India’s attempts to purchase Russian crude oil in the face of Washington’s pressure should be viewed less as a symbolic campaign against Russia and more as a tactic of the bargaining table. The threat of tariffs, the flexibility in enforcement, coupled with negotiations with New Delhi, implies more force than fines are being deployed to secure more extensive concessions.
But it doesn’t rule out those worries about Russian oil revenue. Instead, the pressure applied suggests that Washington views tariffs as a weapon it has to wield in maneuvering India’s trade policies, energy policies and strategic choices.
Tariffs Turned Into a Negotiating Tool
The Trump administration has long been a cheerleader for economic pressure for policy gains. Secondary tariffs and sanctions can impose significant costs on primary importers of Russian energy, while at the same time giving administration the ability to fine-tune enforcement.
That flexibility matters. However, tariffs must be up for negotiation, either be raised, deferred or lowered or be eliminated otherwise they are “tariff for the sake of tariff” for importing Russian crude. They are instruments that Washington has at its disposal with which to advance its US-India ties in a number of tracks.
India’s Russian Oil Imports Create a Dilemma
India will keep on buying cheap Russian oil, raising the challenge to Washington’s economic isolation of Moscow. But the complete upending of those flows has ramifications for global energy markets and consumers.
However, if there is a sharp decline in India’s demand for Russian crude, it will certainly take away a lot of oil off the international streets, which ultimately may positively impact oil prices. This gives Washington optionality, as it will not be enforced at all costs.
What Washington Can Gain From Pressure?
Nevertheless, the threat of tariffs has other purposes for the Russians other than Russia’s own energy policies. Potential to expand trade to/from India, further access for American agricultural and tech goods, investing in U.S. LNG and coal, and defense partnerships.
This is the most obvious form of a transactional approach. To this end the Russian-oil issue turns into more of an economic discussion and thus a part of the bigger debate regarding the terms of the US-India relationship, if concessions on other economic fronts can be achieved.
Strategic Ties Limit the Pressure
India is a crucial ally of the U.S. in the Indo Pacific region. The Quad shows strategic importance beyond trade, as it is an example of cooperation among the Quad.Its cooperation between Quad and balancing with China is strategic in nature apart from trade.
If too much pressure is exerted on the economy, then such pressures may work against the goals of financing.Therefore, too much economic pressure may be counterproductive. While Washington would like India to cut back on its support to Russia where feasible, it has an interest in maintaining close ties with New Delhi and the United States and its partners.
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Real Test Is What Comes Next?
To characterize the policy as merely ‘principled’ is to underestimate the sophistication of modern day economic statecraft. Russia’s energy revenues are something Washington can oppose and that it can use as the leverage to pursue trade and strategic terms from India.
So the crucial issue isn’t whether or not Russia is important, but how the tariff threat might be utilized. Where there is repeated change in enforcement during the negotiation process there is evidence of leverage as one of the aims of negotiation.
FAQs
What are the US reasons for attacking India for Russian oil?
Its aim is to not only dissuade India from buying the gas, but to also affect its economic and strategic decisions.
What are the reasons behind the continuing purchase of Russian crude by India?
Indian refiners have increasingly looked to Russian crude as a source of energy at a lower price and they were considered to have found a very valuable import.
Are the taxes merely concerning Russia?
Not necessarily. Tariff negotiations may also cover bilateral economic issues such as trade barriers, transactions of US energy supplies and investment.
