The war in Ukraine is no longer just a European tragedy, it has become the fulcrum of a new world order. What began with tanks rolling across Ukrainian borders has now spilled into oil markets, trade policies, and currency regimes. The latest signal came not from Moscow or Kyiv, but from Washington: a new tariff strike on India for continuing to import discounted Russian oil. On the surface, this is a trade dispute. In reality, it is a symptom of a much deeper fracture — one that could ultimately redraw the very architecture of globalization.
When Russia launched its “special military operation” in Ukraine or invaded the borders as the West interpret, in February 2022, the West responded with what it promised would be “crushing” sanctions. The US and the EU cut Russia out of financial systems, froze central bank assets, and banned key exports. The only assumption was to isolate Russia economically to force the Kremlin to retreat militarily.
But over the past three years now, Russia has not collapsed. Instead, sanctions have unleashed ripple effects that have boomeranged back on the very economies that imposed them. Global inflation spiked in 2022, fueled by energy shortages and food supply disruptions. Europe, dependent on Russian gas, scrambled for alternatives at enormous cost. Meanwhile, Russia pivoted eastward, redirecting oil and gas flows to China, India, and Turkey.
Now, Washington finds itself in an awkward position. Having failed to choke Moscow through sanctions alone, it is turning its firepower on those who dared to keep trading with Russia. India, the world’s third-largest oil importer, is at the center of this storm.
For New Delhi, the decision to buy Russian oil is rooted in pragmatism, not politics. With a population of 1.4 billion and a growing energy demand, India needs affordable crude. Russian barrels, offered at a discount as Moscow seeks new markets, fit the bill. Since 2022, India’s imports of Russian oil have surged more than tenfold.
This has transformed global energy flows. Where once Europe absorbed the bulk of Russian crude, now tankers sail east, filling Indian and Chinese refineries. India, in turn, re-exports refined products like diesel back to Europe. Ironically making the European cars run on Russian-origin fuel despite official sanctions.
Washington’s patience has run thin. By imposing tariffs on Indian exports in response to Russian oil purchases, the US is signaling that defiance comes at a cost. But the move also risks pushing India closer to Moscow and Beijing, an outcome directly contrary to Washington’s broader Indo-Pacific strategy, which counts India as a counterweight to China.
India is not alone. Across the Global South, countries have quietly continued business with Russia, often out of necessity. Turkey has doubled its trade with Moscow. Gulf states profit from energy arbitrage. Even Latin America has seen a revival of Russian exports.
This is not merely opportunism. It is the emergence of a parallel global economy. Russia now settles much of its trade in rubles, yuan, or rupees that circumvent the dollar-dominated financial system. China and India have expanded currency swap lines, insulating themselves from Western sanctions pressure. BRICS, once dismissed as a talk shop, is openly exploring alternatives to the US dollar for trade.
In short, the Ukraine war has accelerated trends that were already undermining Western economic dominance. The more Washington and Brussels tighten sanctions, the more incentive others have to build workarounds.
For decades, globalization rested on the assumption of open markets, integrated supply chains, and the US-led financial systems. The Ukraine war is eroding all three pillars.
Energy markets are now split. The Western consumers pay premium prices for “sanctions-compliant” barrels, while Asian buyers secure discounts from Moscow. Supply chains are being rerouted away from Europe and North America toward Asia and Africa. Financial flows are fragmenting, with alternative payment systems and currencies gaining traction.
The consequences go beyond economics. If globalization fractures into competing blocs, political alignments will follow. A world divided into the US-EU allies on one side and a Russia-China-India axis on the other could make Cold War 2.0 not just a metaphor, but a lived reality.
This is why the US tariff strike against India is more than a bilateral spat. It encapsulates the dilemma facing Washington and its allies. In efforts to punish Russia, they risk alienating the very partners they need to contain China. It also reveals the limits of sanctions as a tool of geopolitical coercion.
Instead of isolating Russia, sanctions have created a two-speed global economy. One in which Western nations are burdened with higher costs while non-Western nations leverage discounts and new trade ties. Secondly, the tariff move is an attempt to close that loophole, but it may backfire spectacularly by accelerating India’s strategic autonomy.
New Delhi has made clear that it will not be lectured on whom to buy energy from. “We will act in our national interest,” Indian officials repeat. If Washington pushes too hard, it risks turning a strategic partner into a resentful ally.
Over three years into the Ukraine war, one lesson is unavoidable that the battlefield is only half the story. The real war is over the rules of the global economy. Can the US and Europe still dictate the terms of trade, finance, and energy flows? Or is a multipolar order that is messier and fragmented but less Western is already here?
The tariff war with India and other countries suggests the latter. Sanctions may slow Russia’s war machine, but they are also dismantling the post-Cold War globalization that made Western economies dominant.
What began in Kyiv may end in a global reset from oil markets to currency regimes. The US tariffs on India are not just about crude, they are a flashing red light that the world economy is splintering into rival camps. And in this new order, the West may find that it is no longer the only architect.
The writer is an Executive Director, Devcom Centre for Geopolitical Studies, development expert and policy analyst focused on regional cooperation and climate diplomacy. His email: devcom.Pakistan@gmail.com
