Slippery path ahead on oil sanctions

One of India’s largest multinational conglomerates has announced that it will not be importing Russian crude oil in the wake of American pressure on India. A few months ago, the Indian government decried the “unjustified and unreasonable” targeting, and responded defiantly - but diplomatically - that it would ‘take all necessary measures to safeguard its national interests and economic security”. It is not clear at that time if the government wanted to send a strong signal to Washington or whether it was posturing for domestic politics. In hindsight, all the tough talk seems like a bit of bravado.

A section of foreign policy analysts was of the view that New Delhi could weather the storm stirred by US President Donald Trump’s capricious decisions in geopolitics and international trade, in military and trade tariff wars. The government prioritised the ongoing negotiations to conclude the bilateral trade deal with the US and hoped that it would put the relationship on an even keel. But steps were initiated to reduce oil imports from Russia, which were touted as a careful and gradual recalibration which began even before Trump’s tariff onslaught. The impression sought to be given was that the reduction was not due to pressure exerted by the US. In geopolitics, no sovereign state would deign to be seen as buckling under pressure.

Reliance Industries said that from December 1, it would comply with the sanctions imposed on Russia by the US, UK and EU. Sanctions on two Russian oil companies were to come into effect on November 21, and one of the two Russian companies, Rosneft, had a long-term deal with Reliance. The Fortune 500 Indian company was one of the leading buyers of Russian oil, which it refined and exported to EU and other Western countries. The company said that it would not only abide by the sanctions but also be fully aligned with the guidelines of the Indian government. The White House, too, while welcoming the decision, revealed that the US was now looking forward to “advancing meaningful progress” on trade talks. An indication of easing of trade tensions and India acquiescing to US demand to buy more military hardware from the US was also evident in the latter greenlighting defence sales worth USD 92.8 million after India agreed to expand defence cooperation.

India would also be watching closely the US sanctions on the so-called shadow oil network of Iran, as an India-based private limited shipping company’s name figured in the list of 17 entities. Treading carefully, India managed to get a six-month waiver on US sanctions against the Chabahar port project and can hope for a better turn of events after it concludes the India-US trade deal.

Though the NDA government initially veered more towards the US in contrast to the preference given to the Soviet Union, and later Russia, by Congress party-led regimes. With the US proving to be a tough and ruthless negotiator, and even a less reliable strategic partner, under Trump, India had to retrace its steps to restore the balance in its ties with the US, Russia, and China. Through complex negotiations and quid pro quo deals, India needs to persuade the Trump administration to be pragmatic about India’s need for cheaper oil from sources other than the traditional suppliers in the Middle East.