Trump-Modi oil deal: Will India abandon China against global pressure?

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OPINION

By George Musiime

Last Wednesday, the US president announced “a deal” he had reached with the Indian Prime Minister to end Russian oil purchases.

In the announcement, Trump also commissioned the BRICS members to use their influence on China, towards a similar position.  The announcement came after Washington had slapped an additional 25% tariff on Indian goods at the end of August unless it stopped buying oil from Russia. Even though this deal was repudiated, this use of tariffs once again highlighted a systematic rise in unilateralism and bullying in international relations.

The call on India [a major emerging power], to influence China in Washington’s desired direction, also accentuated the enduring view of the global south as minnows that must follow any agenda set for them by the West, regardless of their own interests. The absurdity of this is that this behaviour not only normalises bullying but also erodes the spirit of true multilateralism and jeopardises the principles of fairness and equality.

Sadly, since his return to the white house, Trump has openly used trade tariffs as a tactic to achieve ends in international negotiations. Indeed, using his first tariff regime in April, he was able to set the agenda for negotiations with many countries. This notwithstanding, the impact of tariffs on the final outcome reached remains rather poorly understood.

On the Russia-Ukraine Conflict and global markets, in its early stages, this conflict caused substantial disruption across global supply chains. And while the shocks rippled through the entire global economy, countries in the global south suffered the worst, particularly from oil and grain prices.

While delving into the dynamics of this war would take an entire discussion of its own, as Western countries stopped purchasing oil from the world’s third-largest oil producer, there was a sharp decline in oil supply and a corresponding increase in oil prices. Knowing who such price surges affect the most, continued purchase of Russian oil by India and China, also among the world’s biggest oil consumers, only served as nothing less than a stabilising force in the global oil market.

Furthermore, India, in its repudiation of the supposed deal, emphasised that as a significant importer of crude oil, it remained keen on safeguarding the interests of its nationals. In contrast, pressure from Washington could not care less about the interests of the ordinary Indian oil consumer as long as its geopolitical interests were maintained. In fact, the goal of crippling the Russian economy, hence its war-making capabilities, by targeting its oil production capacity has been overt.

And whereas Ukraine has significantly impaired production and refining capacity, there’s a strong belief in the West that closing the Russian oil taps in India and China will deliver a strategic blow to further weaken Russia’s economy. This approach is further from seeking a political settlement than it is from manipulating the odds to set up one party for a military defeat.

The challenge with this premise is that it is shaded by tunnel vision. Western interests, and the desire to cripple the Russian economy, pay no attention to potential spillover effects on global supply chains and the rest of the world. Similarly, India’s procurement of Russian oil has reduced significantly over the past months, primarily due to reduced production capacity and increasing prices as a result. Consequently, there has arisen a need to diversify supply sources in order to cushion the Indian economy from potential shocks.

However, to understand the interplay between geopolitics and economic interests, one must also ask where will China and India turn if they can’t procure Russian oil? Therefore, it would appear that there’s also a business element to this push away from Russian oil—strengthening one party at the expense of the other in a typical realist’s zero-sum game.

The real problem, though, lies in the approach used by Washington to court India, a major southern economy. Steep tariffs were imposed to force the country into a deal that also involved enlisting its services in an ongoing geopolitical struggle. This further points to an entrenched belief that even the emerging economies haven’t reached equal partner status in international politics.

The assigned errand (implied or otherwise) to influence China to turn on a fellow BRICS country proves how strong the belief is that countries of the global south could still be manipulated into pursuing Western ends at the expense of their own. This might not have worked with India, but for many smaller countries, standing up to a major power like the US is akin to economic suicide. Indeed, Zimbabwe and Venezuela, to mention just a few, are glaring examples of the economic ruin that comes with such a stance in the face of unilateral punitive action.

Obviously, some countries will stand their ground, making this approach seem like a gamble. But with each that cowers, the bullies are further emboldened.  Likewise, with this comes more countries adopting the method, hence normalising bullying in international politics. Of course, this has been the case for a long time, but let’s not forget that the cost to countries of the developing world has often been weakened sovereignty, delayed modernisation, and, in some cases, political and economic stability.

Therefore, the emergence of middle powers led by the BRICS alliance is increasingly viewed as a stabilising force in international politics, yet the announcement from Washington last Wednesday comes off as a manoeuvre to take credence away from these powers.

As the global power balance comes to a point where emerging powers seek to strengthen multilateralism, traditional ones work relentlessly to reassert their control in global affairs. At the same time, the emergence of countries like China and India, Brazil and the like is apparently viewed as a failure of a system designed to preserve northern preeminence over the south.

Multilateralism might have been a great idea at inception, but the growing influence of emerging economies has seemingly put the system at odds with Western interests. As multilateralism faces constant attack and gradual erosion, backing down in the face of international bullying will only normalise the behaviour as the status quo.

In the end, either multilateralism or powerful nations must prevail, but unless emerging powers take a firm stand against bullying, the former is already showing signs of not surviving the storms of unilateralism.

The writer is a research fellow at the Development Watch Centre