U.S. Treasury Secretary Scott Bessent has sharply criticised Europe for indirectly financing Russia's war efforts in Ukraine through its purchases of refined oil products from India.

His remarks come ahead of a high-level summit where India and the European Union are expected to formally announce the conclusion of negotiations on a comprehensive free trade agreement.

Speaking on ABC News on 25 January 2026, Bessent highlighted the irony of Europe's trade policies at a time when the U.S. has imposed punitive tariffs on India for buying discounted Russian crude oil.

The U.S. administration under President Donald Trump has levied 25 per cent tariffs specifically targeting India's imports of Russian oil, with overall tariffs on Indian goods reaching 50 per cent. 

Bessent pointed out that this measure aims to curb the flow of Russian energy revenues that sustain Moscow's military operations. However, he noted a stark contrast in European actions.

Just last week, the European Union finalised a free trade agreement (FTA) with India after negotiations that began in 2007. This landmark deal, set for official announcement on 27 January 2026, is expected to enhance economic ties between the two regions. European Commission President Ursula von der Leyen, who served as chief guest at India's 77th Republic Day celebrations in New Delhi, hailed it as the "mother of all trade deals".

Bessent underscored the circuitous trade route enabling this dynamic: raw Russian oil flows into Indian refineries at discounted rates, where it is processed into refined products such as diesel and jet fuel. 

These products are then exported primarily to Europe, which has banned direct imports of Russian crude but continues to rely on such third-country supplies to meet energy demands.

In Bessent's view, this arrangement effectively means "Europe is financing the war against itself". He argued that European buyers are providing Russia with vital foreign exchange through India, bolstering the Kremlin's ability to fund its invasion of Ukraine, now in its fourth year. This critique comes amid ongoing disruptions in global trade caused by U.S. tariffs.

President Trump has prioritised negotiating a settlement to the Russia-Ukraine conflict, with Bessent emphasising that the U.S. has borne greater sacrifices than Europe in supporting Kyiv. These include substantial military aid packages exceeding €100 billion since 2022, alongside sanctions that have reshaped global energy markets.

India, the world's third-largest oil importer, has significantly ramped up purchases of Russian crude since the invasion began, reaching record volumes of over 2 million barrels per day in 2025. This shift has helped Moscow redirect exports away from sanctioned Western markets, with India refining and re-exporting about 30-40 per cent of the intake to Europe and beyond.

The EU-India FTA could further streamline such trade flows by reducing tariffs on goods, including energy products, and addressing non-tariff barriers. Negotiations covered 27 chapters on issues like market access, services, investment, and sustainability, with both sides aiming to double bilateral trade from €120 billion in 2024.

Critics in the U.S., including Bessent, see this as undermining Western sanctions unity. Europe defends its position by noting that third-country refined products are not directly covered by the G7 oil price cap, set at $60 per barrel. Nonetheless, the bloc has faced internal pressure to phase out such imports fully.

Ursula von der Leyen's visit to India underscores the EU's strategic pivot towards Asia amid U.S. protectionism. The FTA is projected to add €100 billion to annual trade by 2030, boosting sectors like automobiles, pharmaceuticals, and chemicals—ironically, alongside energy.

For India, the deal offers respite from U.S. tariffs while deepening ties with its largest trading partner, the EU. New Delhi maintains that its Russian oil purchases are commercial decisions driven by discounted prices—often 20-30 per cent below Brent benchmarks—and do not violate sanctions.

Bessent's remarks signal escalating transatlantic tensions over burden-sharing in the Ukraine conflict. With Trump pledging to "end" the war under his leadership, the U.S. may intensify secondary sanctions on countries like India facilitating Russian oil trade.

This episode highlights the complexities of enforcing energy sanctions in a multipolar world. As Europe balances energy security with geopolitical solidarity, the EU-India pact risks amplifying divisions within the West.

Based On PTI Report