import Russian crude at a discounted price, especially when Europe, as a result of fresh sanctions, are moving away from Moscow’s exports later this year.
As per recent reports, India is willing to import as much as 10 per cent of its crude needs from Russia, or around 15 million barrels per month, but with one — that it comes at a discounted price of less than $70 a barrel.
Factoring in the recent energy developments and imports, Prime Minister Narendra Modi’s successful tour to Europe — in Germany, Denmark, and France — serves as a testament to India’s rising diplomatic stature where it refuses to be paraded around by the lobbies loyal to the US, engages in bilateral trade agreements with nations irrespective of how the West may perceive them, and prioritises its economic interests over the diplomatic interests of an ally that routinely hails Pakistan.
Make no mistake, for this is Modi’s finest hour in recent times. To balance India’s energy needs between two warring superpowers, both strategically important to India in its long-term contention with China, is remarkable.
While most US hawks and commentators in India would have wished for the crude price surge to leave Modi in an economic conundrum, the results have exceeded expectations for almost everyone.
India have catered to their economic interests, as any superpower in the making must.
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