Western sanctions against Russia have not helped, but have caused Russia to adjust its energy export strategy and promote the internationalization of the yuan, while India has suffered because of the weakness of the rupee.
Western countries have sided with Ukraine in the Russian-Ukrainian conflict, imposing comprehensive sanctions on Russia, even sparing Russian pets. The West also wants to crack down on Russia's energy exports by restricting the production of Russian oil, and countries such as the United States and Australia have joined forces to stipulate that Russian oil must not exceed $60 per barrel.
However, Western sanctions have not brought Russia to its knees, but have stimulated Russia's resistance and innovation, which has not only successfully coped with the economic crisis, but also achieved economic growth that exceeded expectations. Russia's deputy prime minister revealed on the 27th that Russia's oil and gas revenues will reach about 9 trillion rubles (about 715.5 billion yuan) this year, accounting for one-third of Russia's fiscal revenue, comparable to the level in 2021.
Russia's energy exports have not been blocked by the West, but have circumvented Western sanctions by changing the direction and method of exports. This year, Russia exported 90 percent of its oil to China and India, which became Russia's largest energy markets. China has always been an important partner for Russia, while India has changed its attitude towards Russia because of Western sanctions.
India was involved in the Russian Su-57 project, mainly at the expense!
The reason why India began to import a large amount of Russian oil is because Russia, in order to break through the blockade of the West, has lowered the ** of oil, which has attracted India's attention. India's central bank allowed its importers in 2022 to open overseas accounts to pay for oil in rupees in an attempt to get dollars. India also used Russian oil and sold it to Europe, earning dollars and euros. Although Europe knew about the ** of these oils, but because they were cheap, they bought them with one eye closed.
However, this practice of India did not last long, and Russia soon resumed normal export channels and canceled "temporary cooperation" with India. India** has been trying to get Russia to accept rupees, but Russia refused, because in this case, Russia would receive 3.33 trillion rupees (about 40 billion US dollars) a year, which are almost useless in the international market. The convertibility of the rupee is low, and India's share of exports is only 2%. The rupee cannot be compared to the US dollar, which has always been the settlement currency for oil and the cornerstone of its hegemony.
However, Western sanctions have made Russia abandon the dollar and euro in favor of the yuan. In June this year, Pakistan bought 100,000 tons of Russian **, which was paid for in yuan, and in July, some Indian refiners also began to buy Russian ** in yuan. The RMB exchange rate is stable and has the characteristics of safe haven, which also promotes the internationalization of the RMB. By November 2023, the share of the yuan in international payments rose to 46%, a record high, surpassing the yen to become the fourth largest international currency. According to statistics, more than 70 countries currently use the renminbi as their foreign exchange reserves.
Russia foresaw it back in 2014 and diversified its assets in two baskets, one for the dollar and the euro, and the other for ** and the yuan. This approach has freed the Russian economy from the crisis, and the West has frozen $300 billion of Russia's sovereign assets in the Russia-Ukraine conflict, and now the United States wants to use the money to aid Ukraine, but Russia doesn't care anymore.
The renminbi has shown great strength in this storm, pushing for the internationalization of the renminbi, while India has lost opportunities because of the weakness of the rupee. India's oil and gas sector reported to the Parliamentary Standing Committee in December that no one was willing to pay for oil imports in rupees. India's foreign minister also tried to persuade his Russian counterpart in September to accept the rupee, but the Russian foreign minister replied that Russia still had billions of rupees in its hands and did not know how to spend it.
This means that the money may be in vain, and the Russian foreign minister said that the money will have to find promising investment projects in India. That is, Russia will not take the money for nothing, but will invest in India, but find reliable investments. India's investment environment is not friendly, and foreign capital is often bullied by India, just like the executives of vivo's Indian branch were seized by India. It will not be easy for Russia to spend this money. Moreover, Russia received more than that, and Russia also had a headache for it.
When India complained about its failure, the United States ** gave India another stab, and on the 25th, the US media reported that the internationalization of the Indian rupee failed, and India's efforts to pay for oil imports with the rupee were hit hard, and India's oil ** partner Russia did not accept India's goodwill! In the first three months of India's 2022-2023 fiscal year, not a single barrel of oil was settled in rupees.
Cooperation between India and Russia in the military field has not been interrupted by the rupee's problem, and Russia is still India's main businessman, accounting for more than half of India's imports. Russia also supports India's permanent membership in the UN Security Council, which is India's long-standing wish, but it requires the unanimous consent of the five permanent members, and only Russia has expressed its support for it at present. In addition to India, Japan, Brazil and Germany also want to win the seat, but none of the P5 are willing to share their power, especially with the power of veto.
The cooperation between India and Russia has not been smooth sailing, and there have been many contradictions and frictions between the two countries. India once participated in Russia's Su-57 fighter project, mainly to pay for it, but later because it was not satisfied with Russia's technology and progress, it withdrew from the project and bought French Rafale fighters instead. India also got a second-hand aircraft carrier from Russia for free, but it spent billions of dollars on modifications and bought Russian carrier-based aircraft, as a result, the performance and quality of the aircraft carrier were not satisfactory, and there were frequent breakdowns and accidents.
India's aircraft carrier Chaori King was formerly a second-hand Russian aircraft carrier.
In order to get rid of its dependence on Russia, India has not only expanded imports from other countries, such as the United States, Israel, France, etc., but also promoted independent research and development and manufacturing, such as the destroyer Imphal, which was designed and built by India itself, which was launched on the 26th. However, there is still a big gap in India's manufacturing level, many projects have been delayed, overrun, and failed, India's quality is often questioned, and India's army often complains about its unreliability and inefficiency.
In conclusion, the relationship between India and Russia is complex, with both cooperation and competition, friendship and interests. India wants to use the rupee to settle oil imports, because it wants to improve the international status of the rupee and also wants to reduce its dependence on the dollar, but the weakness and low versatility of the rupee make Russia unwilling to accept it. Russia, for its part, has chosen the renminbi as the settlement currency for its energy exports, which can not only circumvent Western sanctions, but also enhance the international influence of the renminbi. Western sanctions, on the contrary, have made Russia and China more closely coordinated, while India has lost opportunities because of the rupee's failure.