The countries of the Third World are well acquainted with the West’s history of bombings, invasions, coups, assassinations, destabilisation campaigns, colour revolutions, etc, to join the latter’s supposedly “democratic” chorus against Russia. Instead of this militarist rhetoric against the bogeyman of Russian “authoritarianism”, most of them have chosen to adopt the path of diplomatic de-escalation. And in this process, they have weakened Western unilateralism
India has been carefully negotiating the fast-moving geopolitical tectonic plates set in motion by Russia’s invasion of Ukraine. On April 1, 2022, Russian Foreign Minister Sergey Lavrov held talks with External Affairs Minister S Jaishankar and also met Prime Minister Narendra Modi before his departure. The Ministry of External Affairs (MEA) stated that the dialogue specifically concerned the impact of the Ukraine crisis on India’s economy, noting “that as a developing economy, global volatility in different domains is of particular concern to India. It is important for both countries that their economic, technological and people to people contacts remain stable and predictable”.
Tensions
Lavrov’s visit synchronised with India’s efforts to maintain a neutral position on Ukraine. Not only has India abstained from all five votes in the United Nations to condemn Russia’s military operation in Ukraine, it has also refused to participate in Western sanctions aimed at isolating and crippling Russia’s economy (Russia has lost $300 billion of foreign exchange reserves due to these sanctions). At a press conference after his bilateral talks, Lavrov remarked, “I have no doubt that a way would be found to bypass the artificial impediments with illegal unilateral sanctions by the West.” This made it clear that Russia and India would go ahead with their plan to use national currencies rather than the dollar-based international system.
India’s persuasion of an independent policy with Russia has perturbed the diplomatic martinets of the Global North. Hours before Lavrov arrived in Delhi, US Deputy National Security Adviser (NSA) Daleep Singh, the main designer of the sanctions against Russia, said that there will be “consequences” to countries that “actively attempt to circumvent the sanctions”. However stressing that “friends don’t set red lines”, he added, “We are very keen for all countries, especially our allies and partners, not to create mechanisms that prop up the ruble and attempt to undermine the dollar-based financial system”.
The US Deputy NSA’s arrival to India was preceded by the visits of the EU special envoy, the German NSA and the UK Foreign Secretary, all of whom were critical of Indo-Russian cooperation. The particularly sharp exchange between Jaishankar and UK Foreign Secretary Liz Truss highlighted the divergent perspectives that India and Euro-Atlantic nations had on the instabilities in Ukraine. Taking a jibe at the moral hypocrisy of the West, Jaishankar said: “I think what we saw happening in Afghanistan last summer had a very, very strong impact here, certainly in India. I probably would say it didn’t have the same impact in Europe…They didn’t identify with the people who are affected in the same way. So you know, the truth is that, many of us have similar or shared beliefs, values, but there is ability to relate, the ability to identify, some of it is proximity…the intensity of the reaction may not be the same all over the world.”
Declining US hegemony
India’s non-aligned response to the Ukraine crisis is similar to the attitude of other Third World nations. On March 2, 2022, non-binding UN resolution that condemned Russia’s intervention in Ukraine, populations represented by governments that did not vote for it were much more likely to come from the nations of the Global South. In fact, the UN condemnation of Russia was endorsed majorly by rich, white nations that represent only 41 per cent of the world’s population. What explains this global divide? The countries of the Third World are all too well acquainted with the West’s history of bombings, invasions, coups, assassinations, destabilisation campaigns, colour revolutions, etc, to join the latter’s supposedly “democratic” chorus against Russia. Instead of this militarist rhetoric against the bogeyman of Russian “authoritarianism”, most of them have chosen to adopt the path of diplomatic de-escalation. And in this process, they have weakened Western unilateralism.
The trading partners of Russia, which is one of the world’s largest exporters of oil, gas, wheat, and fertilizers, have developed alternative payment mechanisms to bypass Western sanctions. Russian financial institutions have been encouraging clients to open accounts in Chinese yuan - a policy direction that is a continuation of the two countries’ decision in 2019 to settle all trade between them in their respective currencies. China and the Eurasian Economic Union consisting of Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia are also evolving a new monetary system. Saudi Arabia — partly concerned by the way the West arbitrarily seized the dollar holdings of Russia — has indicated that it might designate its oil sales to China in Yuan and not dollar. After 1974, this is the first time Saudi Arabia would sell oil in a currency other than the dollar. Russian relations with Saudi Arabia, the UAE and Qatar in OPEC+ agreements, and the Gulf states’ increased sovereign wealth fund investments in Russia are also contributing to the weakening of the dollar’s monetary power.
Presently, the EU gets 40 per cent of its natural gas from Russia; the Kremlin has demanded that Europe pay for this gas in Russian rubles. India has now joined this emerging contestation of US-centered financial architecture by agreeing to a rupee-ruble trade agreement with Russia. For India, the use of non-dollar transaction methods is not new. In 2018, India and Russia entered into an agreement under which Russia agreed to supply five S-400 Triumf air defence systems.
To sidestep the American sanctions imposed under the Countering America’s Adversaries Through Sanctions Act (CAATSA), the two countries agreed that the mode of payment will be in Indian currency. India used a similar system for buying Iranian oil. Through the United Commercial Bank, payments for 30 per cent of the crude oil that India imported from Iran was settled in rupees, which Iran then used to import goods from India.
Unless the core countries of the Global North come to the negotiating table, the attrition of the dollar-dominated system will keep progressing, slowly but steadily. First, given the different kinds of commodities that Russia supplies to the world and the demand from developing economies like China, India, Saudi Arabia, Iran, and those in Southeast Asia, Africa and Latin America, strategic expert Ng Weng Hoong writes that “it is only a matter of time before traders develop an alternative system to make and settle payments without using US-controlled global financial and payment services”.
Moreover, USA’s treatment of Russia like a vassal state — visible in the financial weapons it has deployed — has made it evident that the American empire will very well bully nations into following the so-called “rules-based order” if the need arises. This had made countries realise that de-dollarisation is important for the protection of political autonomy. In this global conjuncture characterised by multipolarisation, the Indian Government needs to strengthen and expand its non-aligned posture.
(The writer is Dean, Faculty of International Studies, Aligarh Muslim University, Aligarh)
