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Countering CAATSA

Despite US sanctions, India should firmly continue dealing with Russia and Iran

Countering CAATSA
Management of foreign affairs has been a major hallmark of the Modi Government and there have been some significant benefits for India in the realm of energy security, defence, and FDI. However, recent moves of the US Administration to impose new sanctions on Russia and Iran have posed some challenges for India. The statement of External Affairs Minister Sushma Swaraj that India only follows UN sanctions and not those imposed unilaterally by any country vindicates that the Modi government is not willing to succumb to the American dictum.
Fresh sanctions imposed by the US Administration on Russia and Iran through CAATSA can impact India's quest for purchasing S-400 air defence systems from Russia, purchase oil from Iran in addition to jeopardising India's strategic investments in Chabahar Port. Countering America's Adversaries Through Sanctions Act or CAATSA is self-explanatory in terms of what the US is trying to achieve through it. The punitive actions through these sanctions are not just aimed at Russia or Iran but also against any country which engages with them in their defence and intelligence sector. Further, certain provisions of the bill give the US Government the right to impose punitive sanctions against those companies which aim to collaborate with Russia (or Iran) to develop their energy export infrastructure.
Beneath the veneer of claiming to counter Russia for its Crimea action, one of the prime reasons for the sanctions, it seems, is to significantly dent Russia's commodity, energy and defence exports and facilitate the void, thus created, to be filled in by US companies. Thus, the blatant and most obnoxious economic motives of the US are all too well apparent. The energy-related sanctions have obvious reasons to make India worry. They have come against the backdrop of India and Russia jointly exploring the proposition of building a $25 billion Trans-Siberian pipeline to ferry gas from Russia to energy deficient India besides plans for Indo-Russian collaboration to develop Iranian oil and gas fields.
While sanctions against Russia by the US and EU, since 2014, did have some impact on the Russian economy; the EU countries were not spared either, given their tremendous dependence on Russian gas to see through harsh winters along with the considerable trade relations they share. Interestingly, such has been the level of frustration in Europe against unilateral sanctions by the US, and meekly emulated by the EU, that countries like Germany have continued with their exports to Russia while displaying an utter disdain to such irrational sanctions. German exports to Russia were to the tune of $31.9 billion in 2017 while imports were $38.7 billion, implying total trade of $70.6 billion in 2017 between the two. This defiance is primarily because of the fact that Germany's economy has been one of the biggest victims of US-led sanctions on Russia.
US and countries of the EU are also on the verge of another major face-off after additional sanctions were imposed on Russia's energy business recently through CAATSA. It is evident that the American objective was to thwart the prospects of the construction of Nord Stream 2 and Turk Stream pipeline to ferry Russian gas to West and East European countries. The ulterior motive, as stated earlier, is to find prospects for American shale gas, since the US is now potentially a net exporter of energy. Nevertheless, in spite of the US sanctions, many major European countries have gone ahead with their procurement of Russian gas which has been on the rise. Compared to 180 BCM in 2016 and 194.4 BCM in 2017, Russia's Gazprom may end up exporting an unprecedented 200 BCM of gas to Europe in 2018.
Interestingly, Rosneft's acquisition of Essar Oil in India for $13 billion signifies that Indians too have now learnt, from Europe, the nuances of dealing with Russia even while ad-hoc American sanctions are operational. This has to be taken forward in every sphere. While India's relation with the US is special and should always be cherished, vested interests cannot be allowed to damage India's dealings with Russia – be it in the realm of defence or energy. Just as the S-400 air defence systems is critical to India's security needs so are India's pertinent needs to have direct access to Russian gas grid through pipelines. Even though India's defence procurement from the US has increased over the years and, which is appreciable, any deliberate motive to intentionally disrupt Indo-Russian defence deals should be resisted with a firm approach. In a non-aligned world, India does not need to be subservient to anyone.
In the same league, while the rationale behind new sanctions on Iran and USA pulling out of the Iran nuclear deal are contentious issues, nothing apocalyptic has happened suddenly to corner Iran again unless the objective is to provoke it sufficiently to trigger a new phase of conflict in the Middle East and raise oil prices further. India is in talks with Iran to procure six million barrels of oil for its strategic reserves besides major plans for investments in Iran's oil and gas fields. Above all, India's strategic investments in Chabahar Port and the Chabahar-Zahedan-Hajigak railway line are critical to India's relation with Afghanistan and countering Chinese endeavours in the Gwadar Port.
If the US wants India to be a net security provider in the Indian Ocean region, it should make sure that disruptive sanctions imposed by it on certain countries do not hamper India's dealings with them. Understanding India's concerns and resolving them would only help in improving Indo-US ties and not otherwise.
(The views expressed are strictly personal)
Pathikrit Payne

Pathikrit Payne

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