Bessent’s ‘Financing War’ Claim Ignites Diplomatic, Economic Backlash

WASHINGTON (Azat TV) – U.S. Treasury Secretary Scott Bessent’s recent controversial statements regarding European trade with India and the NATO alliance have ignited a fresh wave of diplomatic pushback and economic unease, drawing sharp criticism from international leaders and financial analysts alike. Bessent’s assertion that Europe is ‘essentially financing the war against themselves’ by purchasing refined Russian oil from India, coupled with his administration’s confrontational trade stance, has prompted Canada to accelerate its trade diversification efforts and fueled concerns about the stability of the U.S. dollar.

During an appearance with ABC News, Secretary Bessent argued that while the U.S. imposed 25% tariffs on India for buying Russian oil, Europe was paradoxically set to sign a trade deal with India. He contended that Russian oil refined in India and subsequently bought by Europeans amounted to Europe funding Russia’s war machine. This logic, which critics have dubbed a ‘political syllogism,’ has been widely challenged for its factual and economic underpinnings. Observers noted that the argument collapses under scrutiny, as Russia’s revenue from oil sales is realized at the point of sale to India, not when the refined product reaches Europe. Claiming a second donation to the Kremlin at that stage is a misrepresentation.

The Logic of Oil and Sanctions

The premise of Bessent’s argument ignores the complex dynamics of global energy markets and previous U.S. policy. When Russia invaded Ukraine in 2022, India imported a negligible amount of Russian crude. However, Western sanctions disrupted global supply chains and sent oil prices soaring. In response, India significantly increased its purchases of discounted Russian crude. This move was quietly welcomed by senior U.S. officials at the time, including then-Treasury Secretary Janet Yellen and State Department energy envoy Geoffrey Pyatt. Their rationale was that India’s purchases kept Russian oil on the market, preventing a further explosion in global petroleum prices and helping to manage inflation in Western economies. Therefore, the subsequent sale of refined products to Europe is not a direct re-funding of Russia’s war, but rather a consequence of a complex global supply chain that, in part, previously served U.S. interests in price stability, as reported by The Times of India.

Canada Rejects Bessent’s Claims, Diversifies Trade

The impact of the Trump administration’s aggressive trade rhetoric, championed by Bessent, has also been felt directly in U.S.-Canada relations. Canadian Prime Minister Mark Carney publicly refuted Bessent’s claim that he ‘aggressively walked back’ critical remarks made at the World Economic Forum in Davos. At Davos, Carney had condemned economic coercion by major powers without explicitly naming the U.S., a stance that garnered widespread praise. Following a phone call with President Trump, Carney stated he reiterated Canada’s intent to diversify its trade relationships away from the U.S. He outlined plans for a dozen new trade deals across four continents within six months, with a goal to double non-U.S. exports over the next decade. This strategic shift comes amid escalating tensions, including Trump’s controversial push to acquire Greenland and past suggestions of absorbing Canada into the U.S., as reported by ABC News.

Economic Instability and Market Reactions

Bessent’s combative stance and rhetoric have not gone unnoticed in financial markets, contributing to a sense of instability. The price of gold has surged to $5,100 per ounce, up from $4,000 three months prior, a phenomenon Wall Street refers to as a ‘debasement trade’ for the U.S. dollar. The dollar itself has lost 10 percent of its value over the past year. Desmond Lachman, a former deputy director of the International Monetary Fund’s Policy Development and Review Department, criticized Bessent in a Project Syndicate op-ed, stating that the Treasury Secretary is ‘supporting a grossly irresponsible budget and foreign policy, which is putting the United States on a path to economic ruin.’ Lachman highlighted the projected near-doubling of the U.S. deficit to $3.4 trillion by the end of the decade and a 50 basis point rise in the 10-year Treasury yield, indicating declining investor confidence in U.S. bonds. The New Republic further observed that Bessent’s ‘trash-talking’ mouth-offs negatively impact the dollar’s value and increase the likelihood of a recession or even global depression.

The ongoing diplomatic friction and economic uncertainty fueled by Secretary Bessent’s outspoken and often confrontational approach underscore a broader shift in U.S. foreign and economic policy, prompting key allies to seek greater independence and raising questions about the long-term stability of global financial markets.