The weaponisation of India’s oil imports by the United States, linking the sourcing of oil to terms for bilateral trade, is a reminder of the constraints imposed by such external dependence on national security and foreign policy.

Independent India began its development process with four critical external dependencies — food, foreign exchange, defence equipment and energy. The foreign exchange crisis of 1957-58 alerted policy makers to the external financial constraint. The war with China in 1962 signalled the shortage of defence equipment. The droughts of 1965-67 drew attention to the critical dependence on food imports. The Gulf War of 1990 contributed to a spike in oil prices that triggered a balance-of-payments crisis.

The governments of the day learnt important economic and foreign policy lessons from each crisis. The shortcomings in defence equipment available during the 1962 war forced Prime Minister Jawaharlal Nehru to reach out to the United States for assistance. The food crisis of the mid-Sixties showed how external dependence in a vital sector like food could also be used to shape foreign-policy choices. President Lyndon Johnson tried to link food aid to a change in India’s stance on the war in Vietnam. Prime Minister Indira Gandhi stood her ground.

The oil crisis of 1990 and the subsequent foreign exchange crisis of 1991 forced India to approach the International Monetary Fund for support. Neither the United States nor other developed economies were willing to help India until the government of Prime Minister Narasimha Rao undertook major changes in both economic and foreign policy. The diplomatic recognition of Israel was one consequence.

More recently, the weaponisation of finance by the........

© Indian Express