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Mainstream, VOL 61 No 11, March 11, 2023

The UN Vote: India has No Choice | Papri Sri Raman

Saturday 11 March 2023, by Papri Sri Raman


FEBRUARY WAS AN important month for India. US Treasury Secretary Janet Yellen, visiting Bengaluru on 23 February, to participate in the primary G20 finance ministers’ and financial institution governors’ (G7 FMCBG) assembly in the G20 talks (with India as chair) said, ‘imparting any help to Russia’ or any ‘help to avoid any systemic evasion of sanctions, could be a ‘‘critical problem’’ for the United States’. Her’s was no threat, only a wish that India support the sanctions against Russia.

While the United States of America keeps blowing hot and cold at India, the Russians continue to maintain the status-quo in their relationship with this subcontinent, though in a more muted fashion, as their low-key presence at the Aero-India 2023 in Bengaluru in mid-February indicated.The Russian state-owned weapons exporter Rosoboronexport had a stall displaying military hardware like the fifth-generation Su-57E multi-role fighter and the Su-35, Su-30, and MiG-35D fighter aircraft; however, it had its feet firmly on the ground. The Americans, on the other hand, had the F-35, F-16, Super Hornets, B-1B bombers, and Rafales (French) lighting up the clear blue sky of this southern town. But then, as Sushant Singh, a senior fellow at the Centre for Policy Research, has pointed out to the media, ‘Independent India has never bought a single fighter aircraft from the US in its 75 years’, this despite the fact that India today has just about 200 really usable fighter planes.

On 23 February, the 193-member UN General assembly adopted a Resolution asking Russia to get off Ukraine’s back. As many as 141 countries voted in favour of the UNGA resolution, 32 abstained, including China and India, and seven voted against it. This, nevertheless, tells us, that about one-third of members did not want to side with the West. From March 2022, the UN has voted on 38 resolutions condemning Russia for waging war on Ukraine.
India’s abstention is a thorn in the side of the USA, that is not easy to pull out, no matter what Janet Yellen desires, especially the US wish, ‘to see harder and greater, correctly enforced sanctions towards Moscow’. In no way can the USA bring to the table what Russia offers to India. India never had a choice and does not have a choice.

As Indian ambassador to UN Ruchira Kamboj said on the occasion, ‘India continues to remain concerned over the situation in Ukraine. The conflict led to the loss of countless lives and misery with millions becoming homeless. Attacks on civilian infrastructure are deeply concerning. Today as UNGA marks a year of Ukrainian conflict, it’s important we ask ourselves a few pertinent questions: Are we anywhere near a possible solution acceptable to both sides? Can any process that doesn’t involve either of the two sides lead to a credible solution?... India upholds the principles of the UN Charter, we’ll always call for dialogue and diplomacy as the only way out. While we take note of stated objectives of today’s resolution — given its limitations in reaching our goal of securing lasting peace — we’re constrained to abstain.’
Oil: The USA does not like India and China buying oil (petroleum crude) from Russia. No one is, however, selling affordable fuel oil to five billion people. According to data from Vortexa, the intelligence firm, Russian seaborne crude exports hit an eight-month high in January 2023, with exports to India reaching a record high 1.3 million barrels/day. To India, Russia gives crude at $80 (fluctuating prices) or less a barrel. The country has saved about $4 billion (30,000 crore rupees) by importing Russian crude.
Not long ago, in December 2022, External Affairs minister Jaishankar pointed out to the world, ‘The oil import in the European Union is like six times what India has imported... while the European Union imported 50 billion Euros worth (of gas)’. And validating this perhaps, the German ambassador said on 22 February that India buying oil from Russia was ‘none of our business’. 
This was before the EU slapped more sanctions on Russia at the same finance meet in Bengaluru on 25 February. 

Private refiners account for 60 per cent of India’s Russian crude imports. Indian refiners have also expanded their basket of Russian crude by adding blends such as ESPO, Arctic Oil (ARCO), Sakhalin, Sokol and Varandey. Private refiners such as Reliance Industries and Rosneft-backed Nayara Energy have been aggressively expanding their contracts of crude from Russia. According to Businessline, Vortexa data on discharge volume by destination ports in India show that private refiners lead the increase in oil purchases.

