China, India Binge Buy Russian Energy, Nearly Double Last Year's Purchases Amid West's Restrictions
The dramatic uptick in Chinese and Indian purchases of Russian energy comes amid Western nations' attempts to "punish" Moscow for its military operation in Ukraine by slapping it with sanctions and banning or "phasing out" Russian oil, coal and gas. So far, these measures' only impact has been to bring Europe and the US to the brink of recession.
China and India's oil, coal and gas purchases pumped some $24 billion in revenue into Russia's coffers between March and May, nearly doubling the $13 billion the Asian giants spent during the same period in 2021, China Customs and India Trade Ministry data has shown.
The People's Republic accounted for over 78 percent of the revenue - $18.9 billion. India, for its part, bought $5.1 billion in Russian energy - quintupling purchases it made a year ago by taking advantage of discounts on crude made as Moscow maneuvered to shift supplies away from the European and US markets.
Lauri Myllyvirta, lead analyst at the Finland-based Centre for Research on Energy and Clean Air (CREA), predicted that the Asian giants aren't likely to stop their Russian energy binge anytime soon amid rising energy prices, and the West's politicized decision to ban Russian crude oil and coal, and to limit gas imports.
CREA figures indicate that China overtook Germany in the first 100 days after the escalation of the Ukraine crisis in February, but that the European market still accounted for a majority of top ten importer nations during this period.
Combined with Russian discounts, the possibility of ruble-yuan payments (and a similar ruble-rupee scheme currently being finalized), the BRICS nations have enjoyed a dramatic ramping up of the type of 'win-win' cooperation consistently talked about by Chinese officials, with Moscow 'winning' new markets, and Beijing and Delhi a cheap and dependable source of energy.
The United States banned the import of most (but not all) Russian energy in March, with the European Union following suit in the months to follow by banning Russian coal and fertilizers (which is an energy-intensive sector), promising to "phase out" Russian oil, and searching for alternatives to Russian natural gas.
While these measures were meant to "punish" Russia for its military operation in Ukraine, their impact so far has been to send already high energy prices and inflation soaring, and sparking fears of a steep recession.
Germany, the European industrial giant accounting for more than a quarter of the EU's GDP, has been hit hard by the self-inflicted dual calamities of inflation and spiking energy costs. On Sunday, German Trade Union Confederation chairwoman Yasmin Fahimi warned that "entire branches" of the country's industry, including aluminum, glass and the chemical sectors, are at risk of "collapsing permanently" thanks to the gas shortages. Germany depended on Russia for 40 percent of its gas and a quarter of its oil before the escalation of the Ukraine crisis.
Even the US, where Russian crude oil accounted for just one percent of total consumption in 2021, has been affected by the Biden administration's energy ban, with gasoline prices setting records and sending shockwaves of price hikes reverberating on all other sectors of the economy dependent on road transport.
US and EU officials have reacted with general indifference to ordinary citizens' economic distress, with President Biden blaming Russia and calling inflation and the gas price jump "Putin's price hike," while in Brussels, European Commission President Ursula von der Leyen has recommended that people simply 'turn down the thermostat a couple degrees' to compensate for lost Russian energy. On Monday, EU high representative for foreign affairs and security policy Josep Borrell admitted that the transition away from Russian gas and oil is creating "serious difficulties" for members' economies, but stressed that "this is the price which we must pay to defend our democracies and international law."
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