Why India feels the heat of US-Russia diplomatic tensions
India is not responsible for the steady collapse of US-Russia ties
America’s Cold War confrontation with Russia seriously affected our relations with Washington. Ironically, after the Soviet Union’s collapse and the grip the US acquired on Russia’s governance under the Boris Yeltsin regime, difficulties developed in India-Russia ties. Today, with anti-Russian sentiment in the US reaching uncontrolled proportions, India is once again feeling the heat.
Primary problem
The core of the problem is the extra-territorial application of US laws.
India is not responsible for the steady collapse of US-Russia ties, yet India is exposed to penalties because of America’s decision to punish Russia with increasingly stringent sanctions for its alleged misdeeds. Because America has a grip on the global financial system, even when countries complain that the extra-territorial application of US laws is contrary to international law and infringes on their sovereignty and independence, in practice they are careful about violating US sanctions.
Prior to the Iran nuclear deal, India did that in the case of US sanctions when it substantially reduced purchases of Iranian crude oil. Indian entities were also reluctant to deal with Iran for fear of losing access to the US financial market. With Trump unilaterally repudiating the Iran nuclear deal and re-imposing draconian sanctions, the earlier challenge to India has resurfaced. India would want the strategically vital Chabahar project to be excluded from the purview of US sanctions, which also require India to reduce its crude purchases from Iran to zero by November this year.
Doing this would gravely damage India-Iran ties, undermine India’s energy security, and raise questions about its strategic autonomy. The root of our problem lies in Countering America’s Adversaries Through Sanctions Act (CAATSA) passed by the US Congress under which, in April 2018, apart from sanctioning Iran, Trump imposed wide-ranging sanctions on 39 entities or companies in Russia that include Rosoboron export through which all our defence procurement passes and Almaz-Antey (the supplier of S-400 air defence system).
Under CAATSA, dealings with them will make third parties liable to what are euphemistically termed “secondary sanctions”, but which really means that all non-Americans defying American law will also be punished.
Under this law, the US President can impose sanctions on third parties engaged in a “significant transaction” with the Russian defence sector. CAATSA authorises the US President to suspend export licences related to munitions, dual-use and nuclear-related items and ban American investment in equity/debt.
In theory, therefore, the progress made under the India-US nuclear deal and the liberalised export control regime for India culminating in giving it STA-1 status could be affected. If licences are suspended, American companies will be barred from participating in Indian defence contracts and will be unable to provide maintenance support for the defence equipment already acquired by India.
Contestable policy
The ban on equity/debt investment will jeopardise the joint ventures that American defence companies have formed with Indian companies, besides barring them from forming such ventures in the future under MoD’s newly announced Strategic Partnership (SP) model as part of its Make-in-India policy.
All this illustrates the consequences of any ill thought-out action by America under CAATSA to pressure India to subscribe to its contestable foreign policy decisions. CAATSA has the potential to seriously interfere with our defence ties with Russia, considering that about 65 per cent of our defence equipment is of Russian origin and more acquisitions are in the offing, especially five S-400 air defence system worth about $5 billion — an obvious “significant transaction”.
US Defence Secretary Jim Mattis’ strong appeals to the Congress for a waiver for India and India’s active diplomacy have produced a partially successful result. The US Congress has agreed to grant the Trump Administration limited authority to waive sanctions on India (and Indonesia and Vietnam as well) with a view to providing “flexibility for strategic partners and allies to move away from the use of Russian military equipment to American equipment”.
Serious damage
This makes the intention behind the waiver problematic for India.
The US President would need to certify in writing that a significant transaction with any one of seven Russian defence or intelligence agencies listed in the amendment is not involved and that the foreign government in question meets one of two conditions: that it “is taking or will take steps to reduce its inventory of major defence equipment and advanced conventional weapons” made by Russia or it is “cooperating” with the US government on security matters critical to US strategic interests.
India could argue that it has already made major arms purchases from the US — $15 billion worth since 2008, that Russian weapons in Indian hands do not threaten America’s national security interests, and that India and China are cooperating in the Indo-Pacific.
The waiver, however, is for six months at a time, which means that future waivers could be used as levers to press India to acquire still more US arms in preference to Russian weaponry.
Mattis has again requested the Congress for a cleaner, less stringent, national security waiver. Its final version will be voted by the Congress in the coming weeks. As India and the US prepare for their first 2 plus 2 dialogue on September 6 in New Delhi between the foreign and defence ministers, this issue should be resolved in a way that in the process of punishing Russia the US should avoid causing serious damage to its own strategic partnership with India.
(Courtesy of Mail Today)