US Set To Derail India-Russia Oil Deal

SOURCEInSerbia

It becomes increasingly difficult for Indian Prime Minister Narendra Modi to maintain close ties with both the US and Russia. Since becoming the PM in May 2014, Modi has tried hard to shape his government’s foreign policy in a different way. The premier has taken various steps to engage multi-polar India with the uni-polar world. Although Modi’s tactical moves have helped India emerge as an important player in the global geopolitics, the South Asian country has also started facing problems because of his “balancing” acts.

Lord Palmerstone once said that a nation has neither “eternal allies” nor “perpetual enemies”, it has only “eternal and perpetual” interests. Prime Minister Modi, too, tried to promote national interest through his foreign policy. Perhaps, he made a mistake while favouring a multi-polar world and a multi-polar Asia simultaneously. He has invested heavily in strengthening ties with all major world powers, but the outcome of his effort is not satisfactory.

As a result, India’s oil deal with Russia is in jeopardy. The Indian media have reported that US sanctions are threatening to derail Russian energy major Rosneft’s plan to acquire a 49% stake in Essar Oil of India. The deal has been curtailed by the US Treasury’s Office of Foreign Assets Control.

The Department of Treasury included Rosneft on the list of sanctioned Russian companies in July 2014 soon after Moscow got involved in a military conflict in Eastern Ukraine and annexed Crimea. With the US threatening the deal, Indian banks – which have invested more than USD 5 billion into Essar Oil, have expressed serious concern over the deal mainly because of its potential consequences.

A senior Indian banker said: “We may have to review our exposure to Essar Oil, if Rosneft comes on board.” Currently, Essar Oil tries to push the deal with Rosneft through by allowing the Russian company to enter the Indian energy market. The top management of the Indian company argues that it can open up the South Asian country’s retail energy business to the world’s largest oil producer by expanding co-operation with Russia.

However, the US Treasury’s Office has completely changed the scenario. It has not only prompted the Modi government to rethink its foreign policies, but also portrayed India as a soft power that has only increased its defence capability and economic strength. Now, the Modi government will have to overcome setbacks of its foreign policy by addressing new challenges sensibly. Or else, New Delhi cannot ensure better policy results in future.

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