America Keeps Eyepoking India and China for Failing to Fall into Line on Russia; Arrogance Looking More and More Like Impotence

America Keeps Eyepoking India and China for Failing to Fall into Line on Russia; Arrogance Looking More and More Like Impotence 1

Yves here. I’m using an OilPrice post, India’s Russian Dealings Have Left Biden’s Geopolitical Oil Strategy In Tatters, as a point of departure for a mini-rant about the arrogance and rank incompetence of America’s elites, as demonstrated by our predictably unsuccessful efforts to bully both China and India into saying bad things about Russia’s invasion of Ukraine and backing the US, most importantly by joining its sanctions war.

I am at a loss to understand why the US thinks throwing more force behind a clearly failed diplomatic strategy is a bright idea. Pushing China has simply made it more obvious and easier to explain to interested audiences (many!) why the US needs to stop trying to dictate the policies of other countries, most of all really big ones with nukes.

As for India, the US has been at best a fair weather friend. It is particularly insulting for the US to carry on to India about democratic values when we engage in nation-breaking and have counted autocrats like the Saudi royals and a very long revolving door list of authoritarians (past stars include Manuel Noreiga, Honsai Mubarak, Rwanda’s Paul Kagame, Ethiopia’s Hailemariam Desalegn) as allies.

With both countries, the US has tried at least twice (three times with China if you count the recent China-EU teleconference with Xi) to get China to side with the West against Russia, pushing China into “What about ‘no’ don’t you understand?” terrain. Rather than hewing to the convention of having summits only after groundwork was laid so that at least nothing visibly bad happens, Team Biden set out to pick a fight with China at their first get together, in Alaska in March 2021, with the US springing new sanctions on China the day before the session.

This humble blog was featuring at least once a week examples of Biden Administration continuing its eyepoking of China in our Links before the war broke out.

Then in March, Jake Sullivan was set to meet with Yang Jiechi in Rome and threatened China with sanctions. The pretext was disinformation in the form of a Financial Times story claiming that Russia had asked to buy weapons from China (this was clearly absurd because by the time the war had started would be way too late; Russia would have needed to procure and integrate equipment months prior).1 Needless to say, Yang didn’t give any ground.

So not taking no as an answer, Biden had the cheek to call Xi that very same week and ask for China’s help. Xi effectively said this wasn’t his problem: “He who puts the bell on the tiger is the one to take it off.” Biden also said he very much wanted better relations with China and gave lip service to the one-China policy in the chat. That allowed Xi to say he took that statement very seriously: What about all these American officials who were promoting a “wrong understanding” about Taiwan?

EU leaders and Xi then had a regularly scheduled EU-China teleconference. Chinese officials had signaled before the meeting that Xi was interested in EU-China relations, not Ukraine, so of course the EU officials started the conversation off with Ukraine. Xi again deflected the Western pressure.

I’m not double checking the dates, but my recollection is that it was shortly after the EU-Xi talk that the US announced new sanctions against China, mainly against officials accused of oppressing Uighurs. And we’ve just had the off the charts provocation of Nancy Pelosi, third in line to become President, going to Taiwan. Recall that trip has been postponed rather than cancelled. China has stated that there will be consequences if that trip happens.

And we expect them to side with us? It’s not the most important form of payback, but China has taken to stating regularly in official media that the war in Ukraine is America’s fault.

As an aside, if I am China, I do not want that Pelosi visit to occur, since it is de facto recognition of Taiwan. Could China stop it with a pre-emptive air strike, talking out all of Taiwan’s air traffic control and putting nice big holes in all the runways international planes use? Is it possible for China to jam air traffic control in Taiwan and the handoff towers next out on her route? Or would Chinese planes dare to dog Pelosi’s and prevent it from landing as planned?

With India, the US keep acting as if they need us when India clearly needs Russian fertilizer and fuel more. And as a sometimes ally, we in theory should at least make a show of being respectful to India, when we instead keep bludgeoning and bullying them. That’s hard to take generally, but even more so given the presumed and probably actual colonial/racist attitudes.

The big slap was last year, when the US entered into the AUKUS deal, which will give Australia nuclear submarines that can prowl the Indian Sea. India’s foreign minister gave an unusually blunt reaction, which amounted to “We’ll have to rethink who our friends are.”

After India refused to criticize Russia for its invasion of Ukraine, a whole raft of foreign officials descended on India: the UK’s Liz Truss, Russia’s Sergei Lavrov, and the US’s Deputy National Security Advisor Daleep Singh (notice less senior than a foreign minister). Lavrov was the only emissary to meet with Prime Minister Modi. Truss said that while the UK wasn’t happy with India buying Russian energy, it would respect the decision. Singh, by contrast, issued a threat. Last week, Brian Deese, head of the National Economic Council, doubled down. From the Hindustan Times:

“There are certainly areas where we have been disappointed by both China and India’s decisions, in the context of the invasion”….The US has told India that the consequences of a “more explicit strategic alignment” with Moscow would be “significant and long-term,” he [Deese] said.

