Context:

• The interim cessation of hostilities in West Asia has raised hopes for restoring global flows of energy, trade, capital, and mobility.
• However, the conflict has deepened a global polycrisis—marked by United Nations Security Council (UNSC) paralysis, rising stagflation risks, and 363 million people slipping into food insecurity.
• Simultaneously, West Asia has become a key arena of US–China great power competition, reshaping the global order.

US Strategy - Reordering the Global Balance of Power:

• Key features:
  • Forced re-hemisphering (rooted in the Monroe Doctrine): The war in West Asia, pressures against Latin American nations like Cuba, and circumscribing security guarantees.
  • Recalibration of global norms: Tariffs on over 70 nations, withdrawal from 66 international organisations and treaties, and resource colonisation.
  • Power projection in various theatres: Kinetic action in India’s strategic backyard, the Russia-Ukraine war, and an enhanced $1.5 trillion military budget.
  • Political engineering: Support for populist-autocratic to effect regime changes.
• Strategic objective: Each disruption frees American resources for the Indo-Pacific theatre to counter China.

Energy Geopolitics - Weaponisation of Supply Chains:

• US approach:
  • The global energy crisis was partly engineered to choke China’s supply lines by targeting Venezuela and Iran, two of China’s petro-state partners.
  • Similarly,
    • The damage caused to 40 energy assets across West Asia,
    • The Strait of Hormuz blockade (taking 8-10 million barrels per-day),
    • The lack of alternative routes (Houthi blockades at Bab el-Mandeb), and
    • Port terminal strikes.
• US gains:
  • A 40% drop in Russian oil exports, benefiting the US.
  • The US leveraged domestic natural gas reserves, and access to Venezuelan resources.
  • It secured a $750 billion energy export deal with Europe.

China’s Resilience - Energy Security and Diversification:

• Key strengths:
  • Vast reserves: 1.4 billion barrels of oil, and LNG reserves of 60 billion cubic metres.
  • Energy mix: 34.7% from renewables (solar, wind, and hydro).
  • Strong pipeline diplomacy: The Kazakhstan-China oil pipeline, Russia's ESPO pipeline, and the Turkmenistan-China gas pipeline.
  • Continued imports: For instance, 1.5 million barrels/day from Iran.
  • Future push: China’s 15th Five Year Plan promises to add 46 GW through nuclear power.
• Key takeaways: China remains largely insulated from engineered energy shocks due to diversification and long-term planning.

Currency Geopolitics - Dollar vs Yuan:

• US actions:
  • Operation Absolute Resolve: It was partly designed to curb Venezuelan plans to “free itself from the dollar” (by trading in non-dollar currencies).
  • Operation Epic Fury: Target Iran’s non-dollar trade and signal to others (e.g., Saudi Arabia).
• Outcomes:
  • Limited success: Due to Iran’s strategy to shift oil trade settlement to yuan.
  • Global trends: Rise in yuan-denominated trade (now >50% of China’s trade), decline in US dollar share in global reserves, and increased gold stockpiling and reduced US Treasury holdings.
• Constraints on Yuan: Lack of global trust in China’s financial system.
• Implication: Slow but steady erosion of dollar dominance, though not immediate replacement.

Structural Challenges for the Global Order:

• Breakdown of multilateralism (UNSC ineffectiveness).
• Rise of geo-economic fragmentation.
• Increasing energy insecurity.
• Weaponisation of trade and finance.
• Growing food insecurity and inequality.

Implications for India:

• Opportunities: High “Nelson Complexity Index” refineries can process heavy crude (e.g., Venezuelan oil), and can potentially emerge as a refining hub.
• Risks: Overdependence on the US for strategic balancing against China, energy security, and exposure to global supply chain shocks.

Way Forward for India:

• Strategic autonomy: Avoid excessive alignment with any one bloc (especially the US).
• Energy security: Expand Strategic Petroleum Reserves (SPR); diversify energy imports; and scale up renewable energy (solar, wind), and nuclear energy capacity.
• Diplomatic reset: Rebuild ties with extended neighbourhoods (West Asia, Central Asia, Africa), and adopt multi-alignment strategy.
• Domestic political consensus: Involve Opposition in foreign policy formulation. Avoid politicisation of foreign policy for electoral gains.

Conclusion:

• The West Asia crisis underscores the emergence of a fragmented, competitive global order defined by great power rivalry, energy geopolitics, and currency contestation.
• For India, navigating this landscape requires a careful balance of strategic autonomy, energy resilience, and diplomatic pragmatism.
• A unified national approach will be crucial to leverage opportunities while mitigating risks in this evolving world order.