What is the issue?
- The India-Russia Annual Summit was held recently in India, with uncertainty over US sanctions for defence deals.
- Given this, it is essential to understand the significance of the meet and the US’s role in India-Russia relations.
Why is the recent meet significant?
- Autonomy – The S-400 contract was signed in a low-key manner, with no mention in press statement by the leaders.
- Nevertheless, it was clear assertion of autonomy of Indian decision-making on Russia.
- Neighbourhood – International issues of mutual interest, especially on terrorism, Afghanistan and the Indo-Pacific were discussed.
- On Afghanistan, India expressed support for the “Moscow format”.
- Under this, Russia involves regional countries and major powers in an effort to draw the Taliban into negotiations with the Afghan leadership.
- The U.S. has boycotted this initiative, but has initiated its own dialogue with the Taliban.
- A U.S. Special Representative for Afghanistan is now touring Afghanistan, Pakistan, the UAE, Qatar, and Saudi Arabia.
- This is to generate help in bringing the Taliban to the negotiating table and notably, India is not on his itinerary.
- On Pakistan, significantly, the recent Joint Statement mentions cross-border terrorism, which some earlier Joint Statements did not.
- Business – India and Russia have set a target of $30 billion bilateral trade by 2025.
- There are clear opportunities for cooperation between Russia (natural resources-rich) and India (resource-hungry).
- But even before CAATSA, there was confusion in India about sanctions against Russia.
- The U.S. and European sanctions on Russia between 2014 and 2016 are sector- and currency-specific.
- They affect entities operating in Europe and U.S., and transactions in euro or dollar currencies, and are not applicable to other geographies or currencies.
- This remains the case, even post-CAATSA, for all sectors other than defence and energy.
- The economic engagement of major European countries with Russia has actually grown in 2017 and 2018, despite the sanctions.
- European and American corporate lawyers with expertise on sanctions have enabled this.
- So with proper structuring of business deals, trade and investment exchanges with Russia are possible, without losing business with Europe and America.
- Indian business needs to tap into this expertise, as utilising the business opportunities largely depends on this.
What is US’s role in India-Russia relations?
- India balancing its relations between the U.S. and Russia has been a challenge for quite some time.
- India has emphasized earlier that its growing proximity to the U.S. would not affect relations with Russia.
- Given this, the recent summit was centred over the challenges in sealing the S-400 deal.
- As, the U.S. has been publicly warning for months that the purchase could attract sanctions.
- The recent India-U.S. 2+2 meeting (of Foreign and Defence Ministers) also did not resolve this issue.
What is the way forward?
- Every potential India-Russia defence deal could be subjected to a determination on applicability of US sanctions.
- Given the political dynamics in the U.S. today, a systemic solution to this problem is not evident.
- However, it has to be on the India-U.S. dialogue agenda as the strategic partnership between both is based on a strong mutuality of interests.
- Nevertheless, the partnership is not intended to have the exclusivity of an alliance.
- So India should not have to choose between one strategic partnership and another.
- The India-Russia dialogue should not get inextricably entangled in the India-U.S. dialogue.
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