Geopolitics

Can the US afford to impose sanctions on India for its arms purchases from Russia?
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Issue Net Edition | Date : 20 Jul , 2019

S-400

“India was the world’s second largest importer of major arms in 2014–18 and accounted for 9.5 per cent of the global total,” according to the latest report published by the Stockholm International Peace Research Institute (SIPRI). However, Indian imports decreased by 24 per cent between 2009-13 and 2014-18, partly due to delays in deliveries of arms produced under licence from foreign suppliers, such as combat aircraft ordered from Russia in 2001 and submarines ordered from France in 2008.

According to the latest tally from SIPRI, Russia remains India’s top arms supplier, with the US holding down the No. 2 spot. Russia accounted for 58 per cent of Indian arms imports in 2014–18, compared with 76 per cent in 2009-13. Israel, the U.S. and France all increased their arms exports to India in 2014-18. However, the Russian share in Indian imports is likely to go up sharply during the next five-year period as India signed several big-ticket deals recently, and more are in the pipeline. These include S-400 air defence systems, four stealth frigates, AK-203 assault rifles, a second nuclear attack submarine on lease, and deals for Kamov-226T utility helicopters, Mi-17 helicopters and short-range air defence systems.

As Indian imports reduced, Russian exports of major arms were dented, decreasing by 17 per cent between 2009-13 and 2014-18. The report said this was partly due to “general reductions in Indian and Venezuelan arms imports”, which have been among the main recipients of Russian arms exports in previous years.

Surprisingly, countries like India that heavily pursues arms deals with the Kremlin are subject to U.S. sanctions under President Donald Trump’s Countering America’s Adversaries Through Sanctions Act (CAATSA). India is currently at risk of U.S. sanctions after agreeing to a $5 billion deal to buy Russia’s S-400 system — a mobile, long-range, surface-to-air missile system last year.

About 13 countries have expressed interest in buying the S-400. China, India and Turkey have already signed purchase agreements for the missile platform. China is in the middle of receiving its final shipment of the S-400 system. Turkey, a NATO ally, is slated to receive its S-400 this year and is expected to have the system ready for use by 2020.

India’s requirement for Russia’s S-400 missile defence system has been clearly conveyed to the American side, including during US Secretary of Secretary Mike Pompeo’s June visit to New Delhi that the deal was concluded in October 2018.India and Russia also signed eight agreements covering space, nuclear energy and railways in October.India’s Cabinet Committee on Security, the country’s defense policy and spending decision-making body, approved the acquisition of T-90MS tanks in early April, according to Jane’s.The Indian defense ministry and Russia’s state arms exporter Rosoboronexport are reportedly expected to sign the $1.93 billion contract in “the next few months.”

On whether procurement of S-400 missiles by India has been opposed and threatened with a ban, the US CAATSA requires the imposition of certain sanctions on persons or entities that have knowingly engaged in a “significant transaction” with the defence or intelligence sectors of Russia. The US Department of State will determine whether a transaction is “significant” for the purposes of section 231 of CAATSA on a case-by-case basis.

The government had said earlier that it would start receiving the missile systemsfrom Russia in October next year and the deliveries will be completed by April 2023.There were apprehensions about the payment mechanism for the deal in the wake of the US sanctions against Russia.

However, Trump’s threats lacked the sting that was once typical of American presidents who looked at India through Cold War tinted lenses. Being a businessman, he’s always looking for a deal. Soon enough, US officials were believed to have approached the former Defence Minister N. Sitharaman with an offer – New Delhi could avoid sanctions if it agrees to buy the F-16 fighter as a quid pro quo.

The CAATSA is an American law that prevents global free trade; it is patently illegal and can be challenged. Nevertheless, if enforced it could choke the supply of weapons from Russia and blow a gaping hole in India’s war fighting capability. It will also earn India considerable hostility in Moscow and drive the Russians closer to Pakistan and China, creating a different set of complications. Any American interference in India’s fiercely independent defence procurement policies will also create a backlash in India and torpedo the growing strategic and defence partnership between New Delhi and Washington.

