Silent Saviors: How India and China Averted Russia's Economic Collapse

 

India and China's Covert Assistance Saved Russia's Economy from Collapse

Background: The Ukraine War and Sanctions on Russia

In 2022, the Russia-Ukraine war led to unprecedented sanctions against Russia, primarily targeting its oil, natural gas, and diamond industries. The aim was to cripple Russia's economy and hinder its ability to fund its war efforts.

India and China's Role

Despite the sanctions, India and China emerged as major importers of Russian oil, accounting for approximately 90% of Russia's exports.

India's Support:

• India significantly increased its trade with Russia, particularly in oil, to offset the reduced demand from Europe.
• Indian banks backed non-dollar payments for oil transactions with Russia, as an alternative to the prevalent US dollar dominance.
• India also refined Russian oil and exported it to Europe, earning significant profit and helping Russia circumvent the price cap imposed on its oil.

China's Support:

• China became the largest importer of Russian oil, purchasing nearly 50% of its exports.
• China's state-owned companies played a crucial role in facilitating and financing the trade with Russia.

Impact on Russia's Economy

• Despite the sanctions, Russia's oil industry remained a primary contributor to its GDP, largely due to increased exports to India and China.
• The price cap imposed by sanctions was effectively bypassed, as India and China resold Russian oil at higher market prices.
• Russia's oil revenue became a lifeline for its economy, enabling it to continue funding its war efforts and minimize the impact of sanctions.

Countering US Dominance

• The trade between India and China and Russia began to challenge the US dollar's dominance in global oil transactions.
• Non-dollar payments and alternative financial mechanisms weakened the US's ability to exert economic influence through sanctions.

Conclusion

By defying sanctions and supporting Russia's oil industry, India and China played a crucial role in preventing a significant downturn in Russia's economy. Their actions not only benefited Russia but also undermined the dominance of the United States and highlighted the growing geopolitical power of the East.