At the same time, Reliance Industries and Nayara Energy have also increased their exports of diesel to Europe. The media report quotes Serena Huang, Head of APAC Analysis at Vortexa, saying, ‘India’s diesel exports to Europe have rebounded to 260,000 bpd in the first two weeks of January.... Export-oriented private refiners will further edify themselves as key diesel suppliers to the EU after the ban kicks in, giving them more incentives to slurp up Russian crude, as long as it remains attractively priced’.

When asked about the share of private refiners in India’s diesel exports to Europe, she is reported to have said, ‘100 per cent’. There is a catch here, the state is not importing, private players are.

According to a 26 June 2022 report by The Guardian’s Energy Correspondent Alex Lawson, the ‘Russian crude bought and then exported by India suggests some of it may end up in European petrol stations’, including in the UK. Lawson says, Russian and allied tankers come into ports like Vadinar in western Gujarat. ‘Until 2017, the Vadinar oil refinery was controlled by Essar — the Indian owner of the Stanlow refinery in Ellesmere Port. Since then, a consortium including the sanctioned Russian state-owned oil firm Rosneft and the commodities trader Trafigura, which holds a 24.5% stake, have owned Nayara Energy, which runs the refinery.’

Lawson quotes The Centre for Research on Energy and Clean Air and says, Reliance Industries’ Jamnagar refinery in Gujarat received 27 per cent of its oil from Russia in May 2022. The Centre has said, in 2022, about 20 per cent of the exported cargoes from Jamnagar ‘left for the Suez canal, indicating that they were heading to Europe or the US. Shipments were made to France, Italy and the UK. However, there is no evidence that these shipments included Russian oil’, Lawson adds.

‘A third, more niche option to hide Russian transactions is to cut out using a currency and trade oil directly for other products, such as gold, food or weapons. Iran has previously taken payment from trading partners in gold rather than dollars.’

Lawson also quotes an oil expert, Ajay Parmer, to say, ‘If a country or oil operator wants to hide the source of crude or oil products, it can very easily do so’.

More emphatic is Shore Capital analyst Craig Howie. ‘Indian refiners are clearly taking significant volumes of discounted Russian crude and then re-exporting a material proportion of refined product back out of the country.... Given the obvious strength of petrol and diesel prices, this presumably supports robust refining margins for Indian downstream players. The commercial rationale here is of course understandable, but does seem to run contrary to the West’s clear objective to hamper the Russian economy and war machine.’

Obviously, if this is happening, someone in the middle is keeping his eyes shut. This is because, Europe needs the crude, more so as it has cut the branch it sat on, going along with the Western sanctions. So far, the Biden administration has looked at these sanctions with one eye open, one shut as ‘a matter of national interest, to maintain positive relations with Germany and other US allies in Europe’. With India too, it has to deal similarly. Fuelling and feeding Europe and keeping it warm in this winter is likely to soon become the USA’s primary concern.

Natural Gas: In 2021, Russia supplied roughly 45 per cent of the natural gas imported by European Union states through a pair of undersea pipelines, known as Nord Streams. In 2021, the volume of natural gas transported from Russia to Germany via the pipeline Nord Stream, or North Stream-1, reached 59.2 billion cubic meters, exceeding the annual capacity by 4.2 billion cubic meters, says a Statista report in June 2022.

The second pipeline, Nord Stream 2, was completed in September 2021. It is a 1,234-km long pipeline from Russia to Germany, running under the Baltic Sea. The Natural Gas flow was expected to doubled (another 50 billion cubic meters added) to 110 billion cubic metres (3.9 trillion cubic feet) by September 2022. On 26 September 2022, a series of secret bombings of the pipes caused severe underwater gas leaks from Nord Stream 1 and Nord Stream 2.

