ON August 7, the US Senate passed a bill, by a large majority (86-11), permitting the US Administration to impose up to 100 percent tariff on countries that import substantial amounts of oil from Russia in violation of the US-imposed unilateral sanctions against that country. The five countries which import substantial amounts of oil from Russia and are targeted by this bill are: India, China, Hungary, Slovakia and Azerbaijan. The argument advanced by the US government for such high tariffs for violating its unilateral sanctions, is that Russia can finance the war it is fighting in Ukraine because of its large oil exports to these countries.

There is no gainsaying that the US has got much more deeply involved in the Ukraine war of late, which is also the reason behind the greatly increased belligerence of the Ukraine government; in fact, the recent Ukrainian air-strikes deep inside Russian territory have been made possible by the provision of valuable US intelligence. This fact, together with Europe’s implacable hostility towards Russia, bolstered by Germany’s rearmament and new-found aggressiveness, not only prolongs the war, but also makes the danger of its escalation into a nuclear conflict, a very real one.

This insensate Western hostility towards Russia for which both the Russians and the Ukrainians have already paid, and are continuing to pay, a heavy price in terms of lives lost, is sought to be justified by Western propaganda by drawing attention to Russia’s aggressive designs; but such propaganda does not stand scrutiny. The real factor underlying Western aggressiveness towards Russia is greed for Russia’s immense natural resources, which had been up for grabs after the collapse of the Soviet Union, but which have reverted largely to Russian control after Vladimir Putin came to power.

Even as the Ukraine war drags on and unilateral sanctions are imposed on Russia by the Western powers, these powers themselves continue to buy Russian natural resources. In fact there is a strong element of dishonesty behind the current US position. While the US is trying to restrict India’s and other countries’ imports from Russia, on the grounds that such imports help Russia in financing the Ukraine war, the US itself continues to import goods from Russia. It is certainly true that US imports of crude oil from Russia, valued at around $ 17 billion in 2021, have ceased altogether, as the US, instead of conserving its own oil resources, has started extracting and exporting them; but the US continues to import other key items from Russia. It cannot even be claimed that the imports of such commodities have been declining, with their cessation being just a matter of time. On the contrary, the imports of three items, fertilizers, palladium and uranium, which currently account for nearly 90 percent of total US imports from Russia, have increased since 2021, flatly contradicting Donald Trump’s claim that “Russia and the USA do almost no business together”.

The US strategy in other words is to substitute American oil for Russian oil in the international market during the pendency of the war in Ukraine, while it continues to rely on the import of other Russian materials, and while it makes every effort to grab Russia’s natural resources, including its oil and gas reserves.

American oil is much more expensive than Russian oil for a country like India, though a part of the price differential is because of the discount offered by Russia owing to the sanctions it faces. Replacing Russian oil by American oil in India’s import-bill would cost the country an estimated 9-12 billion dollars annually in normal times. In fact during the period when India was buying 35-40 percent of its oil imports from Russia because Russian crude was available at a lower price than the international price of crude, owing to the war on Iran, India is estimated to have saved 17 billion dollars of foreign exchange. The US is thus using the tariff threat to make countries like India buy its oil at much higher prices.

Since the tariff threat against countries buying Russian oil has made Russia offer its crude at even more concessional rates, the foreign exchange loss to India from conforming to the US sanctions regime becomes even larger than the usual price differential would suggest. Not surprisingly, Russia has strengthened its position as a seller of crude oil and gas in Asian markets during the very period when it has been facing the Western sanctions regime.

Not buying Russian oil would give an upward push to India’s inflation rate, and this for two reasons: first, the unit dollar price of imported oil will increase for India, and passing the increase on to consumers will accelerate inflation; and second, the drain of foreign exchange that this will entail will cause a decline in the exchange rate of the rupee, which will raise the rupee value of all imports, and give an additional push to inflation. Of course, the first cause for the aggravation of inflation can be prevented if the government subsidizes oil companies so that they do not pass on higher imported crude prices, but that will only lead to a cutback in government expenditure on other major heads, and hence to an attack on the people through a different channel. Likewise rupee depreciation can be checked by running down our foreign exchange reserves, but that will only strengthen expectations about a decline in the value of the rupee in the future, and hence cause an actual decline in its value after, at the most, a pause. The switch from less expensive Russian to more expensive American oil therefore will necessarily have an adverse effect on the Indian people. Thus, imperialism wants to grab Rusia’s resources today by sacrificing the lives of thousands of Russians and Ukrainians, and the living standards of millions of people in India and elsewhere.

It is significant that at the height of the US-Israeli war against Iran, when there was a fear that the high oil prices arising from Iran’s closure of the Hormuz Strait might cause a world recession that would adversely affect itself, the US had “relaxed” its sanctions against Russia; it had “permitted” Russian oil that was already on the sea to be taken in by countries without their being accused of violating the unilateral US sanctions. The US in other words has arrogated to itself the right to determine what other countries can or cannot do, depending on what is convenient from its own point of view.

China has found an answer to US arm-twisting which it had used earlier and which it would use even now. China currently enjoys a near-monopoly in the export of rare earths. It had used that position when Trump had threatened high tariffs on Chinese goods earlier; it had imposed export restrictions and strict licensing requirements on the export of rare earths and goods containing rare earths, which created bottlenecks in the US and forced the US to come to some understanding with China. A similar measure of countervailing pressure can be deployed by China even now. What India needs to do, instead of “turning the other cheek”, is to exert similar countervailing pressure on the US. True, it does not have any powerful leverage analogous to that which China has, namely, control over the export of a critical commodity; nonetheless, it must use whatever leverage it has.

For a start, it must make a continuation of oil imports from Russia without the imposition of penal tariffs by the US, a condition for going on with trade negotiations with the US. The Indo-US Trade Agreement as it had been negotiated earlier, before its basis was knocked out by a court ruling on Trump tariffs, had been an “unequal treaty”, allowing the US to charge much higher tariffs on Indian exports than the other way round, and stipulating amounts of American goods that India had to buy, but not the other way around. There is no place for such unequal treaties being imposed on independent India. And in particular India’s agriculture has to be protected against the onslaught of American agricultural goods whose production is heavily subsidized by the US government. In addition, any such trade negotiation must occur within a context where India is not obliged to obey either US unilateral sanctions against third countries, or face penal tariff rates for violating such sanctions.

One contribution of the tragedy of the Iran war has been a demonstration of American vulnerability before a regime offering determined resistance to it. It would be a tragedy if a country like India does not demonstrate such resistance to imperialist arm-twisting.