America has imposed sanctions on Russia due to its intervention in Crimea. This led to problems in S-400 air defense missile system deal for which the payment was expected to be made in US dollars. The payments of almost 2 billion dollars for weapons and equipment including those for critical projects such as the repair of leased nuclear attack submarine INS Chakra and S-400 air defense missile system was on hold due to American sanctions on Russia. For decades, India has made payments in US dollars for its transactions to almost every country including Russia, but American sanctions on Russia made it impossible to make payments since April of this year.
Now India, along with Indonesia and Vietnam, is likely to get a waiver from US sanctions against Russia, defense ministry sources told The Indian Express on Tuesday. On the waiver sources from the ministry a South Block said, “This makes the atmosphere conducive for a productive discussion when the 2+2 dialogue takes place between Defense and Foreign Ministers in September”. The already strained bilateral ties between India and the United States have hit a new low, as the much-hyped 2+2 dialogue between the two nations had been postponed. The 2+2 format entails a meeting between the foreign and defense heads of both the nations and was touted to be a positive step towards warmer Indo-US ties.
Now it will be held on September 6 when External Affairs Minister Sushma Swaraj and Defense Minister Nirmala Sitharaman will host US Secretary of State Mike Pompeo and Defense Secretary James Mattis. According to sources, US Congressional committee has proposed waivers for India from stringent sanctions under countering America’s Adversaries through Sanctions Act (CAATSA). This is directed against those doing business with Russia’s defense industry. The CAATSA waiver or “carve-out”, however, wants India to gradually reduce Russian-made weapons, and to enhance cooperation with the US.
New Delhi’s argument was that “a weaker India in this neighborhood is not in the US interest”. Sources said that putting India under sanctions would weaken the Indo-Pacific strategy of the US. Moreover, China has been assertive and proactive in the Indo-Pacific region. The United States has benefited a lot from Indian defense procurements and the Indian government is expected to buy more arms from US companies as with India being designated as a “major defense partner” of the country.
The US sanctions on Russia led to Indian payments worth over $100 million to Russia being blocked in less than a month, with payments of over $2 billion facing uncertainty. It impacted ongoing submarine repairs besides purchases of missiles and ammunition. The signing of a $5-billion deal to purchase the S-400 air defense system from Russia is also under doubt. When there was no chance of cooperation India had found a way to pay to Russia. It was planned by the Indian government that now India will go on with a rupee-ruble transfer as this is the only way out for both sides.
The Russia-American relations had hit an all-time low due to Russian interference in the 2016 presidential election and its actions in Crimea, Ukraine, and Syria. But it is important for United States to understand that India has to see its own benefits as well. US needs India as much as India needs them. Hence, it is a partnership among equals and no country is subservient to the other.