Although the US sees it as a critical potential ally in the wider region, India refuses to coordinate with the West in a clearly anti-Russian stance.
The announcement by Indian President Narendra Modi that India and Russia will soon launch an exchange swap to finance their trade in rubles and rupees, thus bypassing US sanctions on Russia, marks another step. in moving countries away from the current regime in international trade which relies heavily on the dollar.
The swaps will be made by various state-owned banks in India, under the supervision of the Reserve Bank of India, and although their trading volume will be small, their importance is wider.
At the moment, US sanctions have not been extended to Russia’s gas and oil flows to Europe, and with the exception of Putin’s recent announcements that Russia will ask for ruble payments from “friendly countries”, no alternatives have been sought. payment methods.
The only exception is Saudi Arabia’s apparent choice to price oil and futures on yuan, although oil in the Gulf remains dominant at the moment.
This explains why this decision is important, as it paves the way for a more comprehensive “de-dollarization” of a significant part of world trade. It should be noted here that India has lately insisted on buying Russian oil, taking advantage of discounts offered. Local media have reported two million barrels sold to Hindustan Petroleum and three million barrels to Indian Oil.
Of course, the trend for local currency swaps was already widespread in Asia, as this allows for emergency transactions in local currencies, with central banks making the final balance with stock transfers, either foreign exchange or gold. The deals are worth as much as $ 380 billion, although they are rarely used.
India refuses to identify its policy with the US
However, India’s choice to reach an agreement with Russia also has a special symbolism, because it sends the message that India will continue to trade with Russia in any case and comes to underline the position of neutrality taken by New Delhi. in the face of the conflict in Ukraine and the abstention from the relevant votes on Russia’s condemnation to the UN.
Besides trade relations, India is also one of the most important customers of the Russian defense industry. Between 2016 and 2020, 23 percent of Russia’s arms exports went to India, while 49% of India’s arms imports were to Russian weapons systems, although in recent years India has significantly increased its arms purchases from the United States, having bought $ 20 billion worth of US weapons systems over the past 22 years.
The great dependence of the Indian armed forces on the then USSR and later Russia, as early as 1953, on military equipment explains to a considerable extent India’s attitude towards Russia.
We note here that due to the special importance that the US attaches to the accession of India, the US had not applied its previous sanctions (the infamous CAATSA). Thus, while sanctions were invoked in relation to the S-400s in Turkey, no sanctions were imposed against India even though it acquired the exact same anti-ballistic missile system.
All this at the same time as one of the most systematic efforts by the US in recent years is to be able to integrate India into their own concept of collective security. This was reflected in the Quadrilateral Security Dialogue they had developed with India, Australia and Japan since 2007 (and re-established after 2017) and which is part of the overall US effort to contain China in the region of the Indo-Pacific.
However, India’s tactics are generally cautious. Although the country has a history of confrontation with China, open border issues are still open, a confrontation that explains, among other things, why India has historically sought cooperation with Russia, considering the relationship with Moscow as a counterweight to China. In recent years, the Monti government has tried not to look particularly competitive with China.
It is clear that in the midst of the war in Ukraine, India does not want to be part of the controversy and, like many non-Western countries, does not show a willingness to follow the path of sanctions against Russia or to fully identify with US foreign policy, which clearly differentiates it from e.g. Australia or Japan. At the same time, of course, India is making great efforts to reduce its dependence on Russian armaments, and this has opened the door to both the United States and France for the supply of modern weapons systems. And of course he is watching, among other things, the way in which China and Russia have come closer in recent years, but this does not translate into a rift with Russia.
In addition, the wider area of Asia, with all its great economic potential, forms an environment of economic opportunities for India itself, which in turn leads to specific differences from what is presented as a Western strategy today.
Smoothing steps with China as well
Indicative of an additional distance between Washington and New Delhi and the fact that India seeks a normalization of its relations with India. In any case, China has become a very important partner of India. In December 2021, the annual growth rate of Indian imports from China exceeded $ 120 billion. This means that China is currently the largest exporter to India, with the US remaining the largest destination for Indian exports.
In this context, it is particularly significant that Chinese Foreign Minister Wang Yi was invited to visit New Delhi on Friday, March 25, for a visit to normalize bilateral relations, with the Chinese side also considering opening a window to repair bilateral relations. after the border confrontations of recent years.
All this shows that in spite of an attempt, mainly in the western public sphere, to draw a clear and vertical dividing line in the international landscape, the real choices made by many countries, several of them particularly important, point to a much more complex international landscape.
