Hafsa Ammar is a student of the Department of Peace and Conflict Studies at the National Defence University, Islamabad. Her areas of expertise are hybrid warfare, narrative building, and nuclear deterrence in South Asia.
Russia’s Key Resource
Recent reports for 2022 have showcased that Russia has officially replaced Saudi Arabia as the key supplier of crude oil to China. Sino-Soviet relations on the rise are a new worry on the horizon for the West. The implications China obtaining oil exports from Russia are global and far-reaching. Both Russia and China are second only to America in pure unadulterated power, therefore this alliance is only a marriage of convenience.
For Russia, it was to fill the gap caused by Western sanctions on the Russian energy sector, and for China, it is merely the profit of massive amounts as Russian crude oil is being sold at extremely discounted rates. Instead of the sanctions causing a catastrophic amount of damage to the economy of Russia, it instead saw a rise of 55% in annual oil exports. Chinese imports reached 8.42 million tons a month, despite the honeyed drag of its economy and needs due to the pandemic.
Dominating Asian Markets
Russia’s energy market (oil, gas, fossil fuels) saw hundreds of billions of dollars (93 billion euros) in revenue; something the West never predicted as it assumed all to follow its faux-humanitarian sympathies in boycotting Russia. China is not the only steppingstone in the Russian attempt at destabilizing the American hold over Asia. It has also been successful in bringing India under its web of influence.
Just in June, Russia had officially been the second largest supplier of oil to India after Iraq. It replaced Saudi Arabia in this regard as well. Western strategists believe that such hefty discounts in oil prices will lead to more countries partaking in the oil trade with Russia. Turkey is most likely to follow suit as it has been on its path to self-determination and separation from domineering Western ideals.
Another tactic being employed by Russia is its demand for payment in currencies other than the US dollar. The destabilization of the USD and a stronger ruble is perhaps the last obstacle that stands between the current unipolar world and an impending multipolar one. By refusing to trade in the Western currency, Russia is in fact insulating itself from the harsh damage that American and European sanctions have been inflicting.
The sanctions were applied in a response to the Russo-Ukrainian war or the ‘Russian invasion of Ukraine,’ as the West prefers it, in February. These embargoes made their presence known at every level from the arms and ammunition trade to that of commercial and luxury goods such as alcohol and diamonds.
Russia didn’t suffer the debilitating effects of such sanctions and therefore continued its active operations in Ukraine and simultaneously decided to use these sanctions to its own goal of eliminating American influence from the continent – slowly but effectively. The demand, by a major Russian player in the oil market – Rosneft, for India to pay for the crude oil in dirhams brought the spotlight to the UAE.
The country states that it has a neutral stance, but the US experts hint at worrying notions of the UAE leaning towards Russia. The collaborations between Moscow and Beijing are not new in nature. The ‘Power of Siberia’ project, a transnational pipeline that can send gas from Siberia to Shanghai, is evidence of this high-stakes friendship. It became partially operational back in December of 2019 (set to finish by 2025).
China ($14.72 trillion) and India ($2.66 trillion) both rank in the top 10 performing economies of the world, with Russia ($1.48 trillion) grazing the 11th spot. These statistics go to show that Russia’s choice of economic allies was a calculated move. Even Brazil (12th economy) has refused to comply with the economic sanctions on Russia due to its vested interests in fertilizer imports.
Discounted Oil Exports from Russia
The Sri Lankan Prime Minister also admitted towards his growing interest in buying oil from Russia at such cheap prices, seeing as it would go long way in stabilizing the turbulent and downright destructive economic crisis in Sri Lanka. It goes to show that countries will be pragmatic and always opt for the maximization of their self-interests and personal agendas. Russia just had to incentivize them with something more powerful than the fear of the US.
These observations are not to say that Russia hasn’t faced losses from the sanctions. However, the alternative trade route and opportunities that showed up are leading to the long-term plan of internally collapsing the influence of American hegemony. The Organization of the Petroleum Exporting Countries (OPEC) has stated that it is very difficult and unadvisable to fully detach itself from the Russian oil market.
Sohail Muhammed, the Oil Minister of the UAE, placed the blame for the instability of the oil economy on the West and its impulsive sanctions. The Russo-Ukrainian War has little to no direct impact on most of the states that are benefiting from the Russian discounts—no ideological, religious, cultural, linguistic, or ethnic familiarities—which is why it is inherently pointless to convince realist nation-states to abandon the needs of their own people for those of far-fetched Europeans.
Of course, due to the acceptance of shunned oil, Asian states are starting to find themselves in hot water with America. America’s major concern is not the actual humanitarian crisis in Ukraine, but rather that the war be used as a cover to finally cripple Russia. After all, even past the demise of the Soviet Union, Russia is still the largest country in the world with massive global influence synonymous with anti-American sentiments.
China and India are energy-hungry states, while Russia being an energy-rich state has decided to actively exploit it. Both China and India house the largest growing populations in the world, meaning that if Russian ties and discounted oil are what keep their wheels greased and running, there is little that America can do about it.
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