US-Nato's threat to Russian oil buyers masks a bid to check China and corner the arms market

Economic Times

a day ago

Play ball, our way Nato secretary general Mark Rutte may have thought he would cause jitters in India, China and Russia if he spoke the strident language of Donald Trump. That he caused no disquiet was evident in the stock markets in India, China and the Western world.Rutte 'ordered' India, Brazil and China - all BRICS members - to stop buying Russian oil after Trump threatened to punish them for non-compliance by imposing an additional 100% tariff. Curiously, he omitted mentioning Turkiye, a Nato member, being the third-biggest importer of Russian crude after India and China.
It is amazing that some of the best strategists in the Western world would come up with a simplistic solution for resolving the Ukraine crisis: provide Ukraine with top-notch weapons and weaken Russia by blocking oil exports. Choking distribution of Russian oil, which accounts for 15% of global supply, would shoot up international crude prices, possibly by 20-30% from the present level of $68 a barrel. Markets were indifferent because they knew that European countries, and even the US, would not seriously commit themselves to such self-harm. Though the EU has moved away from Russian oil, it still purchases 19% of its natural gas requirements from Russia.
Trump, once wary of Ukraine aid and banking on Putin ties, flipped after Rutte dangled big US arms sales So, why should India, which saves more than $11 bn a year by buying discounted Russian oil, accept this 'diktat', which is equal to an additional tariff? Indian officials prefer to wait. An earlier statement by S Jaishankar after US senator Lindsey Graham proposed a 500% tariff on buyers of Russian oil is an indicator of New Delhi's thinking. 'So, we have been in touch with Senator Graham. Our concerns and our interests on energy security have been made conversant to him. So, we'll then have to cross that bridge when we come to it, if we come to it,' Jaishankar said earlier this month.China has protested the move, while Russian leaders are literally joking about it. 'China believes dialogue and negotiation are the only viable solution to the Ukraine crisis. We categorically oppose all illegal unilateral sanctions and long-arm jurisdiction,' Chinese foreign ministry spokesperson Lin Jian said on Wednesday. 'Coercion and pressure cannot resolve fundamental issues.'Trump, who consistently opposed high-spend support for Ukraine, and relied on his 'friendship' with Vladimir Putin to resolve the crisis, made a volte-face, offering top-notch military equipment to Kyiv. Some commentators have credited Rutte for bringing about this change by enticing Trump with promises of higher sales of US-made military hardware.But there is more to it. Trump, and a section of European leaders, have been looking for ways to keep Beijing under pressure as they find Chinese companies surging ahead of Western businesses in sales and innovation. Cutting off Russian oil supplies could be a good way to force China, the biggest oil buyer, to pay more while weakening a supposed India-Russia-China 'alliance'.They are also hassled by the expansion and rising clout of BRICS, which Trump recently described as an 'anti-American' group. He takes the de-dollarisation threat more seriously than some BRICS members like India. The fact that the Russian economy has survived nearly four years of, in Putin's words, a 'special military operation' is seen by many as a direct affront to the supposed power of economic sanctions and Western plans to weaken the nation. India and China are blamed in some quarters for Russia's endurance.India is the second-biggest arms buyer in the world after Ukraine. Russia remains the largest arms supplier, meeting 36% of India's arms requirements - though the number has declined from 72% during 2010-14, suggesting major changes in GoI's approach on the issue. According to Stockholm International Peace Research Institute (Sipri), 'India is shifting its arms supply relations towards Western suppliers, most notably France, Israel and the US.'A key element in the growth of the defence industry is the existence of enemies and threat perception. Russia, China, Iran, North Korea and, to a smaller extent, India help to meet this requirement for Western defence manufacturers. Qatar and Saudi Arabia are the third- and fourth-biggest buyers, mainly because of the threat perception from Iran.Trump recently said that his success in persuading European countries to spend 5% of their GDP on defence has thrown up a potential market of $1 tn for the sector. It is obvious that American defence companies and politicians do not want China to start bidding for a piece of the new market by offering discounted rates. They don't want to share the fate of US construction and railroad companies, which failed to stop Chinese players from penetrating parts of Europe over the past decade-and-a-half.They also want a share of the Indian defence market, even if it's necessary to ensure continued discord between Asian neighbours, India, Pakistan and China. Trump's repeated claims about ending the recent India-Pakistan conflict should be seen in this context.So, the goals set out by the Trump-Nato combine cover several aspects other than oil. They include countering China's influence, weakening BRICS and enlarging the market potential of Western arms producers. The question is whether it will succeed in bringing India closer to the West (read: the US). Or, make New Delhi and Beijing strange tactical bedfellows. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.) Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. As deposit ground slips under PSU banks' feet, they chase the wealthy
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