THE SANCTIONS SHADOW
A NEW US LAW THREATENS TO CUT OFF THE BOOMING INDIA-RUSSIA ARMS PIPELINE. WILL IT FORCE INDIA TO CHOOSE BETWEEN THE US OR RUSSIA AS A MILITARY PARTNER?
WWhen foreign minister Sushma Swaraj
and defence minister Nirmala Sitharaman travel to Washington next month for the first of the annual ‘2+2’ strategic dialogue with their respective US counterparts Mike Pompeo and Jim Mattis, they will have Russia on their mind. Specifically, how to insulate India’s military preparedness from the threat of US sanctions, which has hung a sword of Damocles over the country’s military ties with Russia.
In January, the US law CAATSA (Countering America’s Adversaries Through Sanctions Act) came into effect. The law imposes sanctions on Russia, North Korea and Iran as well as countries buying arms from them.
A senior government official says while the sanctions imposed after the Russian annexation of Crimea in 2014 focused only on Russian firms, CAATSA shifts the US attack to foreign countries doing business with all Russian military firms. This has serious implications for India, one of Russia’s largest defence partners for nearly 50 years. It not only needs spare parts for warships, fighter jets, radars and battle tanks that now make up nearly 60 per cent of its weaponry, the sanctions impact arms deals worth over $12 billion that the Indian armed forces are seeking to counter China and Pakistan.
The navy has recently negotiated the lease of a second nuclear-powered attack submarine from Russia for $2 billion. The amount will pay for the lease and refit of a Russian navy Akula-2 hull, which is to join the navy in the next decade to replace INS Chakra, which was leased from Russia in 2008. The army needs to urgently replace its ageing fleet of Cheetah and Chetak helicopters with Kamov 226 light utility helicopters, 140 of which will be manufactured in India as a joint venture between Russian Helicopters and Hindustan Aeronautics Limited (HAL). The Indian Air Force wants five S-400 surface-to-air missile systems worth over Rs 40,000 crore from Russia to significantly offset the disadvantages of its depleted fighter squadrons when facing the air forces of China and Pakistan in case of a two-front war. Each missile has a range of nearly 400 km. When deployed on the border, they can cover vast reaches of Pakistan’s airspace (the US-made Patriot PAC3 missile has a range of just 70 km).
All of these deals will see significant currency transactions, which are likely to attract provisions of CAATSA, but given India’s financial constraints, the deal for S-400 missiles seems closest to the finish line. The S-400 contract is likely to be signed when President Vladimir Putin visits India later this year for the 19th Annual India-Russia bilateral summit. This one deal will thus be the test case of the Indian government’s ability to withstand United States sanctions, particularly since the US regards this particular missile system with deep suspicion.
On May 28, Mac Thornberry, chairman of the House Armed Services Committee, told journalists in Delhi that there is “a lot of concern in the US in both the administration and the Congress” over the S-400 system. “And there is concern that any country, and it is not just India that is looking at clearing it, but any country that acquires that system will complicate our ability to work out interoperability,” Thornberry said.
THE WAY OUT
CAATSA forces New Delhi to choose between strategic partners Russia and the US. A decade since the signing of the landmark Indo-US nuclear deal in 2008, the relationship has blossomed into a thriving arms partnership, with the United States becoming India’s second-largest arms partner. Both countries regularly hold a series of military manoeuvres under the re-
cently renamed ‘Indo-Pacific Command’ and have shared common concerns over a rising China.
Meanwhile, CAATSA and the unpredictability of the Donald Trump administration have forced a subtle reset in New Delhi and driving India and Russia closer.
Even as the US gears up to counter a China-Russia axis, New Delhi has reiterated its belief in a multi-polar world. On May 21, Prime Minister Narendra Modi met Putin at an informal summit in Sochi, Russia. On May 29, National Security Advisor Ajit Doval, a key figure in the India-Russia relationship, got Pankaj Saran, India’s ambassador to Russia, as his deputy national security advisor. And on June 5, defence minister Sitharaman came out with an emphatic endorsement. “In all our engagements with the United States, we have clearly explained to them that India and Russia’s defence cooperation has been going on for a long time and that it is a time-tested relationship. We have also mentioned that CAATSA cannot be impacting on this,” she said in New Delhi. Adds a senior defence official: “We are not the Dominican Republic or Canada, we are India and we have conveyed our concerns to the US administration.”
The United States was already conscious of the impact of CAATSA on partners like India. Signing the bill into law last August, President Donald Trump raised objections, terming it ‘seriously flawed’ because it limited the executive branch’s flexibility on foreign policy. On April 27, Mattis told a Congressional hearing by the Senate Armed Services Committee that a national security waiver be urgently provided to India and other countries, which are trying to turn away from Russian-sourced weapons, to avoid sanctions under CAATSA.
Responding to the request, the US Senate this month inserted four new clauses under Section 1292 of the Act ‘Enhancing Defense and Security Cooperation with India’ in its defence budget passed last month. The new clauses empower the Trump administration to suspend CAATSA sanctions, but it has to certify that India was reducing its dependency on Russia ‘and has a desire to continue doing so’, as Thornberry told the media in New Delhi. The clauses are of the nature of describing ‘limitations that hinder or slow (down) progress’ in IndoUS ties, ‘a description of actions India is taking, or the actions the Secretary of Defense or the Secretary of State believe India should take’, to advance the relationship with the United States, measures that can be taken by the United States and India to improve interoperability. And, lastly, it also inserts a clause ‘progress in enabling agreements between the United States and India’. The last reflects the US administration’s pique over India’s slow progress in ‘foundation agreements’, such as LEMOA (Logistics Exchange Memorandum of Agreement), signed in 2016 after nearly a decade. The Communications Compatibility and Security Agreement (COMCASA) and Basic Exchange and Cooperation Agreement (BECA) are yet to be signed.
“It’s not just the S-400 deal, but India’s strategic autonomy that is at stake,” says Vice Admiral A.K. Singh (retired), a former commanding-in-chief, Eastern Naval Command. “Hopefully, our leaders will realise we cannot break ties with Russia. The United States is the world leader in antisubmarine warfare, stealth technology and drone technology, but will never part with it or even sell it. There are certain technologies only the Russians will give us.” With the 2016 commissioning of the nuclearpowered ballistic missile submarine INS Arihant, India recently operationalised the third leg of its nuclear triad, the ability to fire nuclear-tipped missiles from under the sea. This could not have been done without considerable Russian assistance.
“We have clearly explained to the US that India and Russia’s defence cooperation is a time-tested relationship.” NIRMALA SITHARAMAN Defence Minister
ON THE GROUND
Meanwhile, India and Russia have moved away from US dollars and euros and now do business in rupees and roubles. Agreements are being re-drafted and new modes of payments being established between Indian and Russian state-owned banks. Syndicate Bank, Vijaya Bank and the Indian Bank and Sberbank of Russia have been designated to handle the rupee-rouble payments for India to pay for Russian military purchases. The payments bypass SWIFT transactions, which are routed through New York. The first contracts were redrawn recently for the $208 million mid-life upgrade of a Russian-built Kilo class submarine in Russia. But while these relatively minor deals might go under the radar, it is the big-ticket items like the S-400 missile system that have the potential to cause worry in South Block. A waiver from the US administration will leave a strong negotiation lever in their hands, which they can use to extract other concessions from India. Under present circumstances, India’s choices seem pretty limited.