US warns India against entering into rupee-rouble arrangement with Russia to dodge sanctions

US President Joe Biden's administration has subtly warned India against entering into any arrangement with Moscow to circumvent the sanctions the United States imposed on Russia in response to its invasion of Ukraine.

The US Secretary of Commerce Gina Raimondo said that India's move to buy discounted crude oil from Russia and to work out an alternative payment mechanism to bypass restrictions imposed by the Western nations was “deeply disappointing”. A senior official of the Biden Administration said that given the “no limit partnership” between Moscow and Beijing, Prime Minister Narendra Modi's government should not expect Russia to come to its rescue, if China again breached its Line of Actual Control (LAC) with India. He also said that the nations trying to circumvent the restrictions the US imposed on transactions with Russia would face consequences.

External Affairs Minister S Jaishankar also had a phone-call with US Secretary of State Antony Blinken in which they discussed the situation in Ukraine in the wake of Russia's military operations in the East European nation.

The US stepped up pressure on India, even as Putin sent his Foreign Minister Sergey Lavrov to New Delhi and add momentum to talks between Russia and India to work out an arrangement for making transactions in respective national currencies so that bilateral trade between the countries could continue despite Western restrictions on banking.

Lavrov will have a meeting with Jaishankar and call on Modi on Friday.

The US would not like to see mechanisms designed to prop up the rouble or to undermine the dollar-based financial system or to circumvent the financial sanctions it imposed on Russia in response to its aggression against Ukraine, Daleep Singh, American President's Deputy National Security Advisor on International Economics said after his meetings with Foreign Secretary Harsh Shringla on Thursday.

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Singh, an Indian-American, is overseeing the Biden Administration's move to step up economic pressure on Russia in response to its aggression against Ukraine.

He said that India's energy import from Russia did not violate any sanctions. He, however, also added that the US would not like to see rapidly acceleration of India's imports from Russia, be it energy or any other commodities.

The sanctions imposed by the US and other Western nations on Russia has made it difficult for India to pay for its imports. India is now exploring a rupee-rouble payment system to continue its trade with Russia.

The officials of the Reserve Bank of India and the Central Bank of Russia are likely to meet in New Delhi soon.

With Moscow offering crude oil to New Delhi at a discounted price, India has already planned to buy about 15 million barrels of crude at a discounted price over the next few weeks, notwithstanding criticism in the US and the United Kingdom. The Indian Oil Corporation (IOC) already made a move to buy as much as 3 million barrels of crude oil from Russia immediately. India also decided to double its import of coking coal – a key ingredient for making steel – from Russia.

Lavrov arrived in New Delhi after visiting China to attend a meeting on Afghanistan hosted by Chinese Foreign Minister Wang Yi.

Russia’s military operations in Ukraine brought to public domain the differences between India and the US. India abstained from voting on the resolutions the US and other Western nations sponsored or supported at the United Nations Security Council and the General Assembly denouncing Russia for its aggression against the East European nation.

Though India called for cessation of hostilities and return to the path of dialogue and diplomacy to resolve the conflict, it refrained from directly condemning Putin for his February 24 order for launch of military operations in Ukraine.

India still relies heavily on Russia for its military hardware, including ammunition, given the long-standing defence cooperation between the two nations.

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