India will have to skilfully manage the ‘collateral damage’ of US sanctions on Russia and Iran

by G Parthasarathy

American recognition of India as a valuable “strategic partner” emerged only after India tested nuclear weapons and then successfully defied US economic and military sanctions, which ended with the 2005 India-US nuclear deal. The nuclear deal was inked when the US was getting concerned about the rise of an assertive and strategically aggressive China.

Washington’s embrace also came with an increasing emphasis on “containing” Russian influence and undermining the virulently anti-Israeli and regionally ambitious, Iranian clerical regime. Iran’s rulers also evidently had ambitions to acquire nuclear weapons capabilities.

American hostility towards Russia grew after the Russian takeover of parts of Eastern Ukraine and Crimea, which, in turn, followed crude American interference in Ukraine’s internal politics. Not surprisingly, the Russians responded to such American interference, by actions during American Presidential elections, which heralded the victory of Donald Trump.

The Russians backed by Iran, have also foiled American efforts for “regime change” in Syria. The US Congress has responded by imposing financial sanctions on transactions involving arms purchases from Russia. This has been accompanied by the Trump Administration re-imposing sanctions on Iran, while ignoring opposition from Russia, China and European allies like Germany, France and the UK. India will face due “collateral damage” from American sanctions on Russia and Iran, unless it acts skilfully to safeguard its interests.

American sanctions on arms purchases from Russia have come at a time when India still imports over 60 per cent of its defence equipment from Russia. The US is currently the second largest supplier of defence equipment to India, followed by Israel and France. India is set to acquire a number of potent weapons systems from Russia, most notably lethal long-range, surface-to-air S 400 missiles, which will provide formidable air defences on our borders with both Pakistan and China. India is also set to acquire “stealth” frigates for its Navy and helicopters for the armed forces, apart from spares and ammunition, from Moscow.

Asian ‘Partners’

At a time when the US is looking for “partners” to balance Chinese power and “assertiveness” in Asia, these American sanctions will also hurt the defence preparedness of two other American partners — Indonesia and Vietnam. Indonesia is acquiring frontline SU 35 fighter aircraft from Russia. Vietnam, another major Russian defence partner armed with Russian SU 30 fighters, is also looking for other Russian acquisitions.

Foreign Secretary Vijay Gokhale and Defence Secretary Sanjay Mitra have held discussions on the American sanctions in Washington. American legislation on Russian arms was passed in the wake of allegations of Russian interference in US Presidential elections, to facilitate Trump’s electoral victory. US Defence Secretary General Mattis has already made known his opposition to the ill-advised sanctions on sales of Russian weapons systems to American “strategic partners”.

This issue will figure prominently when External Affairs Minister Sushma Swaraj and Defence Minister Nirmala Sitharaman visit Washington, for a joint meeting with their American counterparts. There appears to be little understanding in the US Congress, that the proposed sanctions on import of Russian arms will hurt American strategic interests in the Indo-Pacific region. Defence partnerships like the “Quad” involving the US, Japan, Australia and India will be meaningless, if the US undertakes moves that undermine the security of India. It remains to be seen how and when the US deals with the problems its legislation creates, even those it designates as “strategic partners”.

Iranian oil exports will be subjected to US sanctions, which will also target projects and investments by foreign companies in Iran, after November 4. The largest markets for Iranian oil are China, Japan, India and South Korea. While France, Germany the UK and other EU members have proclaimed that they will not abide by these sanctions, most big companies in these countries, like French oil major TOTAL, having vast business and investment interests in the US and dollar holdings in American banks, will inevitably exit from Iran. The American sanctions will bite Iran deeply and seriously affect sectors like its oil industry and civil aviation. It is only a question of time before the flow of money and investments from the EU to Iran fall significantly.

Iran Factor

China, Japan and South Korea will be able to continue oil imports from Iran as they all have substantial exports to Iran and money flows can be balanced. India cannot do this, as the Iranians have consistently shown little interest in either import from India, or in Indian involvement/investment in projects in Iran, particularly in the energy sector. India should use the forthcoming sanctions to point out areas where Indian agricultural and other products can be increasingly imported by Iran, if there is to be some basis for a mutually beneficial economic relationship.

The crucial issue for India is, however, to persuade the US not to interfere with the Indian involvement in the construction of the Chabahar Port in Iran, which is a crucial project for getting access to Afghanistan. US officials in Afghanistan recognise the strategic importance of this project for Afghanistan and would try to ensure that it is not the subject of US sanctions.

The Trump Administration has undermined its international credibility by flip-flops in its dealings with foreign powers. It has talked tough on relations with China and then backed off. It has changed its approach to North Korea, alternately threatening nuclear strikes one day and cooing friendship and reconciliation, the next. Secretary of State Mike Pompeo served notice of Tehran with 12 conditions Tehran had to meet, ranging from ending support for Houthi rebels in Yemen, the Hamas in Palestine and Hezbollah in Lebanon, to shutting down its ballistic missiles programme and ”respecting the sovereignty of Iraq.” Predictably, the Iranians have responded with disdain.

India cannot, but be concerned, about the likely impact of American actions, in our volatile western neighbourhood, extending across the Straits of Hormuz and the Gulf of Aden. An estimated 7 million Indians reside in this region, from where we get 70 per cent of our oil imports. There will inevitably be growing unrest and tensions across this region, fomented by Iranian ambitions on the one hand and the US, Israeli, Saudi nexus on the other.

Moreover, the time has come for India and others to use forums like BRICS to initiate a process to devise a new architecture for monetary exchanges, so that Washington cannot indefinitely continue to use the US Dollar as an instrument for diplomatic blackmail and to disrupt world trade, through unilateral monetary sanctions.

The writer is former High Commissioner to Pakistan