The US insulted India again by just adding hypersonic missiles to the AUKUS deal rather than pursuing that thought the Quad alliance. And yesterday, Anthony Blinken slapped India once more by accusing it of human rights abuses. That can be seen as a sighting shot, that if India does not fall in line, it will be sanctioned for them just as China just was.

Now it turns out the immediate pretext for the rebuke may have been Ilhan Omar complaining about how Muslims are treated in India. But who are we kidding? Since when does the Secretary of State take up whinge by a single, pretty junior Congresscritter? From The Wire:

US Secretary of State Antony Blinken said the United States was monitoring what he described as a rise in human rights abuses in India by some officials, in a rare direct rebuke by Washington of the Asian nation’s rights record.

“We regularly engage with our Indian partners on these shared values (of human rights) and to that end, we are monitoring some recent concerning developments in India including a rise in human rights abuses by some government, police and prison officials,” Blinken said on Monday in a joint press briefing with US Defense Secretary Lloyd Austin, Indian external affairs minister S. Jaishankar and India’s defence minister Rajnath Singh.

I don’t like pathologizing the behavior of our putative leaders, since they are unduly fond of demonization presented as armchair analysis. But it’s hard to think of a historical example of such arrogant, short-sighted, and self-defeating foreign policy. We’re managing the difficult task of making Kaiser Wilhelm II look good.

In the meantime, since the US is clearly not getting the message, maybe Chinese and Indian officials should start playing “American Woman” at rock concert ear-splitting volumes to visiting American counterparts before their meetings:

By Simon Watkins, a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for Credit Lyonnais, and later Director of Forex at Bank of Montreal. He was then Head of Weekly Publications and Chief Writer for Business Monitor International, Head of Fuel Oil Products for Platts, and Global Managing Editor of Research for Renaissance Capital in Moscow. He has written extensively on oil and gas, Forex, equities, bonds, economics and geopolitics for many leading publications, and has worked as a geopolitical risk consultant for a number of major hedge funds in London, Moscow, and Dubai. Originally published at OilPrice

  • India ramped up crude oil purchases from Russia despite warnings from Washington not to do so.
  • India’s relations with the U.S. seemed to have improved during a brief struggle with this China last summer.
  • Besides oil, India also signed defence and industrial deals with Russia at the end of 2021.

Up until recently, Washington thought India could finally and definitively be brought on to its side in the evolving power struggle between the U.S. and its allies on the one hand, and China and its allies (including Russia) on the other. However, a series of quick-fire developments have derailed this optimism, leaving a key part of the U.S. broader Middle Eastern and Asia Pacific military, economic, and hydrocarbons strategy in tatters. The latest example of India not playing the vital role that had been envisioned for it by the U.S. are the plethora of oil deals being done by India with Russia, despite the obvious opposition to such activities from Washington.When the U.S. unilaterally withdrew from the Joint Comprehensive Plan of Action (JCPOA, ‘nuclear deal’) with Iran in May 2018, a key concept in the White House was to use this hard-line stance on Iran to parlay into broader and deeper relationships with other Arab states that had become increasingly alarmed by Iran’s efforts to destabilise the region, as analysed in depth in my new book on the global oil markets. This was to be achieved in large part through a series of bilateral agreements – later formalised into the ‘relationship normalisation deals’ – to be done between Israel (a power more than equal to Iran in the region, tacitly backed up by the even bigger power of the U.S.) and those Arab states that Washington believed were open to becoming unequivocal allies of the U.S. These included the UAE, in which the U.S. has its Al-Dhafra Air Base, plus Patriot missiles, to help intercept any air assaults by the Iranian-backed Houthis or anyone else. They also included Bahrain (as a proxy for Saudi Arabia, and home to U.S. Naval Forces Central Command, and the Fifth Fleet), and Morocco (a crucially-positioned ally to the U.S. in its counterterrorism efforts, so much so that Washington designated it ‘a Major Non-NATO Ally’ in 2004) and Sudan (also regarded as a potentially important centre for counterterrorism activities by the U.S.).

For the Middle Eastern contingent in these deals there was the added incentive for the U.S. that oil flows from these countries could be used in the short-term to counterbalance the net loss of oil to the markets that resulted from new sanctions on Iranian oil flows. Medium-term as well, thought Washington, by investing more money into both the UAE and Bahrain – with more oil-rich countries then encouraged to also sign relationship normalisation deals – they would see significant boosts in their oil production to allow the U.S. to reduce its relationship with non-cooperative Middle Eastern countries. Longer-term, the U.S. planned to be so self-sufficient in oil and gas that it only has to deal with countries that also offer it political allegiance in its struggle to retain its number one global superpower spot in the face of China’s advances. In any event, all of this was to be done whilst ensuring that the price of oil did not stay for any extended periods above the US$75-80 per barrel level at which it starts to cause economic trouble for the U.S. and political trouble for the sitting president at the time, as also analysed in depth in my new book on the global oil markets.

