If US wants to sell us gas, it must match Russian discounts

Western governments and media have criticised India for buying Russian oil since economic sanctions are seen as the way to end Russia’s invasion of Ukraine. US commerce secretary Gina Raimondo said India’s action was “deeply disappointing.” She added, “Now is the time to stand on the right side of history, and to stand with the United States and dozens of other countries, standing up for freedom, democracy and sovereignty with the Ukrainian people, and not funding and fuelling and aiding President Putin’s war.”

Dan Tehan, Australia’s trade minister, said that democracies must work together “to keep the rules-based approach that we’ve had since World War II.”

India should shrug off such criticism. The US and Australia are rich countries that are also oil exporters. Their oil companies (though not consumers) have benefited enormously from the sharp rise in oil and gas prices after imposition of western sanctions. But India is a lower middle-income country that is 70% dependent on imported energy. Skyrocketing oil and gas prices have mauled its economy at

a juncture when wholesale price inflation was already 12% before the war. Imported gas has doubled in price. Consumer price inflation in March crossed 6.07%, above the RBI’s acceptable maximum of 6%.

In the face of public protests against expensive petrol and diesel, the government has slashed the excise duty on these fuels and VAT on gas, providing some consumer relief. But that has exacerbated a bleak fiscal situation already worsened by slowing growth. Even before the Ukraine war, the combined fiscal deficit of the centre and states was projected at a whopping 10% of GDP. It will now be worse.

India should tell Australia and the US it will be delighted to buy their oil instead of Russia provided they match the 30% discount Russia is offering. This will be equitable burden-sharing of the cost of sanctions. Why should poor countries in tough economic conditions be forced to bear enormous burdens when rich countries escape with far less?

The case against Russia is less one-sided than the West would have you believe. Top US academics like John Mearsheimer had earlier warned against the “reckless” expansion of Nato into Ukraine and Georgia, predicting that Russia would respond to that as a security threat — which indeed it has. Now, I think countries must be free to join any alliance they choose without being invaded. But the fact remains that if Ukrainian president Zelensky had stated on coming to power that he would keep Ukraine neutral — a position he has offered Russia right now — the war would not have happened.

Mearsheimer has argued that “the West, and especially America, is principally responsible for the crisis.” Tension over Ukraine started at Nato’s Bucharest summit in April 2008, when the US sought to expand Nato to cover Ukraine and Georgia. An outraged Russia called this an existential threat that it would never allow. The US ignored Moscow’s red line and pushed forward to make Ukraine a western bulwark. This eventually sparked hostilities in February 2014, after a Kyiv uprising (supported by the US) caused Ukraine’s pro-Russian president, Viktor Yanukovych, to flee abroad. In response, Russia invaded Crimea and helped fuel a civil war that created Russian ethnic enclaves in eastern Ukraine.

Historically, the Russian-Ukraine border was unclear. Crimea had a Tatar majority during centuries of Ottoman rule. This was eroded after Russia conquered Crimea. Then in 1944 Stalin deported the bulk of Tatars to northern Russia as punishment for their alleged collaboration with German Nazis. Some historians call it the Tatar genocide. Crimea was repopulated with Russians and Ukrainians. Then for no apparent reason — maybe because Crimea was a geographically logical shipping outlet for Ukrainian agrarian surpluses — Khrushchev decided in 1954 to transfer Crimea from Russia to Ukraine in 1954. This brief history shows how muddled are border claims in the region.

To portray the Ukrainian imbroglio as democracy versus autocracy is a stretch. The US-led group includes several Gulf autocracies, notably Saudi Arabia. Countries that abstained on the UN resolution included Tanzania, Bangladesh, Bolivia, Madagascar, and Pakistan, which are doubtless flawed democracies but no more so than some US allies.

Invasions are wrong, whether of Crimea in 2014 or Ukraine now. On principle, India should oppose it. But realpolitik often requires the sacrifice of a principle to preserve something as strategically important as the Indo-Russian defence relationship.

Besides, India badly needs help to offset the heavy cost of anti-Russian sanctions. Since Europe continues buying oil and gas from Russia, why not India? If the West offers equally discounted oil, India should happily switch. If not — and that seems impossible — India should keep buying Russian oil.

This article was originally published in The Times of India on April 3, 2022.

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