[ANalytics] India to lose more than it gains from Quad

Essar Oil's refinery at Vadinar village, near Jamnagar, in India. Unlike the US and Australia, India is a net importer of fossil fuels. Photo: AFP. Sketched by the Pan Pacific Agency.

The foreign-ministerial meeting of the member states of the Quadrilateral Security Dialogue, commonly known as the Quad, namely Australia, India, Japan and the US, is scheduled to be held on October 6 in Tokyo. The meeting was supposed to be held in New Delhi last September in a 2+2 ministerial format whereby the foreign minister and defense minister of each country would attend the meeting. Bhim Bhurtel specially for the Asia Times.

Washington has been pushing Canberra, New Delhi and Tokyo to transform the Quad into an Asian NATO. The US wants to develop the Quad as a collective defense system of all member countries. Each member state would agree to mutual defense to respond to any military attack on any other member, like the North Atlantic Treaty Organization. But the real target of the proposal is China.

It is not difficult to surmise that India changed its mind about hosting the Quad meeting because of the Chinese pressure along the Sino-Indian border.

The first point of the agreement reached between Indian External Affairs Minister Subrahmanyam Jaishankar and his Chinese counterpart Wang Yi in Moscow on September 10 reads, “The two ministers agreed that both sides should take guidance from the series of consensus of the leaders on developing India-China relations, including not allowing differences to become disputes.”

There is increasing criticism that the Bharatiya Janata Party (BJP) government led by Indian Prime Minister Narendra Modi has been using the support and goodwill of “the West” to oppress its own citizens in the name of Hindutva policy. Amid such criticism, Amnesty International, which has been working in India since 1966, has decided to quit India after the government’s systemic crackdown on human-rights defenders. The Home Ministry ordered the freezing of Amnesty International’s bank account recently.

The US decided to halt its plans to convert the Quad into an Asian NATO for the time being, blaming India for its illiberal behavior. The US had been under pressure from international human-rights defenders and media after Amnesty International’s decision to exit India. The watchdog’s India exit was an opportunity for the US to save face after its failure to convert the Quad into and Asian NATO.

In reality, India and Australia withdrew from the plan to formalize the Quad into an Asian NATO because of Beijing’s immense pressure.

The US wants to use the Quad as a long-term strategy to contain China by encircling it from the Indo-Pacific Ocean region. About 70% of China’s crude-oil imports pass through the Malacca Strait. Creating a disruption to the free flow of oil into China through the Strait could ruin its prosperity. But China’s announced intention to move toward a carbon-free economy means the US strategy could be less effective in the future.

Additionally, Bloomberg Businessweek has already declared China the winner of the Sino-American trade war. The tech war between these two economic giants has turned out to be counterproductive for the US. Thus the US needs to recalibrate its policy on China.

The Quad ministerial meeting is being held right after the Chinese announcement of going for a green economy by 2060. The Chinese statement has posed a serious question over Quad’s legitimacy in the long term.

Australia and the US were dumbfounded by China’s sudden decision to go for a green economy, because those two countries are net fossil-fuel exporters. Thus it is natural that Tuesday’s ministerial meeting is expected to redefine Quad’s aims and objectives.

Traditionally, the Quad aims to promote a “free and open Indo-Pacific” amid “China’s aggressive postures” in the region. It is based on the four dimensions of power – diplomacy, information, military, and economy (DIME) – to find common ground for policy coordination among the member countries of Quad to contribute to “the rules-based order” in the Asia-Pacific region.

Australia and the US are highly likely to push a new agenda in the Tokyo Quad meeting after China’s unexpected vow to aim for a fossil-fuel consumption peak before 2030 and a carbon-neutral economy before 2060.

Thus energy security will be the most pressing new issue in this Quad meeting. Discussions are likely to take place on how to cope collectively with China’s decision to move toward a carbon-neutral economy over the next four decades.

The US strategy

India is the world’s second-largest consumer of fossil fuels. It is a net importer of coal, natural gas and oil. Similarly, Japan is also a significant consumer and net importer of gasoline. In contrast, the United States and Australia are net exporters of fossil fuel.

China declared that it will reach the peak point of coal and petroleum energy consumption before 2030. Then it will continue to substitute those fuels with clean energy and get to a carbon-neutral economy before 2060.

Naturally, China will first consume all of its domestically mined coal and crude oil reserves. Thus Chinese will immediately reduce coal and crude-oil import as domestic supply increases. That means that the US and Australia must find new destinations for their coal and petroleum export.

The US also wants to reach a consensus among the Quad members on pushing China back to save its vast automobile industry, whose products run on fossil fuel. Thus India and Japan are natural choices for America’s export of crude oil and coal and partners for saving its auto industry.

Bad news for Indians

It is bad news for Indian fossil-fuel consumers. The US is likely to force India and Japan to buy its crude oil and coal in bulk, while Australia is also expected to get a share of that market.

India had been importing cheap oil from Iran, as the US had exempted India from its sanctions against Iran. But India has stopped importing Iranian oil since May 2019 after the US withdrew its exemption.

The US is likely to force India to import its oil and coal through long-term agreements. In that situation, India will have to cut its imports from Arab nations. The US may may even pressure India to agree to a particular purchase mechanism that will not be affected by daily market price fluctuations. As a result, Indians will have to pay more for American petroleum products than they do now for Arab oil.

If India refuses the US proposal, Washington will use retaliatory measures, as it has done in the past. Thus Indian consumers will have to pay the price of India’s external affairs minister’s risk-loving strategy to go for an alliance with the US.

India is going to lose more than it gains from the Quad in the future.

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