The only potential problem with this plan was that as its aim was essentially to undermine the global power that China could wield through its position as the number one backstop bid in the world’s oil market, the Middle Eastern oil producing countries that the U.S. wanted to tie in to its new world order would need the assurance of a replacement huge backstop bid for their oil. For Washington, India looked like the obvious choice. First, politically, there appeared to be a new willingness on India’s part to stand up to its dominant and domineering neighbour, China, with a clash on 15 June 2020 between the two great Asian powers in the Galwan Valleybeing instructive in this respect. It marked a new push back strategy from India against China’s policy of seeking to increase its economic and military alliances from Asia through the Middle East and into Southern Europe, in line with its multi-layered multi-generational ‘One Belt, One Road’ power-grab project. China dramatically upped the tempo of this OBOR-related policy at around the same time as the U.S. signalled its lack of interest in continuing its own large-scale activities in the Middle East through its withdrawal from the JCPOA and its withdrawal from much of Syria, Afghanistan, and Iraq. At the same time, coinciding closely to the signing of the first Israel-Arab state relationship normalisation deal (that with the UAE), India began to shift from its previous policy of trying to contain China to advancing its own ‘Neighbourhood First’ policy alternative to China’s ‘OBOR’ initiative.

Related: EU-OPEC Meet As Europe Discusses Russian Oil Embargo

Economically as well – and with direct positive implications for Middle Eastern oil producers looking for a global backstop bid for their hydrocarbons products – India appeared well-positioned to take over that mantle from China. According to data released in the first quarter of 2021by the International Energy Agency (IEA), India will make up the biggest share of energy demand growth at 25 percent over the next two decades, as it overtakes the European Union as the world’s third-biggest energy consumer by 2030. More specifically, India’s energy consumption is expected to nearly double as the nation’s GDP expands to an estimated US$8.6 trillion by 2040 under its current national policy scenario. This will be underpinned by a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040, according to the IEA. The agency added that the country’s growing energy needs will make it more reliant on fossil fuel imports.

Warning signs for the U.S. plan came as countries it had identified as being ripe for cultivation did not play their role as envisaged, but rather asserted their own intention to deal with both the U.S. and China as they saw fit. News emerged, for example, that the U.S. discovered that China was in the process of building a secret military facility in the UAE port of Khalifa. Then there was the high-profile snub by Saudi Arabia and the UAE to U.S. President Joe Biden in not taking a phone callto discuss rising oil prices. Perhaps the most far-reaching was the series of meetings in Beijing between senior officials from the Chinese government and foreign ministers from Saudi Arabia, Kuwait, Oman, Bahrain, and the secretary-general of the Gulf Cooperation Council (GCC). At these meetings, the principal topics of conversation, according to local news reports, were to finally seal a China-GCC Free Trade Agreement and “deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat.”

Unbeknownst to Washington, India was also about to even more dramatically buck its intended role in the U.S.’s new grand scheme of things, and at the worst possible time for Washington, with 28 investment dealssigned during the very recent visit of Putin himself to Indian Prime Minister, Narendra Modi just before Christmas. These covered a broad range of subjects, including not just oil, gas, and petrochemicals, steel, and shipbuilding, but also military matters. These latter deals included India producing at least 600,000 Kalashnikov assault rifles and, even more disturbing for the U.S., India’s Foreign Secretary, Harsh Vardhan Shringla, stated that a 2018 contract for the S-400 air defence missile systems is now being implemented. Following on from this, India – and the UAE –  along with just China – failed to vote in favour of the UN Security Council’s resolution to condemn Russia’s aggression against Ukraine and to demand the immediate, complete, and unconditional withdrawal of Russian forces from the neighbouring country.

It is little wonder, then, that India has not introduced sanctions against Russia and that its Finance Minister, Nirmala Sitharaman, said at the beginning of April that: “If there is, first of all, fuel available at a discount [Russian Urals grade has been trading at a discount of around US$30 per barrel to the Dated Brent benchmark], why shouldn’t I buy it? I need it for my people so we have already started purchasing.” He added: “We have started buying, we have received quite a number of barrels – I would think three to four days’ supply – and this will continue.” These views were restated following the high-level meetings in New Delhi at the beginning of this month between Russian Foreign Minister Sergei Lavrov and senior Indian government officials. These meetings, in turn, occurred even after the U.S. warned at the end of March that any significant increase in Russian oil imports by India could expose New Delhi to a “great risk” as Washington prepares to step up enforcement of sanctions against Moscow for its invasion of Ukraine.


1 The plan as best I can guess was that having China agree not to ship weapons it had never been asked by Russia to send in the first place would still look like a big Biden win in DC at supposedly no cost to China. Plus any no to Russia, even a completely fabricated one, would set the stage for creating more daylight between China and Russia. China instead expressed its extreme displeasure at this bullshit rumor having been floated.

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