India could thus end up in a Catch-22 situation in which it loses either way – whether the country abides by CAATSA or not. Sanctions under CAATSA would be triggered once Delhi makes a payment for the Russian equipment. The sanctions include blocking of licences and permissions for a US entity to export a significantly large number of items to India. The restrictions on this front would include any arms sale or the transfer of nuclear equipment or technology.

As one of the biggest customers of the Russian armaments industry, India will have tremendous difficulty scaling down its ties with Moscow. More than 70 per cent of the weapons fielded by India’s armed forces and 60 per cent of the country’s defence imports are of Russian origin.

Significant weapons deals such as the $6 billion Sukhoi Super 30 upgrade, the $5.4 billion S-400 deal, highly successful projects such as the BrahMos supersonic cruise missile, and secret collaboration in the area of nuclear powered submarines, miniature nuclear reactors and aircraft carriers, all point to the deep defence ties between Moscow and New Delhi dating back over 50 years. In this backdrop, nobody expects India to abandon its defence ties with Russia, even if economic and people to people ties have cooled considerably.

The strain CAATSA could place on the resurgent India-US relationship was in focus at a hearing of the US Senate Armed Services Committee in March 2018. Admiral Harry Harris, the former commander of the US Pacific Command, said: “Seventy per cent of their military hardware is Russian in origin. You can’t expect India to go cold turkey on that. I think we ought to look at ways to have a glide path, so that we can continue to trade in arms within India.”

The general consensus in the US is that both houses of Congress would have to consider ways to give a waiver to India. The main reason why the US is going easy on India – at least for the moment – is that Washington and New Delhi are in the process of working out multiple nuclear power plant and arms sale projects.India has deep pockets and the US need the money to keep its factories running.

India isn’t Saudi Arabia or Britain that the US can push around; it is poised to be the world’s third largest economy by 2024. Due to India’s large market and manpower, it is the US that needs India more than the other way round. Instead of getting into a heated diplomatic scrap, India could explore ways to sidestep CAATSA’s punitive measures in the following ways:

India may seek an official declaration from the US, specifying that anti-Russian measures would not be used against Indian companies.

India should enact its own legislation, which declares that decisions based on extraterritorial foreign laws that prevent free trade are unlawful and therefore not applicable.

New Delhi can complain at the World Trade Organization (WTO) and threaten counter sanctions to protect its legitimate interests.

Prime Minister Narendra Modi has an ambitious $250 billion plan to modernise India’s military and a hefty chunk of that amount will go to buy advanced weapons. The US – which has been the biggest beneficiary of India’s arms diversification programme in the past two decades – will end up as the biggest loser if it slaps sanctions.

Conclusively, CAATSA could be the much needed wakeup call India needs to fast track‘Make in India’. By fast tracking indigenisation, India can ensure self-sufficiency in defence and become immune from sanctions conjured by the US State Department.

Even if India decides to spread its imports evenly between Russia, the US, Israel and Europe, the reality is that all four are interlinked. For instance, Israel is touted as a reliable arms supplier and also a country with shared strategic interests. However, a number of Israeli weapons systems such as the Green Pine radar incorporate American technology at some level. This gives the US leverage against Israel, which may be arm twisted to apply sanctions on India. Although Tel Aviv has always stood by India during wars, hopefully, it will support India in future too.

New geopolitical developments are also in India’s favour. With the US creating a new Indian Ocean-Pacific Ocean command (the aforementioned IndoPaCom) to take on China’s growing naval power, Washington needs India as a strategic partner. The new command replaces the Pacific Command, indicating the importance of having a larger US naval presence in the Indian Ocean.

While Japan and Australia are the lynchpins of the American plan to contain China in the Pacific, in the Indian Ocean it is India that is the key to cornering the dragon. New Delhi should use this leverage to squeeze all the waivers it can to nullify CAATSA. If India plays its cards right, America’s brand new CAATSA could simply fizzle out.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Col (Dr) P K Vasudeva

Col (Dr) P K Vasudeva is a defence analyst and commentator.

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