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Given the past differences over oil and agriculture, India and the US are finding some common ground (on agriculture). As sanctions threaten to disrupt Russian oil supplies, India and China, the biggest buyers, could face challenges in finding alternatives. Ahead of Trump’s participation in the ASEAN Summit and his meeting with Chinese President Xi Jinping, attention turns to how regional players like Malaysia will balance between the two powers. Israel’s killing of over 90 Palestinians and its blockade of aid since the October 10 ceasefire cast doubt on Trump’s Gaza peace plan – here’s the weekly roundup of key global news.
In the midst of India-US trade talks, President Donald Trump’s administration has imposed sanctions on Russian oil, which accounts for a little over a third of India’s imports. Following the announcement of the sanctions on Russian oil majors Rosneft and Lukoil on Thursday (23 October), oil prices jumped over 5 per cent, hinting at market fears that Russian crude exports could nosedive.
However, India has stood firm on its ground in the ongoing trade negotiations with the US, asserting that trade deals are not done in a hurry or with a gun to the head. Rather, they are for the long run, and India will negotiate based on the future in mind, as the country will become a $30-trillion economy in the next 20-25 years.
While India’s growing market and its demographic weight are some of the advantages the US seeks to tap into, Delhi has remained steadfast in upholding its national interest and non-negotiable ‘red lines’. Against this backdrop, India-US trade discussions are understood to centre on the following points:
— According to a senior government official in New Delhi, there are some non-tariff barriers that are being discussed.
— Given the past differences over oil and agriculture, the two sides are finding some common ground (on agriculture).
— Since the US has begun adding more and more items under the Section 232 tariffs net, India seeks to address them in some of the areas.
— The India-US trade deal won’t be like conventional free trade agreements (FTA) based on the World Trade Organization’s (WTO) most favoured nation (MFN) tariffs, as it involves reciprocal tariffs, the official added.
Interestingly, the impact of US sanctions on Russian oil majors will play out against this backdrop.
The Trump administration’s sanctions against Russian oil companies – Rosneft and Likoil – are the latest attempt to arm-twist Moscow into ending the war in Ukraine. The two companies reportedly account for around 5 per cent of global output, and a significant portion of India’s oil imports from Russia.
Notably, the US has been joined by the European Union (EU), which has also unveiled measures that target Russian oil and gas. In addition, the EU has also imposed sanctions on three India-based companies for their suspected connections with Russia’s military.
While these measures are poised to interrupt established export flows and send global crude markets into a recalibration phase, India and China, the two largest buyers of Russian oil, face the challenge of substituting this oil from other regions. However, given the volume of imports – Delhi and Beijing together import nearly 3.6 million barrels per day – the transition won’t be seamless.
India has thus far resisted the pressure to stop buying Russian oil for which the US imposed a 25 per cent tariff penalty. But the sanctions seemingly create diplomatic space for Delhi to maintain the delicate balance between external political pressures (particularly from the US) and its strategic autonomy, especially in dealing with its long-standing partners like Russia.
India has maintained that it will buy oil from wherever it gets the best deal, as long as the oil is not under sanctions. But it has historically avoided oil imports from countries like Iran and Venezuela, whose oil was sanctioned. Although the American sanctions on Rosneft and Lukoil are not sanctions on Russian oil per se, they are likely to disrupt supplies to India.
As per industry estimates, the two energy firms account for over two-thirds of India’s Russian oil imports, while Russian oil has accounted for over 35 per cent of India’s oil imports so far this year.
However, given his transactional approach as well as unpredictability, Trump, who will meet his Chinese counterpart, Xi Jinping, on the sidelines of the Asia Pacific Economic Cooperation Summit (APEC), might change his stance on sanctions.
Ahead of the APEC Summit, President Trump will attend the annual summit of the Association of Southeast Asian Nations (ASEAN) in Kuala Lumpur, which will be held from October 26 to October 28.
His participation in the ASEAN Summit for the first time since 2017 comes against the backdrop of a few notable developments, including:
— First and foremost, the US-China trade war, recently exacerbated by Beijing’s tighter control over rare earths and subsequent threats by Trump of new 100 percent tariffs, as well as controls on exports of software to China.
— Trump is the third US leader to travel to the Southeast Asian country after former US presidents Barack Obama and Lyndon B Johnson. His visit comes as the region reels from his aggressive trade tariffs.
— Trump is also likely to preside over the signing of a peace deal between Cambodia and Thailand to cement a cease-fire that he says he played a role in brokering.
Setting aside Trump’s self-proclaimed role as a peacemaker, focus will be on his meeting with Xi and how other regional players, such as Malaysia, navigate the tensions between the two powers. It will play out against the backdrop of a complex web of geopolitical developments, with the US and China at the helm, especially around the relationships between Pakistan and Afghanistan, particularly the Taliban, and their competing interests in Balochistan.
In fact, analysts have pointed out that President Trump’s recent outreach to Islamabad, alongside China and Russia, underscores the need for India to further strengthen its ties with its neighbouring countries. In this context, how India’s engagement with the Taliban works out will be closely watched. But Prime Minister Narendra Modi’s decision to skip the ASEAN Summit in Kuala Lumpur, choosing to attend virtually instead, will be discussed at length.
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All the while, Trump’s Gaza peace plan appears to falter, with Israel killing over 90 Palestinians and restricting aid delivery to the war-ravaged enclave since the beginning of the October 10 ceasefire.
The UN’s International Organisation for Migration (IOM) has said “shelter needs remain dire” in the Gaza Strip, with about 90 per cent of the population displaced and at least 1.5 million people in need of emergency shelter assistance, Al Jazeera reported.
Meanwhile, US top diplomat Marco Rubio has rejected the involvement of both the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) and Hamas in the future of Gaza while on a visit to Israel to oversee the ceasefire.
Israeli lawmakers this week also approved a bill aimed at annexing the occupied West Bank, but Trump dismissed it, saying Israel is “not going to do anything with the West Bank”.
Under the first phase of Trump’s 20-point peace plan, Israel and Hamas exchanged hostages and Palestinian prisoners and detainees. However, as it moves into the second and third phases – involving demilitarisation, governance and reconstruction – the ceasefire looks precarious.
The US military announced this week that about 200 troops with expertise in transport, planning, security and engineering had started monitoring the ceasefire and would organise the flow of aid and security assistance to Gaza, Reuters reported.
Israel’s war on Gaza has killed at least 68,280 people and wounded 170,375 since October 2023. A total of 1,139 people were killed in Israel during the October 7, 2023, attacks, and about 200 were taken captive.
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