Being Anti-Russia is the selling tip for any policy by US policymakers. It helps them gain votes, earn election funding and a whole lot of other advantages. But now they want others to participate in it. Europe has already fallen in line and now they want India to join its crude price cap coalition.
US wants India on its side
The United States has again asked India to cap the price of oil they are buying from Russia. This time they have done more research and are luring India with lower oil prices. Quote, “The price cap can reduce the Russian revenue and reduce the price for consumers”. It was said by deputy treasury secretary Wally Adeyemo during his 3-day visit to India. Recently, he met with our Finance Minister Nirmala Sitharaman for the purpose.
Claiming that he is not only negotiating with the Indian government but also with the private sector, Wally said, “I had a very constructive conversation with my Indian counterpart (finance minister Nirmala Sitharaman) on the price cap proposal. But I also talked to the private sector participants in India about price cap as well. Ultimately, we share the same objective, which is making sure that our consumers and businesses pay the lowest price possible for energy”.
US does not want nationalists to grow
Apparently, whatever incentive they are offering to India, its ultimate goal is harming Russia and not benefitting India. The Ukraine-Russia skirmish has become an ego issue for the United States.
They have become desperate to counter the emergence of nationalistic leaders like Vladimir Putin in other European countries. Hungarian Viktor Orban was a part of a dangerous trend for the US and its allies. Why? Because nationalistic leaders do not sell out their countries to western companies and governments.
Jaishankar’s criticism and Europe’s response
As a part of this greater mission, they started to pressurise India to not buy Russian oil. India did not pay a heed to it and in fact, our EAM S. Jaishankar exposed the hollowness and hypocrisy of their appeal. That was a clear-cut message to them that until they themselves shelve their dependence on Russian crude oil, they can’t exert moral pressure on any country. These countries then became proactive and started to chalk out a strategy.
By 5th of December, the European Union won’t be buying Russian crude coming towards them through sea-route. Similarly, by the beginning of February next year, they will stop importing petroleum products from Russia. It is pertinent to note that they will keep buying Russian oil coming to them through pipeline.
The Biden administration believes that this initiative is enough to galvanise more and more countries in favour of imposing a limit on Russian oil. But its long-term viability is a concern which India has to think about. Price-capping never works.
Checking the viability of capping the price of Russian oil
Things available at lower prices get sold out quickly leading to the opening of black market. We all have seen this in our childhood when subsidised cylinders were available at lower prices. People either wasted their productive hours to buy them or they had to buy them from black market at the price two to three times above subsidised one.
There is no guarantee that it would not happen in the case of crude oil. And What if Russia altogether decides to ditch India altogether for capping the price. The Putin administration has even expressed its inclination about the same. It will be a big loss for India since Russia will certainly find alternate markets, but we won’t find alternate sources of cheaper oil.
Would lead to OPEC monopoly
We will have to again increase our dependence on Gulf nations. It’s true that Iraq is offering us a lower oil price, but that is because their Russian competitors are threatening their big market. If Russian oil is eliminated altogether, it would lead to the establishment of a monopoly of these countries on India’s oil import basket.
And that is the final result of every price-capping strategy applied in history. It leads to a monopoly of a particular group on the supply chain. World has seen how OPEC oligarchs manipulate geopolitics by leveraging their oil production capacity. We would not want that. Government needs to deliberate deeper on the issue.
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