 The United States has been a major opponent of the Nord Stream pipelines. Former US President Donald Trump said in 2019 that Nord Stream 2 could turn Europe into a ‘hostage of Russia’ and placed sanctions on any company assisting Russia. In December 2020, then President-elect Joe Biden too opposed the new pipeline. In 2021, the Biden administration, however, said that while it was ‘unwavering’ in opposition to Nord Stream 2, this was ‘a matter of national interest, to maintain positive relations with Germany and other US allies in Europe’.

On 8 February 2023, American journalist Seymour Hersh published an article on his Substack page in which he said that the attack was ordered by President Biden and carried out utilizing American and Norwegian assets. He said, the bombs were planted during a NATO exercise in the area in summer, and detonated later in September 2022. While who did it is hotly debated, to confuse matters further Der Spiegel said, the CIA had warned the Germans of such an attack. The long and short of it is, now Europe is without Natural Gas.

Meanwhile, India also now has an opportunity of importing Liquified Natural Gas from Russia, and cannot be blamed if it does. The Dharma port LNG receiver terminal on the east coast of India was supposed to be ready in 2021 but has been delayed somewhat. It is expected to be ready by April 2023, and will have the capacity to take in 5 million tonnes of LNG per year, increasing the country’s energy mix by 15 per cent from the present five per cent. The first LNG cargo here goes to Adani Total Private Ltd. Most of the LNG India imports are under the long-term supply pact and linked to crude prices.

Fertiliser: Russia is a major inorganic fertiliser producers and supplies many African and Asian nations. Without this import, many small countries are unable to produce food. The war with Ukrain has not only disturbed the Russian supply chain, it has brought starvation to many countries. The West says, it has not sanctioned fertiliser, however, the product cost has risen enormously ever since the war began. As many as 48 nations in Africa, Asia and Latin America have been identified by the International Monetary Fund as ‘most at risk from the shock to food and fertiliser costs’.

Suddenly, the world is learning that much of the world relies on just a few nations for most of its fertilisers, notably Russia, its ally Belarus and China. India imports most of its fertilizer from China, United Arab Emirates and Spain and is the largest importer of fertiliser in the world. Volza’s India Import data says, fertiliser imports by India stood at 32.8K, imported by 1,089 India Importers from 2,030 suppliers in the last two years. But with relations with China frayed, Russia is a better option for India. A recent Reuter report says, India is in its first government-to-government negotiations with Russia for the long-term supply of fertilisers.

Food: According to the UN Food and Agriculture Organisation, Ukraine is the fifth largest exporter of wheat in the world. Ukraine represented 9 per cent of the global market share in the segment in 2021 and the war has brought down its production to about 5.5 million ton, and disrupted its supply route. Russia, on the other hand, is expected to export 8 million tonnes of wheat and 16 million tonnes of maize in 2023. The largest importer of wheat globally, Egypt, yet another now-extinct Nonalignment stalwart, draws most of its supplies from Russia, Ukraine and Romania and is looking at the Indian basket.

Weapons: Russia fulfils about 46 per cent of India’s defence needs, valued at $19,432 million (SIPRI Trend Indicator Value). So far, India, China, Egypt, Iraq, Belarus, Kazakhstan, Syria, Algeria and Vietnam have been the main importers of arms from Russia. The total defence imports in 2023 is valued at $15,356 million TIV, a recent The Hindu report says. New Delhi says, it keeps a close watch on Ukraine’s defence ties with Pakistan and regular arms supplies by Pakistan Army to Kyiv through European states.

Foreign Minister Jaishankar says, India ‘played a role in persuading Russia to honour the grain deal with Ukraine and to lower nuclear dangers at the Zaporizhzhia power plant when it was being bombarded by Russian forces’.

Five crucial elements fill the Russian table for India. It is impossible for India to ignore this and it has no option to get out of the ‘Nonaligned’ mode. For India, there is just no other way but abstain on the UN votes against Russia. Perhaps a real push towards resurrection of the non-aligned movement may help India gather more allies for its neutral stance. In this, China could be an ally as in the G20 forum, China refused to condemn Russia, despite Western pressure.


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