How Russia Sanctions Could Affect India – Foreign Policy

Welcome to Foreign policySouth Asia Brief.

This week’s highlights: The new US and EU Sanctions on Russian oil companies It has indirect effects on India. Indian Prime Minister Narendra Modi does not appear in person at the conference ASEAN Summitand Afghan-Pakistani talks Collapse after cross-border violence.

Welcome to Foreign policySouth Asia Brief.

This week’s highlights: The new US and EU Sanctions on Russian oil companies It has indirect effects on India. Indian Prime Minister Narendra Modi does not appear in person at the conference ASEAN Summitand Afghan-Pakistani talks Collapse after cross-border violence.

India’s oil dilemma

India – the world’s second-largest importer of crude oil from Russia – is bracing for impact following the recent announcement of new US and EU sanctions on Russian oil companies.

Despite India’s deep trading partnership with Russia, it has not always been a major customer of its oil. New Delhi imports 85 percent of its total oil needs. But in 2021, a year before Moscow launched its full-scale invasion of Ukraine, only 2% of these imports came from Russia. In that year, the main source of its oil imports was Iraq, and India was also the top destination for US oil exports.

But India’s purchases of Russian oil have risen amid the war in Ukraine, accounting for about 40% of its total crude oil imports over the past two years. New Delhi justified this significant rise by pointing to low costs; The Trump administration denounced it as war profiteering and imposed additional 25 percent tariffs on India.

Now India is in a difficult situation, as refiners are expected to significantly reduce their imports of Russian oil, which amounted to about 1.7 million barrels per day during the first nine months of this year. The two giant Russian energy companies subject to US sanctions – Rosneft and Lukoil – supply about 60 percent of India’s total oil imports from Russia. (Rosneft was the only company targeted by the European Union.)

India’s state-owned oil companies will take necessary steps to ensure that none of their imports come directly from Rosneft and Lukoil; Many of these purchases actually come from brokers.

However, one of India’s private energy giants is not so lucky. Last December, Mukesh Ambani’s Reliance Industries signed a deal with Rosneft to import between $12 billion and $13 billion worth of oil annually for 10 years. This equates to about 500,000 barrels per day, or 50 percent of Reliance’s total crude oil imports. The company said it would comply with the new sanctions but did not mention the deal.

Reliance said in a statement that it will rely on its “time-tested diversified crude sourcing strategy” to continue successful refining operations. But overall, India may not recover so quickly. There are no immediate alternatives to Russian oil at this cheap price. The country is likely to increase its already strong imports from the Middle East, which could add significant cost.

Here, the ongoing trade talks between India and the United States gain great importance. The Trump administration has called on India to reduce its imports of Russian oil, and New Delhi may now try to negotiate an arrangement to import more American oil at a lower price. It can be said that it has some influence, as it has actually increased its oil imports from the United States in recent years.

It squandered one of New Delhi’s last opportunities to discuss such matters with Washington: This week, Indian Prime Minister Narendra Modi chose to attend the Association of Southeast Asian Nations (ASEAN) summit in Malaysia virtually, preventing him from meeting in person with US President Donald Trump.

We should not overestimate the impact of sanctions on India’s energy security. The country still relies heavily on coal, which makes up 46% of its energy mix, and has a diverse range of suppliers for both oil and gas. However, oil accounts for nearly a third of India’s total energy consumption – higher than any other source – meaning it is important for both domestic and commercial use.

And there may be a silver lining: the sanctions scare is a reminder to India of the risks of its heavy reliance on imported hydrocarbons. It could strengthen those voices that have long called on New Delhi to accelerate the development of domestic renewable energy sources – a goal that the Modi government has embraced and pursued.

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Modi misses ASEAN. India did not give a reason for sending External Affairs Minister S. Jaishankar to the ASEAN Summit in Kuala Lumpur instead of Modi. But it is likely a result of Modi’s desire to remain in the country during the final preparations for key state elections in Bihar next month, and perhaps a desire to avoid a meeting with Trump (and a potentially awkward moment) given the ongoing tensions between the US and India.

Modi’s absence in person remains notable, as India has given geopolitical importance to the Association of Southeast Asian Nations (ASEAN). The group includes some of its closest partners in Asia, such as the Philippines and Vietnam; Neighboring countries whose telecommunications interests are important, such as Myanmar and Thailand; And growing economies like Singapore — all important for India amid Trump’s tariffs.

Modi delivered a virtual speech at the summit and linked India’s fate to that of ASEAN. “The 21st century is our century, the century of India and the Association of Southeast Asian Nations (ASEAN),” he said.

Collapse of the Afghan-Pakistani talks. Four days of negotiations between Islamabad and Kabul aimed at cementing a long-term ceasefire after this month’s cross-border violence – the deadliest since the Taliban returned to power in Afghanistan in 2021 – ended without an agreement on Tuesday.

Pakistani Information Minister Atalullah Tarar said the Taliban “continued to deviate from the core issue,” referring to Pakistan’s demand to rein in the Pakistani Taliban, a Taliban ally that has carried out repeated cross-border attacks from bases in Afghanistan. Previous Pakistani reports said that Taliban officials refuse to go beyond verbal pledges to curb the Pakistani Taliban.

The unsuccessful outcome was not surprising, but the potential for renewed violence has now increased. On Wednesday, the Pakistani Taliban carried out a bomb attack against security forces in Pakistan, killing at least six soldiers. Such attacks sparked violence this month, as the Pakistani army carried out air strikes against Pakistani Taliban targets in Afghanistan, and the Taliban responded with attacks on Pakistani border posts.

Both sides spoke forcefully. On Wednesday, Pakistani Defense Minister Khawaja Asif warned on Channel X that if cross-border attacks continued, Pakistan could “completely wipe out” the Taliban regime. In recent days, the Taliban threatened to respond to any Pakistani strikes by launching attacks on Islamabad. The Taliban lacks the capacity to do this; The threat is likely a signal of potential TTP actions.

Promise me scoop. the The Washington Post It published an investigation last week alleging that the Indian government funneled $3.9 billion from state-owned Life Insurance Corporation of India (LIC) into the business of Indian billionaire Gautam Adani – a close friend of Modi. LIC quickly dismissed the allegations, and many Indian government supporters opposed the accusations mail story.

However, the widespread coverage the allegations have already received makes the report embarrassing for Adani. The underlying theme of Adani’s letters in the past few years has been the challenge of confronting allegations of fraud and other abuses. In fact, such allegations have not harmed his companies, which are still standing. But reports that Adani companies have received huge amounts of funding from New Delhi contradict these messages.

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Under the radar

US Secretary of State Marco Rubio made a notable comment about US-Pakistan relations in an interaction with reporters on his way to Qatar over the weekend. “We see an opportunity to expand our strategic relationship with Pakistan,” Rubio said.

Although relations between the United States and Pakistan have enjoyed an unexpected rise during Trump’s second term so far, the main focus has been commercial. Trump and other White House officials have expressed interest in Pakistan’s critical minerals, energy, and cryptocurrency resources. But Rubio’s comments suggest that the Trump administration’s interests in the relationship could go beyond business.

This would be a big change. Washington has shown little interest in working closely with Islamabad, especially since the US withdrawal from Afghanistan in 2021. In the final days of the Biden administration, officials were not even willing to recognize Pakistan as a US ally, even though it has the status of a major non-NATO ally.

Rubio did not explain how he envisions the strategic partnership between the United States and Pakistan to be more ambitious than specific. But with Pakistan recently becoming a formal part of the Middle East’s security architecture — signing a joint defense agreement with Saudi Arabia — the Trump administration may see attractive paths to engagement outside the commercial sphere.