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How a key Australian ally has helped keep Kremlin’s war chest full

How a key Australian ally has helped keep Kremlin’s war chest full

In the weeks leading up to Russia invading Ukraine, President Vladimir Putin flew out from Moscow to visit two longtime allies.

The first trip, on December 6, saw Putin touch down in New Delhi for a one-day meeting with India’s Prime Minister Narendra Modi.

Two months after that, on February 4, Putin jumped on a plane to Beijing for two days of talks with Chinese President Xi Jinping.

Prime Minister Narendra Modi with Russian President Vladimir Putin
Vladimir Putin met with Narendra Modi two months before the Russians invaded Ukraine. (Photo by Sanjeev Verma / Hindustan Times)

Three weeks later, Russian troops and tanks rumbled across Ukraine’s border.

Since the invasion, and despite a range of US-led sanctions designed to hit Moscow’s state coffers hard, China and India have been major buyers of heavily discounted Russian oil.

Critics claim China and India’s willingness to buy countless barrels of Russian oil has softened the blow of Western sanctions, which two years after the invasion began are widely viewed as having failed to stop the Kremlin war machine.

India’s actions, in particular, have raised eyebrows, given it is a member of the Quad partnership, alongside the United States, Australia and Japan.

Turkey, too, has emerged as a key financial market for Moscow, after it dramatically stepped up its imports of fossil fuels from its near neighbour.

The Turkey Embassy told 9news.com.au it was buying Russian oil products because the sanctions – initiated by the White House – did not come from the United Nations.

Prior to the Ukrainian conflict, India bought hardly any Russian crude.

But data from the International Energy Agency, and the graphs below, show just how radically that trade relationship changed after the West stopped buying Russian oil.

Average Russian oil exports by country and region, 2021-2023
Average Russian oil exports by country and region, 2021-2023. (International Energy Agency)
The countries which bought Russian oil after EU bans until the end of January 2024. (Graphic: Polly Hanning)

China, more or less, has maintained its pre-invasion oil trade with Russia.

But India and Turkey have both snapped up cheap Russian oil and fossil fuels in big volumes, stepping into the vacuum created by sanctions.

The Centre for Research on Energy and Clean Air (CREA) said 46 per cent of Russia’s seaborne crude oil since sanctions were imposed had gone to India.

In the second year of the invasion, India’s imports of Russian crude increased by 79 per cent.

Russia’s crude oil sales to India in 2023 were worth $US37 billion ($55 billion), according to CREA data.

Dr Allan Orr, an Australian strategic defence analyst, described India as being an “ace in the hole” for Putin, who he said had been “playing chess, not checkers” in the conflict.

Putin’s trips to New Delhi and Beijing, “the last two (international visits) he did before he entered Ukraine”, were important, Orr claimed.

“He was assured of a market that he could sell oil to,” Orr speculated.

But, he cautioned, “no one can blame India for the Ukraine war, that’s got nothing to do with them” and that it made “great economic sense for India to take this oil”.

“It doesn’t matter what you think of Putin, it was a magnificent strategic plan,” he said.

“He had all the bases covered.”

Foreign Minister Penny Wong did not respond to questions if India’s actions had caused tension or rifts with Canberra or inside the Quad.

India is Australia’s sixth largest trading partner with two-way trade valued at $46.5 billion in 2022.

One of the world’s top three crude producers, Russia is heavily reliant on oil and gas revenues, which frequently make up near half of its total federal budget.

Russia’s federal revenues hit $US320 billion ($491 billion) in 2023 – a record total – and that figure is forecast to rise this year.

Some analysts estimate the Kremlin spent a third of the 2023 revenues on the war in Ukraine.

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Putin, the former head of the FSB, the spy agency to evolve out of the defunct KGB, knew the West would try and hobble him with sanctions targeting fossil fuel.

But, Orr said, Putin also knew Russia had regional friends he could rely on.

“India’s in the Quad, but big deal,” Orr said.

“Just because (India) has signed an international agreement doesn’t mean when push comes to shove they’re going to stick to it, or you can rely on them.”

India’s High Commission in Canberra did not respond to questions from 9news.com.au, but Hardeep Singh Puri, India’s minister of petroleum and natural gas, claimed the world should be “grateful” to India for buying Russian oil, in a recent interview on CNBC

Puri claimed India was, in effect, helping to keep global oil prices low.

Viewing India’s oil trade any other way was simply “hogwash”, he said, declaring that “no one ever tells India what to buy (or) where to buy from.”

Chinese President Xi Jinping and Russian President Vladimir Putin shake hands.
Russia and China have agreed to discuss ways to deepen their security cooperation. (Getty images)

Vaibhav Raghunandan, an analyst with CREA, disagrees with Puri, saying that “ethically, I think it’s problematic ground for India to stand on”.

He claimed to 9news.com.au that India had, directly or indirectly, been a “massive” help to Moscow, “because a huge amount of the market for Russian oil immediately disappeared after the sanctions”.

Raghunandan claimed CREA had observed a 66 per cent increase in India’s exports of oil products over the past 12 months, often to countries which had signed up to sanctions on Russian oil, he said.

India’s crude imports from Russia have dipped over the start of 2024, largely a result of stricter US sanctions which have targeted the tankers which carry Russian oil to India and other markets.

Though Russia was more or less internationally isolated, it was no surprise India had ramped up oil trade with Russia, and that China had remained steadfast, Orr said.

India is the world’s biggest arms importer, and it has always bought the majority of its arms from Russia. India considers Russia a trusted ally from the Cold War era, and it has not voted against Russia in the UN or criticised Putin since the invasion began.

“Russia has played the India card, and the India card is so significant (Moscow) has won that hand,” Orr said.

“The West has been trying to win this war without fighting this war.”

Rosneft oil rig in eastern Siberia
A rig drills for oil in eastern Siberia. (AP / Sergey Ponomarev)

Orr said the West should be worried the Ukraine war may be strengthening BRICS, a strategic alliance of Brazil, Russia, India and China and South Africa.

Responding to questions about its trade with Russia, Turkey’s Embassy in Canberra said it had “a long-standing policy concerning unilateral sanctions by third parties” which stands on two pillars.

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“First, we exclusively observe international sanctions endorsed by the UN Security Council and do not sign on to unilateral restrictive measures,” it said.

“Second, an integral part of this non-abidance policy is strict monitoring and prevention of efforts to skirt sanctions through Turkey.

“These two foundational elements of our sanctions policy are inseparable.”