Responding to reports that India may take up Russia’s offer of discounted crude oil, White House Press Secretary Jen Psaki said on Tuesday that it would not be a violation of US sanctions.
Asked pointedly about the same at a press conference, Jen Psaki said, “I don't believe this would be violating that [sanctions]."
However, she added that such a decision could put India on the wrong side of history.
“But also think about where you want to stand when history books are written at this moment in time. Support for the Russian leadership is support for an invasion that obviously is having a devastating impact,” Jen Psaki said.
As stringent sanctions imposed by the European Union and US are crippling business and trade, desperate Russian oil companies are offering huge discounts to India, provided a payment mechanism to bypass the SWIFT ban is quickly approved by the government. According to sources familiar with the development, Russian oil firms are offering 25-27 per cent discount to the dated Brent crude prices.
India, the third-largest oil importer in the world, is planning to buy oil from Russia at a discounted rate to deal with inflationary pressures.
India, which imports 80% of its oil needs, usually buys only about 2-3% from Russia. But with oil prices up 40% so far this year, the government is looking at increasing this if it can help reduce its rising energy bill.
Under the rupee-rouble trade mechanism, Indian exporters to Russia will get paid in rupees instead of dollars or euros. As part of the arrangement, an Indian bank will open an account in Russia while a Russian bank will open an account in an Indian bank.
Earlier, Hindustan Times had reported that the government had formed an inter-ministerial panel, led by Economic Affairs Secretary Ajay Seth, to scrutinise the impact of the Russian sanctions on the Indian economy.
Moreover, India's dependence on Russia for its military hardware still runs as high as 60%, despite a significant reduction over the last decade.
U.S. officials have declined to say if India would be sanctioned should Russia send S-400 missile systems as part of a $5.5 billion deal signed in 2018 for five of them.
Initial supplies of the system started late last year despite a U.S. law (CAATSA) aimed at deterring countries from buying Russian military hardware.
Reuters reported that Ely Ratner, U.S. Assistant Secretary of Defense for Indo-Pacific Security Affairs, told a U.S. Congress hearing last week that India was diversifying its defence suppliers.
"We recognise that India has a complicated history and relationship with Russia. The majority of the weapons that they buy are from the Russians," he said.
"The good news is that they are in a multi-year process of diversifying their arms purchases away from Russia - that's going to take some time. But they are clearly committed to doing that, including the indigenisation of their own defence industry and that's something we should support."
