India_will_buy_Russian_oil_despite_Trump’s_threats(360p)

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00:00Welcome back on Alive Now. I'm Austin Westphal. The New York Times has this.

00:06India is saying that it will keep purchasing cheap oil from Russia,

00:10despite a threat of penalties from President Trump. The Times says that the move reflects

00:15increasing frustration surrounding the U.S.-India relationship, a relationship that was once much

00:21praised, but has been souring rapidly. Trump recently said he would impose an unspecified

00:27penalty on India if they didn't cut their imports of Russian oil. Host of the Strat Podcast,

00:32Hal Kemper, is still here. We'll get to the Russian piece of this in a moment, Hal. Let's

00:36focus on the U.S.-India relationship first. Why is a healthy U.S.-India relationship important?

00:41Maybe the better question is, why is a turbulent relationship not ideal?

00:46Well, it's not ideal because it's kind of a counter, if you will, to China. Also,

00:51it's part of what's called the Quad, which is an informal group that's become more and more

00:56formalized over time, where India is a linchpin, and then you have Japan and Australia with the U.S.,

01:01and doing joint military exercises, a lot of interaction with that. So we've been trying to

01:08basically make India our lead ally, if you will. I don't know if it's going to become more lead than,

01:15say, Australia, but a major ally that we can rely upon in not just South Asia and Asia,

01:21but also in the Indian Ocean and everything that connects to. So it's been a relationship we've

01:26been working on for a number of years. However, if you go back historically, India has always had

01:32kind of a third way of doing things. And during the Cold War, they would say, we have our third way.

01:38We're neither communists. We're neither fully capitalist. We do what we do. And they used to buy

01:44weaponry from the Soviet Union. And they maintain very cordial relationships with the Soviet Union,

01:51which we found very unsettling. We had a closer relationship with Pakistan during the Cold War.

01:58And that has been reassessing itself, shifting around. Pakistan has aligned itself closer with

02:04China. We aligned ourselves very closely with Modi's, India. And it seemed like everything was

02:12moving pretty close up until a few months ago. And then all these trade issues popped up.

02:18And now we're seeing this more distant relationship starting to emerge.

02:24So one thing as we take a live look at the White House, 512 in the nation's capital,

02:29I got to say this, India is the most populated country on the planet, 1.4 billion people.

02:35Is there an argument to be made, Hal, that the word of the White House shouldn't decide

02:40how they get energy to their people? Is that India's perspective?

02:45Well, India's perspective is that they don't want to be bullied by the U.S. And a lot of this is

02:50with Modi internal to India. Right now, they've got trade negotiations with the U.S.

02:55One of the things we're really pushing hard on is we're saying, look, you can't keep protecting all

03:00your agricultural goods. Now, 40% of the population works in agriculture, very different from here.

03:05And they've always had these massive barriers protecting agricultural production, agricultural

03:10products, and blocking agricultural imports into India. The U.S., we're a major ag power in the world

03:18scene, and we want to be able to export there. This is causing huge political turmoil within India.

03:25And I think what you're seeing is Modi is kind of lashing back, not directly on the ag issue,

03:31but he's saying this on oil. The interesting thing on oil, though, is most of the oil companies there

03:37had already stopped buying more Russian oil. They'd kind of put a moratorium on that. There's

03:44even one firm, which is about half Russian-owned, where they kicked out the Russian CEO, or the

03:50Russian-picked CEO, I should say. And there have been cases where tankers coming from Russia with oil

03:56literally a few days ago turned around and went the other direction because they weren't going to

04:01offload their oil in India. That would indicate one thing, but now we're seeing this political

04:06statement, which says we're not going to be bullied in terms of buying Russian oil. We get our sources

04:11of oil from anywhere else. I think they're a little concerned, though, that if they don't get Russian

04:16oil, then they're really dependent on the Middle East, primarily Saudi Arabia, and dependent on the

04:21U.S. for oil. And I think they've been kind of working through, well, what does that do for us,

04:27strategically speaking? Are we going to make ourselves more vulnerable by doing that? So

04:31I think they're just taking a kind of a third way in the Indian tradition, if you will.

04:36Can you expand on the amount of people that still buy oil from Russia? Do a lot of countries still buy

04:44oil from Russia?

04:46Some. The two biggest countries that buy oil are China and India, by far. And to give you an idea of

04:52how much oil India is buying. Before the war in Ukraine, India imported about less than 1% of its

05:00oil from Russia. Now it imports about 40%. Okay, that's a lot of oil. And they've been buying that

05:07oil at a discount because Russian oil is kind of cheap on the global market. It's heavily sanctioned,

05:12obviously, but it's very cheap on the global market. So they get it at a discount, which actually

05:17kind of subsidizes their industry and everything else because they're able to buy oil cheap.

05:23So that's for the gain that they get out of that. Now, here's the tough part is that coming up on

05:29August 8th, if there isn't some sort of agreement in Ukraine, we may impose secondary tariffs on

05:36countries that import Russian oil. According to President Trump, that could be 100% tariff on what

05:42they export. That would have enormous implications in India, enormous implications in China. But

05:49politically speaking, that also comes across as very much as a threat or bullying to India. And I

05:57think what you're seeing is basically some lashing back at this because they don't like to be bullied.

06:04What avenues does the US have to punish India if they choose to? Are we likely looking at higher

06:11tariffs? Is that what it's going to be? Probably right now, I would say higher tariffs. And, you

06:16know, I thought it was kind of interesting that we suddenly decide to impose 35% tariffs on India. And

06:23that was in part to, I think, to pressure Indians to come to some sort of trade agreement that we would

06:31find acceptable. And so they put that 35%. Well, that caused a lot of pressure with India. And it is

06:37kind of the rule of second and third order effects that, you know, India is a, you know, the largest

06:44democracy in the world. And like all democracies, there's a lot of different opinions that run around

06:51in India. And they tend to be very independent. You know, that's kind of their history since they've

06:57been an independent country, they have very independent thinking within India. And I don't think they like

07:02to be pressured by a foreign power. And, you know, originally, you would have said it would have

07:07been Britain way back when. Now it's the US. And I think to them, they feel like the US is pressuring

07:14them to accept whatever deal that we want to put out there. But also, they may interpret that I'm

07:19sure with some, they say they're pressuring the US, we're pressuring India to be, you know, fall into

07:24the US orbit, if you will. And, and so there's, there is some pushback there. Then I also mentioned

07:31one other thing, you may have noticed that they had a little war, little battle a while back, not

07:35too long ago, and a lot of fear stuff, we're talking about the threat of maybe it expanding

07:41into nuclear war. That's a big deal. All right. Anyway, with all that said, after that was done,

07:48as I understand it, if I got the timing right, the head of India's military actually visited the

07:58White House, or not India, I'm sorry, Pakistan's military visited the White House, which really

08:03irritated the Indians to no end, that here you have this Pakistani military chief, if you will,

08:11sitting in the White House meeting with the President after what's just happened. You can

08:16imagine how that that has caused ripples in the political pond, if you will, within within India

08:21that Modi has to deal with. This is a tricky situation in the political pond. What's the path

08:26of least resistance going forward? How do we think this is going to end? Is India simply going to keep

08:30buying Russian oil? Is some other agreement going to be made with the White House? How does it feel?

08:34I think we're gonna have to figure out some deal where they get oil for a really good price and

08:39certainly more than enough to keep them going. I think we've probably done enough with the stick,

08:44we need to figure out some carrot approach to incentivize them to do this. And I think there's

08:48a lot of carrots out there that we have, we just probably haven't explored everything that we can

08:53do to help them out. But I think we're also being a little cautious, you know, because India does

08:58at times, move the other direction. And they recently did that with their decision on aircraft

09:03purchase, which was very disappointing to the US. Don't think that that isn't part of the mix of why

09:09we're frustrated with India is because they have not separated themselves from Russian weapons.

09:15The problem is, if they're buying Russian weapons, then they get Russian influence and Russian

09:20presence all at the same time, which makes it very difficult for us to work with them

09:24on a military side. If there's a bunch of Russians keeping their military going, all right, and from

09:32maintenance side, technical support, things like that. So there's just a lot of factors and

09:37considerations that go into this. How important is India buying Russian oil to the Russian economy?

09:45How big of a piece of the pie is it there? Huge. It's enormous. And if they were to lose

09:52that Indian purchase of oil, that would cause a massive hit on their foreign revenues, which would

09:59eventually cause them to have to rethink how much they can put into the war with Ukraine.

10:04If we could achieve the same thing with China, I think that's a much more difficult objective to

10:12achieve, if you will. But if we could cut off Russian oil exports to India and China, we have

10:18literally cut off the primary source of foreign revenue going to Russia. And at that point, Putin

10:24is really stuck. He just will not be able to sustain the war against Ukraine for too much longer.

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